Kait Labbate, Centretown News
The Department of National Defence will be reducing its current 40 headquarter locations to a mere seven, as part of efforts to cut spending. This Ottawa location at 101 Colonel By Drive will remain one of the department’s central spaces.The federal government’s pursuit of balanced budgets is drawing criticism for its impact on the Ottawa economy.
“We still have a fragile economy and in this context to put every effort in the books to balance the books, I’m not sure was the strategy,” says Mario Lefebvre, an economist, and the former director of the Centre for Municipal Studies of the Conference Board of Canada.
Lefebvre is criticizing the federal government’s pursuit of balanced budgets because of its impact on the Ottawa economy. He suggests the aggressive strategy to erase the national deficit may not be the right approach to stabilize Ottawa’s volatile economy.
In his keynote speech at the Ottawa Real Estate Forum on Oct. 8, Lefebvre illustrated the impact the federal government has had on the economy. He pointed to 18,000 public sector job cuts in the past few years in the Ottawa-Gatineau region, also referred to as the National Capital Region. “At the end of the day this is a sector that is about 28 per cent of your economy, give or take a few. And it’s been in declining mode, so not good news for the overall bottom line,” he says.
While he doesn’t think dramatic job cuts in Ottawa’s public sector is the best approach right now, Lefebvre also doesn’t support running deficits unconditionally. “When the Quebec government decided to take the bull by the horn and bring the deficit down to zero, I stood up and applauded because the debt-to-GDP ratio in the province of Quebec, was and still is, 60 per cent,” says Lefebvre.
In contrast, he says because Ottawa’s debt-to-GDP ratio is only hovering around 30 per cent there shouldn’t be any rush to balance the books, “particularly when your economy is going sideways,” he adds.
The government job cuts also means there is less need for office space in Ottawa. Another money saving strategy of the federal government has been to consolidate underused workspace in the NCR.
Julianne Wright, director and general manager of the Altus Group, a commercial real estate consulting firm in Ottawa, says, “There’s been an impact definitely on the size of the workforce and therefore it’s had an effect on their footprint, their lease, their lease space in the city.”
The office space for the Department of National Defence in the Ottawa-Gatineau region is one example of how aggressive the consolidation movement is. The DND has confirmed in an email that the National Defence Head Quarters will “Consolidate from approximately 48 locations to seven,” they write, adding, “the move is planned to start in fall 2016 and will span several years, divided into three phases. Approximately 3,400 people will be moving in the first phase from several locations.”
DND gave few details about the locations of the more than 40 spaces they’ll be moving out of. They did reveal that office spaces at 295 and 285 Coventry Rd. and 1745 Alta Vista Dr. are going to be vacated in the first phase.
Bona Building & Management Company oversees the lease for the 295 and 285 Coventry Rd. locations. They did not return our request for comment on the financial impact of DND’s departure.
1745 Alta Vista Dr. is owned by the federal government and “has been identified as surplus to DND’s needs and is slated for divestment,” a DND spokesperson also confirmed in an email.
Once all of the consolidation is complete, DND says offices at 1600 Star Top Rd. and 101 Colonel By Dr. will remain in operation. They suggest the bulk of the staff in the consolidation effort will be moving into the Carling Campus, the former Nortel Complex, in the west end of Ottawa. DND says their entire consolidation effort is expected to save taxpayers $750 million over 25 years.
The consolidation of DND office space is just one example of ways the federal government is cutting back in Ottawa to balance the budget. The Conference Board of Canada estimated approximately 18,000 public sector job cuts between 2013 and the end of 2015, which is probably the most telling number.
While Mario Lefebvre is critical of the aggressive strategy to balance the budget, he is not entirely pessimistic. His outlook for the Ottawa-Gatineau economy sees growth over the next 12 to 24 months because of a promising future in the information communication technology sector and a rebound in federal government employment.
“The public sector, federal government, will not shrink forever, we all know that. Once the books are going to be balanced, they’re going to be hiring again,” says Lefebvre.