Ottawa’s “comprehensive spending review” will only yield about half the savings needed to put

federal finances back on track, according to a report from the Canadian think-tank C.D. Howe Institute. John Lester in his study, Federal Expenditure Review: Welcome, But Flawed, estimates that the spending review launched in July will cover just a third of federal program spending.

Letters sent to ministers by Minister of Finance François-Philippe Champagne aimed to achieve a 15 per cent reduction in government operating expenditures by 2028/29, with their answers expected by the end of this month. But Lester estimates that with exemptions and carveouts, potential savings will only amount to $22 billion, less than half the $50 billion needed to put

federal finances on a “prudent path.”  “The federal government’s ‘comprehensive spending review’ falls short of its name and purpose,” he said.

While the review focuses on operating expenditures, Lester said there are “substantial” carve outs. Some are for government priorities such as programs that support capital investment and the proposed increases in defence spending. Lester said it also appears that transfers authorized through legislation and refundable tax credits will be exempt.

Most departments have a 15 per cent target for cuts, but the target is two per cent for the Department of National Defence, the Canadian Border Services Agency and the RCMP.

“With all these carve outs, spending in 2025/26 subject to the “comprehensive” review will amount to $175 billion, which is about two-thirds of operating expenditures but only one third of program spending,” he said.

The amount of savings he estimates the review will generate are not enough to prevent a rise in the

debt-to-GDP ratio over the forecast horizon. Lester said its scope should be broadened to include not only all program spending but also programs delivered through the tax system.

The government should also abandon its across-the-board approach and target the poorest performers.

“It takes time to identify underperforming programs and to build political support for substantial spending reductions,” said the report.

What Lester recommends is expanding the review, but imposing a multi-year cap on operating costs to deliver immediate restraint. Then the government can take more time to identify underperforming programs and build consensus to change them.

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Venture capital deals in Canada have slowed to a pace last seen at the height of the pandemic, a new report by Canadian Venture Capital and Private Equity Association (CVCA) reveals.

Investors put $2.9 billion into 254 Canadian VC deals in the first six months of 2025, a 26 per cent drop in the number of dollars invested and 22 per cent decline in the number of deals.

It adds up to the lowest first-half total since 2020. U.S. investors are big players in Canada’s venture capital space, but so far this year their participation is down 3 per cent from last year and down 8 per cent from a record high reached in 2021.

CVCA director David Kornacki said global trade tensions and a similar slowdown in the U.S. is behind the slump.

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Read more from Yvonne Lau At 65, Kate is rebuilding her life and finances in a new province after a costly divorce wiped out her savings. She would like to buy a house, but wonders if that is out of reach. Family Finance has some suggestions on how to make that happen, including drawing Canada Pension Plan now rather than waiting.

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Find out more Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

Financial Post on YouTube

mortgage rate page for Canada’s lowest national mortgage rates, updated daily. Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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