From the Fraser Institute

By Ben Eisen

At the same time the Trudeau government opened Canada’s borders to historic numbers of immigrants leading to an explosion in population, the federal workforce was growing even faster.. much faster.

Here’s a fact that all Canadians should understand. Prime Minister Justin Trudeau has overseen the seven highest years of federal government spending in Canadian history (on a per-person basis, after adjusting for inflation).

The federal government’s high spending levels have produced a long string of budget deficits and growing mountain of debt. Federal net debt has approximately doubled in nominal terms since 2014/15 (one year before Trudeau took office), rising from $17,800 per person to $34,000 this year.

What’s driving all of this?

There are many factors, including the growth in the number of federal government employees. Our new study published by the Fraser Institute (based on data from the Parliamentary Budget Officer) found that after years of shrinking, the size of the federal government workforce began to grow in the mid-2010s. In fact, it began to grow significantly faster than the Canadian population.

To measure the growth, we used the federal government’s Full Time Equivalents (FTEs), which captures the expected work hours of a fulltime employee and allows for comparisons over time. In 2014/15, there were 340,669 FTE workers working directly for the federal government. By 2022/23 (the latest fiscal year of comparable data), this number had grown to 431,537 or by 26.1 per cent. By comparison, the Canadian population grew 9.1 per cent during this period—still a substantial growth rate, but far slower than the rate of growth of the federal workforce.

So how much has the rapid growth in federal government jobs cost taxpayers?

In our study, we consider what would have happened had the Trudeau government simply held the rate of growth in federal employment to the rate of population growth. Under this scenario, the federal government’s workforce today would be 57,170 fewer FTE workers than is in fact the case. Given that the average per-FTE cost of federal employment in 2022/23 was $130,583 (which includes salaries and other costs), the savings would have been substantial. Specifically, taxpayers would have saved $7.5 billion in 2022/23 alone. And if this money had not been spent, the federal deficit would have been 21.2 per cent smaller that year.

At all times, but particularly during a period of large deficits, the federal government should scrutinize all areas of spending including government employment. Personnel costs represent approximately half of the federal government’s operating costs, so it’s no surprise that growing employment costs have heavily contributed to Ottawa’s recent string of deficits.

According to the Trudeau government’s latest budget, Ottawa will run deficits for the foreseeable future and in 2029 net federal debt will reach $1.5 trillion. Unless the government reverses its spending trends, the cost of increased government employment will continue to strain federal finances in the years ahead, with taxpayers paying the bill.’

Ben Eisen

Senior Fellow, Fraser Institute

 By Martin Armstrong

Argentina has posted its first budget surplus in 123 after President Javir Milei took office and demanded an abrupt halt to government spending. Governments worldwide should carefully take note.

Milei proudly announced:

“The deficit was the root of all our evils — without it, there’s no debt, no emission, no inflation. Today, we have a sustained fiscal surplus, free of default, for the first time in 123 years. This historic achievement came from the greatest adjustment in history and reducing monetary emission to zero. A year ago, a degenerate printed 13% of GDP to win an election, fueling inflation. Today, monetary emission is a thing of the past.”

Economic emissions should become a coined phrase as it is far more harmful than anything government is currently trying to conquer.

Argentina was forced to stop printing money back in 2022 after inflation surpassed 60% in July of that year, and their currency became utterly worthless. The central bank raised rates to nearly 70% to no avail as government continued borrowing. The problem with socialism is that they eventually run out of other people’s money. The government was spending over $6 million daily on social programs, but the poverty rate continued to rise, and around 57% of the working population could not find jobs. There were mass strikes since their money could not fund basic goods. Even if they could find employment, what incentive would the people have when the currency is worthless? Since they had no way to pay off their debt, the government simply continued to print more and devalued its own currency in the process.

Javir Milei was called a right-wing extremist for denouncing socialism and promising to curtail government spending and social programs. He understood that socialism COULD NOT WORK. It took President Javier Milei of Argentina a mere two months to push his nation into a surplus. The Economy Ministry declared that the government posted a $589 million surplus back in April, the first surplus in a decade. Milei referred to the government as “a criminal organization,” and recognized that the public sector needed to shrink as 341,477 people were on the government payroll when he took office.

Referred to as the “gnocchi” after the Italian pasta dish that is commonly served on the 29th of the month, the same day as payday, are the individuals in Argentina on the government payroll who do absolutely nothing. They were installed by politicians in exchange for favors. Critics claim he is firing at random, but the Milei Administration has assured the public that selecting those who will be laid off will be an “extremely surgical task, done so as not to make mistakes.”

Milei has already eliminated useless agencies such as the Ministry of Culture, Ministry of Health, Ministry of Labor, and Ministry of Social Development. In his words, Argentina is currently a poor country and cannot afford these departments that do absolutely nothing to improve the nation’s economic conditions. He has cut the Cabinet in half and no one has noticed a difference.

Milei removed price controls and devalued the currency by 54%. Transport and fuel subsidies were eliminated. It was noted that these measures would at first hurt PPP before the economy could begin to heal. Imagine inflation cooling in February at 276% — the situation was dire. The International Monetary Fund awarded Argentina a $44 billion credit program. The nation is beginning to stabilize very slowly, and it took decades of deteriorating economic conditions for someone to come in and clean house.

He has called his measures a form of “shock therapy” for Argentina’s economy. Milei agreed to devalue the nation’s peso from around 350 to 800 pesos per USD. He has eliminated quotas on imports and exports and removed the licensing that was difficult to obtain. There is a temporary rise in taxes for non-agricultural trade that brings it on par with industry standards. Transportation and energy subsidies have been eliminated.

Milei is the same man who stood before the crowd at Davos and criticized their glorification of socialism. “The main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism,” Milei said to a hostile crowd at Davos. “We’re here to tell you that collectivist experiments are never the solution to the problems that afflict the citizens of the world—rather they are the root cause.”

Those in charge want us to believe that capitalism equates to greed while collectivism is seen as a form of social justice but, of course, requires the money of others. Free enterprise is under constant attack, and Milei is one of the only world leaders fighting for its existence. “Social justice is not just. It doesn’t contribute to the general well-being,” Milei said to Davos, citing that socialism is “intrinsically unfair” and forces the state to attack the people for taxes. “Can any of us say that they voluntarily pay taxes?” he asked the crowd.

He was once called the Donald Trump of Argentina. We can hope that Donald Trump will take swift action to reduce government spending. DOGE appointee Elon Musk congratulated Argentina’s president when news of the budget surplus broke. Unfortunately, America is too far in the hole to recover by slashing programs or cutting government. It would be a massive step forward but our deficit has been permitted to run wild for too long to be tamed.