Canada's federal government has announced that expenses next year will actually FALL by 6.2%, or $16.5 billion. Having become accustomed to the ever expanding and bloated size of government, a decrease in expenditures came as a bit of a shock. Where will the savings come from?... Mostly slashes to regional development and environmental programs, which surely will not be popular or favoured by many segments of the Canadian population.
Total expenses for the year will be $250 billion. The majority of this will consist of transfer payments to the provinces, of which Quebec will receive a large chunk, the operating costs of governmental departments, and interest on Canada's growing national debt... or generational mortgage.
The largest increases in expenses will come from security and law enforcement (+ 21 %) to boost jails and prisons. The savings are coming from massive cuts to Environment Canada, Agriculture Canada, and Natural Resources Canada, with cuts of 20%! These, in addition to cuts to science and regional development initiatives are where the government is gaining the money to expand security efforts.
In order, however, for the government to achieve its target of a balanced budget by 2015, there will either have to be more cuts, or an increase in tax revenues from economic growth. Of course, partially what the government is banking on is reduced payments to the unemployed and work programs as the economy improves and unemployment declines. There was, of course... no mention of cancelling the purchase of billions of dollars worth of military hardware, which surely is using valuable government resources during a time of financial and economic austerity for many Canadians.
For many, this announcement will be seen as good news as spending cuts are often a sign of prudent and reasonable financial administration. Canadian currency holders, and holders of Canadian debt, should be pleased to see a decline in the massive spending of the recession, as governments spending way beyond their means is bad for future business, and investors in the future of the Canadian marketplace. Nonetheless, slashes to environmental and agricultural programs in favour of jails and prisons may not necessarily be a move in the right direction. But for now, be happy to know that the Canadian government is beginning to reign in some of its cavalier spending habits.
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