Canadian government pays Deloitte $90k per day

20 February 2012

It was revealed recently that the federal government has contracted Deloitte to help trim the federal budget. Deloitte’s 8-month contract is worth $19.8 million, drawing ire from the opposition New Democratic Party.

There was grumbling from some opposition MPs in Ottawa after it was revealed that Big Four accounting and consulting firm Deloitte is earning over $90k a day from the Canadian government in return for delivering advisory services. As part of an 8-month contract with a total value of $19.8-million, Deloitte is advising the federal government on several cost-cutting measures. The news comes on the heels of a government announcement that it has paid PricewaterhouseCoopers a $2.5-million fee for a strategic plan to reduce 308 data centers to nearly 20.

Deloitte was hired in August 2011 to help the federal government cut costs and find enough savings to balance its books by 2014. Canada is facing a massive cost-cutting challenge, with the government setting out to trim $4 billion from $80 billion in annual program spending. Deloitte was selected out of a shortlist of more than 20 "pre-qualified" firms, including Ernst & YoungIBM and Accenture. The victorious Deloitte will advise senior and elected officials on public- and private-sector best practices in improving productivity and achieving operational efficiencies. The contract runs to March 2012, with an option for a one-year extension.

Canadian government pays Deloitte $90k per day

Criticism from the opposition

Voices from the opposition NDP party were critical of the Deloitte contract. "Hiring Deloitte and paying them firm $90,000 a day is wasteful and unnecessary," remarked NDP MP Peggy Nash. "The government likes to pretend that they're prudent in terms of economic spending but at the same time they have this massive contract with an external consulting firm that will only advise them to chop thousands of public sector jobs," she added.

According to NDP MP Jean Crowder, the Canadian people "will not buy the justification for spending $90,000 a day for an outside consultant to plan cuts.” She continued, “A day's pay for [Deloitte Consulting] is more than a year's pay for front-line Service Canada workers. While Conservatives throw money away on high-priced consultants, they are forcing Canadians to accept cuts to the programs and services that they rely on.”

Government defends deal

In reaction to the criticism, the government stood firm in its decision to hire Deloitte. Industry Minister Christian Paradis called the Deloitte contract "normal," saying that "there will be major decisions to be taken and we need an expert from the private sector to do it properly."

"With respect to spending, we certainly are opposed to reckless spending,” added Finance Minister Jim Flaherty. “Private sector advice is valuable, it’s important, it’s essential."


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Buck illuminates federal budget's impact on employee benefits

01 April 2019

The Canadian federal budget for 2019 ushered in a raft of new program spending. According to human resources consulting firm Buck, the two most central announcements related to employee benefits were the budget’s concrete moves toward a national pharmacare plan, as well as changes to protect employees in the case of an employer’s insolvency.

"While Budget 2019 provides many details regarding a range of measures, we are particularly encouraged by progress toward a national pharmacare program, covering high cost drugs and rare diseases, as there are many cases where such coverage is needed," Karen DeBortoli, director of the knowledge resource centre at Buck, said. "Although the success of the program will ultimately hinge on how it balances coverage with cost, we saw good progress in the new budget this week."

The budget outlined the creation of three national pharmacare projects: a Canada Drug Agency (CDA), a National Drug Formulary, and a National Strategy for High-Cost Drugs and Rare Diseases.

The CDA will work on assessing the effectiveness of new drugs, while serving as the single negotiator for drug prices. The newly created agency will also develop the national formulary – an evidence-based list of prescribed drugs for patients nationwide.

The budget also introduced the creation of a strategy to gather and evaluate evidence on high-cost drugs for rare diseases, while working to negotiate lower prices with drug manufacturers.

Buck illuminates federal budget's impact on employee benefits

"Canada is currently home to a patchwork of federal and provincial pharmacare programs," DeBortoli said. "The replacement of the current patchwork of prescription drug benefit programs, which provide what Budget 2019 acknowledges as 'inadequate and inconsistent coverage,' will be welcomed by most Canadians. In order for the CDA to operate effectively, all provinces and territories must participate. A single negotiating entity will have greater bargaining power, and a single formulary will be of greatest benefit to all Canadians."

Buck hopes that the evidence-based drug formulary will include certain expensive but high-benefit drugs that have a high impact on quality of life and overall healthcare cost reduction. An example is PEI’s Hepatitis C Program, which is providing drug treatment to all provincial resident despite high drug costs to eradicate the destructive liver disease by 2025.

The consulting firm would also recommend the coverage of high-cost “orphan” drugs to ensure affected Canadians don’t fall through the cracks, as well as the institution of low deductibles and no income or coverage cut-offs to maximize the national plan’s utilization rate. The scope of the formulary, coverage restrictions, and any interactions with existing employer programs for now remains unclear.

Protecting pensioners

In the wake of a number of high-profile insolvencies such as Sears Canada and Wabush Mines, the 2019 budget sought to better protect employees and pensioners in the case of an employer’s insolvency. Employees will benefit from proposed changes to the Companies’ Creditors Arrangement Act (CCAA) and the Bankruptcy and Insolvency Act (BIA). New measures will allow courts to investigate payments to executives before an insolvency, while requiring that participants in insolvency proceedings “act in good faith.”

Employees of federally incorporated business will also benefit from proposed changes to the Canada Business Corporations Act (CBCA) and the Pension Benefits Standards Act (PBSA). The changes would require publicly traded companies to disclose policies on workers, pensioners, and executive compensation, while also requiring that a wound-up pension plan “provide the same pension benefits as when it was ongoing.”

The budget outlines are, however, more of a foggy outline of good-natured intentions than concrete policy. "The vagueness of the announcements on pensioner protection raise a number of questions, such as how CCAA and BIA changes will protect member and retiree pensions, what is meant by acting 'in good faith,' and the details on forthcoming PBSA requirements on the continuity of pension payments, among others," DeBortoli said.

Buck expects the CBCA changes which require the disclosure of executive compensation policy at publicly traded firms to generate some controversy. And while the measures only apply to federally incorporated businesses, they could eventually serve as a template for broader legislation, according to Buck.