A Comprehensive Expenditure Review "by end of summer" ?
**Post-publication update**: Various media stories have now added new information on the size and scope the expected cuts. For example, the Ottawa Citizen reports that the cuts are incremental, gradually reaching a 15% total over the 3 year period, and that only direct program spending will be affected. This would bring the rough estimates sketched below to a cumulative $34.1B over 3 years, with $17B in the first year (fiscal 2026-27). The CBC reports that Transport Minister, Chrystia Freeland, has provided assurances that direct program costs will also exclude the Canada Dental Care Plan, in addition to the transfers to provinces and territories for early learning and care (which are not part of direct program spending since they are transfers and included in the broader category of program spending). Backing out the Canada Dental Care Plan reduces the base of direct program spending by $247M annually, which doesn’t do much to adjust the value of total direct spending when it’s $227B a year. Other programs in the direct spending envelope will still include direct transfers to individuals, like the Canada Disability Benefit (about $1B a year), veterans’ programs(about $5.5B a year) and more. I’m not sure we have full clarity on what’s in and what’s out.
I’m reading today’s Globe and Mail article (https://www.theglobeandmail.com/politics/article-federal-cabinet-ministers-letters-spending/) that has the only publicly available details on the federal spending cuts that have been expected for several months. The marching order across the system, via the Minister of Finance, is to find federal program spending reductions to the tune of:
7.5% in fiscal year 2026-27,
10% in fiscal year 2027-28, and
15% in fiscal year 2028-29.
Total program spending by the Government of Canada (which includes transfers to people, transfers to organizations, transfers to other orders of government, plus the costs of federal labour and overhead to run those programs) is about $533B annually**. If the percentages are being taken as a share of total program spending as of the current baseline, that means cuts of:
-$39.9B in 2026-27,
-$53.B in 2027-28, and
-$79.9B in 2028-29; for a total of $173B in cuts over 3 years**.
It’s also possible, given the politics, that major transfers to people and provinces will be exempt. In that case, there’s mostly just money to organizations (mainly in grants and contributions), the transfers to people that aren’t “major” (things like the Canada Disability Benefit, the Canada Dental Plan, and benefits for veterans) and the labour and overhead costs of running federal programs (re: public service workers, workspace and equipment). That direct program spending is about $227B** annually (same Fiscal Monitor source as above). If the percentages are levied over this baseline instead, that means cuts of:
-$17B in 2026-27,
-$22.7B in 2027-28, and
-$34.1B in 2028-29; for a total of $73.8B in cuts over 3 years**.
A second letter, the annual call-out for budget proposals, also makes clear that new items will have to fit into the 7 priorities articulated in the whole-of-government mandate letter, which I wrote about previously, and which I’ve included below for ease of reference. That’s a strategy to try to force the usual demand for budget space into a narrow funnel, but it will still take a PM and Finance Minister willing to be ruthless about saying no to new spending.
That just stems demand for new spending. Within current spending, there will be some share of grants and contributions that are also, arguably, central to the Government’s 7 priorities.
For example, the Housing Accelerator Fund and the Canadian Apprenticeship Strategy might pass this test and qualify for special dispensation (although opportunities to reduce the costs of delivering them might still be on the table). But you can bet that officials and ministers will be working hard on logic models to show how their programs fit inside these seven priorities.
According to the Globe, the letter also directs each minister (and their officials) to review programs according to these three criteria:
Is it meeting its objective?
Is it core to the federal mandate?
Does it complement (and not overlap) programming elsewhere in the federal government or by other levels of government.
While I might push on the definition of “objective” (as originally set, or as it drifted over time, under different governments/ministers?) and “federal mandate” (as in just the 7 things or the full suite of obligations of the federal government, as assigned, cumulatively by Parliament?), this is at least a recognition that there may be thing the current federal Public Service does that it can and should stop doing.
I also have to hope that tax expenditures, which in many cases are just spending via the tax system, might also be on the table. Does it make sense to continue, for example, to provide such significant tax relief to higher-income seniors through the stacking of various tax deductions and credits? Or, in this period of existential crisis for the country, would it make sense to ask generations that have already benefited so much from past public spending to also make a few sacrifices while we ask current working-age and younger generations to accept program reductions?
The Globe article suggests that responses to the two letters, both the ambitious savings and the restricted budget proposals, are expected “by end of summer”. BTW, I’d guess the actual hoped-for answer to the budget call-out is: “nothing, but thanks for asking!”.
Getting a real and accurate plan to find somewhere between $73B and $173B in savings, a plan that doesn’t make government worse and less capable of delivering on its 7 key priorities (while also continuing to walk and chew gum in the other areas of federal responsibility), THAT should be given more than (..checks calendar…) 9 weeks-worth of effort. Not to get too DOGE-esque about this (because that hot mess is proving to be so much more dodgy than even many of us warned), but if ministers really do have only 9 weeks or 63 calendar days, that means finding between $1.15B and $2.75B in savings each day, again depending on the definition of program spending. That’s not just unlikely, that’s fucked in the head.
I suspect the reality will be that the Centre will express disappointment with the results, and conclude that it has to just do this exercise itself. That will probably be done by handing each department a dollar figure that has been cut from their budget, whether they like it or not, whether it makes sense or not, whether they have an implementation plan or not, whether Parliament’s previous directions on the use of public funds are respected or not.
It’s possible that more details will be made public that put this all in a different light. But from what’s been released so far, on a quiet Monday in the second week of peak summer vacation, this will not be 1990s Program Review (which took years). This will not be 2010s Deficit Reduction Action Plan (which also took more than a year). This is something potentially more drastic and far more hurried.