Spending already lean before budget cuts

Jim Flaherty. REUTERS/Blair Gable

Jim Flaherty. REUTERS/Blair Gable

Randall Palmer, REUTERS

, Last Updated: 4:43 PM ET

OTTAWA - The federal government spending for the coming fiscal year is expected to be tightly controlled even before the implementation of planned budget cuts aimed at reducing the deficit, official figures released on Tuesday showed.

Ottawa’s initial estimates are that total budgetary spending will decline 3% to $251.9 billion in the fiscal year starting April 1, from $259.6 billion in the current fiscal year.

The comparison is made between what are called the “Main Estimates” for this year and all the estimates, including supplementary ones made during the year, for 2011-12.

“For 2012-13, the Main Estimates do not include deficit reduction action plan measures. Additional requirements for initiatives included in the 2012 budget are presented through Supplementary Estimates,” the Treasury Board document said.

The government plans to eliminate the deficit by 2015-16, and is undergoing a systematic review of all federal operations with a view to cutting of 5% to 10% in departmental spending. The cuts will exclude debt servicing costs as well as transfer payments to provinces and individuals.

Finance Minister Jim Flaherty is expected to unveil his annual budget at the end of March or the beginning of April. A government official said on Monday that it would provide a general accounting of planned cuts though not full details.

The estimates released on Tuesday show expected transfer payments in 2012-13 of $154.7 billion, operating and capital spending of $68.4 billion and public debt charges of $28.9 billion.

Flaherty’s fiscal update in November had the deficit falling to $31.0 billion in 2011-12 from $33.4 billion the year before, but he appears to be ahead of schedule as the deficit for the first nine months of 2011-12 was just $17.7 billion.

The November document projects the budget gap shrinking further with the help of the upcoming spending cuts: to $26.4 billion in 2012-13 and $3.5 billion in 2014-15, before turning a small surplus the following year.

(Reporting by Randall Palmer; editing by Rob Wilson)