This is the tenth edition of How Ottawa Spends. Like previous editions, it focuses on particular departments and policy initiatives of the federal government. Beyond evaluating past actions, the book is intended to offer informed comment on prospects for the future in the areas it explores. This is the first edition since the re-election of a Conservative majority government in November 1988. As such, it provides a specific opportunity to identify some of the issues and challenges facing the second Mulroney government. Accordingly, this particular volume moves beyond How Ottawa Spends' customary treatment of the annual budget and Estimates to examine a broader question: Are we entering a new era of Canadian federalism wherein the federal government has a new and possibly reduced role? Put somewhat differently: Are we seeing new limits to the discretion of the federal government to act? If so, what are those limits and what are their implications for the style and substance of federal policy making? The broad treatment of these questions in the book's first chapter is intended to set the stage for the more specific discussions of discretion and the federal government which follow.