Government shifts focus to cutting external consultants in spring economic update

The federal government unveiled its spring economic update on April 28. Photo by Staff /Postmedia

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With the public service spending review well underway, the federal government says it’s now turning its attention to reining in spending on external consultants.

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In the spring economic update tabled in Parliament on Tuesday, April 28, the government said it’s targeting savings of $450 million next fiscal year and $900 million annually from 2028-2029 onward through cuts to spending on external management and other consulting services.

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The annual savings targets expand on an existing budget commitment to trim spending on consultants by 20 per cent over the next three years, as the government concurrently cuts jobs in the public service.

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Out of $23.1 billion in total spending on “professional and special services” in 2024-2025, the government spent $5.1 billion on management and other consulting.

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According to the update, cuts to consultants are intended to “protect the government’s defence priorities,” while strengthening its internal capacity and accelerating in-house skills development.

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Hadrian Mertins-Kirkwood, senior researcher and political economist at the left-leaning think tank Canadian Centre for Policy Alternatives, said the commitment to cutting spending on consultants raises some pressing questions. 

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“On paper, of course we should do that,” he said. “But what services were those external consultants providing? If those were essential services, then where in the public service are we going to pick those up? If they weren’t essential, then why were we doing them?”

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Mertins-Kirkwood said the government has few answers for how it intends to maintain services while reducing both internal and external capacity.

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“The best of all worlds is that your existing workforce gets more productive,” he said. “And really the only answer they have for how you can manage to do that is AI.”

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The pledge to reduce spending on consultants followed promises by successive governments to do the same.

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Scarce details on public service spending review

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The update contained little information about the ongoing “comprehensive expenditure review” — the government’s plan to find $60 billion in savings over five years from the operational budgets of most departments and agencies. 

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Instead, it pointed toward “ongoing horizontal reviews” that go beyond spending by individual departments, including federal procurement contracts, external management consulting and thematic reviews of “horizontal programming,” such as a review of skills and youth programming.

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Mostafa Askari, chief economist at the University of Ottawa’s Institute of Fiscal Studies and Democracy, said the economic update “seems to be silent” on cuts to the public service.

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“I was a bit surprised,” he said. “By the time of the (next) budget, they should have a complete picture of what is happening.”