Government Departments May Use ‘Musical Ride’ Manoeuvres to Avoid Budget Cuts: PBO

Parliamentary budget officer Yves Giroux. The Canadian Press

Taxpayers need to beware of manipulative manoeuvres when it comes to spending on public services and cutting government costs, says Canada’s Parliamentary Budget Officer.

Yves Giroux made the comments when testifying before the Senate National Finance Committee on Feb. 13, as first reported by Blacklock’s Reporter.

Mr. Giroux described what he called a well-known phenomenon in the public service called “offering a Musical Ride.” The reference is to the RCMP being told to cut its proposed 1994 budget and responding by offering to cut the Musical Ride.

“If you tell departments, ‘Cut 5 percent or 10 percent’ and you let them do it, there is a chance that some of [them] will do what we call the Musical Ride ... where the RCMP offered to cut the Musical Ride, which was very popular, to avoid cutting services or expenditures,” Mr. Giroux said.

Performances of the show, which dates back to 1887, were not cut in the end.

Mr. Giroux also said that political direction matters when it comes to reducing public servant spending.

“Some of you may have heard the prime minister say that he’s not a firm believer in spending reductions, and he said that in a specific context, but it may be interpreted by senior public servants as the leader of the government not being so adamant that spending has to be reduced,” Mr. Giroux said.

Cutting expenses to government departments will not always lead to a reduction in public service, Mr. Giroux told the committee.

“There are ways to improve or at least maintain services while reducing expenditures by looking at how things are done, for example, as opposed to same old same old,” he said. “It could lead to improvements in the services.”

The government has said it will focus on economic performance and aim for a scenario where interest rates can come down, Finance Minister Chrystia Freeland said on Feb. 13.

“We definitely are conscious as our priority, when it comes to economic policy, of acting in such a way that creates conditions that will make it possible for interest rates to come down,” Ms. Freeland told reporters in Ottawa.

The Liberal government has been running a deficit with rising debt servicing costs stemming from Prime Minister Justin Trudeau’s public spending during the COVID-19 pandemic and has postponed debt-reduction goals twice, including in the 2023 Fall Economic Statement.

Ottawa opted to set new goals, including capping the deficit at $40.2 billion, which is about 1.4 percent of GDP. Another goal would see the debt-to-GDP target lowered and keep it declining so the deficit could be kept under 1 percent of GDP by 2026–2027.

“We intend to hit those [fiscal] targets,” Ms. Freeland said.

Balancing the budget could be done in about two years with “modest spending restraint,” a Fraser Institute report says.

Reducing the growth in annual program spending to 0.3 percent could help the government balance the budget by 2026–2027, the organization said. It would also require a 4.3 percent reduction in program spending.

The 2024 budget is expected to be tabled in Parliament in March or April.

Jennifer Cowan contributed to this report.