Federal government spending is on the way down after two years of record increases, but a new report by the Parliamentary Budget Officer notes that Ottawa’s budget is still 15 per cent higher than before the recession hit.
Watchdog Kevin Page reviewed the government’s latest spending estimates – which amount to about $260-billion for the current fiscal year – to find out where spending is going up and where it is going down.
One of the largest positive changes for Ottawa’s bottom line is the winding down of the “Economic Action Plan,” the two-year infrastructure-heavy spending plan that was deficit-financed in an effort to boost the Canadian economy during the recession.
Another big source of savings is coming from the National Defence budget, which the PBO found will be spending $701-million less this year on infrastructure and major capital projects and will also save $639-million through “cost containment measures to reduce the rate of growth in operating expenditures.”
Past practice suggests the unspent money for capital projects could be carried forward into next year.
Finance Minister Jim Flaherty recently told Global News that the National Defence wasn’t able to get as much done this year as it would have liked.
“We have a very large program going on to rebuild our Canadian armed forces, and they’ve found – repeatedly, actually – that they can’t get as much done in a given year as they perhaps thought they were going to,” he said.
In terms of spending growth, the biggest increase is an added $1.5-billion for the Canada Health Transfer, which is legislated to increase by 6 per cent a year until 2013-14. The second largest increase is an additional $1.4-billion due to higher borrowing costs as a result of Canada’s debt, which grows each year Ottawa runs deficits.
The third highest increase is an extra $1.2-billion in pay for public servants as a result of collective bargaining agreements and the fourth largest increase is an added $1.1-billion for Old Age Security payments because there is a higher number of beneficiaries and because the payment amount has increased.
In his report, Mr. Page suggests parliamentary committees may want to focus their review of spending estimates on departments that have shown the biggest changes to their budgets. He also notes that while some departments are providing detailed explanations of how they are finding savings under “strategic review” exercises, others – such as Fisheries and Oceans, Human Resources and Skills Development, Industry Canada, Infrastructure Canada and the Privy Council Office – are not.
“Eight months in the current fiscal year, it is apparent that the most significant changes in planned authorities arise from the planned wind-down of the Economic Action Plan, as well as legislated increases for major transfer programs,” his report says.