Congratulations on your election victory. You have earned the trust of Canadians to lead the country through one of the most challenging periods in our history. The public service is here to support your government and deliver for Canadians.
You take office having set out a platform of electoral promises as well as statements you made in numerous campaign appearances and interviews. These will be foundational to building the agenda of your government, and will soon have to be translated into laws, policies, programs and changes to the taxation and regulatory systems.
You can also sift for policy ideas through the recent wave of entrepeneurship from stakeholders, think-tanks, op-ed writers and podcasters and look for nuggets of gold among the dross. The public service will be able to help with due diligence and translating all these disparate and often conflicting ideas into implementable options your Cabinet can consider.
You will also be provided with scans and assessments of many other issues that will come across your desk, from events around the world, upcoming international summits and negotiations to upcoming court cases, sunsetting laws and programs, Auditor General chapters and appointments to be made.
The first set of decisions about how you structure your government will imprint on all subsequent decisions. You will be assigning the more than 300 federal government organizations to Ministers for the purposes of accountability and reporting to Parliament, and you have options to restructure some of the departments and agencies as you do so. You will also be determining who will have the levers of influence and decision making on issues that will arise.
The next set of important decisions will come with the first Budget or Economic Statement. Your decisions about taxes and spending priorities will shape the overall fiscal envelope for planning the rest of your mandate. You have the option of starting down the path of a spending review or a policy overhaul of the tax system right away or leaving that until later.
Part of your agenda should be the public service itself – not what it will be asked to do but how it works. You have the option of making the size and capabilities of the public service part of that initial Budget or waiting for another window to launch a renewal initiative.
Whichever timing you choose, you basically have two options regarding the public service– a passive agenda where issues come to you and your decisions gradually take you down a path – or a proactive agenda where you mindfully chart a course for the public service and spend effort and political capital to get there.
A PASSIVE AGENDA? THESE ISSUES ARE COMING AT YOU, LIKE IT OR NOT
Technology
The public sector is already well into another wave of disruptive technological change. You are inheriting the legacy of previous initiatives to incorporate digital technologies, more sophisticated and strategic approaches to data and information, and the early applications of artificial intelligence (AI).
You have inherited the legacy of an Open Government agenda, the 2021 Benefits Delivery Modernization program 2022’s “Digital Ambition”, the efforts in 2023 and 2024 by a Minister of Citizen Services, and the October 2024 Guidelines on the use of generative AI. You will have to decide how much ambition and financial investment to commit to this agenda.
You will soon have to decide whether you are willing to confront less comfortable issues raised by the emergent technologies, such as job reductions or changes to requirements for bilingualism as AI tools for translation and interpretation continue to improve. There will be a lot to learn, for better and worse, from how other countries are faring.
Collective Bargaining and Compensation
As an employer you are still at the bargaining table today with a few unions and will have to quickly be ready for another broad round of negotiations. The agreements signed after the strike of 2023 expire soon. Those agreements included commitments to work with public service unions on issues such as hybrid work and diversity and inclusion. The main bargaining issue this time is less likely to be about wages catching up to inflation and more about job security and the algorithm for layoffs, euphemistically called “workforce adjustment policies”.
There are other compensation issues where you will have to decide whether to stick to the status quo or pursue reforms. Performance pay for executives and Governor-in-Council appointees draws regular criticism from right wing journalists and union leaders and arguably needs a software update. The defined benefit pension plans are out of step with most of the private sector workforce, and the financing has drawn attention from the Parliamentary Budget Officer. There have been calls to provide more flexible bundles of non-salary benefits such as health and disability insurance. The sick leave plan is badly out-of-date with current best practices and needs replacement. There is a strong case to add retention and recruitment bonuses to the compensation toolkit to ensure key skillsets are acquired in a competitive labour market and reduce the need to hire contractors.
Diversity Equity and Inclusion (DEI)
You will have to choose between advice that the emphasis by your predecessor on DEI has gone too far and created “woke culture” and a drag on effectiveness, and advice that it hasn’t gone far enough. The status quo won’t likely hold for long.
Your predecessor failed to update 1980s vintage employment equity legislation after three years of consultations and you will need to decide whether to resume this effort. A starting point will be what to do with the 2024 report of the Review Task Force, and what to do with the DEI inspired changes in recent years that are now deeply embedded into procurement and many aspects of human resources management.
You will also have to decide how to respond to the next wave of legal challenges and advocacy by employee representative groups. While a class action launched by Black employees was not certified, some new legal action seems likely.
Productivity
Your predecessor launched a Task Force on Public Sector Productivity in 2024. You will have the opportunity to review their advice and to decide whether to invest further effort in this initiative. A serious approach to productivity would require delving into deep rooted issues where there are no quick fixes, including sluggish staffing and procurement, chronic underinvestment in training, the thickness of middle management, and badly neglected information management that hold back aspirations for digital government. To be productive the public service will have to move money, people and information around at a much quicker pace.
Procurement
Procurement of goods and services is the aspect of government operations in most need of early attention. Before the election the ArriveCan app procurement drew media and Parliamentary attention to the tangle of overlapping policy objectives and to shortcomings in oversight. The current political context will create pressures to procure faster, especially for defence and security, and to tilt procurement even further to Canadian sources. Those objectives are often in conflict. There is an old adage that among cost, speed and quality you can only pick two of the three. Procurement reform will be a big undertaking. The design and boundaries of any new procurement agency will be crucial to future success and is just the beginning of a bigger policy conversation. You should consider banning public servants from also acting as contractors.
