Canada politics: Billions not spent on promised programs
OTTAWA — The federal government failed to spend tens of billions of dollars on promised programs and services, including new military equipment, affordable housing and assistance for veterans, in the last fiscal year.
Federal departments blame a record $38 billion in funding forfeited in 2021-22 for a variety of factors, including delays and disruptions caused by the COVID-19 pandemic.
They also say that much of the money remains available for years to come.
The unspent funds also played a large role in the Liberal government posting a lower than expected deficit for the year ended 31 March 2022.
Canada posted a deficit of $90.2 billion – $23.6 billion less than budgeted.
The unprecedented amount of forfeited funds, much of which has been returned to the federal coffers, leads one observer to suggest it is a sign of longstanding challenges in implementing major federal projects for the country.
The amount of government funds forfeited is set out in the latest edition of the Public Accounts, a report on federal revenue and expenditure by all departments and agencies, presented each year in the House of Commons.
The $38.2 billion reported forfeited last fiscal year marks a new record from the previous year’s $32.2 billion. That was a dramatic increase from the previous record of $14 billion set in 2019-20.
That’s the equivalent of about $10 billion about a decade ago, when Stephen Harper’s Conservative government was accused by political opponents and pundits alike of secretly making big mistakes in cuts.
Health Canada and the Public Health Agency of Canada reported the largest failings of any department and agency, with nearly $11.2 billion underspent from their total $28.2 billion budgets.
Much of that has been set aside for unneeded COVID-19 initiatives, said Health Canada spokeswoman Tammy Jarbeau. This includes vaccines, personal protective equipment and rapid tests.
“Both Health Canada and the Public Health Agency of Canada have rigorous internal financial management controls in place to prevent, detect, and minimize error and financial loss, and to ensure funds are spent in the best interests of Canadians,” she wrote in an E -Mail.
The pandemic played a role in the responses and statements of many other departments and agencies, with many blaming delays on COVID-19.
One of them was the Department of Defense, which reported a $2.5 billion forfeit in the last fiscal year. Much of the money went unspent due to delays in the delivery of new military equipment such as arctic patrol ships and upgrades to the army’s armored vehicles.
There have also been delays in major infrastructure projects for the military, according to Defense Department spokeswoman Jessica Lamirande. These include the modernization and reconstruction of two naval jetties in Esquimalt, BC and a new armory in New Brunswick.
“The COVID-19 pandemic has had a significant impact on many of our businesses,” said Lamirande.
“The impact of the pandemic on the supply chain and industry capacity is causing production backlogs and delays.”
Lamirande added that most of the unspent funds are expected to be available in the coming years through a process called reprofiling, in which timelines are revised to reflect projected spending in the coming years due to these delays.
Former Parliament Budget Officer Kevin Page said the government’s handling of lapsed funds is now “slightly more relaxed” than in previous years, when unspent funds were not reprofiled and even used to justify budget cuts in Ottawa.
But defense analyst David Perry of Canada’s Global Affairs Institute said the Department of Defense’s failure, which has steadily increased in recent years, is a symptom of Ottawa’s ongoing difficulties in purchasing new military equipment.
“If we don’t get these procurement projects through, we don’t get new gear into inventory, so we don’t really have the gear for our troops,” he said, noting that many of the delayed projects were started under the Harper administration.
Perry also pointed to the current rate of inflation, which is already naturally higher for military equipment and the defense sector than most other parts of the economy. Not spending money now means Canada will have to pay more later for the same equipment and services, he said.
The Department of Infrastructure, Canadian Mortgage and Housing Corp. and the Department of Fisheries, which includes the Canadian Coast Guard, also reported delays in various capital projects, including affordable housing and broadband internet.
“Due to the unprecedented circumstances of recent years, such as the COVID-19 pandemic, disbursements of funds to advocates for many projects are expected to and will take longer,” CMHC spokeswoman Claudie Chabot said in an email.
Perry suggested a bigger problem.
“The Canadian government’s ability to actually deliver services to the public, especially when it comes to large projects, large capital projects, whether it’s for equipment or infrastructure or IT projects, has problems across the board,” he said.
Other federal agencies with large errors included Indigenous Services Canada, which failed to spend $3.4 billion, and Crown-Indigenous Relations and Northern Affairs Canada, which reported an error of $2.2 billion.
Spokesman Vincent Gauthier attributed much of the latter error to “the timing and progress of negotiations for certain child claims and litigation,” adding that funds will become available “in some cases” in the years to come.
Gauthier did not say why Indigenous Services, which are responsible for providing federal services to First Nations, Inuit and Metis, have failed to spend billions of dollars. He said most of the money has been reprofiled “to make it available when recipients need it”.
Veterans Affairs Canada also reported a nearly $1 billion loss last year, which the department attributed to fewer sick and injured ex-soldiers applying for assistance than expected.
However, critics have described earlier lapsed funding as evidence of the challenges many veterans face in accessing benefits and services. In 2014, the Royal Canadian Legion demanded an explanation from the Harper government as to why $1.1 billion went unspent over seven years.
This report from The Canadian Press was first published on January 30, 2023.