Canada budget officer doubtful on spending freeze

Thu Jan 20, 2011 11:24am EST
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OTTAWA (Reuters) - The federal government does not appear to be taking the steps needed to freeze departmental operating budgets as promised, the country's parliamentary budget officer said on Thursday.

Finance Minister Jim Flaherty's 2010 budget said that spending at federal departments would be frozen at 2010-11 levels for the following two years, as part of the Conservative government's deficit-reduction plan.

In a report published on its website, the office of Budget Officer Kevin Page said "there is limited evidence" that progress had been made toward this goal, based on planning reports provided by federal departments.

The government has said it could meet the target simply by not filling thousands of jobs that become vacant.

It estimates the departmental budget freeze and other measures taken in the last federal budget to cut operating expenses would generate savings of C$300 million ($300 million) in the 2010-11 fiscal year, C$900 million in 2011-12 and C$1.8 billion in 2012-13.

Page has been critical of the Conservative government's plans for eliminating the federal deficit, which bulged to an unprecedented C$55.6 billion in 2009-10, in part due to stimulus spending to fight the recession.

Page forecasts a deficit of C$11 billion in 2015-16, contradicting Flaherty's estimate of a return to a small surplus in that year.

(Reporting by Louise Egan; editing by Rob Wilson)