Canadian finance minister reiterates warning on tight government finances
Canada’s finance minister Chrystia Freeland has warned that a slowing global economic outlook will require continued restraint in federal public spending.
Freeland hosted a meeting with provincial and territorial finance ministers to discuss the state of the Canadian economy and a range of shared priorities on 3 February, and afterwards warned of the need “to behave with real fiscal responsibility”.
Speaking at a news conference following the meeting, as reported by CBC, Freeland said: “It was important for me to be candid with provincial and territorial finance ministers about that reality.”
The comments come amid a slowing global economy and as many governments around the world face rising inflation and interest rates.
Freeland set out a “strategic policy review” in last year’s federal Budget, which is intended to ensure that spending matches the government’s priorities as part of a plan to “review and reduce government spending” post-pandemic. More details could be revealed in the upcoming 2023 Budget, which the government is seeking consultations on until 10 February.
Freeland’s comments come as prime minister Justin Trudeau prepares to meet provincial premiers to discuss their demand for a boost to the Canada Health Transfer – the funding provided by the federal government to pay for health care. According to the provinces, the federal administration only covers 22% of the cost of providing health care; they want to see that increase to 35%, an amount calculated by CBC as being roughly C$28bn (US$20.1bn).
Read more: Canadian federal Budget announces strategic policy review amid spending restraint
‘A proud tradition of fiscal responsibility’
Announcing the strategic policy review in the 2022 federal Budget, Freeland 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.”
In the statement, she said 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 is intended to “ensure that government programmes are delivering the intended results”.
It includes 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. A cross-government mandate went into force on 16 January which requires public servants to work in federal office buildings at least two to three days a week.
Read more: Canadian public servants could face discipline for shirking return-to-office rules
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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