Thursday, 22 September 2011

Mr. Lorne Gunter's Got It "Bass-Ackwards" And Here's Why

Lorne Gunter: $90k-per-day too much to pay budget-cutting consultant

Mr. Gunter makes his point known:
"I don’t care how you try to explain it away, in this day and age of tight budgets and runaway deficits,  $90, 000 per day is way too much to pay an accounting firm for advice on how to cut $4 billion from Ottawa’s budget, particularly since the proposed cuts Deloitte comes up with are unlikely ever to be acted upon by FinMin Jim Flaherty."
This is a tall order to demonstrate Mr. Gunter.  The value needs to be determined by the results, not 'the times we are living in'. For if the value shows that incredible savings were achieved, then the expense would support your 'concern for the times', so we need to compare the value against the results which we expect to honor the 'times'. On this note, an MP personally told me, they expect $200 saved for every $1 spent.  I have been in business 11 years...and my experience says that sounds like good value. Now, we need to focus on the results of Deloitte's work in relation actual savings to know if this was a value based expense for the times.   There is no universal principle "spending to save money while in a bad economic times is simply wrong". Believe the best, and if the Conservatives flub this, I will join you in calling them out and demanding accountability for the millions invested. Furthermore, although possible that the gov. ignore suggestions, it is a fallacy to say that because something is unlikely, it therefore is wrong to expect follow-trough. On both points, we need to 'wait and see': it appears too early to make the call Mr. Gunter.

 "Mr. Flaherty has been Finance Minister since Feb. 6, 2006 — more than 5-1/2 years — if he doesn’t already know where the potential savings are buried, he never will."

It is fallacy to think the "CFO", or Finance Minister ought to be responsible for the horde of variables and inter workings of a multi-billion dollar complex organization called 'government'.  The Finance Minister is responsible for taking the data presented to him and making sound judgments that best govern and serve the people.  Getting help on determining how to arrive at sound logic via council of the wise (properly tendered bid of professionals) is a good thing and a sign of humility and wisdom...not incompetence. We should weigh the fruit of the recommendations and the initiatives taken before we presume getting wisdom from experts is weak, or not 'of the times'.

"Still, federal program spending has increased by at least 25% above and beyond the growth in the size of our economy during the Tories’ tenure."
Sadly, this is true.
"Since Jim Flaherty put far than $4 billion in spending there himself, he should be able to find a few billion in savings without the help of a very high-priced consultant."
Oversimplification Mr. Gunter. You sound frustrated.
"Yet if Deloitte’s analysts could come up with $4 billion in budget cuts that Mr. Flaherty could get through the House of Commons, their fee might be worth it."
Correct, therefore we wait and initial point.

"But here’s a better idea: Make the fee a percentage of the savings found and open the process to everyone — consultants, academics, members of the public, even civil servants."
This comes with a host of variables: who set's up a commission to receive, sort and process each request? What is the process that is used to determine the weight of each suggestion and how would they know the inner workings of both peoples lives and surrounding structures?  A tendered process makes sense, although it may not necessarily be the best option.

"Many bureaucrats, too, know how to make their departments more efficient, but are stymied by institutional inertia or internal politics. But if the budget-cutting process is opened up to all comers and if everyone proposing a useful solution is awarded 10% or even 5% of the savings their ideas generate, then sit back and watch the good ideas come from inside the public service itself."

This does not sound as efficient at the 0.5% fee Deloitte is working towards ($200 savings:$1 fee). Given your concerns for the 'times' Mr. Gunter you are proposing paying 10 - 20 times what the conservatives are proposing: that is bad value, please reconsider this suggestion :)  Also, suggestions 'from the trenches' are an invaluable source of feedback, learning and opportunity for improvement and this should continue. However, there is a difference between a seasoned specialist focusing on cost structures (clearly making lots of money) versus a hard working non-specialized worker. That's why we use such terms as 'specialists' and 'experts', to hone in on something narrow, and execute with excellence.
"When there is so much concern over out-of-control spending, it seems absurd to pay a consultant exorbitant fees for advice the government should be able to come up itself or get from others much, much more cheaply."
It is not absurd due to 1/2 a percent fee being incredibly low on money saved. Consider RIM who spent US118million on their similar 'cost optimization program'.  That exorbitant amount of money was invested to better RIM's position.  Time (and The Street) will judge if their investment was worth it through a simple but powerful word: RESULTS.  Likewise, we need to give the Conservatives the same: time, then view their results.  What if their program with Delloite proves to cost them $1 for every $200 saved? What if they demonstrate that fat is cut? What if the Finance Minister acknowledges the complexity of working with billions as beyond his (or any one's) scope of mind and uses the advice to somewhat simplify and discern these complex matters to many Canadians satisfaction?
Mr. Gunter, I issue you a challenge: Give the Conservatives time, then view their results.  Use this time to articulate your vision of what you expect to see from this investment.  What would make it worth it for you?
You mentioned trimming fat, reasonable offered 5%-10% to employees for their suggestions, why not 1/2 percent for Delloite?  Time may show them to be a flop or an incredible investment.  Let's make sure we are there to hold the Conservatives accountable by discussing their results.


  1. So if the Cons can't find the cuts on their own what right did they have running for office?
    Why elect people who can't do what they are elected to do?
    The Conservative party or the MPs themselves should shoulder this cost of hiring others to do what is in fact part of their jobs?
    It's BS.

  2. The fact that the government is spending 90 grand a day to find areas within our bloated bureaucracy where cuts can be made reinforces what many conservatives believe: Our overpaid senior civil servants are more interested in sustaining their vast empires than they are in serving the Canadian public.

  3. I don't agree with hiring Deloitte. If they were good corporate citizens they would offer the information for the "GOOD OF CANADA".I guess our only option is to go back to the cheating,lying, thieving, quebec controlled liberals. That would be better.

    Rob C

  4. I think the Conservative government are a very well educated group of people. Why are they spending this amount of money on this when they can figure out how to cut costs themselves. Is this patronage or sweethearting or WHAT?

  5. Ms Hume said"As always our government is committed to maintaining an open fair and transparent procurement process while obtaining the best value for Canadians." How so? A select group of 20 pre qualified firms were INVITED tobid - It was not a fully open tendering process from all I have read about this.

  6. dsaar said..."So if the Cons can't find the cuts on their own what right did they have running for office?"

    Because they are politicians who are elected to represent the people. They may have been dog groomers (or lawyers, heaven forbid) in a previous life. That doesn't exactly give them the skill set to analyze an operation as complex as the federal government. You want them all to go to Afghanistan to fight the Taliban too? (because it's part of their job?)


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