Ottawa’s plan to find billions in savings will ultimately fall short because it declares too many categories as off limits for cuts, according to a new analysis by the C.D. Howe Institute.
The report is authored by former federal government economist John Lester, who questions why large categories such as transfers to provinces, seniors benefits and the billions in investment tax breaks for businesses are being shielded from the review.
“This review is a very welcome initiative, but it’s really just too narrowly focused,” Mr. Lester said Thursday in an interview.
The Globe and Mail first reported last month that Finance Minister François-Philippe Champagne sent letters to all cabinet ministers informing them of plans for a “Comprehensive Expenditure Review.”
Ministers are being asked to find ways to reduce program spending by 7.5 per cent in the fiscal year that begins April 1, 2026, growing to 10 per cent in savings the next year and 15 per cent in the 2028-29 fiscal year.
Mr. Champagne’s letter said ministers are expected “to bring forward ambitious savings proposals” in the category of day-to-day spending on the operations of government.
The instructions to ministers clearly state that federal transfers to the provinces for health and social services, as well as direct transfers to individuals, are exempt from any cuts.
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Prime Minister Mark Carney campaigned on a plan to cut back on “operational” spending in order to increase capital spending, such as new infrastructure. However, the Liberal government has not yet clearly said how these terms will be defined and the effect this will have on how spending information is disclosed to Parliament and the public.
“The federal government’s ‘comprehensive spending review’ falls short of its name and purpose,” Mr. Lester concludes in his analysis for the C.D. Howe Institute, where he is a fellow-in-residence at the public-policy organization.
“By excluding large swaths of program spending through exemptions and carveouts, the review will cover only about a third of total spending, limiting potential savings to an estimated $22-billion in 2028/29 – far below the roughly $50-billion needed to put federal finances on a fair and prudent path.“
Mr. Lester’s report questions why the review will not look at a category called tax-based expenditures, which include targeted tax breaks for businesses and individuals.
This category includes a range of seniors benefits as well as incentives for businesses to encourage investment in green technology or scientific research.
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An additional concern expressed in the report is that the federal government has not clearly urged ministers to find programs that could be eliminated entirely, rather than simply trimming the budgets of all existing programs under their responsibility that are eligible for reductions.
“The government has set out its priorities in the mandate letter to ministers, but they are too general to provide guidance on which programs should be dropped because they no longer help achieve key government objectives,” the report states.
Joël Lightbound, the federal Minister of Government Transformation, Public Works and Procurement, was asked Thursday to respond to the report’s warning that the exercise will fall short of finding the necessary level of savings.
Mr. Lightbound did not directly address the report, but said every department is going through the process of identifying savings and sharing proposals with the Finance Minister.
He said that he’s personally looking at ways of making government more efficient through the use of new technology.
“As the Prime Minister mentioned during the campaign, we’re capping the size of the public service. Our goal is to reduce it through attrition. But there are also other ways to look at where we can make savings in terms of the federal government spending,” he said at an unrelated event in Gatineau.