Canadian federal Budget announces strategic policy review amid spending restraint

By on 10/04/2022 | Updated on 10/04/2022
Finance minister Chrystia Freeland, at the National Press Theatre last December with Bank of Canada governor Tiff Macklem
Finance minister Chrystia Freeland, at the National Press Theatre last December with Bank of Canada governor Tiff Macklem. Photo: Bank of Canada Flickr

Canada’s finance minister Chrystia Freeland has announced a “strategic policy review” in the 2022 federal Budget to ensure that spending matches government’s priorities, while also setting out plans to rein in public spending.

In a speech on Thursday in parliament, Freeland said the 2022 Budget was focused “on growing our economy and on making life more affordable for Canadians”, but said spending plans needed to be reviewed following “extraordinary COVID support” for the economy.

“But our ability to spend is not infinite,” she said. “And we will review and reduce government spending, because that is the responsible thing to do.

“Canada has a proud tradition of fiscal responsibility. It is my duty to maintain it – and I will.”

She confirmed that the government would both reduce the public spending deficit and cut the national debt as a proportion of GDP every year of the fiscal forecast period to 2026-27.

The Strategic Policy Review, which will be led by the President of the Treasury Board, Mona Fortier, will contribute by “ensur[ing] that government programmes are delivering the intended results”.

It will include two streams. The first will involve assessing the effectiveness of government schemes in meeting key priorities of strengthening economic growth, inclusiveness, and fighting climate change, while the second will involve identifying opportunities to “save and reallocate resources” to reflect “a new post-pandemic reality”. This second portion will also look at how government can build upon changes made during the coronavirus pandemic, such as digital delivery of public service, and the use of increased virtual or remote work arrangements, after the Canadian public service restarted its drive to return staff to their offices in March.

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This plan will target savings of CAN$6bn (US$4.8bn) over five years, peaking at CAN$3bn (US$2.4bn) annually by 2026-27.

Alongside this review, Freeland also announced a plan to reduce government spending by up to CAN$3bn (US$2.4bn) over the next four years by cutting back on areas of planned spending that had not yet taken place.

She said that the government was focused on three investment categories: people, the green transition, and innovation and productivity.

“These three pillars will create jobs and prosperity today, and build a stronger economic future for our children,” she said.

“They will make life more affordable, and they will ensure Canada continues to be the best place in the world to live, work, and raise a family.”

Support for Ukraine

Freeland admitted that inflation was posing challenges, with Russia’s invasion of Ukraine adding to the pressure by making food significantly more costly.

“From the first day we started working on this Budget, this growth agenda was always going to be our focus. And then, Vladimir Putin invaded Ukraine,” she said.

“When Putin opened fire on the people of Ukraine, he also turned his guns on the unprecedented era of prosperity that the world’s democracies had worked so diligently to build over more than 76 years.”

“Our rules-based international order – born from the ashes of the Second World War – today confronts the greatest threat since its inception.”

She said that the response of Canada and its allies had been “swift and strong”, imposing the toughest sanctions ever inflicted on a major economy. “Russia has become an economic pariah.”

However, she added that the scenes reported from the Ukrainian town of Bucha, where people had been shot with their hands tied behind their backs, “[show] us that this is not enough”.

“Putin and his henchmen are war criminals. The world’s democracies – including our own – can be safe only once the Russian tyrant and his armies are entirely vanquished,” she said.

“And that is what we are counting on the brave people of Ukraine to do.”

“They are fighting our fight – a fight for democracy – it is in our urgent national interest to ensure that they have the missiles and the money they need to win.”

The Budget includes a new loan facility to be made available to the Ukrainian government, worth up to CAN$1bn (US$790m) through a new administered account for Ukraine at the International Monetary Fund. Canada will also provide an additional CAN$500m (US$397.5m) in military aid.

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Boost to government’s green procurement

Other public service elements of the Budget include a pledge to develop new tools, guidelines, and targets to support the adoption of green procurement across the federal government, and to ensure that the more than CAN$20bn (US$15.9bn) government spends on goods and services every year is used to drive the transition to net zero.

The Budget also announced better mental health support for black federal public servants. The document highlighted that black Canadians face distinct mental health challenges that can arise from structural racism and inequities, including unequal access to mental health care.

The 2020 Public Service Employee Survey showed that black federal public servants feel less included in the workplace, which is a key component of a healthy and safe work environment.

“The government is committed to supporting a more equitable, diverse, and inclusive workplace for Black public servants across the federal government,” the Budget document said.

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About Richard Johnstone

Richard Johnstone is the executive editor of Global Government Forum, where he helps to produce editorial analysis and insight for the title’s audience of public servants around the world. Before joining GGF, he spent nearly five years at UK-based title Civil Service World, latterly as acting editor, and has worked in public policy journalism throughout his career.

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