Ottawa’s Spending Review Comes Up Short: Skips Two-Thirds of Budget

August 14, 2025 – Ottawa’s much-touted “comprehensive spending review” will cover barely one-third of federal program spending and yield savings of at most $22 billion in 2028-29 – less than half the savings needed to put federal finances on a fair and prudent path – according to a new report by the C.D. Howe Institute.

In “Federal Expenditure Review: Welcome, But Flawed,” John Lester demonstrates that the expected savings from expenditure review are not substantial enough to prevent a rise in the ratio of debt to GDP, which signals an unfair fiscal burden on future generations and a lack of prudence. Securing a declining debt ratio requires about $50 billion in spending reductions in 2028/29.

In addition to lacking ambition, the narrow base of the expenditure review and its reliance on across-the-board cuts means that the review will not eliminate the programs that are performing poorest overall.

“By carving out entire categories of spending, the government is reducing the scope for improving the quality of federal spending. Some programs eliminated or restructured will be performing better than some programs outside the purview of the review,” says Lester, a former federal government economist and a Fellow-in-Residence with the C.D. Howe Institute.

Lester recommends expanding the review to cover the missing two-thirds of program spending, imposing a multi-year cap on operating costs to deliver immediate restraint, and then assessing programs through a value for money lens. He also calls for transparent goals and clear communication of trade-offs to build public consensus around necessary choices.

 “Canadians deserve a truly comprehensive review of federal spending that eschews across-the-board cuts and that delivers enough restraint to put federal finances on a prudent and fair path,” concludes Lester.

Read the Full Report

Earlier this year, Lester and Institute staff developed “An Economic Strategy for Canada’s Next Government,” a blueprint for fiscal discipline, stronger productivity, and economic renewal. Read their full report here.

For more information, contact: John Lester, Fellow-in-Residence, C.D. Howe Institute; Percy Sherwood, Associate Editor and Communications Officer, C.D. Howe Institute, 416-407-4798, psherwood@cdhowe.org.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

Want more insights like this? Subscribe to our newsletter for the latest research and expert commentary.