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Despite anticipated cuts, the federal budget will grow by $7B from now until 2014-2015

Tuesday March 27, 2012 – “The concerns expressed by union leaders who fear that the next federal budget will destroy public services in Canada are greatly exaggerated,” asserts Filip Palda, associate researcher at the Montreal Economic Institute (MEI) and a professor at the École nationale d'administration publique (ÉNAP). Indeed, based on available projections, in spite of possible cuts of 8 billion dollars, the government’s total budget will grow from 243 billion dollars in 2011-2012 to 250 billion dollars in 2014-2015, as shown in a new MEI publication signed by Mr. Palda.

The Strategic and Operating Review undertaken by the government anticipates at most a 10% reduction in direct program spending. This kind of spending, however, represents just one third of the federal budget. Costs associated with the budget’s other components, like transfers to individuals and to provinces and municipalities, will continue to rise.

“In the best case scenario, we will have to wait until 2016-2017, or eight years after the economic recession, to return to 2008-2009 overall spending levels as a proportion of the economy. Indeed, eight billion dollars of cuts will only be marginally helpful in returning us to pre-recession spending levels,” says Mr. Palda.

“Let’s be realistic: Ottawa will not become a ghost town due to the measures proposed by the government. Since the Conservative Party formed the government in 2006, the number of people employed by the federal public service has jumped by 32,000. That’s equivalent to the population of Moose Jaw,” the author points out.

The Viewpoint entitled The federal government’s budget cuts, prepared by Filip Palda, associate researcher at the MEI and professor at ÉNAP, can be consulted free of charge on our website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Interview requests: Ariane Gauthier, communications coordinator, Montreal Economic Institute / Tel.: 514 273-0969 ext. 2231 / Cell: 514 603-8746 / E-mail: agauthier@iedm.org

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