Federal Payroll Hit Record High in 2023 at $67B

Parliamentary Budget Officer Yves Giroux waits to appear before the Senate Committee on Banking, Commerce and the Economy, Sept. 27, 2022 in Ottawa. The Canadian Press/Adrian Wyld

The total cost of federal employee salaries and benefits reached a new high of $67 billion in the past year, says Parliamentary Budget Officer Yves Giroux, marking a 68 percent increase from $40.2 billion in 2016.

Mr. Giroux highlighted the growth in payroll costs in a Feb. 22 report titled “Supplementary Estimates (C),” as first covered by Blacklock’s Reporter. The report said the costs have been expanding at an average rate of 9 percent annually alongside an expansion of the federal workforce, with 428,000 employees in the last year compared to 340,461 in 2016.

Mr. Giroux expressed concerns during his testimony before the Commons government operations committee on Oct. 19, 2023, over the payroll expense growth, emphasizing the absence of corresponding improvements in services for Canadians despite the increased hiring.

“Should we be worried that spending on hiring is going up even though the impact on service leaves something to be desired?” Bloc Quebecois MP Julie Vignola asked Mr. Giroux at the meeting.

“Since about 2016, the number of public servants has gone up dramatically, and payroll spending has gone up proportionally in part because there are more employees and in part because compensation is higher,” Mr. Giroux responded.

“What we haven’t seen is significant service improvements,” he added, “so, yes, that worries me a lot.”

When questioned by New Democrat MP Gord Johns on potential budget cuts, Mr. Giroux said that the impact of possible reductions in the public service had not been evaluated.

“We have not looked at the impact of potential reductions in the size of the public service—for example, where those would be, what they would look like, and what their impact would be on services,” said Mr. Giroux.

“It is something we will consider doing in 2024,” he added.

Mr. Giroux, in a Senate national finance committee testimony on Feb. 7, 2023, described the federal public service system as “broken” and called for corrective measures.

“There is a system that is broken,” he said, responding to a question on how to improve departmental results from Senator Larry Smith.

Giroux said federal cabinet ministers “are not very well equipped to challenge their own officials” and that departments often lack accountability.

“We end up in a situation where it’s public servants responsible for delivering programs that set their own targets, and they usually set the bar not too high so that it doesn’t look too easy, but neither too low, so it’s fairly easy to achieve most of the time,” Giroux said.

“But yet by their own assessment, they fail to deliver upon many of these.”

He went on to criticize the government’s inability to effectively manage departments and accused it of using Departmental Results reports to hide poor performance.

According to Giroux, the process for setting targets within these reports is flawed, as it allows public servants, including assistant deputy ministers and deputy ministers, to set their own benchmarks without adequate oversight from ministers.

This practice, he argued, leads to mediocre targets that are easily achievable, highlighting a systemic issue in government accountability and performance evaluation.