The consequences of the federal expenditure review must be clear to Canadians: Senate finance committee

Ottawa – Departments and agencies must have the necessary human, financial and operational resources to fulfil their responsibilities, particularly when the public service workforce is being reduced, the Senate Committee on National Finance concluded after its review of the Main Estimates 2026–27, which detail the government’s planned spending for each federal organization.

This document was tabled following the 2025 budget, in which the government set out its intention to reduce the number of public service employees from 368,000 in 2023–24 to 330,000 by the end of 2028–29 through the implementation of the findings of the Comprehensive Expenditure Review.

In addition, the committee noted that the 2025 budget changed the way the government’s planned spending is presented, categorizing expenditures as day-to-day operating spending and capital investments. Operating spending can be understood as money needed to ‘keep the lights on,’ while capital investment involves the creation of longer-term value, such as infrastructure or intellectual property.

The Parliamentary Budget Officer noted in a September 2026 publication that the government’s definitions of operating spending and capital investment are not fully consistent with the System of National Accounts, an internationally agreed set of recommendations about how to measure economic activity. This raises an additional transparency issue, as the government could argue it has reduced operating spending simply by reclassifying that spending as a capital expenditure.

The committee will continue to scrutinize federal spending and reporting practices.

Quick facts

• The Main Estimates provide information on how the federal government plans to spend public money. Appropriation bills then authorize the spending of this money once they are adopted by Parliament.
• Studying the Main Estimates is a key responsibility of the Senate Committee on National Finance. As part of its work, the committee holds public meetings with witnesses to provide oversight of how the government is spending taxpayer money.
• The federal government lists two criteria for an expense to be categorized as capital investment:
  • Conditionality, i.e., whether the person receiving funds is required to invest in the creation of capital.
  • Clear linkage, i.e., whether the spending encourages or enables capital investment.

Quotes

“The federal government owes it to Canadians to be transparent and forthright about how their money is being spent.”

- Senator Claude Carignan, chair of the committee

“Our committee would like to see more detail about how the federal government is applying its new spending categories. The Parliamentary Budget Officer has raised valid concerns that must be addressed.”

- Senator Éric Forest, deputy chair of the committee

“Finding efficiencies in the public service should not come at the expense of public services. We need to know more about the effects of the spending review on Canadians.”

- Senator Andrew Cardozo, member of the Subcommittee on Agenda and Procedure

“Our committee has taken a sober, serious look at the government’s new changes. In our view, there is room for improvement.”

- Senator Krista Ross, member of the Subcommittee on Agenda and Procedure

Associated Links

• Read the reports: Main Estimates 2026–27 and Supplementary Estimates (A) 2026–27.
• Follow the committee on social media using #NFFN.
• Subscribe to email alerts for Senate committees.
• Sign up for the Senate eNewsletter.

For more information:

Nicolas Daoust
Communications Officer | Senate of Canada
343-551-4621 | nicolas.daoust@sen.parl.gc.ca