Canadian government plans C$500m of in-year budget cuts

By on 15/11/2023 | Updated on 15/11/2023
Canadian Treasury Board President Anita Anand at a rally during the 2021 Canadian federal election.
Canadian Treasury Board president Anita Anand at a rally during the 2021 Canadian federal election. Photo: Joey Coleman reproduced under Creative Commons 2.0

The Canadian government has announced a C$500m (US$362m) in-year cut to government spending in the first step of efforts to save up to C$15.4bn (US$11.5bn) over five years.

The focus for the rest of the 2023-24 fiscal year will be to cut spending on outsourcers, government contracts, and travel costs.

Treasury Board president Anita Anand, who had asked government departments to submit plans for spending cuts by 2 October, said that the reduction announced last week was “just the first tranche of the results relating to our spending review”.

Overall, the 2023 Budget set the goal of “refocusing” C$15.4bn (US$11.3bn) over the five years up to the 2027-28 Budget and C$4.5bn ($3.26bn) annually thereafter to “priorities that matter to Canadians the most”.

“You are going to see additional examples of departments coming forward and it won’t always, in the separate tranches, be precisely equal. But generally speaking, the exercise is for each department to take a look within their departments — not to take all of it from operating budgets, but to look across their spend to see where savings can be had,” Anand told reporters last week.

Of the announced cuts, C$350m ($253.5m) is expected to come from saving money spent on contractors, according to Anand, while travel costs are expected to drop by C$150m ($108.6m).

The department facing the biggest in-year reduction is the Department of National Defence (over C$211m), followed by the Department of Public Works and Government Services (C$34.5m), and the Department of Foreign Affairs, Trade and Development (C$27.6m).

In total, budget reductions have been identified for 80 government departments and bodies, although certain spending is excluded. For example, no targets have been set for savings from the Canadian Armed Forces (despite cuts to the defence department’s spending), or from direct benefits to Canadians or transfers to Indigenous communities.

Process for spending reductions revealed

In its announcement of the in-year cuts, the Canadian government set out details of the process that had been undertaken to arrive at them.

Departments were asked to review programming and operations to identify where there might be duplication, lower value for money, or what it called “misalignment with government priorities”.

Proposed reductions identified through these reviews were then submitted to the Treasury Board of Canada Secretariat (TBS) for consideration. TBS then worked with departments to review proposals to ensure that these reductions are sustainable and do not create future service delivery or programme integrity pressures, while any proposals requiring additional scrutiny are being reviewed by a committee of ministers.

Overall spending reductions have now been published by department, but TBS said that ministers and their departments were “given the flexibility to reduce spending across their portfolios” so, as a result, spending reductions may vary between organisations in different departments.

Governments around the world move to tighten belts

This is the latest in a series of signals that governments around the world are reducing spending.

In New Zealand, reductions to public spending formed part of the campaigns of both the Labour Party and opposition National Party in the run up to the country’s general election in October. The National Party leader Christopher Luxon is likely to become the prime minister following coalition talks.

Read more: New Zealand election battle lines drawn over public services

In the UK, meanwhile, chancellor Jeremy Hunt has capped the size of the UK civil service at its current headcount as part of a government efficiency drive.

Read more: UK public sector faces productivity review

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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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