Ottawa MP and Conservative cabinet minister John Baird said 4,800 local jobs will be cut over the next two to three years in a post-budget breakfast speech to Ottawa's business community on Friday morning, co-hosted by OBJ and the Ottawa Chamber of Commerce.
These direct local federal jobs losses are less than what budget documents initially suggested. In total, 19,200 public service positions will be eliminated, with 7,200 expected to be cut through attrition, such as retirements and voluntary departures.
Mr. Baird's figure suggests the much-feared civil service layoffs may have a relatively minor effect on the National Capital Region's currently robust labour market, which had an unemployment rate of six per cent at the end of February.
If all 4,800 jobs were to be eliminated today, it would push Ottawa-Gatineau's unemployment rate up to 6.6 per cent, which is still below the national average in February of 7.4 per cent.
Nevertheless, there are still several significant economic pitfalls hanging over the region as businesses dissect Thursday's budget.
The document contains no discussion of the impact on the sizable "shadow" public service that consists of the legions of temporary workers, consultants and contractors who work alongside full-time, permanent bureaucrats.
John Gordon, president of the Public Service Alliance of Canada, said the total job losses will be closer to 30,000 after taking into consideration cuts that have already been made, including many workers who finished up their term contracts on Friday.
Indeed, Statistics Canada has recorded consistent, but modest, declines in local public administration positions in recent months. But the region continues to create thousands of net new jobs, suggesting these earlier cuts have been absorbed.
The other area of concern is the impact felt by local companies that do business with the federal government, which bought more than $694 million worth of goods and services from Ottawa-area firms in its fiscal third quarter.
Collectively, government departments and agencies are expected to find $5.2 billion in savings by 2014-15. While specific targets have been assigned to various organizations, there were few details within the budget on how those savings will be achieved, beyond vague references to "streamlining," "business transformation" and "organizational restructuring."
The head of the city's largest business organization says she believes the city can shoulder the cuts contained in the federal budget.
"I think he 4,800 jobs lost in the next two to three years can be easily absorbed," said Erin Kelly, executive director of the Ottawa Chamber of Commerce.
She adds she hopes the private sector will scoop up young graduates that the government previously attracted.
The city won't shrink because of jobs lost to attrition because those people will likely stay in Ottawa, Ms. Kelly said, but it's crucial to keep new graduates in the city - graduates that for the past 10 years have been flocking to the federal government, she said.
"Students who come here to study, if they get a job right out of university, they will stay here," she said. "They'll establish their families here and that will help our city grow. If they leave, they're probably not going to come back so we have to grab them when they're graduating."
The budget drew praise from one of the city's fastest growing tech companies.
Brett Serjeantson, CEO of MediaMiser, said that the government's continued support for the widely used SR&ED tax credit program will help small and medium sized-businesses increase productivity.
The Conservative's earmarking of $400 million for venture capital funding will help slake the city's thirst for high-tech investment, he said, adding that Ottawa now sees only 10 per cent of the dollars invested during the years of the tech boom.
"I don't think it will be the silver bullet that will turn around the high-tech industry in the region, but I think it's a positive start," Mr. Serjeantson said.
-With reports by Peter Kovessy
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