Federal Expenditure Review has too many exemptions, warns CD Howe Institute

Ottawa’s Plan to Find Savings Facing Criticism

A recent analysis by the CD Howe Institute suggests that Ottawa’s plan to uncover billions in savings may fall short due to its exclusion of key expenditure categories from potential cuts.

Authored by former federal economist John Lester, the report questions why significant areas such as transfers to provinces, senior benefits, and tax incentives for corporations are shielded from scrutiny.

In an interview, Mr. Lester expressed concerns about the scope of the assessment, labeling it as “too conservative.”

Minister of Finance François-Philippe Champagne recently tasked cabinet ministers with identifying ways to reduce program costs by 7.5 percent in the upcoming fiscal year, with increasing targets over the following years.

While ministers are urged to propose ambitious savings measures, certain areas such as federal transfers to provinces and direct payments to individuals are off-limits for reductions.

Prime Minister Mark Carney’s emphasis on cutting operational expenses to fund capital projects has raised questions about the government’s budget priorities.

Mr. Lester’s analysis suggests that the expenditure review falls short in addressing the full breadth of government spending, potentially limiting savings to a fraction of what is needed to stabilize federal finances.

The report also highlights the absence of clear guidelines for ministers to identify programs for elimination, rather than across-the-board budget reductions.

Despite these concerns, Minister Joël Lightbound of government transformation expressed confidence in the process, emphasizing the government’s commitment to efficiency and modernization.

While the debate over expenditure cuts continues, Ottawa remains focused on finding innovative solutions to streamline government operations and ensure fiscal responsibility.