Where will Ottawa’s $10.5 billion in cuts come from?

Photo: Sean Kilpatrick The Canadian Press As part of the plan to “refocus” government spending, nearly 70 ministries, agencies and state corporations have been instructed to reduce their spending.

On the eve of a budget where Ottawa's fiscal discipline will be scrutinized, federal departments will have to save $10.5 billion over the next three years, including $2.3 billion next year.

Ministerial plans analyzed by Le Devoirshow that the majority of budget reductions will be linked to travel and travel costs, but also to the elimination of certain programs and the reduction of casual staff and students.

The Trudeau government, which will present its budget on Tuesday, must juggle between the need to respond on important issues, such as housing and defense, and that of reassuring Canadians on the issue of deficits.

As part of the plan to “refocus” government spending announced in the last 2023 budget, nearly 70 ministries, agencies and state corporations were instructed to reduce their spending to achieve savings of $15.8 billion over 5 years and $4.8 billion per year thereafter.

Earlier this year, each ministry disclosed the amounts it plans to save and the strategies to achieve it.

In an interview with Le Devoir, the Treasury Board Secretariat (TBS) states that the targets are “more than serious”.

“These amounts have already been removed from the [ministries] budget. When the expenditure budget is approved by Parliament in June, this money will not be given to the ministries, since it has already been removed from their reference level,” explains a spokesperson for the SCT.< /p>

These saved amounts will, however, be “reallocated” to other “government priorities”. The government has not revealed in detail where these funds will be redirected, saying only that the monies will be intended for affordable housing, health care and support for the elderly.

The President of the Treasury Board, Anita Anand, avoided giving more details on the destination of the reallocated sums when tabling the 2024-2025 Main Estimates.

End of funding

About a third of the reallocated money will come from the Department of National Defense, with $810 million in 2024-25, followed by even larger savings of $851 million in 2025-26 and $907 million in 2026-27.< /p>

To achieve this, Defense will reduce its travel spending by 58 million in 2024-2025 and by 354 million for its “general operating fund”.

The other departments that will have to save the largest amounts are Public Services and Procurement Canada (148 million), Innovation, Science and Economic Development Canada (141 million) and Global Affairs Canada (118 million).

The Ministry of Innovation and Science is already planning to “not replace certain vacant positions due to attrition.” With other work “reorganization” measures, the ministry will realize savings of $24.3 million in 2024-25.

The department will also reduce the funding envelope for the Canadian Digital Adoption Program (a program that helps small and medium-sized businesses (SMEs) adopt digital technologies) by $43.7 million in 2024-25.

810 million About a third of the reallocated amounts will come from the Department of National Defense, with $810 million in 2024-2025. The other departments that will have to save the largest amounts are Public Services and Procurement Canada (148 million), Innovation, Science and Economic Development Canada (141 million) and Global Affairs Canada (118 million).

Funding for Canada's Middle East Strategy will end in April 2025, Global Affairs Canada included in its departmental plan. Humanitarian aid measures in Gaza will remain unchanged.

For its part, the Ministry of Finance will make cuts in particular by reducing the workforce through attrition, delaying hiring, and reducing the use of temporary and student staff.

Many departmental plans, however, are very vague as to the origin of the savings they will have to make over the next three years. The Public Health Agency of Canada plans, for example, to “eliminate programs that have proven less effective,” without naming them.

Last year, nearly 70 departments already cut spending by $500 million, including on business travel costs and the use of management consulting services.

It remains to be seen to what extent these reallocations of funds will limit the scale of the deficits. According to a report from the Parliamentary Budget Officer published last March, Ottawa's deficit should stand at $46.8 billion for the 2023-2024 fiscal year rather than $40 billion, as Ottawa had announced in its fall economic statement.

With Clémence Pavic