Federal government increased number of public service employees by more than 40%

“the size of the federal public service reached 274,219 employees in 2022/23—an increase of 40.4 per cent since 2014/15”

Over the last eight years the Trudeau government has expanded the size of the federal public service to ensure it plays a more active role in the Canadian economy. However, there’s little evidence that this bigger government has made Canadians better off.

According to the Public Service Commission of Canada, the size of the federal public service reached 274,219 employees in 2022/23—an increase of 40.4 per cent since 2014/15. And according to data from the Parliamentary Budget Officer, total compensation for federal bureaucrats (adjusted for inflation) increased by nearly 37 per cent between 2015/16 and 2021/22.

This is occurring even as government workers in Canada already enjoy a substantial wage and benefit premium compared to comparable workers in the private sector. According to a recent study published by the Fraser Institute, in 2021 (the latest year of comparable data) government workers at all levels (federal, provincial and local) received wages that were 8.5 per cent higher, on average, than Canadians employed in the private sector. (The study controls for factors such as gender, age, education, tenure and industry to provide an “apples to apples” comparison among workers.)

But higher compensation and an increasing size of the federal public service have not provided better access to government programs and services or translated into tangible economic results for Canadians.

A recent poll found that only 16 per cent of Canadians believe they get good or great value from the services they receive from governments such as health care, education, police, roads and national defence. Nearly half (44 per cent) of Canadians believed they receive poor or very poor value from the services they receive.

Moreover, living standards have only improved marginally in Canada since 2015. Gross domestic product (GDP) per person—a broad measure of living standards—has grown by a meagre 5.1 per cent (inflation-adjusted) over the last eight years. By comparison, Americans have seen their living standards grow by nearly three times as much over the same timeframe.

To put this into further perspective, total compensation and employment for federal bureaucrats are increasing much faster than living standards for Canadians.

These results are not surprising. Bigger governments are not necessarily better than smaller ones. Empirical economic research suggests that economic growth is maximized when government spending ranges between 24 per cent and 32 per cent of the size of the national economy. When government spending exceeds this optimal range, government impedes both economic growth and improvements in living standards. Unfortunately, Canada’s size of government (federal, provincial and local) was far beyond the optimal level at 40.5 per cent of GDP in 2022.

Since 2015, the Trudeau government has added more administrators and managers to the federal public service and significantly increased spending—while failing to help raise the living standards of Canadians. Entrusting bureaucrats to pick winners and losers by subsidizing certain industries instead of others has not been a recipe for economic success. Instead, Ottawa appears to be competing with the private sector for skilled workers and inhibiting the national economy in the process.

Canada needs a leaner and more efficient federal government that focuses only on its core functions. Bigger government hasn’t been good for Canadians, it’s only been good for government workers.

Authors:

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute

Related Topics:#FederalPublicService #FraserInstitute #GradyMunro #JakeFuss

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Trump Abolishes DEI for the Feds

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Trump, taunts and trade—Canada’s response is a decade out of date

Business / 4 hours ago

Trade retaliation might feel good—but it will hurt Canada’s economy

Business

Trump, taunts and trade—Canada’s response is a decade out of date

Published on January 21, 2025

Todayville

From the Fraser Institute

By Ross McKitrick

Canadian federal politicians are floundering in their responses to Donald Trump’s tariff and annexation threats. Unfortunately, they’re stuck in a 2016 mindset, still thinking Trump is a temporary aberration who should be disdained and ignored by the global community. But a lot has changed. Anyone wanting to understand Trump’s current priorities should spend less time looking at trade statistics and more time understanding the details of the lawfare campaigns against him. Canadian officials who had to look up who Kash Patel is, or who don’t know why Nathan Wade’s girlfriend finds herself in legal jeopardy, will find the next four years bewildering.

Three years ago, Trump was on the ropes. His first term had been derailed by phony accusations of Russian collusion and a Ukrainian quid pro quo. After 2020, the Biden Justice Department and numerous Democrat prosecutors devised implausible legal theories to launch multiple criminal cases against him and people who worked in his administration. In summer 2022, the FBI raided Mar-a-Lago and leaked to the press rumours of stolen nuclear codes and theft of government secrets. After Trump announced his candidacy in 2022, he was hit by wave after wave of indictments and civil suits strategically filed in deep blue districts. His legal bills soared while his lawyers past and present battled well-funded disbarment campaigns aimed at making it impossible for him to obtain counsel. He was assessed hundreds of millions of dollars in civil penalties and faced life in prison if convicted.

This would have broken many men. But when he was mug-shotted in Georgia on Aug. 24, 2023, his scowl signalled he was not giving in. In the 11 months from that day to his fist pump in Butler, Pennsylvania, Trump managed to defeat and discredit the lawfare attacks, assemble and lead a highly effective campaign team, knock Joe Biden off the Democratic ticket, run a series of near daily (and sometimes twice daily) rallies, win over top business leaders in Silicon Valley, open up a commanding lead in the polls and not only survive an assassination attempt but turn it into an image of triumph. On election day, he won the popular vote and carried the White House and both Houses of Congress.

It’s Trump’s world now, and Canadians should understand two things about it. First, he feels no loyalty to domestic and multilateral institutions that have governed the world for the past half century. Most of them opposed him last time and many were actively weaponized against him. In his mind, and in the thinking of his supporters, he didn’t just defeat the Democrats, he defeated the Republican establishment, most of Washington including the intelligence agencies, the entire corporate media, the courts, woke corporations, the United Nations and its derivatives, universities and academic authorities, and any foreign governments in league with the World Economic Forum. And it isn’t paranoia; they all had some role in trying to bring him down. Gaining credibility with the new Trump team will require showing how you have also fought against at least some of these groups.

