From the left: Elon Musk, Donald Trump and Vivek Ramaswamy.ALAIN JOCARDCHARLY TRIBALLEAUAND/AFP/Getty Images
Allan Lanthier is a retired partner of an international accounting firm and has been an adviser to both the Department of Finance and the Canada Revenue Agency.
The American people have spoken, and the United States and its allies must now deal with the consequences. With the election of Donald Trump as president, the U.S. may abandon its role as leader of the free world. Tax breaks may favour corporations and the wealthy. And the U.S. may retreat into economic isolation, becoming a country that prefers tariffs over trade.
None of this bodes well. But there is one issue where Canada can learn something from Mr. Trump: his focus on smaller government. And while federal government size may not in fact be a problem in the U.S. – Mr. Trump’s protests notwithstanding – it is in Canada.
In the U.S., more than 85 per cent of government employees work for state and local governments (the same is true in Canada). Still, the U.S. federal government employs about three million people, around the same number it had in 1945 with a much smaller population. Mr. Trump says he will create an advisory commission, the “Department of Government Efficiency,” in part to slash that number.
Curiously, the commission will have two leaders, not one, hardly a model of efficiency: multi-billionaire Elon Musk, and entrepreneur and former presidential candidate Vivek Ramaswamy. They say they want to eliminate up to 75 per cent of the federal work force and cut annual government costs by at least US$2-trillion.
Is this realistic? Of course not. But let’s take a look at Canada.
Unlike the U.S., Canada does have too much government. In 2023, the Organization for Economic Co-operation and Development reported that, for all levels of government, public-sector employment in Canada as a share of total employment was 20.7 per cent, compared with an OECD average of only 18.6 per cent. The U.S. was at a relatively modest 15 per cent.
Federally, Canada’s bureaucracy has ballooned by more than 43 per cent under Justin Trudeau’s tenure as Prime Minister, to 368,000 employees in 2024 from around 257,000 in 2015. Head count increased in 87 of Canada’s 93 federal departments and agencies, often significantly.
For example, the Canada Revenue Agency grew to more than 59,000 employees from 40,000, an increase of close to 50 per cent. Even so, there is little evidence of additional revenue being collected from tax avoiders, and it is often difficult or impossible for tax-compliant Canadians to even speak with a CRA employee when simple questions arise.
And who is responsible for this government bloat? Where exactly does the buck stop? The answer isn’t obvious.
The Treasury Board is the employer of the federal public service and its president is cabinet member Anita Anand, who double shifts as Minister of Transport. But the last comprehensive review of the civil service – Blueprint 2020 – was carried out by the Clerk of the Privy Council, Canada’s top civil servant.
Blueprint 2020 was launched in 2013, and was heralded by the government as “a first-of-its-kind transformation initiative” that would fundamentally change the way the public service does business. One of its stated goals was to create a “lean, nimble, motivated and high-performing Public Service.” Clearly, that goal has not been achieved.
There is no question that a strong and robust public service benefits any democratic country, both socially and economically. But economists have concluded there are limits: Excessive government intervention can stifle productivity and economic growth without any significant, additional social benefit.
In its April budget, the federal government said it would eliminate 5,000 government jobs over the next four years, primarily through attrition. Earlier this month, the Public Service Alliance of Canada – one of Canada’s largest unions – warned its members that the government intends to go further, and will be terminating some employees as part of a spending review initiative.
However, details of the initiative have not been released, and decisions on how to reduce spending – whether by attrition, termination of employees or contractors, or otherwise – appear to be in the hands of each department and agency.
There is no need to make Canada great again – we already are. But there are issues that need to be addressed, and one of those is the public sector. Canada needs to significantly reduce the size and scope of the civil service, and make it more accountable to the Canadians it serves.
The Prime Minister should appoint or empower a cabinet member whose sole responsibility is to do exactly that.