Federal government cancels Strategic Policy Review aimed at finding $9B in savings: PBO analysis

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OTTAWA — The Trudeau government has scrapped a review that was supposed to find $9 billion in savings little more than a year after promising it, notes the Parliamentary Budget Officer in his latest report.

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The Strategic Policy Review, pledged in the 2022 federal budget, was to include two streams: assess program effectiveness in meeting the government’s priorities, and adapt government programs to “save and reallocate resources to adapt government programs and operations to a new post-pandemic reality.” The efforts were to target savings of $9 billion over five years.

The government promised at the time to provide an update on the review’s progress and provide further details in this year’s budget — a promise that was reiterated in last fall’s economic statement. But the PBO notes that the review is not even mentioned anymore.

“Budget 2023 … does not reference the government’s ‘comprehensive Strategic Policy Review’ and instead proposes to achieve savings by ‘refocusing government spending’ through predetermined spending reductions,” reads his analysis on the 2023 budget released Thursday.

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The president of the Treasury Board, Mona Fortier, was not immediately available for comment.

The PBO also highlighted that this year’s budget does not provide an assessment of program effectiveness as promised, but rather announces the introduction of “cross-government program effectiveness reviews.” The first review is set to examine “skills training and youth programming” to determine, by budget 2024, “whether improvements can be made.”

The government has been touting it has reduced previously announced spending by $3.8 billion thanks to the lower-than anticipated uptake of COVID-19 business supports in 2021-2022.

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But the PBO points out that, aside from proposing to reduce spending on management consulting and travel by “roughly 15 per cent” of the discretionary spending in those areas, the government has not identified opportunities to adapt government operations for a “new post-pandemic reality” as promised in the Strategic Policy Review.

The government also proposes a three per cent reduction of “eligible spending” by departments and agencies by 2026-2027, and is committed to work with federal Crown corporations to ensure they achieve “comparable spending reductions” in that time period.

In total, the federal government estimates that these new measures will represent savings of $15.4 billion over the next five years. It also expects to reduce or delay previously announced funding that remains unallocated, which will save $6.4 billion over six years.

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The PBO also noted that, for the first time since budget 2021, the government has revised its outlook for the budgetary balance, with no sign of returning to a balanced budget for the next five years.

Following this downward revision, the government announced $69.7 billion in new spending that was partially financed by $14.0 billion in revenue raising measures and by $12.8 billion in spending restraint measures

PBO Yves Giroux

Revisions to the private sector economic outlook and fiscal developments since last fall’s economic statement have lowered the budgetary balance by $26.1 billion over five years — or an average of $4.4 billion per year. But that was prior to including new spending measures.

“Following this downward revision, the government announced $69.7 billion in new spending that was partially financed by $14.0 billion in revenue raising measures and by $12.8 billion in spending restraint measures,” said PBO Yves Giroux in a press release.

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Meanwhile, a majority of Canadians are getting increasingly concerned by the size of the deficit.

A new survey from Nanos Research conducted for CTV News shows that 70 per cent of more than 1,000 survey respondents are either “concerned” or “somewhat concerned” about the increasing deficit in the budget, which is set to be $40.1 billion this year — almost $10 billion more than anticipated in last fall’s economic statement.

Finance Minister Chrystia Freeland has also dropped the idea of returning back to a balanced budget in the next five years — projecting a deficit of $14 billion by 2027-2028 instead of the previously projected surplus of $4.5 billion last fall.