Second, Trump has earned the right to govern in his own style, including saying whatever he wants. He’s a negotiator who likes trash-talking, so get used to it and learn to decode his messages.

When Trump first threatened tariffs, he linked it to two demands: stop the fentanyl going into the United States from Canada and meet our NATO spending targets. We should have done both long ago. In response, Trudeau should have launched an immediate national action plan on military readiness, border security and crackdowns on fentanyl labs. His failure to do so invited escalation. Which, luckily, only consisted of taunts about annexation. Rather than getting whiny and defensive, the best response (in addition to dealing with the border and defence issues) would have been to troll back by saying that Canada would fight any attempt to bring our people under the jurisdiction of the corrupt U.S. Department of Justice, and we will never form a union with a country that refuses to require every state to mandate photo I.D. to vote and has so many election problems as a result.

As to Trump’s complaints about the U.S. trade deficit with Canada, this is a made-in-Washington problem. The U.S. currently imports $4 trillion in goods and services from the rest of the world but only sells $3 trillion back in exports. Trump looks at that and says we’re ripping them off. But that trillion-dollar difference shows up in the U.S. National Income and Product Accounts as the capital account balance. The rest of the world buys that much in U.S. financial instruments each year, including treasury bills that keep Washington functioning. The U.S. savings rate is not high enough to cover the federal government deficit and all the other domestic borrowing needs. So the Americans look to other countries to cover the difference. Canada’s persistent trade surplus with the U.S. ($108 billion in 2023) partly funds that need. Money that goes to buying financial instruments can’t be spent on goods and services.

So the other response to the annexation taunts should be to remind Trump that all the tariffs in the world won’t shrink the trade deficit as long as Congress needs to borrow so much money each year. Eliminate the budget deficit and the trade deficit will disappear, too. And then there will be less money in D.C. to fund lawfare and corruption. Win-win.

Ross McKitrick

Professor of Economics, University of Guelph

Business

Trade retaliation might feel good—but it will hurt Canada’s economy

Published on January 21, 2025

Todayville

From the Fraser Institute

By Steven Globerman

To state the obvious, president-elect Donald Trump’s threat to impose an across-the-board 25 per cent tariff on Canadian exports to the United States has gotten the attention of Canadian policymakers who are considering ways to retaliate.

Reportedly, if Trump makes good on his tariff threat, the federal government may levy retaliatory tariffs on a wide range of American-made goods including orange juice, ceramic products such as sinks and toilets, and some steel products. And NDP Leader Jagmeet Singh said he wants Canada to block exports of critical minerals such as aluminum, lithium and potash to the United States, saying that if Trump “wants to pick a fight with Canada, we have to make sure it’s clear that it’s going to hurt Americans as well.”

Indeed, the ostensible goal of tariff retaliation is to inflict economic damage on producers and workers in key U.S. jurisdictions while minimizing harm to Canadian consumers of products imported from the U.S. The hope is that there will be sufficient political blowback from Canada’s retaliation that Republican members of Congress will eventually view Trump’s tariffs as an unacceptable risk to their re-election and pressure him to roll them back.

But while Canadians might feel good about tit-for-tat retaliation against Trump’s trade bullying and taunting, it might well make things worse for the Canadian economy. For example, even selective tariffs will increase the cost of living for Canadians as importers of tariffed U.S. goods pass the tax along to domestic consumers. Retaliatory tariffs might also harm productivity growth in Canada by encouraging increased domestic production of goods that are produced relatively inefficiently here at home compared to in the U.S. Make no mistake—once trade protections are put in place, the beneficiaries have a strong vested interest in having the protections maintained indefinitely. While Trump will be gone in four years, tariffs imposed by Ottawa to retaliate against his actions will likely remain in place for longer.

The U.S. president has substantial leeway under existing legislation to implement trade measures such as tariffs. While Trump has several legislative options to impose new tariffs against Canada and Mexico, he’ll likely use the International Emergency Powers Act (IEEPA), which grants the president power to regulate imports and impose duties in response to an emergency involving any unusual and extraordinary threat to national security, foreign policy or the economy. According to Trump’s rhetoric, the emergency is illegal immigration and drug traffic originating in Canada and Mexico.

However risible Trump’s emergency claim might be when applied to Canada, overturning any action under the IEEPA, or some other enabling legislation, would require a legal challenge. And in fact, because no president has yet used the IEEPA to impose tariffs, the legality of Trump’s actions remains in doubt. In this context, a group of governors sympathetic to Canada’s position (and their own political fortunes) might spearhead a legal challenge to Trump’s tariffs with encouragement and support from the Canadian government.

To be sure, any legal challenge would take time to work its way through the U.S. court system. But it will likely also take time for domestic opposition to Trump’s tariffs to gain sufficient political momentum to effect any change. Indeed, given the current composition of Congress, it’s far from clear that a Team Canada effort to rally broad anti-tariff support among U.S. politicians and business leaders would bear fruit while Trump is in office.

While direct retaliation might be emotionally satisfying to Canadians, it would likely do more economic harm than good. And while a legal challenge will not obviate the immediate economic harm Canada will suffer from Trump’s tariffs, it might help limit the ability of Trump (and any future president) to use trade policy for political leverage in our bilateral relationship. After all, there’s no guarantee that the next president will not be a Trump acolyte.