A PROACTIVE APPROACH
The other path open to you would be to place the issues set out above in a larger frame and make public service renewal an explicit part of your agenda, worthy of serious attention and focus.
A comprehensive reset/renovation/renewal of the federal public service would address all aspects of what has made the public service what it is today and shape its future:
- The role of the federal government in our economy and society
- Intergovernmental boundaries and federalism issues
- Total spending and total operating costs
- Total headcount of the public sector workforce and its distribution across Canada
- Reducing program sprawl and complexity
- Structural issues in management layers and occupational groupings
- The toolkit for compensation
- Opportunities and challenges presented by AI and other digital technologies
- Enhancing productivity and effectiveness
- Strengthening capabilities needed for the future
- New machinery of government options
- Deep dives into the future of a few specific federal organizations
Why Comprehensive?
The alternatives are worse. Muddling through would mean a drift into mediocrity that will constrain your government’s success and further erode the trust of citizens.
Relying exclusively on attrition to bring down staff levels is a bad idea. In practice it means a slowdown or freeze in hiring that chokes off the recruitment of new talent and skill sets. It is a passive approach anchored in a random distribution of departures that is very unlikely to lead to having the right people in the right places. It foregoes the opportunity to strengthen functions or skillsets that are priorities for the future.
There is no avoiding the need to use layoffs and early departure incentives. There is no way to insource a lot of the work done by contractors and consultants without a substantial investment in training and development of the public service workforce.
Looking only at the body count or salary spend doesn’t take you very far without looking at the actual workflows. What are those people working on? Which programs, external services, functions, professions and internal services are more important than others? Where are they located?
The second worst approach is the traditional one of slicing operating budgets with flat across the board cuts. This also damages future capability. Without political cover to make deliberate changes to programs and institutions, organizations reflexively turn to reducing their spend on new hiring, training and upgrading of technology. The cumulative impact on the public service can be debilitating. During the campaign a distinction was drawn around spending that is for investment. The same thing applies to the public service. Spending on training and technology is an investment in future capability.
Past spending reviews have achieved savings targets but have fallen short of achieving serious reform. “Vertical” reviews that look at each department or agency separately forego the chance to look at boundary issues with other organizations and miss opportunities to prune overall program sprawl, reduce overlap, or renovate common internal processes. Vertical reviews treat the current machinery of government as a fixed constraint and miss the opportunity to make structural changes that create new organizations better fit for purpose.
Functional or “horizontal” reviews that cut across organizations have been useful in reviewing common cost centres such as real property, advertising, vehicle fleets, fixed assets, or common administrative services such as security clearances, translation and interpretation, legal advice, human resources, or finance. These horizontal reviews tend to disadvantage the many smaller organizations or departments with thinner operating budgets. They are usually driven by arbitrary savings targets and rarely result in investment to build future capabilities. Functional reviews today would be more successful if explicitly linked to the emergence of AI and other tools to augment services.
Looking to the Future
It is possible to get to a public service that is smaller, flatter, more productive, agile and capable. The way to get there is a mindful proactive approach to pruning and renewal that is as comprehensive as possible.
The big difference with the spending resets of 1995 and 2012 is that AI and other digital technologies are already flowing through many occupations and functions. There will be opportunities to harness them to assist and augment the work of public servants. However, there has not yet been a candid conversation with a largely unionized workforce about how change will impact the number of staff and the training they will need. Any reset of the federal government in 2025 must incorporate the impact of AI and digital technologies into the discussion and the potential to transform not just external services but especially the internal workings of the public service.
Broad spending reviews don’t usually provide the setting for a deep dive into what should be done to renovate a specific federal entity. Examples where this is arguably needed, if not long overdue, include the RCMP, the CBC, Canada Post, and the Coast Guard. There is also a policy case to renovate the civil defence role of the military and to create new foreign intelligence capabilities. It is also time to review the constellation of central agencies (PCO, Finance and Treasury Board) to make sure they are still fit for purpose. Each renovation is worth taking the time to do it right.
The Climate Change Analogy
The best way to get to a smaller, leaner, flatter and more focused federal public sector is not through short term measures and ad-hoc reforms. It would be to set an ambitious medium range target and let smart people work the problem and innovate, especially with technology and processes.
The analogy could be something like a “20 by 30” target. You could set a goal to reduce the size of the civilian federal workforce by 20 percent by 2030. You could also set a target for the share in the National Capital Region. Currently that share is just over 40 percent. You could set a medium range target of “one third in the capital” to serve as both ceiling and floor and plan to spread federal jobs and presence more widely across Canada.
Then within those macro parameters for size your government should attack programs, functions and structures simultaneously. It would be a mistake to aim for a quick harvest of savings. Instead, a serious reform would make allowances for adjustment and implementation costs if the direction toward the medium-term outcome is right and progress is being made.
There would be many ways to set up a path to success. Lessons from the past are that it would be essential to make sure there is constant engagement and a robust change management strategy because resistance is inevitable, from within and outside the public service.
Canada seriously underinvests in generating a supply chain of ideas and innovations related to the biggest most complex set of institutions in the country. If you are to avoid piecemeal incrementalism and overcome inevitable resistance you will need to strengthen that supply chain.
You should revive the Advisory Council on the Public Service, create a new Parliamentary Committee focused on capabilities and readiness for the future of the public service, create an Advisory Body specific to technology in government, and create an innovation fund to stimulate research and debate.
The public service cannot reform itself. It will need help from political leaders who will be ready to provide focus and direction and to own and defend the difficult choices that will have to be made. It is your public service now.
