Shrinking the Size of Government is No Longer an Option – It’s Required

Atlantic Canada is facing serious challenges and we no longer have the option of kicking the can down the road. The demographic tsunami is upon us, and there is a looming financial crisis in that wave. With an aging workforce, there will be fewer potential workers and a shrinking tax base. This is compounded by higher demands on healthcare, the single greatest cost driver of provincial budgets.

With a greater tax load, borne by fewer workers, something’s gotta give and part of that that something is the civil service. The cost and size of governments have continued to increase in Atlantic Canada at an unsustainable rate. I would also challenge anyone to demonstrate how a 60 percent increase in spending over 15 years has created commensurate improvements in our government’s service delivery for citizens.

This week, CFIB released Winter is Coming, a report designed to encourage governments to get their spending in check, not just to balance budgets in the short-term, but to be able to provide priority services for the next thirty years.

Last month the Parliamentary Budget Office released its Fiscal Sustainability Report for 2017 and there is some downright scary stuff in there for Newfoundland and Labrador, but the picture isn’t much rosier for the other Atlantic Provinces. The fiscal policy for three of the four Atlantic Provinces is described as “unsustainable” with only Nova Scotia squeaking by with a sustainable assessment that is “sensitive to alternative demographic and health spending assumptions”. In other words, don’t bet your farm on it.

Spending

In spite of organized labour’s protestations of “austerity” budgets, Provincial government expenditures have grown at roughly double the rate of inflation. What this has left us with is some of the highest taxes in the country, three of the top five largest public sectors per capita in Canada and four of the five highest percentages of public sector compensation as a share of overall compensation.

working age residentWith our aging workforce, however, there may be great opportunity to press the reset button on our public service. A recent CBC report noted 1 in 4 civil servants in Nova Scotia will be eligible for retirement by 2020. Attrition may provide an important opportunity to reduce the cost of government and return to some level of sustainability without creating an undue hardship on public sector workers.

Government is currently exploring new service delivery methods which will allow for renewal and reduction in the size of the public service. New accessibility legislation is also providing an opportunity for the government to begin shedding excessive, redundant or unnecessary full-time employees (FTEs) through greater use of technology.
Reducing the need for people with mobility challenges to interact face-to-face with the government for routine renewals, permits, licensing or payments through online and mobile device applications will be a welcome relief for many and an enormous cost saving for the government.

The reality is we are also moving into an era where our mantra will be less about finding jobs for people and more about finding people for jobs. Weaning our society off the largest per capita public service in Canada will also free up workers for a private-sector where employees will be in high demand.

The discussion around reducing the cost of government has to move from restricting spending growth to an actual real reduction in spending. Finding technological efficiencies is only one tool. There are real opportunities to be explored in regional cooperation and resource sharing between provinces.

While it needs to be acknowledged New Brunswick has taken steps to reduce the per capita size of its public services in the last couple of years, the region, as a whole, remains well above the Canadian average.

The problem is serious and the problem is upon us. Government leaders must have the courage to acknowledge its severity and presence and take meaningful steps to correct it.

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