OTTAWA - Federal departments will "easily" be able to meet the government directive to freeze operational spending after this year, says the administrative head of the Treasury Board.

Treasury Board secretary Michelle d'Auray told a House committee Monday that Ottawa's operating budget has grown to a record $54 billion in the last few years, so there is plenty of room to restrain costs.

D'Auray noted that in the current fiscal year, the budget calls for departments to absorb the 1.5 per cent scheduled increase in public service salaries, a $300-million saving.

"There is a huge amount of flexibility. It is not, at least for the first couple of years, a significant reduction. It is in fact something we can easily do," she said.

In later testimony to the committee, budget watchdog Kevin Page did not disagree with d'Auray, but said it was not possible to know whether there is enough fat in the system to freeze spending.

Page complained that the government has refused to release information to him that would allow his office to do a proper analysis of whether the savings are achievable or whether service to Canadians will be impacted.

"Given that there is a lot of money in the system, it may be possible that there isn't a lot of pain," he agreed, but said he needs more information to make an informed judgment.

Page had other criticism of the budget, repeating his claim that he does not believe the Harper government can balance the budget in five years.

In the March budget, Finance Minister Jim Flaherty forecast economic growth and spending restraints would gradually reduce the current $54-billion deficit to $1.8 billion in 2014-15.

As part of the spending restraint, Flaherty ordered a two-year freeze on the operational budget of departments based on this year's levels, resulting in a $1.8-billion saving by 2012-13. Salaries for MPs were also frozen.

Page has said that to meet its fiscal targets, the government will have to consider tax increases, transfer cuts to provinces or make major program spending reductions.

D'Auray's testimony that restraint on operational budgets could easily be met surprised some opposition MPs, who said there was no more fat to be cut.

And she bristled at the suggestion department heads were being asked to cut deeply, given the overall size of the operating budget.

"I do not consider a freeze on operating budgets to be a cutting and slashing exercise ... it is a good management exercise," she said.

She gave several examples of how efficiencies can be achieved, including attrition, cutting transportation, maintenance and communications costs, consolidation, as well as modernizing the government's antiquated payroll system.

D'Auray said there has not been a freeze on hiring, but hinted that the government will be seeking ways not to replace all of the estimated 13,000 federal employees who retire each year.