CGE LEADERSHIP SERIES Spring 2025 // Canadian Government Executive / 25 find inefficiencies. The only way you’re going to get those kinds of cuts is if you do a serious spending review, where you look at what you’re going to stop doing. You’re not going to get it from efficiencies as keen as I am to do so. Efficiencies from AI are very promising. But you’re talking about hundreds of millions in the medium term, not billions in savings. To put the $13.5 billion in context, the most significant cuts exercise we’d had was $5.2 billion. But our analysis when we looked at draft ten years later was almost $2 billion of that had to be given back because of operating pressures that got created as a result. There were cuts that were not sustainable. So in comparison to drop and the Tories wanted to cut the $13 billion would represent 3 to 4 times the cuts we did on a much larger government spend. But that is not going to happen unless you do a serious deep spending review exercise. These are not the kind of things we saw under previous majority governments. Hiring freezes and caps does not create long term savings. It creates cuts in areas you didn’t want to have the cuts. If you’re actually going to achieve $13 billion in efficiencies by year three, the deficit level would remain at this north of $60 billion range. Basically the declining deficit is exactly a function of the efficiencies they’ve proposed to get out of the public service. The only way that’s going to happen is if you do a Chretien-Martin style serious deep spending review that does not talk about efficiencies, but does a deep dive in what is core to government, what can we stop doing and what are we going to cut. And just couple observations on that. First, that is an all-consuming major exercise. That’s going to be challenging for public servants to simultaneously be doing a deep spending review at the same time as their driving forward on many priority friends that, that Martin and Kevin have talked about. Secondly, it’s going to take political courage to go beyond saying, can we just get this out of, quote, “efficiencies”? You’re not going to get $13 billion out of efficiencies. You’re going to have to go into a deep dive and do that. And that’s going to be a big impact for the public service. So I think if they follow through on this they’re going to have to do it seriously. And it’s going to be the most significant exercise of public service has seen since the Martin-Chretien cuts. Kevin Page It’s not going to be easy. There are different types of reviews. One type is like austerity which we kind of lived through in the 1990s with Chretien-Martin when we ran deficits and debt in the early 1990s and we had some bond rating pressures. Today is not austerity. This is government getting actually bigger. This is more about reallocation efficiency and effectiveness. It is nauseating when political leaders put out campaign numbers and they said, well, well, you know, we need to plug a hole. So this is what we’ll get from efficiencies. And they don’t do the arithmetic that, you know, that Graham just did. If Mr. Carney is going to be successful in terms of balancing his operating budget in four years by 2029, he’s going to need some positive economic news that doesn’t seem to be in the short term. He will need to find some of these savings as well. And whether they get all these savings again, as an outside observer, I have a bit of different numbers than Graham with respect to the size of the operating budget and something we call transfers. There are other transfers that departments run, not just transfers to people like old age security and child care or transfers to governments like the Canada Health Transfer and Equalization. A lot of my time in the last few years was spent looking at First Nations history, where we really increased the transfers to deal with First Nations related issues, particularly children. There’s going to be a hard look at those transfers. But the operating budget of the government of Canada is closer to $90 or $100 billion, not $60 billion. The wage bill alone is $60 billion and when we add in the national defence component, it will get bigger. So this is about reallocation. And will they get all the efficiencies? Probably not. Would I bet that Mr. Carney’s going to actually balance the operating budget in four years? Probably not. Would it be like, terrible news if we didn’t achieve that? Probably not. Lori Turnbull One of the messages that that is coming through here is the role of political will. At this moment, the Prime Minister has an enormous amount of political capital because he’s new and people really want him to do well. I think he’s got political capital. Does he have political will? The Chretien-Martin model was a very specific one where Chretien had not the same kind of mandate that Carney has, but he had a big majority. He knew he had to keep the left side of the Liberal Party happy, while he used Martin to do the cuts and deal with the right side of the Liberal Party. How is Carney going to do this like cabinet wise? What do you see to be his approach to being prime minister and organizing the team around him? Kevin Page Unfortunately, it kind of feels like we’re also dealing with a unity crisis, which is like the first time around. It was a really tough time for Canada. We’re dealing with a kind of a public debt crisis, but we’re in, which resulted in a lot of steep cuts to transfers to health. And we were dealing with a Quebec referendum, which we pretty much we came very close to losing. I got very nauseated listening to the premier of Alberta kind of throwing out this question of another referendum. Unity is job number one for the Prime Minister at this time. Prime Minister Mulroney’s majority government did big things. They had very strong cabinet ministers. So, I think we’re going to need all the talents of this cabinet. And I would bet that Carney manages more by the cabinet. There was a sense, like Prime Minister Trudeau, when he came in in 2015, talked about government really by cabinet. But I don’t know that it really happened that way. I think at first we’ll start to see a lot of these very strong cabinet ministers playing a lead role. It’s going to be tough work. Marta Morgan Yeah. So, I mean, this is kind of really the moment where a lot of decisions are being made. And I think, you know, who’s in the cabinet and what does a cabinet look like. It won’t be as big as the recent, cabinets that you’ve seen by Prime Minister Trudeau. And I think that’s going to be a function of wanting to convey sort of a seriousness of purpose and focus. They do have some very experienced cabinet hands. They’ve also got some very experienced individuals who have who are going to be new to Parliament. And I think it’s really with a view to what are really the top line priorities, he knows he’s going to have to move and it’s really going to be it’s going to be Trump. So it’s trade, finance, and foreign affairs, I’d say for the first time in a long time it’s also defence. Because defense really has to deliver on increasing its budget quickly. And it’s not it’s not an easy task for them to do that. And then I think the other thing to look for is kind of what governance does. A big change from Prime Minister Harper to Prime Minister Trudeau was there was no kind of priorities and planning. Harper had a small committee of ministers. It was his core cabinet, called Priorities and Planning. This is where they discussed the really tough issues. This is where they set the set, the strategy for the government. Prime Minister
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