Nearly $3 billion in federal spending approved for ’16 17 to go unspent: PBO

The federal budget watchdog says nearly $3 billion in planned government spending authorized by Parliament will go unspent this fiscal year. (Photo: Racquel Heron/Flickr)

OTTAWA—The federal budget watchdog says nearly $3 billion in planned government spending authorized by Parliament will go unspent this fiscal year.

A large portion of that total — almost a third — is tied to the government’s infrastructure program, said an analysis released Thursday by the parliamentary budget office.

The Trudeau government has faced criticism over the slow movement of billions in new infrastructure spending that it promised in last year’s budget.

The budget office’s report identified large amounts of authorized spending for this year that were “administratively frozen” in government estimates, the largest of which was $829 million allotted to Infrastructure Canada.

The analysis also found that $366 million in spending this year had been frozen for National Defence, $192 million for Fisheries and Oceans Canada and $100 million for Indigenous and Northern Affairs Canada.

These sums can no longer be spent by federal organizations in 2016-17.

In most cases, some or all of that approved funding will be re-requested by the department the following year, said Mostafa Askari, assistant parliamentary budget officer. It can be reprofiled in the future, he added.

“The Treasury Board identifies amounts that they don’t want the departments to spend or they’re sure that they’re not going to spend,” Askari said.

“A big chunk of it is because of infrastructure. … Obviously, they haven’t been able to get all the money out and get all the infrastructure programs running.”

Askari said it’s common for allotments to be frozen when it comes to federal departments that are involved in a lot of capital spending — like Infrastructure, Defence, Fisheries and Oceans and Indian and Northern Affairs.

“Parliamentarians may wish to inquire about the reasons why specific allotments have been frozen, which programs or projects have been affected and what delays in program implementation have led to the reprofiling of funds,” the budget office report said.

On infrastructure, the budget watchdog released a report this month that said departments had only identified $4.6 billion worth of projects out of the $13.6 billion in infrastructure money announced in last year’s budget. That total was slated to be spent through March 2018.

The budget watchdog warned of “a significant gap” in meeting that target.

Questions have also been raised on how spending delays could weaken Ottawa’s economic growth projection for 2016-17. The federal prediction includes an anticipated boost in growth from the promised infrastructure investments.

In response, Infrastructure Minister Amarjeet Sohi said Ottawa was confident cities and provinces would complete projects by the end of next March, with the exception of a few whose funding flows in 2019 and beyond.

Sohi said the feds have pressed provincial officials to finalize the list of projects they want funded. Federal officials have been examining project proposals with the expectation Ottawa will approve them for funding over the coming months.

Looking at the overall number in Thursday’s budget office report, Askari said due to many offsetting factors it’s unclear how the $3 billion in unspent money this year could affect the government’s 2016-17 bottom line.

Last fall, the Trudeau government projected a deficit of $25.1 billion for this year.

Earlier this month, the budget office predicted Ottawa was on track for a shortfall of $20.5 billion, thanks in part to its estimate that program expenses would be $1 billion lower than the government expected.