Federal government spending is projected to continue its upward trajectory for the upcoming 2024–25 fiscal year, even as departments pivot to emphasize cost reduction amid the waning of pandemic-related programs.
The Public Health Agency of Canada (PHAC) intends to reduce its spending from a forecasted $5.1 billion in the current fiscal year 2023
–24 to about $1.9 billion for the next fiscal year, reflecting a 63 percent decrease, according to the agency
’s 2024–25 Departmental Plan.
PHAC’s spending, which peaked at $8.7 billion during the height of the COVID-19 pandemic in fiscal 2021–22 and fell to $5.8 billion in 2022–23, has continued to decline. This is primarily due to the gradual reduction in pandemic response, including spending on the procurement and distribution of vaccines, rapid test kits, and other medical supplies and equipment, the plan stated.
Ottawa’s spending plan for the coming fiscal year, as announced in its Budget 2023 and reiterated in its 2024
–25
Main Estimates, emphasizes scaling back the pace and growth of government spending to pre-pandemic levels.
The plan includes a savings of
$14.1 billion over five years, starting in 2023
–24, followed by $4.1 billion annually thereafter. The 2024-25 Main Estimates also notes the announcement in the
2023 Fall Economic Statement that the government will expand its Budget 2023 effort at spending restraint by identifying an additional savings of $345.6 million in 2025
–26 and $691 million ongoing.
Despite the shift away from substantial pandemic spending, the overall federal government expenditure in 2024–25 is estimated to rise to $449 billion. This reflects a 3.8 percent increase from the $433 billion allocated in budgetary spending in the 2023–24 Main Estimates. However, the 2023–24 estimates to date is already at $493 billion.
The anticipated growth in government spending for the next fiscal year is fuelled by an expansion in unavoidable expenses, including the cost of servicing public debt. Debt servicing costs are projected to reach $46.5 billion next fiscal year, reflecting a $4.8 billion increase compared to the 2023–24 Main Estimates to date, according to the
Parliamentary Budget Officer (PBO) in a March 7 report.
Other significant spendings include $81.1 billion for benefits to the elderly, a $5.6 billion, or 7.5 percent, increase from the previous year, and $52.1 billion for the Canada Health Transfer to the provinces, indicating a $2.7 billion, or 5.4 percent, year-over-year growth, the PBO said.
The PBO noted that it’s the first time for the cost of elderly benefits to surpass $80 billion, driven by Canada’s aging population. These benefits consist of the three complementary programs of Old Age Security, the Guaranteed Income Supplement, and Allowance payments.
Citing its most recent
economic and fiscal outlook, published March 5, the PBO report said federal spending on elderly benefits will reach $99.7 billion by fiscal year 2028–29, due to “a combination of a larger number of seniors and inflation.”
In addition, the PBO said the federal government is working to deliver its commitments outlined in Budget 2023 to restrain spending.
On Feb. 29, Treasury Board President Anita Anand announced Ottawa’s decision to
repurpose $10.5 billion over the next three years from the budgets of 69 departments, agencies, and Crown corporations.
However, Ms. Anand only offered generalities when asked to explain why the government’s main spending estimates, tabled in the House of Commons that morning, don’t show specifically where the funds are being reallocated.
“What we want to do is take the savings that we are seeing across ministries and put them towards the priorities that you are seeing in our main estimates,” she said.
“So that is affordable housing, that is health care, that is supports for seniors.”
The Canadian Press contributed to this report
