00:49I will see what's in it before I support it or not.
00:52But, as I said, I don't see how.
00:56I do not.
00:57I cannot see how we could support a budget which is first based on some taxes reductions, electoral gifts, and some fantasies in many regards.
01:12I cannot support that.
01:14So, what might operational spending cuts look like?
01:18Can the Prime Minister square the circle of significant spending while balancing the government's operational books?
01:23With me now to discuss just that is the former clerk of the Privy Council, Michael Wernick, and former parliamentary budget officer, pardon me, Eve Giroux.
01:30Mr. Wernick, Mr. Giroux, it's a pleasure to see you both.
01:32Thank you very much for making the time.
01:34My pleasure.
01:34Thank you, Mr. Wernick.
02:04I just wanted to present the government who will also be more effective.
02:08So, my focus is more on where are we going to land in two or three years.
02:11We want a smaller public service.
02:13That's fine.
02:14But I think we also want to pay attention to its long-term capabilities.
02:16attention to its long-term capabilities.
02:20And I want to ask you about the details of how that can be navigated in a moment.
02:23I just want to bring Mr. Giroux in and ask you, I guess, from the perspective of someone
02:27who has analyzed the growth of the public service.
02:29We kind of talk about it in a very political sense, but in a more numbers-based way, how
02:35much has the public service grown, let's say, from pre-COVID to post-COVID to now?
02:40Well, it's grown from about 340,000 full-time equivalents in 2014-15 to close to 440,000
02:49full-time equivalents as of, I think it's last year, March 2024.
02:55That's the latest numbers I have.
02:57So it's grown by over 100,000 full-time equivalents in a span of 10 years, which is very impressive.
03:04And that suggests that there is potential for reducing the size of the public service.
03:10But it will all depend on how it's done and where it is done in order to minimize the
03:16impact on service to Canadians.
03:19And that will be a very fine balance to find.
03:23Well, that's exactly where I want to take the conversation, how to strike that balance
03:28or how to navigate that path.
03:30Mr. Wernick, the political discussion so far has talked about, will it be cuts?
03:34Will it be attrition, a cap, all that kind of thing?
03:37You have written that attrition is the worst way to go about it.
03:40Why do you think that is the case?
03:41Well, attrition is just relying on a passive pattern of who dies, who gets sick, who takes
03:48retirement.
03:49It's not going to end up with a public service in the right people in the right places.
03:53I would work backwards from what kinds of services and functions you want to offer Canadians, and
03:58then you make sure the people are in the right place.
04:01If you want to reduce the overall personnel complement at the same time, that's fine.
04:07But you can't just wait for people to leave.
04:09I think you have to mindfully, proactively put people where you want them to be.
04:13There are parts of government they want to bulk up, parts they're willing to cut.
04:17That requires a much more proactive strategy.
04:20And I would rather than rely on waiting for people to leave, I would do what we've done
04:25in the past, and the private sector often does, which is incentives for people to leave early
04:30and prepay some of that attrition.
04:33So I have heard that that is on the table, something that's being discussed, if I could
04:37follow up with you, Mr. Wernick.
04:39What about the idea that that could have some of your more experienced people head out the
04:45door at a time when you are facing this crisis and might need that?
04:50Are there other ways to go about reducing numbers that wouldn't see a commensurate loss
04:56in experience?
04:57Well, what they're doing now is they're cutting off the supply of new talent.
05:01It's the younger, the people that have arrived in the last few years are not being renewed.
05:06The students I work with are not being hired.
05:08So there'll be a loss at the younger end of the public service.
05:12And it's a difficult trade-off.
05:14You obviously want some of your experienced workers.
05:17But if we're in this situation, where you really want to dramatically downsize, I would
05:21take measures to preserve as many jobs as possible of the young, diverse, digital part
05:26of the public service, because they're the ones we're going to need for facing the future.
05:33Mr. Giroux, just jumping off some of that, and in particular around the idea of attrition,
05:38the government has been explicit about the scale, at least in their campaign, during
05:43the campaign, of what they would like to see reduced, right?
05:45Essentially, over a three-year period, $15 billion of what they have classified as
05:50excess spending on the operations of government.
05:54Can that be accomplished through solely attrition or some idea of a cap, though they haven't
06:00even defined really what they mean by a cap?
