Budget watchdog 'throwing up flags' over spending cuts

The parliamentary budget officer wants to see a more detailed plan from the government on how it intends to reach its savings targets.

Following the release of his latest report Monday, Kevin Page says the government needs to show where the planned savings announced in last year's budget will come from, particularly given the further austerity measures announced in the 2011 budget.

"We're still left scratching our heads," Page said in an interview with CBC News.

In a report on the main and supplementary estimates, documents which lay out government spending plans, Page highlighted a 2010 budget measure that froze operating budgets for government departments in order to meet a goal of saving $1.8 billion a year. After viewing documents tabled last week by government departments on their spending plans, Page said it's still not clear how that target will be reached.

According to Page's analysis, the documents indicate that the government intends to reduce the number of full-time employees by 6,000 by 2013-2014. But the budget officer said that will only get the government one-third of the way to its goal of saving $1.8 billion, and it isn't clear where the other two-thirds will be found.

"Where are the savings?" Page said. "Where is the plan? We don't see it."

His analysis of the main estimates and supplementary estimates for this fiscal year shows that despite the freeze on operational spending, the government is seeking more money for personnel and internal services costs. The estimates show personnel costs are set to rise $1.7 billion over last year.

"Is there something we're missing here?" said Page. "Where's the freeze?"

Personnel costs include salaries, allowances for MPs and senators, and government contributions to employee benefit and pension plans.

The government's spending plans also show that it intends to cut spending on capital expenditures by $560 million in 2011-12, which also causes Page some concern.

Spending less on repair and maintenance costs for government assets can save money in the short-term, but not necessarily in the long-term, he said.

"These things are not sustainable. Eventually you have to go in and do repairs," he said.

Page said MPs should ask for more details on how the government will reach the savings target announced last year, particularly given that this year's budget, tabled on June 6, plans to find billions more in savings to eliminate the deficit by 2014-15. A government-wide spending review is underway to find $4 billion in savings annually, and Page said it's going to be a challenge to implement austerity measures.

"We need to do it in a smart way, we need more transparency," he said. "In some ways, we're throwing up flags."