May 18, 2024

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Feds spending more on professional and special services: PBO report

5 min read

The all-time high spending projections come despite Treasury Board president Anita Anand’s focus on government cuts.

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Despite moving forward with its plan to reduce unnecessary spending across government organizations by $500 million, the federal government is still on track to spend a record amount on professional and special services, according to a recent report by the Parliamentary Budget Officer (PBO).

The total planned spending – which includes spending on outside consultants and contracted work – is at a record $21.6 billion, according to the report. That’s compared to $18.6 billion in 2022-23, $17.5 billion in 2021-22 and $14.7 billion in 2020-21.

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The federal government’s 2023 budget outlined spending reductions on consulting, professional services and travel by around $500 million (or 15 per cent), as part of the government’s goal to cut $15.4 billion in spending over the next five years.

Treasury Board president Anita Anand said leading the government’s refocused spending initiative was a key priority of hers when she took on the new role this summer, calling on federal ministers to provide her with their assessments of where spending could be cut within each sphere.

“In this economic time in our country, as Canadian households across the land are examining their own pocketbooks, the Government of Canada is no different,” Anand said. “We have to be prudent with taxpayer dollars, and that is exactly what my role is as president of the Treasury Board: to manage the public purse prudently.”

Earlier this month, the Treasury Board of Canada Secretariat unveiled its plan to decrease spending on professional services and travel, announcing that funding had been “refocused and removed” from the 2023–24 budgets of 68 departments.

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The department that saw the biggest cut was National Defence, facing reductions of just over $211 million, representing 42.2 per cent of the total amount. The departments of public works, foreign affairs, fisheries and oceans and citizenship and immigration also saw major cuts ranging between $20 million and $34 million. The Federal Economic Development Agency for Northern Ontario saw the smallest cut at $3,000.

Of the $500 million outlined in the plan, $350 million relates to professional and special services, with the remaining $150 million attributed to travel.

However, “PBO notes that even with the reduction, planned spending in 2023-24 remains above previous years’ spending levels,” the report indicated.

The PBO report also found that the government is spending more on its staff than in previous years. Personnel spending includes salaries and wages; expense allowances; and government contributions to employee benefit plans.

According to the PBO report, in 2022-23, spending on personnel totalled $67.4 billion, up from $63.3 billion in 2021-22 and $59.6 billion in 2020-21. The report noted that the government recently approved eight new collective agreements for 138,000 public servants.

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Vivek Dehejia, an economics professor at Carleton University, said he was “surprised and disappointed” to see the findings of the PBO’s latest report.

“(Spending) has been steadily going up and, in my opinion, it’s part of a larger pattern of very large and excessive fiscal spending by the government,” Dehejia said. “It seems strange that while they’re spending more on their full-time, professional staff they’re also contracting out a lot more. It really does seem a bit puzzling.”

Dehejia said the high rates of spending are concerning given the current economic environment.

And while the projections could have even higher in the absence of the cuts they say they’re making, Dehejia said, “in absolute terms, it’s a very large amount.

“Fiscal policy is still very inflationary,” he added. “The bank is trying to reduce inflation by raising interest rates, causing pain for average Canadians. With a higher fiscal deficit, the bank has to work even harder and may have to raise rates again, even more than they would have had to if the fiscal deficit were under control. I find the whole the whole pattern, the whole mix of things quite worrying.”

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The PBO report outlined the Government of Canada’s additional spending requirements include $2.1 billion to the Treasury Board of Canada Secretariat (TBS) to compensate organizations for pay raises; $584 million to the Department of National Defence for compensation and benefits for the Canadian Armed Forces; and $359 million to TBS for public service insurance plans and programs.

The report stated that the total proposed spending for the year, including the recent estimates, is $480.5 billion, representing a $37.2 billion (or 8.4 per cent) increase compared to this point last year.

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