WORLD NEWS Feds announce more cuts to public-service spending in fiscal...

Feds announce more cuts to public-service spending in fiscal update

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The federal government has announced a plan to make hundreds of millions of dollars in further cuts to spending within the federal public service in the coming years on top of what was outlined in the last federal budget. How those cuts will be made, however, remains unclear.

The Government of Canada’s 2023 Fall Economic Statement, tabled Tuesday by Deputy Prime Minister and Finance Minister Chrystia Freeland, outlined new reduction targets for 2025-26 and beyond.

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The document — which introduced new housing measures and committed to removing the barriers to internal labour mobility between provinces and territories — outlined that departments and agencies would find additional savings of $345.6 million in 2025-26 and $691 million ongoing to “extend and expand” efforts to refocus government spending.

The federal government’s 2023 budget introduced a plan to cut $15.4 billion in spending over five years. It outlined that departments and agencies would work to reduce spending by three per cent by 2026-27 and that the federal government would reduce spending on consulting, professional services and travel by around $500 million (or 15 per cent), resulting in savings of $7.1 billion over five years starting in 2023-24, and $1.7 billion thereafter.

“In Budget 2023, the federal government made decisions to find savings which would help to pay for important services and programs for Canadians,” the fall economic statement said. “By requiring departments and agencies to reduce spending by three per cent, in addition to reducing spending on consulting and professional services, the government was able to make investments to strengthen Canada’s public health care plan, deliver the Canadian Dental Care Plan and make transformative investments in Canada’s future economy.”

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The statement also said that, combined with $15.4 billion in cuts already outlined in the 2023 budget, the government would save $4.8 billion per year in 2026-27 and ongoing, “returning the public service closer to its pre-pandemic growth track.”

The document did not share any details about how the government planned to find the additional savings.

It did, however, say that government operating expenses were forecasted to be $125.9 billion in 2023-24, $121.7 billion in 2025-26 and $121.8 billion in 2026-27.

By 2028-29, the fiscal update projected, that number will grow to $126.1 billion.

“Decreases in the early years are driven by lower expected contingent liabilities, public-service pensions and benefits, and a tapering off of expenses from therapeutics and vaccines,” the document said. “Growth over the outer years of the horizon is driven in part by wages for federal employees and the ongoing implementation of Strong, Secure, Engaged, modernization of NORAD, and investments in Continental Defence.”

The document said the growth in spending would be offset “in part” by already-announced reduction plans, including those from the 2023 budget and the fall economic statement.

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