Canada Budget Austerity Yields Lower Fed Spending

Efforts to rein in Canada's budget deficit have resulted in a 3.0 percent decline in overall federal expenditures in the first half of the fiscal year, the office of the parliamentary budget officer said on Wednesday.

The spirit of austerity is beginning to take hold, said Jason Jacques, who prepared reports on the April-September period for the office. Whatever they're doing, it's working.

Total expenditures in the six months fell 3.0 percent to C$123 billion ($120 billion) from the same period a year earlier.

This contrasts with the forecast 1.5 percent rise for the 2011-12 fiscal year as a whole that was projected in the government's November fiscal update.

The report said the lower spending was widespread across most government organizations and likely reflected restraint measures announced in the last two budgets.

The November fiscal update projected a C$31.0 billion deficit for this fiscal year, ending March 31, vanishing by 2015-16. Government departments and agencies have been told to come up with scenarios for cutting operating spending by 5 percent and by 10 percent.