As he prepares his first budget, Finance Minister François-Philippe Champagne has asked federal ministers to find program spending cuts that will rise to 15 per cent by 2028-29. Calling this a comprehensive expenditure review and not mere cost-cutting, his office says it’s about spending less running government in order to invest more in the productive capacity of the Canadian economy. Not to mention that we’ll soon be spending a lot more on defence. Read MoreJean Chrétien and Paul Martin slashed the bureaucracy by almost 20 per cent. But what’s the best formula for the current government to shed federal workers?
Jean Chrétien and Paul Martin slashed the bureaucracy by almost 20 per cent. But what’s the best formula for the current government to shed federal workers?
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As he prepares his first budget, Finance Minister François-Philippe Champagne has asked federal ministers to find program spending cuts that will rise to 15 per cent by 2028-29. Calling this a comprehensive expenditure review and not mere cost-cutting, his office says it’s about spending less running government in order to invest more in the productive capacity of the Canadian economy. Not to mention that we’ll soon be spending a lot more on defence.
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Champagne took pains to emphasize that this is not a job-cutting exercise. But it’s pretty hard to imagine how to cut the cost of operations without cutting staff, especially when major social transfers such as dental, daycare, and provincial transfers are not up for grabs.
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So, while it’s not clear that there will be a 15 per cent cut in the size of the public service, the bureaucracy will have to brace for some serious reductions, a far cry from the cap that Mark Carney talked about during the election.
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Can this be done? Well, yes — we know because we’ve done it before. A generation ago, the Jean Chrétien government’s Program Review (1994-99) cut total program spending by more than 10 per cent between 1994-95 and 1996-97 — in absolute terms, not based on projected increases. It reduced government spending as a share of GDP from 16.8 per cent to 12.1 per cent over five years and cut the size of the public service by 19 per cent, or 45,000 people (55,000 counting separate agencies). Cutting 15 per cent of today’s federal public sector would involve roughly the same number of jobs.
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How hard this will be depends on what you consider hard. Public sector unions have characterized the review as a betrayal of both workers and Canadians who rely on government services. But Canada’s public service grew at a heady pace under Justin Trudeau’s government and it’s not clear whether there were service improvements to match. It’s hard to argue that Canada has right-sized its public service, although we’re still waiting on a report from the Working Group on Public Service Productivity to (one hopes) help guide us in this respect.
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It’s not just about attrition
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In human terms, the cost of cuts could be very high. The supposedly easy way to cut is through attrition: retirements and other voluntary separations. We don’t have firm numbers (the Treasury Board has stopped publishing them) but Public Service Commission data on “outflows” suggest that the attrition figure in recent years has been in the 10,000 range annually. Another convenient option is not to renew the contracts of term and casual workers, although the cost in both human terms and lost skills may be high.