Francois-Philippe Champagne, Minister of Finance and National Revenue, takes part in a meeting with provincial and territorial finance ministers in Ottawa on Thursday.Sean Kilpatrick/The Canadian Press
The cabinet committee that developed a plan to find $60-billion in internal savings will focus in the new year on cross-government areas such as contracting, says Finance Minister François-Philippe Champagne in a year-end interview.
Mr. Champagne chairs the “government transformation” cabinet committee, where he and nine other ministers spent the past year reviewing proposals from departments on how to meet Prime Minister Mark Carney’s goal of reducing day-to-day spending to help fund infrastructure projects.
“A lot of the things we did were vertical,” he said, in reference to finding savings in individual departments. “The next thing that one would have to ask is what kind of horizontal efficiencies can you find in government?”
The minister told The Globe and Mail this will include looking at ways to to use artificial intelligence and how to get better value from vendors, while also adopting more of a Buy Canadian approach.
Part of the committee’s “next mission” he said is “to make sure that the government uses its purchasing power to really reduce cost across the federal agencies, across the government.”
Mr. Champagne’s Nov. 4 budget, his first as finance minister, was largely a big-spending document that shifted the projected federal debt-to-GDP ratio from a downward trend to one that rises slightly.
The deficit for the current fiscal year is projected to be $78.3-billion, up from $36.3-billion the year before.
Yet consistent with Mr. Carney’s campaign pledge to “spend less” and “invest more,” the budget also had a substantial section focused on spending restraint.
The clearest step in this direction is the budget announcement that Ottawa will shrink the size of the public service by 30,000 people, in addition to a 10,000-worker reduction between 2024 and 2025.
Specifics of that plan are only starting to emerge from federal departments. Public sector unions have been expressing frustration with the lack of detail and consultation related to the staffing reductions.
The budget included an annex in which many larger departments outlined their targets for internal savings, but the descriptions tended to use general terms, like finding “efficiencies,” that did not provide much detail as to what cuts might occur.
There were some specifics. The RCMP and Veterans Affairs said they would be adjusting how they deliver a medical cannabis benefit, moving to a reimbursement rate of $6 per gram instead of $8.50 per gram, which they said moves the benefit closer to market rates.
National Defence said they would save $1.1-billion by divesting equipment that is near its end of service life rather than continuing with costly maintenance. Specific fleets were not disclosed.
When asked if he and his cabinet colleagues are looking to go beyond the $60-billion target, Mr. Champagne suggested that is not the plan.
“Look, $60-billion is ambitious,” he said. “We’re going to be focusing on delivering what we have set for ourselves.”
Mr. Champagne’s own budget illustrates the challenges Ottawa has faced in meeting past targets to find savings.
While the minister boasted in his budget speech of finding $60-billion in savings, the fine print shows a slightly different story.
A summary table points out that about $5.5-billion in promised internal savings announced and booked in the 2024 budget were “unrealized.” As a result, the table deducts that amount and a few other categories to say the “net fiscal impact” of the exercise is $51.2-billion over five years.
Mr. Champagne had originally planned earlier in the year to only release a fiscal update in the fall rather than a budget. That plan ultimately changed and the government then announced that fall budgets would become the norm.
The minister said there will be a spring fiscal update, but the government hasn’t decided yet whether it will simply be an update of spending and revenue projections or something more substantial that would announce new policy measures.
“It’s early. We’re still in December,” he said. “The world is a fast-changing place.”