06:02Is that on salaries?
06:03Is that on people?
06:04That kind of thing.
06:05What is realistic?
06:06Well, I don't think that can be achieved through attrition just based on the numbers.
06:12And even if it could be done through attrition, I don't think, as Mr. Wernick said, it's desirable,
06:17because people will retire and will leave the public service in sectors where you don't
06:22want to see reductions.
06:24For example, RCMP officers will leave the force and you probably want them to be replaced.
06:30Same with border service, the CBSA, you want border officers to be on a full contingent.
06:37Food Inspection Agency, the Coast Guard, so there's a number of examples where you want those departing
06:43to be replaced, to maintain a good level of service to Canadians, maintain the safety and security of Canadians.
06:50So even if it was mathematically possible to reduce the size of the public service solely through attrition,
06:58it's not desirable because that leaves gaps where you don't want gaps.
07:02And that leaves parts that may be ripe for reductions relatively untouched or not reduced as much as there should be.
07:11So that's why it's very easy from a management perspective to rely on attrition,
07:17but it's probably the least efficient way of reducing the size of the public service in the short term,
07:24but also in the medium and in the long term.
07:27I remember joining the public service in 1995, a year where there were deep cuts and these effects,
07:34the effects of these cuts, as well as the reduction in the intake of new public servants was reduced.
07:42And that left impacts for years and years where there was a big gap in talent rising through the ranks
07:50because of the impacts of these cuts and the hiring freeze.
07:53So if the government wants to do it that way, it's certainly not the best and the most efficient way of doing.
07:59Instead, as Mr. Wernick said, they should identify areas where they need to prioritize employment and an active public service
08:08and reduce other areas that are deemed less or lower priorities.
08:14What are the stakes, Mr. Wernick, of not getting the balance right?
08:19I think there's this, again, like political discussion going on about a bloated bureaucracy and, you know,
08:26things getting out of hand after COVID and things like things like that.
08:29And again, that's very political.
08:30But like for people who are at home who rely on many government services, like what are the stakes of getting it wrong?
08:35Well, you're going to have to make choices.
08:37Every single one of those employees and 60 percent of them are spread across the country and not here in Ottawa.
08:43They're attached to a program, a service, a function, a profession, a location.
08:47So I think governments can't duck their responsibility to make those choices.
08:51I think the other factor that people will notice is, unlike 1995 or 2012, you know, the other big downsizing that even I went through,
09:02this one's taking place with the backdrop of AI.
09:04And AI is changing professions and occupations right across the economy and certainly within the public service.
09:11So I think you also have to layer in technology and equipping people, you know, with AI tools to do their jobs.
09:18And I've also called for a doubling of investment in training.
09:21If you shed 20 percent of the workforce, let's increase the training and the technology and the tools to the 80 percent that stay.
09:28Mr. Giroux, final question to you, and it's about the budget in particular, just because this entire discussion is framed against that backdrop.
09:37We're a month less a day away from the budget dropping.
09:41Do you agree with the person who's replaced you that we're on the precipice of some kind of fiscal cliff?
09:48Well, I would probably personally wait until we see what's in the budget before making such a statement.
09:55I think for my part, it's a bit premature, but my predecessor, my successor, sorry, said what he said.
10:02So he probably has maybe has different information.
10:05But from what I see and from the information that I've been exposed to, I would rather wait until the budget is stable to see exactly what the fiscal track looks like for the foreseeable future.
10:17What types of measures the government wants to implement on the spending, but also on the revenue side that may or may not plug the fiscal gap that we're expecting to see.
10:29So we'll have a much better idea of that on the evening of November 4.
10:36Fair point. I hope I can lean on both your expertise following the introduction of the budget.
10:40I appreciate making the time for the conversation today. Thank you.
10:43My pleasure. Thanks for your interest.
10:46Thanks so much, Mr. Wernick and Mr. Giroux.
10:48When we come back today, tensions between Russia and the West are spiking.
10:51European leaders are warning that Moscow is stepping up hybrid warfare activities on the continent, while Vladimir Putin is dismissing those claims as, quote, hysterical.
11:00I'm going to speak with the Prime Minister of Estonia, Kristin Mikal, after a short break about just that.
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