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Aligning spending with priorities

How governments can make every dollar deliver

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The case for change

Governments today face mounting fiscal pressures and increasingly complex mandates – challenges that demand more than incremental budgeting or routine planning. After COVID, when spending had increased dramatically, it never fully returned to previous levels, leaving many governments locked into patterns that dilute impact. With multiple worthy priorities competing for resources, the need for deliberate choices is clear. To maximize public value and ensure long-term fiscal sustainability, governments must adopt a bold, strategic approach; one that moves beyond simply repeating past practices.

When governments continue to rely on incremental planning, making only minor adjustments to previous budgets, spending decisions become disconnected from strategic priorities. This lack of alignment allows “temporary” programs to become permanent, causes resource demands to escalate, and spreads funding too thinly across too many initiatives. 

Without the discipline of a unified strategic vision, governments risk drifting away from their core goals, making it increasingly difficult to achieve meaningful impact or respond effectively to emerging needs.

Strategic tools for smarter budgeting

The private sector offers a valuable lesson: true success depends on aligning strategy (setting a clear direction and making deliberate choices) with strategic planning (charting the course to achieve those choices). By rigorously measuring outcomes and ensuring every dollar is tied to well-defined priorities, governments can deliver more meaningful results for the public. 

Anchoring spending in strategy gives leaders the clarity and direction to turn ambition into measurable outcomes. With a well-defined strategy, leaders can allocate budgets with purpose, ensuring that both day-to-day operations and strategic initiatives are evaluated through the same lens: their contribution to the government’s mandate.

ZBB puts strategy at the heart of every spending decision. Instead of defaulting to last year’s numbers, every dollar must be justified by the value it delivers. This disciplined approach empowers governments to focus on what truly matters, redirect resources to high-impact priorities, and quickly stop funding activities that no longer serve their goals. The result: stronger fiscal discipline and a clear path to both immediate results and long-term sustainability.

Establishing clear categories of spend and assigning budgets accordingly enables leaders to direct resources where they have the greatest impact. This approach sharpens visibility into trade-offs, balances investments between immediate needs and long-term priorities, concentrates funding on high-value areas, and allows to rapidly discontinue activities that no longer align with strategic objectives.

From insight to action: A Canadian example

In response to the Canadian federal government’s call to reduce spending, a federal agency put this approach into practice. While developing its strategy, the agency also conducted a thorough review of its expenditures. The insights gained from this review directly influenced how resources were allocated, and which new capabilities were prioritized.

This enabled the agency to concentrate its financial and human resources on its highest priorities, while cutting spending in areas with minimal impact. As a result, strategy and spending became better aligned, supporting more effective, value-driven decision-making. This approach not only strengthened the agency’s core functions but also gave teams like IT clear, data-driven criteria to evaluate and prioritize both new and ongoing initiatives, ensuring that the allocation of over $100 million in investment advanced strategic outcomes.
 

A practical guide to getting started 

Build a clear baseline by thoroughly examining all current spending. Catalogue every program and activity, whether it’s day-to-day operations or strategic initiatives, front office or back office.

With a clear understanding of where your resources are currently going, set your organization’s overall direction. Clearly state your ambition: What are the core outcomes you aim to achieve under your mandate? Just as importantly, decide what you will not pursue. Make bold, deliberate choices about your value proposition and where to focus your efforts and resources. Develop testable hypotheses about how your organization will succeed in these priority areas, and pinpoint the key capabilities and systems needed to deliver results. Set clear metrics to measure success, test your assumptions, and guide adjustments as needed.

Break free from incremental budgeting. Start with a zero-based approach and define clear spending portfolios or ‘buckets.’ Allocate resources according to your strategic priorities, not past patterns. Ask the tough questions: Which initiatives directly drive your core ambitions? Which no longer align and should be reconsidered or stopped?

Embed strong governance to keep spending aligned with your strategic priorities. Make regular reviews, like quarterly business reviews, a core part of your fiscal discipline, and use tools such as staged funding releases to maintain control. Strategy-driven oversight ensures the organization stays focused on its core outcomes and avoids costly distractions, keeping everyone accountable and on track. Lastly, don’t just do the work; communicate it. Share your goals and the reasons for fiscal discipline both internally and externally until they are widely understood; this visibility reinforces focus and commitment across the organization.

Take the next step towards fiscal resilience

Many governments still allocate budgets based on outdated patterns that no longer match today’s priorities, diluting impact and hindering targeted investment. By conducting comprehensive expenditure reviews and making strategic choices, such as adopting zero-based budgeting and portfolio allocation, governments can direct resources to where they deliver the greatest value. This disciplined approach increases transparency, focuses on core mandates, and drives greater public value while supporting fiscal sustainability.

Deloitte brings deep expertise in strategy, transformation, and public finance reform. We can help governments align spending with their highest priorities, ensuring every dollar delivers measurable public value. 

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To explore our comprehensive recommendations for Canadian government leaders on confidently achieving a sustainable fiscal future, including strategies that extend beyond aligning spending with priorities, please consult our full insights report.

Meet the leaders

Michel El-Khoury

Michel El-Khoury

Partner, Government and Public Services Fiscal Sustainability leader
613-751-5206

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