Program spending increased 7.5% and 6.9% in the first two years of the Conservatives current minority government mandate, pushed up by a variety of one-time initiatives that were affordable in those years of huge unexpected surpluses.

But even with a forecast 1.1% drop in revenue in fiscal 2008-09 ending Mar. 31, 2009, caused by the one percentage point cut in the goods and services tax as of Jan. 1, 2008, the Tories are still spending at a good pace, with a projected 3.7% increase in 2008-09. And that’s the lowest increase expected over the next five years; the average increase for the period is 4%.

A 4% increase in program spending is perfectly reasonable when the economy is growing at a healthy pace. Indeed, it doesn’t cover the higher costs and increased usage for some major programs. For example, elderly benefits, which account for $33.3 billion of the estimated total $208.1 billion in program spending in fiscal 2009, are rising by 4.5% a year. Federal transfers to other levels of government are increasing by more than 5%.

As a result, spending increases aren’t high in many areas. Defence is one. The Conservatives brought in its $5.3-billion Canada First defence plan in 2006. But there’s little in this budget beyond a promise to up the automatic annual increase in defence spending to 2% in fiscal 2012, from 1.5%.

The little room to maneuver on the spending front is clear from a perusal of the 2008 budget; it contains many measures but few of them cost much money.

The big-ticket items mentioned in the budget have already been funded from the large fiscal 2008 surpluses. This includes the $1-billion Community Development Trust, aimed at assisting workers and communities experiencing hardship as a result of international economic volatility; an extra $500 million for public transit; and $400 million of the Police Officers Recruitment Fund.

Because there is little extra cash, strategic reviews of departmental spending were ordered last year. This has resulted in $386 million in expenditures that could be dispensed with because they are “lower priority, lower-performing or no longer needed,” with the funds deployed elsewhere.