Taxpayers need to be cautious of manipulative tactics related to spending on public services and reducing government costs, the Parliamentary Budget Officer, Yves Giroux, warns. Giroux made these comments to the Senate finance committee on Feb. 13, cautioning that giving departments a general instruction to “Cut 5 percent or 10 percent” can lead to unintended consequences.
To illustrate his point, Giroux referenced the “Musical Ride” which occurred in the 1990s when the RCMP threatened to cut performances in response to budget cuts. The concern is that the same type of creative accounting might be deployed today which could distort genuine ways to reduce spending.
Giroux also emphasized the importance of clear political guidance when it comes to reducing public servant spending. He noted a case where the Prime Minister’s statement about not being a “firm believer” in spending reductions could be interpreted by senior public servants as a sign that the government isn’t committed to controlling spending.
Giroux also pointed out that reducing expenses to government departments would not necessarily lead to a reduction in public service. He suggested that it’s possible to maintain or improve services by changing how things are done.
This comes as the Liberal government faces ballooning debt from COVID-19 pandemic spending. The government has pledged to focus on economic performance with the aim of bringing down interest rates. The Liberals have postponed debt-reduction goals but have set new targets to cap the deficit and reduce debt-to-GDP.
The Fraser Institute report suggests that the budget could be balanced in two years with “modest spending restraint.” The report proposed that reducing the growth in annual program spending could help the government balance the budget by 2026–2027. However, it would also require a significant reduction in program spending.
The next government budget is expected to be tabled in March or April.