Canada is cutting spending faster than planned, watchdog finds

25 Jan 13
The Canadian government cut spending much more than expected in the first six months of 2012/13, with a focus on frontline services rather than on back-office reductions, an independent watchdog said yesterday.

By Nick Mann | 25 January 2013

The Canadian government cut spending much more than expected in the first six months of 2012/13, with a focus on frontline services rather than on back-office reductions, an independent watchdog said yesterday.

Parliamentary budget officer Kevin Page’s found that total federal spending fell by $0.8bn, or 0.6%, between April and the end of September compared with the same period the previous year.

This compares with a 2% increase in spending forecast for the period by finance department officials in November.

Spending on frontline services, or ‘direct programme spending’ fell by almost 4%, with $0.9bn being reduced from the operational expenditures of departments. Of this, $0.8bn came from reduced spending on staff, which Page said reflected the government’s announcement that 11,000 posts had been lost in the first six months of the year.

Page noted, however, that spending had increased on ‘internal services’ – departmental spending in areas such as financial management and human resource management. Spending in this area increased by $5.3bn, or 8%, over the first six months of 2012/13 compared with the same period a year earlier.

The cuts come despite Canada’s 2012 budget having identified ‘operating efficiencies and back-office services’ as the target for the majority of its savings.

Page said: ‘The continued increase in Internal Services expenditure suggests that spending growth on overheads has not been curtailed, as suggested in Budgets 2010 through 2012, and the focus of restraint exercises has instead been on reduced spending to frontline services.’

The report also noted that departments and agencies were expected only to provide ‘limited detail’ on the amount of money spent on individual government programmes. Having this kind of information would strengthen ‘fiscal transparency and monitoring’, Page said.

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