Ottawa’s hiring spree must end

Under the federal Liberal government, the size of the core public service has grown, and grown, over the past eight years. At the same time, it is increasing its reliance on contractors.

There is no single area with a bigger impact on spending: Personnel expenses consume half of Ottawa’s operating budget. And yet there has been little effort made to demonstrate whether this has improved program effectiveness.

Canadians who have recently struggled to access federal services such as passports, Veterans Affairs supports, Indian status cards, or immigration applications could reasonably conclude services have not improved in step with the growth in employment.

With the economy forecast to stagnate this year, Budget 2023 is a moment to rein in the growth of government.

As the chart shows, growth of the federal public service has outpaced that of local and provincial governments.

Provincial governments have grown in part because of the need to hire more workers to relieve the pressure on longterm care and health care systems across the country, exacerbated by the pandemic.

Ottawa can’t say the same thing, as it does not deliver those critical services. Additionally, its hiring spree has only accelerated after the initial pandemic-fuelled surge.

If that’s not enough, the federal government’s reliance on contractors is also growing from $12.9-billion in fiscal 2017-18, to a projected $21.4-billion this fiscal year.

Canada’s population is growing, and some could argue that the public sector is simply growing in equal measure to deliver services to Canadians. And the Liberals might also point out that they were catching up after the Conservative government’s austerity measures shrunk the size of the core federal public service by nearly 10 per cent between fiscal 2010 and 2015. (The core federal public service excludes Crown corporations such as Canada Post and government agencies such as the Canada Revenue Agency.)

Somehow, other levels of government are making do with less largesse.

It’s important to note that even if the government slammed the doors shut with a hiring freeze, the cost of the public service would continue to grow.

Contract talks with the Public Service Alliance of Canada, representing about 120,000 federal workers, are at a stalemate. The union has firmly rejected the government’s offer of a three-year contract with wage increases of just over 2 per cent in each year. A labour tribunal has tried to mediate the gap with a recommendation of wage increases of 9 per cent over three years for more than 120,000 PSAC workers. The union says that’s still not enough.

The federal government did promise, in its last budget, to review spending to ensure government programs are fit to changing circumstances, with the aim of reallocating resources without pinching services.

The review is supposed to ensure that Canadians’ tax dollars are being used effectively, that government is focused on the right priorities. Done right, it’s a timely exercise.

The review is not ambitious, however. With annual expenditures soon to top $500-billion, it will target savings of $6billion over five years, starting in 2024-25, and $3-billion annually by 2026-27.

Those targets were set out at a time when the economy was expected to grow. This year, Canada faces economic headwinds which will mean a further decline in residential investment and weakness in consumer spending.

As taxpayers tighten their belts, it is time to freeze hiring and to broaden the scope of Ottawa’s strategic review to look for more savings.

As The Globe examines six major fiscal issues this week, in advance of the March 28 federal budget, you can find the editorials online at: tgam.ca/budget-editorials