We often talk about Canada’s poor productivity and low per capita income growth. What we don’t discuss is productivity in the public sector. The goal of governments may be to make our lives better but is a bigger public service really giving us a higher standard of living?

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Jack Mintz: Federal employment growth is now out of hand Back to video

Since 2015, the number of federal, provincial and local employees has grown by 18.5 per cent, twice as fast as in the private sector, where employment growth was 9.0 per cent. What is less appreciated is the over-the-top employment growth in federal departments and agencies. There were 336,000 federal government employees in 2022, up from 257,000 in 2015 — a 30.7 per cent increase.

That bigger-than-ever federal bureaucracy is costing Canadians a bundle. Federal employee compensation rose from $38 billion in 2015 to $58 billion in 2021 (the latest year for which data are available) — a whopping 52 per cent increase. Yet this growth has not led to a higher standard of living: Canada’s per capita economic growth has been among the weakest among OECD countries since 2015.

It doesn’t have to be this way. During the final seven years of the Harper government, 2009-2015, federal employment compensation grew by only seven per cent and employment actually fell. Though not stellar, Canada’s per capita income growth did at least outpace U.S. growth.

Productivity in government is hard to measure (and not just because it’s sometimes miniscule!). Because it’s hard to know how to value government services they’re often proxied by the money spent producing them. And that’s a problem. If you can’t measure outputs, you don’t know if you are doing better. Instead, you judge productivity by looking at specific measures such as the time taken to process tax files or applications of one kind or another.

With so many new federal workers since 2015, have Canadians gotten better service? Yes, during the pandemic the federal civil service doled out money at lightning speed, though without the usual care in making sure it was appropriately spent. That helped prevent a depression — which was definitely a valuable “output” — but can we say the same thing today now that the economy has recovered?

The government’s Phoenix payment system, introduced in 2015, is an awful mess, having generated many thousands of incorrect payments to federal employees and contractors. Immigrants can’t get into the country, given a backlog of 2.2 million cases that has only just begun to improve this past couple of months. We can’t deliver LNG to Europe because federal regulations have killed export opportunities.

Even the little things aren’t easily done. It recently took a friend six months to receive a passport even though Service Canada promises to deliver by mail within 20 days. Another friend applied for Old Age Security in September and is still waiting for the application to be reviewed. Luckily, no financial stress is involved — but it very well could have been. For several years now I have found it impossible to change a mailing address on Service Canada’s website.

Yet federal employment has been growing by leaps and bounds. Over 16,000 employees were added to the Canada Revenue Agency last year, accounting for almost half the increase in federal employment in 2022. Since 2015, CRA employment is up 37 per cent to 55,000. Will the agency make decisions faster? Getting a decision on a medium-complex objection takes on average 318 days according to the CRA. (It doesn’t say whether the decision is guaranteed to be correct.)

The federal government’s second largest department — Employment and Social Development Canada — now has 35,609 employees, two-thirds more than seven years ago. Though COVID measures wound down last year, the department added another 3,000 employees rather than figure out how to improve service without expanding its already bloated workforce.

Not all departments have grown as fast, if at all, as the rest of the federal civil service. National Defence is the third largest department with 26,400 civilian employees but has grown only half as fast as the rest of the civil service since 2015. And despite world tensions military employment actually fell by 23 employees. Employment also fell at Veterans Affairs last year, by 233 positions, a 6.5 per cent reduction in that department’s staffing.

Where were Ottawa’s greatest employment priorities? The “no pipelines” Impact Assessment Agency (employment up 89 per cent since 2015), Fisheries and Oceans (up 37 per cent) and Parks Canada (up 39 per cent). The Innovation and Sustainable Economic Development department, which hands out corporate welfare, is up 29 per cent. The Public Health Agency has doubled in size since 2015, with a 30 per cent increase last year alone. And Women and Gender Equality Canada has quadrupled over the last seven years to 390 employees. It is now almost half the size of the Department of Finance, one of the key central agencies, which is itself up 18 per cent since 2015.

Will the federal government get a handle on its ever-growing bureaucracy? Some indications suggest perhaps. Despite heavy union opposition, the government quite rightly is asking employees to return to work at least part of the week to improve performance. The government has also been introducing more technology — though the Phoenix experience suggests that can be a mixed blessing for productivity.

Overall, it’s very hard to make the case that we need so many more federal employees now than we did in 2015. With the rate of federal employment growth more than three times greater than in the private sector over the last seven years, a finance minister focusing on productivity in her next budget needs to take a hard look in her own backyard.