Feds should cut spending, but don’t hold your breath

Posted on September 21, 2023 by Ryan Dahlman

Cutting back on Big Macs so you can spend more on beef Wellingtons isn’t saving money.

Taxpayers want to be optimistic as Treasury Board President Anita Anand orders ministers to find $15 billion in savings. Only one problem: saving money means something different in Ottawa than in the rest of Canada.

“The budget … includes that $15 billion of savings so we could fund the programs outlined in the budget,” Finance Minister Chrystia Freeland said. “It is not new savings.”

In other words, the savings will be spent – and then some.

Budget 2023 shows spending was $470 billion in 2022. By 2027, Ottawa plans to spend almost $556 billion. When you increase spending by $85 billion, you’re saving money wrong.

The Trudeau government was spending all-time highs before the pandemic, even after accounting for inflation and population differences. The 2019 budget then projected spending this year at $402 billion. The Trudeau government now plans to spend $491 billion this year.

After years of embarking on a debt-fueled spending binge, real cuts are needed. Here’s a blueprint for any politician serious about cutting spending:

The place to start is at the top. That means ending automatic pay raises for members of Parliament, like the feds did following the 2008-09 recession.

MPs took four raises since the beginning of 2020, ranging from an extra $15,700 for a backbencher to an extra $31,400 for the prime minister. After taking a $48,800 pay bump during the pandemic, the governor general should also be content with her $351,600 salary for a while.

The cost to run the Senate has soared roughly 70 per cent since Justin Trudeau became prime minister.

The feds must also cut extravagant travel expenses. That means no more spending $6,000 per night on luxury hotel suites, no more spending $71,000 on “icelimos” or spending $18 million to attend a four-day German book fair.

These savings won’t balance the budget on their own. But they would give leaders the moral authority needed to cut spending within the bureaucracy. And that’s important because the bureaucracy consumes half of the government’s day-to-day spending.

Spending on the bureaucracy increased by 31 per cent over the past two years, according to the Parliamentary Budget Officer. Trudeau hired an extra 98,000 employees since taking power – a roughly 40 per cent increase.

The feds dished out $1.3 billion in bonuses since 2015, despite the PBO finding “less than 50 per cent of (performance) targets are consistently met.” Add 800,000 pay raises over the last three years, and it’s easy to see how costs balloon.

The Bank of Canada rubberstamped $20 million in bonuses last year, despite failing to keep inflation around its two per cent target. The Canada Mortgage and Housing Corporation handed out $75 million in bonuses since the beginning of 2020, despite Canadians struggling to afford homes.

A simple way to save money would be to take a tip from Opposition Leader Pierre Poilievre and “cancel bonuses for failing government authorities.”

The feds should cancel corporate welfare, like the $20 billion for multinational automakers Volkswagen and Stellantis. There’s also lesser known subsidies the feds announced: $420 million for Algoma Steel, $700 million for Transat, $295 million for the Ford Motor Company, $110 million for Toyota, $41 million for Honda, $372 million for Bombardier and $12 million for Loblaws.

Bigger savings can be found by asking bigger questions.

Are taxpayers in some province going to subsidize other provincial politicians through equalization for the rest of Canada’s existence?

Why do the feds need to own a train that loses hundreds of millions of dollars every year?

Why do Canadians pay more than $1.2 billion annually for a state broadcaster that’s losing relevance, but still competing directly with other media?

Why does the loser of an election get a taxpayer-funded mansion for an official residence?

Will this government find $15 billion in savings? Its track record suggests it won’t. But given the bloat in Ottawa, cutting $15 billion should only be the start.

Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.