‘Five Levels of Executives’: Excess Management Driving Up Federal Spending, PBO Says

Parliamentary Budget Officer Yves Giroux waits to appear before the Senate Committee on National Finance, in Ottawa on Oct. 17, 2023. The Canadian Press/Adrian Wyld

Federal employees routinely answer to seven levels of management, contributing to higher levels of government spending, according to Parliamentary Budget Officer (PBO) Yves Giroux.

The federal payroll rose to $67.4 billion in the 2022–23 fiscal year, from $63.3 the year before, states a report Mr. Giroux presented to the House of Commons Standing Committee on Government Operations and Estimates on March 18. The issue was first reported by Blacklock’s Reporter on March 19.

Personnel spending in the first eight months of 2023–24, from April to November 2023, was $44.4 billion, up 6.6 percent over the same period in the previous year, said the PBO report published Feb. 22, which examined the federal government’s supplementary estimates for the 2023–24 fiscal year.

“It’s not uncommon for departments to have five levels of executives, an associate deputy minister or more, and a deputy minister,” Mr. Giroux told MPs at the committee meeting.

“It leads to a situation where an employee can have seven levels of management above them.”

He said the proposal of eliminating two levels of executives had been discussed in the past, although that would come with its own set of challenges.

“There is certainly room for ‘delayering,’ as some would call it,” Mr. Giroux said in response to an MP’s question about streamlining management and government services. “Yes, there is room to reduce some levels of executives in the public service.”

The PBO said his biggest concern with the current government’s spending habits is “the disconnect between the increased levels of spending, which is a policy choice, and the performance indicators that don’t seem to be markedly improved.”

“Over time, we are seeing an increase in the number of public servants, in public expenditures. But year after year, despite the fact departments choose their performance indicators and the targets, they don’t seem to be getting significantly better,” Mr. Giroux said. “That is what worries me with the increased level of spending.”

Conservative MP Garnett Genuis said Mr. Giroux’s figures show that money could be cut from the federal budget without impacting services Canadians rely on.

“We hear this narrative from the Liberals that any cut, any reduction in spending, is going to impact service delivery,” Mr. Genuis said. “But this clearly shows there is waste within government.”

Restraining Spending

A Feb. 13 report by the Fraser Institute think tank said “government workers in Canada currently enjoy an 8.5 percent wage premium (on average) relative to comparable private-sector workers.”

The report’s authors suggested aligning government-sector wages with wages in the private sector as part of a strategy to provide savings and balance the budget.

The report, titled “A Case for Spending Restraint in Canada,” found that Ottawa “could balance its budget in one or two years with only modest spending restraint,” according to the news release. The release added that slowing the growth in program spending to 0.3 percent would result in a balanced budget by 2026–27.

Federal spending before the COVID-19 pandemic increased faster than the population and inflation, resulting in “a string of large budgetary deficits,” the news release said.

It noted that these deficits have contributed an estimated $941.9 billion increase in the gross federal debt between 2014–15 and 2023–24.

“This accumulation of debt, along with recent hikes in interest rates, has raised the cost of interest on the federal debt to one of the largest budget expense items,” said report co-author Jake Fuss, director of fiscal studies at the Fraser Institute, in the news release.

Along with adjusting salaries to align with private-sector wages, the report said reviewing business subsidies and addressing inefficiencies within the government might also reveal savings.