Canadian troops of NATO enhanced Forward Presence battle group attend meeting with Canadian Defence Minister Anita Anand in Adazi, Latvia, on Feb. 3, 2022. The $500-million spending reduction for this year matches the target set in the March federal budget, with the Department of National Defence responsible for 42 per cent of that amount.INTS KALNINS/Reuters
Treasury Board President Anita Anand released the first wave of promised federal spending reductions Thursday, and National Defence, her former department, will receive the largest cut.
Spending documents tabled in Parliament show that of a $500-million reduction this fiscal year from previous spending plans, the Department of National Defence is responsible for $211.1-million, or 42 per cent of that amount.
The $500-million for this year matches the target set in the March federal budget, which laid out a plan to shave $15.4-billion from existing spending plans over five years.
The spending reductions must come from department budgets allocated for travel and outsourcing on consulting and other professional services.
In an interview, Ms. Anand said she is committed to reducing the government’s use of outsourcing and the policy will not impact the operations of the Canadian Forces.
“We aren’t reducing the spending on our armed forces operations. This is asking government departments to look at their budgets and see where there is unnecessary spending,” she said, adding that the $211-million will come from travel and outsourcing in the department.
Ms. Anand was procurement minister during the early days of the pandemic and then minister of National Defence from October, 2021, until this summer’s cabinet shuffle.
“Since I have been in this seat, I have done whatever I can to reduce discretionary spending,” she said.
After National Defence, the second-largest reduction is at the Department of Public Works, which must find $34.5-million in savings. Foreign Affairs is third at $27.6-million, followed by $25.7-million at the Department of Fisheries and Oceans and $20.4-million for Citizenship and Immigration.
The budget plan said the target for reductions in those categories will increase to $1.65-billion next year and the three following years. It also said savings would be found at Crown corporations and through realigning previously announced spending.
Bill Matthews, the deputy minister of National Defence, told the Commons defence committee in September that the department is expected to find about $900-million in savings over four years.
Chief of Defence Staff Wayne Eyre raised concerns about the process during that same meeting. “There’s no way that you can take almost a billion dollars out of the defence budget and not have an impact, so this is something that we’re wrestling with now,” he told MPs.
A budget provides a high-level outline of planned federal spending. The government also presents documents called spending estimates that contain the detailed funding amounts for each department. These reports must be approved by Parliament.
The details announced Thursday are contained in supplementary estimates for the 2023-24 fiscal year.
Altogether, the estimates represent $479.4-billion in total budgetary spending for 2023-24. The budget said total spending for this fiscal year would be $490.5-billion. However, it is possible that the government will table another round of supplementary estimates before the end of the fiscal year.
The biggest source of new spending in Thursday’s document is $9-billion for the Department of Crown-Indigenous Relations and Northern Affairs. That amount includes $5-billion in funding for the Restoule settlement agreement with 21 First Nations in Ontario.
The spending review exercise has been criticized by some economists, such as Queen’s University adjunct professor Don Drummond, as “accounting sleight of hand.” The criticism is that the reductions are not in comparison to the previous year’s spending, but rather a reduction from planned future spending.
Even as Thursday’s document shows reductions in outsourcing, it also includes $1.2-billion in new spending in that category above what had previously been presented to Parliament. Ms. Anand said that is for “non-discretionary” spending, such as engineering costs.
Finance Minister Chrystia Freeland announced Thursday that she will release the government’s fall economic and fiscal update on Tuesday, Nov. 21.
Ms. Freeland’s 2023 budget said the continuing spending review “will focus on targeting these reductions on professional services, particularly management consulting.”
The budget also said reductions would not impact direct benefits and service delivery to Canadians, direct transfers to other orders of government and Indigenous communities, and the Canadian Armed Forces.
Conservative MP Kelly McCauley questioned the focus on defence.
“It’s incomprehensible that the Liberals are further cutting defence spending at a time when our forces are already hobbled by a combination of incompetent Liberal defence procurement and cuts,” he said.
Documents recently tabled in Parliament show Ottawa hired KPMG consultants at a cost of hundreds of thousands of dollars for advice on how to save money on consultants.
Specifically, the Department of Natural Resources approved $669,650 for KPMG to provide managing consulting advice as part of its contribution to the government-wide spending review effort.
Thursday’s report shows the Department of Natural Resources will cut $8.7-million from this year’s budget for travel and outsourcing.