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Frequently Asked Questions

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1. What is the Expenditure Management System?

The Expenditure Management System, implemented in 2007, is the framework for developing and implementing the government's spending plans, and encompasses a number of activities (e.g., planning and evaluation) that guide decisions on the allocation of resources.

Its various elements and activities provide the information necessary to support the development of spending plans, the government's priority-setting process, fiscal and budget decisions, and the translation of those decisions into resource allocations for government programs.

The government introduced a new Expenditure Management System in 2007 as part of an ongoing commitment to better manage government spending. This system ensures value for money for all government spending. A key pillar of this system is the ongoing assessment of all direct program spending, or strategic reviews.

2. What are strategic reviews?

In 2007, the Government of Canada introduced a new Expenditure Management System in order to better manage government spending. Under this system, all government programs are put through a rigorous evaluation process called "strategic review."

The objective is simple: ensure that every tax dollar delivers results for Canadians and provides value for money.

One important element of this initiative is the regular review of the direct program spending by every department and agency on a four-year cycle, referred to as the Strategic Review Process. In this way, federal organizations are better able to:

  • Increase efficiencies and effectiveness: Programs deliver real results for Canadians and provide value for money;
  • Focus on core roles: Programs and services are aligned with the federal role and must be delivered by those best positioned to do so; and
  • Meet the priorities of Canadians: Programs focus on the needs and priorities of Canadians.

As a result of their review, federal organizations identify reallocation proposals from programs that do not meet the above criteria.

Strategic review results are announced through the annual budget. By the end of this first four-year cycle, 98 per cent of direct program spending will have been reviewed.

3. Who must conduct strategic reviews?

Federal organizations, including departments, agencies and Crown corporations that receive appropriations (public money) from Parliament, are required to undertake a strategic review of their direct program spending and the operating costs of their major statutory programs on a cyclical basis.

4. What is the process of strategic review?

Once organizations have completed a comprehensive review of all of their programs, they are required to identify a total of five per cent of their program spending from their lowest-priority and lowest-performing programs. These funds are proposed for reallocation to higher priorities.

Strategic reviews are done at the same time every year in order to put recommendations forward for consideration as part of the Government of Canada's annual budget planning process.

Savings achieved through strategic reviews are redirected to budget priorities to better meet the needs of Canadians.

5. Do all organizations have to identify 5 per cent of their total spending?

All organizations are required to identify reallocation options totaling 5 per cent from their lowest-priority and lowest-performing program spending.

Organizations can identify more potential savings in order to provide a greater range of options.

6. What programs are reviewed through this process?

Organizations review 100 per cent of their direct program spending and the operating costs of their major statutory programs.

7. What is direct program spending and major statutory programs spending?

Direct program spending is the cost of programs delivered by the federal government and consists of operating and capital spending as well as subsidies and transfer payments, such as grants and contributions made to provinces and territories.

Major statutory programs consist of the major transfers to other levels of government, such as the Canada Health Transfer, the Canada Social Transfer, Fiscal Equalization, Territorial Formula Financing, Youth Allowances Recovery, and Alternative Payments for Standing Programs.

They also include the major transfers to individuals, such as Elderly Benefits (including Old Age Security, the Guaranteed Income Supplement, and Spousal Allowances), Children's Benefits (including the Canada Child Tax Benefit and the Universal Child Care Benefit), and Employment Insurance benefits.

Although major statutory programs are not subject to strategic review, their operating costs are reviewed through this process.

8. Does the Strategic Review process make use of advisors external to the government?

Yes. Each organization is required to seek advice from arm's-length external advisors to get a third party perspective on the process and its results.

9. How are the results of the review made available to the public?

The final results of the annual Strategic Review are announced in the federal budget of the following year. The results of the 2007 reviews were announced in Budget 2008, the results of the 2008 reviews were announced in Budget 2009, and the results of the 2009 reviews were announced in Budget 2010.

As with prior rounds, results of the 2010 strategic reviews were announced in Budget 2011.

10. Aren't strategic reviews just another way of cutting programs?

Strategic reviews are about sound management of program spending and ensuring every government program is achieving results for Canadians.

As a result of their review, each federal organization identifies reallocation proposals from programs that do not deliver results for Canadians. These savings are reinvested in budget priorities.

Strategic reviews are one of the many steps the government has taken since 2006 to keep spending focused on the priorities of Canadians and to ensure value for money.

11. How does the government track results of strategic reviews?

Each department is responsible for its strategic review process.

Every year, the strategic review results are published in the government's budget.

The information related to these decisions is incorporated into documents such as Reports on Plans and Priorities and Departmental Performance Reports, which are presented to Parliament annually.

12. What is the impact of strategic reviews on public service jobs?

Any impact on jobs is manageable through attrition and workforce adjustment agreements.

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