This article was published in the Globe and Mail on Dec. 19, 2024

In the United States, Tesla’s Elon Musk will soon be co-heading the new Department of Government Efficiency with the goal of slashing federal spending. While we likely won’t have a flashy tycoon in such a role in Canada, similar cuts loom here.

Cuts to the federal public service are coming, first to meet some fiscal targets, as recently announced by the Liberal government, then probably on a much larger scale under a future Conservative government.

Regardless of which party makes the cuts, lessons from the past suggest they will mostly make across-the-board cuts in operating budgets, since no government would dare cut programs that benefit people or businesses. The hope is that reducing the number of civil servants will unleash productivity gains, allowing the government to accomplish the same goals with fewer people.

However, experience shows that while staffing cuts may achieve short-term fiscal gains, they will create long-term unintended consequences. Across-the-board reduction exercises tend to concentrate on the less visible parts of government programs such as research, documentation and risk management, as ministers will want to limit the public visibility of the cuts. This ends up making programs less effective over time and at risk of disruptions.

Moreover, the most effective programs are not necessarily those requiring fewer civil servants. For example, separate programs targeting individual sub-groups (Indigenous communities, people with disabilities, etc.) are more effective than one program that paints everybody with the same brush. But the first approach requires more civil servants. By having a greater impact on programs with a greater number of public servants, across-the-board cuts could hurt the most effective programs more, reducing government’s effectiveness as a whole.

Any serious political party wanting to reduce thesize of the government should let Canadians know which programs and objectives they want to cut. But this takes political courage.

Every program should be adequately evaluated on its ability to deliver its objectives and demonstrate that those objectives are still relevant. Because it is difficult for politicians to admit that their pet programs, announced with great pomp and ceremony, are not working, this evaluation should be done outside the bureaucracy, not within the responsible department, as is the case now. There is perhaps some wisdom in a body such as Mr. Musk’s – which is really just an advisory commission, not a department – but with a totally different reporting structure and objective and certainly not with someone like Mr. Musk in charge. Some people suggested creating an “evaluator-general” who could sit with or between the auditor-general and the parliamentary budget officer to inform decisions on what to cut.

Across-the-board cuts would not solve either of thetwo problems plaguing the public service: low-quality leadership and a lack of trust between the people of Canada, their elected representatives and public servants. Concerns that public servants may not always act in the best interestsof the people (or their elected representatives) are being addressed through an overt politicizationof the public service – something we see happening at warp speed under the incoming U.S. administration.

But there is a better way. In the private sector, any potential conflict of priorities involving shareholders, the board and employees (called the principal-agent problem) is addressed by aligning priorities through transparent accountability metrics: Profitability is the mot d’ordre everybody must act on, and shareholders can quickly see whether employees are delivering or not.

Accountability metrics can also work in government. The debt reduction and inflation targeting of the mid-1990s were successful largely because debt and inflation are observable, accountable metrics that aligned priorities. However, governments have multiple and sometimes conflicting priorities, such as economic growth, inequality and sustainable development. Priorities can be set through the democratic process, and various metrics (e.g., the poverty rate, greenhouse gas emissions) can make the government accountable to deliver on them.

Federal departments do publish annual reports assessing their actions against some metrics, but these metrics are often chosen because they are easy to meet and not informed by a comprehensive framework and public input. Few players outside the bureaucracy look at these metrics, and follow-ups and repercussions for not meeting them are rare.

Discussions about priorities, the evaluation of progress using valid metrics and decisions on which programs to cut or create to advance priorities – informed by the evaluator-general analysis – are what budgets should be about (results-based budgeting). Not just a list of soundbites and a disjointed launch of new measures.

Cutting the public service without rethinking how policies are chosen will achieve nothing good. Moving from the Liberals to the Conservatives may just move us from niche programs to niche tax breaks without any amelioration of the societal outcomes.