National Defence Hit With Biggest Cut in Feds’ First Round of Spending Review

Treasury Board President Anita Anand says the spending review was based on ‘discretionary spending’ of federal departments.

Members of the Canadian Armed Forces march during the Calgary Stampede parade in Calgary on July 8, 2016. The Canadian Press/Jeff McIntosh

Canada’s national defence department is facing the biggest hit in federal spending reduction in the first iteration of promised cuts released by the Liberal government on Nov. 9.

Speaking at a press conference that day, Treasury Board President Anita Anand outlined her government’s plan to slash $500 million from federal spending for the current fiscal year, which runs from April 1, 2023, to March 31, 2024.

Spending estimates tabled by Ms. Anand in the House of Commons on Nov. 9 showed that the Department of National Defence (DND) is expected to cut its spendings by $211,082,000, or 42.2 percent of the planned amount.

The $500 million cut was committed in March of this year when the federal budget was announced. Budget 2023 proposed to reduce spending on consulting, other professional services, and travel across 68 government departments, agencies, and Crown corporations. The Liberals plan to save $15.4 billion over five years, from fiscal 2023-24 to fiscal 2027-28.

Asked if the spending reductions would impact military operations, Ms. Anand said no.

“I want to be clear that when I wrote to ministers, we deliberately said that the Canadian Armed Forces would not be touched,” she said. The Globe and Mail reported in August that Ms. Anand had sent a letter to cabinet ministers asking them to find spending cuts that were promised in the federal budget giving them an Oct. 2 deadline.

On Sept. 28, Chief of the Defence Staff (CDS) Gen. Wayne Eyre told the Commons defence committee that the DND needs to find almost $1 billion in savings, while Deputy Defence Minister Bill Matthews said that this spending reduction would “ramp up over four years.”

“There’s no way that you can take almost a billion dollars out of the defence budget and not have an impact, so this is something that we’re wrestling with now,” Gen. Eyre told MPs.

The CDS provided the answer during the committee meeting where everything from personnel and equipment shortages to insufficient production of ammunition to the dire housing situation for military members was mentioned.

The general was answering a question from Conservative MP Shelby Kramp-Neuman, who raised the issues of recruitment and retention and asked how the cuts would affect the ability of the Canadian Armed Forces to serve and protect.

‘Discretionary Spending’

The 68 government bodies affected by the $500 million spending cut this fiscal year are listed in a table on the federal government’s “Refocusing government spending” webpage.

After DND, the department with the next highest spending cut is the Department of Public Works and Government Services, which is expected to reduce its spending on consulting, other professional services, and travel by $34,501,000.

The Department of Foreign Affairs, Trade and Development comes in third, at $27,602,000, while the Department of Fisheries and Oceans and the Department of Citizenship and Immigration are responsible for $25,742,000 and $20,363,000 respectively.

Ms. Anand told reporters on Nov. 9 that her spending review, detailed in the document “Supplementary Estimates (B), 2023-24,” was based on “discretionary spending.”

“The savings that we are finding within departments is discretionary spending,” said the Treasury Board president. “In terms of the items that are going to be voted on in the Supplementary Estimates (B), those are the priorities of our government.”

Priorities she cited include spending on military aid for Ukraine, green economy, and indigenous reconciliation.

While Budget 2023 projected total expenses to reach $490.5 billion by the end of this fiscal year, the latest estimates tallied that federal spending has hit $479.4 billion to date.

According to the estimates, the Department of Crown-Indigenous Relations and Northern Affairs is set to be the biggest spender once its voted expenditure of $9 billion is approved by Parliament. Included in that amount is a $5 billion funding for the Restoule Settlement Agreement.

“The governments of Canada and Ontario have reached an agreement-in-principle with 21 First Nations related to past annual payments under the 1850 Robinson-Huron Treaty,” said the Treasury Board in Supplementary Estimates (B).

“Once the agreement is finalized, funds will be paid to a trust established by the First Nations.”

An Inquiry of Ministry document tabled in Parliament disclosed that federal managers had paid $669,650 to consulting firm KPMG for advice on how to save money on consultants within the federal government.

Specifically, KPMG was hired to “develop recommendations” to ensure Canadians’ tax dollars “are being used efficiently and being invested in the priorities that matter most to them,” as first covered by Blacklock’s Reporter on Nov. 6.

Matthew Horwood contributed to this report.