Opinion: A federal action plan for Ottawa’s economy

This is my second opinion piece in a six-part series on the changing local economy. It will focus on the federal government’s role as a major employer and economic catalyst in the region.

The federal government is the largest employer in Ottawa. From 2000 to 2012, the number of workers on the federal payroll grew from about 100,000 to more than 150,000.  

The federal government also purchases more supplies and services from companies based in Ottawa than from anywhere else, fuelling a significant amount of the city’s private-sector employment.

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It has a rich history of creating economic growth in the capital in other ways as well. It was the commercialization of research and ideas from the National Research Council and other federal institutions that helped make Ottawa a global technology leader through the creation of companies such as Computing Devices, Mitel and many others.

Indeed, up until a few years ago, the federal government was a steady and reliable linchpin of our economy. Ottawa had been through federal cutbacks in the past, but for the most part they did not have a lasting negative impact on our economy – that is, until 2010, when the federal government got serious about reducing spending and eliminating the debt with the Deficit Reduction Action Plan.

Even in the mid-’90s, when the federal Liberals under the guidance of then-finance minister Paul Martin slashed more than 10,000 civil service jobs, Ottawa businesses didn’t suffer significantly. There were a variety of reasons for this, the most significant being that the government was conscientious about minimizing the local economic impact of job and spending cuts.

As part of this effort, the feds launched a program called REDO (Regional Economic Development Organization). Calian founder Larry O’Brien co-chaired the committee, which was created and funded by the federal government to develop and implement a strategy for employees to transition from the public sector to the private sector. The government cared about what happened to its employees and to the city of Ottawa.

This time around, things are a little different. While most taxpayers would agree the government needed to balance its books, as a community Ottawa was given very little information on how the governing Conservatives would manage the thousands of layoffs and the reduction of hundreds of millions of dollars of local spending.

Sadly for Ottawa, the current government has made very little effort to help affected employees transition to other jobs. In addition, it provided no information to local companies to help them understand the impact of the spending cuts on hotels, restaurants, caterers, travel agencies, convention centres and many other firms and facilities in Ottawa that provide goods and services to the government.

In fact, to this day we don’t know exactly how many federal employees have been laid off in Ottawa, how much the government has cut spending on local goods and services and the impact of these measures on the city’s economy as a result.

We had mistakenly assumed that the federal government would act compassionately and be sensitive to how its restructuring would affect employees and our local economy.

Still, it is not too late for the government and local economic groups to develop programs to plan and manage what appears to be a permanent downsizing of the federal government’s employment levels and local spending. We can redo REDO.

The federal government and private sector must also work together address another issue that is stunting local economic growth.

Though Ottawa-Gatineau is the country’s fourth-largest urban region, it remains a “small” city in terms of economic diversity because its major employer does not participate in the local economy to the same extent it would if it was a private company.

For example, Ottawa’s sports teams and cultural institutions are negatively affected by federal government restrictions on sponsoring, buying tickets to and accepting invitations to games and cultural events. Yet I don’t know of a single instance in which a federal government employee or politician has been influenced or corrupted by accepting an invitation to a hockey game, concert, gala or a simple meal.

The Harper government and the private sector need to work together to implement a process that would be transparent and provide full disclosure of the events politicians and civil servants are invited to attend.

In closing, most employers will tell you “our people are our greatest asset.” The federal government needs to show its employees that it cares about them and that they will be dealt with fairly to maintain morale and productivity. It is in the government’s – and our economy’s – best interest to have a strong and motivated public service.

Simply put, Ottawa needs the federal government, and the federal government needs Ottawa.

Next month, I will discuss the region’s private-sector companies and what they can do to help stimulate the local economy. As always, I welcome your comments.


Jeffrey Dale is the director and co-founder of the Odawa Group as well as the former president of the Ottawa Centre for Research and Innovation.

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