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AFB 2024: Public services

Alternative Federal Budget: what the federal government could achieve on public service

August 24, 2023

10-minute read


The federal public service is the institution that makes the government work. Public service workers implement government priorities—including finances, defence, taxes to fund operations, benefits for Canadians of all ages, economic development, natural resources stewardship, climate mitigation and much more. Without its operational capacity, the government would just be a group of elected people talking—equivalent to trying to build a house without any tools or materials. If the institution is going to work, then it must be healthy. This chapter recommends important actions that the government should take to improve the health of public service.


A healthy public service is a place where people want to work—where all jobs are decent jobs. It pays its employees a decent wage and it pays them on time and accurately. It is a model employer that prioritizes rectifying systemic inequities and harmful workplace cultures and prevents them from occurring in the first place. It encourages innovation and upward advancement within its own ranks and provides the resources for workers to do so. It embraces taking on the work that is necessary to achieve employment equity. It has a holistic, government- wide strategy to staff and resource all programs so that workers have the tools and capacity to do the best job possible for Canadians.

For now, however, the federal public service in Canada is struggling.

In the recent Public Service Employee Survey, 23 per cent of those surveyed—just over 43,500 workers—reported having experienced pay problems in the last year, seven years after the Phoenix pay system was introduced. A full 65 per cent indicated they have experienced some level of stress around whether or not their pay is accurate, and the consequences if it is not.

Class action lawsuits have been launched by employees against the federal government, claiming ongoing systemic discrimination. Government officials regularly contract out government work. And we’ve clearly seen in the last year that the federal government has no strategic staffing plan. As a result, many departments and programs are understaffed and vacancies are left unfilled.

The size of the public service

The size of the public service, on a per capita basis, is now at the same level that it was before the draconian Harper cuts and remains significantly below 1980s and 1990s levels. As clearly demonstrated since the onset of the COVID-19 pandemic, Canadians and provincial, territorial and municipal governments are regularly calling for greater federal intervention. Even corporations are looking to the government for programs and supports to create stability in supply chains, trade corridors and so on. Public service workers do this work.

The Canadian population has grown and it will grow more because of increased immigration. The AFB believes that the size of the public service ought to be determined by citizen requirements and not by ideological assumptions that are most often divorced from reality. More Canadians mean that more service delivery is necessary, and more service delivery requires more workers for the provision of immigration services, Employment Insurance, veteran’s benefits, pay administration, and IT services, just to name a few.

Despite this increase in work, the 2023 federal budget announced cuts, promising a three per cent reduction in departmental and agency spending by a cumulative $7 billion between 2024-25 and 2026-27, with $2.4 billion ongoing savings from 2028-29 onwards. Crown corporations are expected to cut another $1.4 billion over the same period of time. In addition, the budget announced unidentified spending cuts of $6.4 billion of “unallocated” spending.

Consulting and contracting out

The 2023 federal budget also promised to reduce spending on consulting, professional services, and travel by 15 per cent, reducing spending by $7.1 billion over five years. This is a small portion of existing consulting services, which have grown to more than 36 per cent of what the government spends on its public service workforce.1 The budget further indicates that most of this reduction will be in “management consulting services” but fails to indicate how it will increase capacity in departments to continue this work.

Additionally, this cut doesn’t address the exorbitant amount of contracting out of non-management work. Private contractors are paid far more than the salary costs of public sector employees to do work such as cleaning, food preparation, general labour, skilled trade work, data entry, administrative services, facility maintenance, call centre work, processing ATIPs, case management. This costs the government more while providing poorer services.2 And while the contracting companies may be making more money, individual workers in these contracts are usually making low wages, have few benefits and little job security.

Past AFBs have called for decreases in contracting out and consulting, but the 15 per cent decrease proposed by the government is likely not enough. Consulting and contracting out services undermine the health of the public service. It prevents governments from evolving the capabilities they need to transform our economy for the common good and accelerate a green transition. Consulting services are often too non-specific and general, while the workers doing the work already know what needs to be done and, if not, they should be trained so that they do. Consultants become the default and hollow out the public services that they are supposed to complement.3

There is no more poignant example than the disastrous Phoenix pay system. If public service workers had been allowed to lead and guide the Phoenix pay exercise instead of the cascading levels of contractors, a pay system that after seven years retains a backlog of 222,0004 pay issues with financial implications would not have been created. The most recent Public Service Employee Survey (PSES) shows that public service workers are still experiencing significant issues and the stress that goes along with such economic insecurity.5 They are concerned that any changes in their job within the government will lead to further pay discrepancies. This level of stress and uncertainty is not reflective of a healthy workforce.

The German public service has eliminated significant contracting out and has created value (financial and innovative) by forming its own in-house consulting firm for instances when public service-based expertise is required by other government entities.6 This approach would allow the Government of Canada to build the capacity to handle issues such as the internal analysis of workplace toxicity and harassment at the Department of National Defence. Department officials contracted McKinsey to do this work because, to paraphrase what the minister said in committee testimony at the Government Operations Committee of the House of Commons, she didn’t trust anyone within her department to do such analysis, knowing that the entire department was suspect.7 Instead of existing in silos, a holistic approach to government management with in-house expertise would solve this gap. Proposals have also been made to create temporary in-house help within the Canadian federal public service, akin to the typist pools of old, which would significantly reduce the use of temporary help agency services by the federal government, as recommended by the Human Resources committee of the House of Commons several years ago.8

Whistleblowing legislation reform

The health of the public service is also compromised by existing whistleblowing legislation that is designed to punish workers who whistleblow and, overall, to discourage whistleblowing. Canada currently has an embarrassing record on whistleblowing legislation, making international news.9 Legislation before the House of Commons seeks to make a small, but important, change by extending what meagre protections currently exist for contract workers.10 An internal review is underway to amend this legislation and give it teeth, but the review committee can only make recommendations to the government. While we question the need for yet another review while not acting on previous reviews, the AFB would accept the committee recommendations and would amend the legislation to reflect the improvements.11

Reform of the Public Services Relations Act

The Federal Public Service Labour Relations Act (FPSLRA) is the labour legislation that governs this sector. The FPSLRA unjustifiably restricts access to collective bargaining, and it hinders free and fair collective bargaining for those federal public sector workers to whom that access is provided, creating unacceptable delays in bargaining and in the grievance process that are and out of step with other labour legislation across jurisdictions. As is often said, justice delayed is justice denied—and federal public sector workers are regularly denied justice under this Act.

This AFB would conduct a comprehensive review of the FPSLRA, with an eye to making amendments that eliminate the discrepancies in legislation and provide federal public service workers with measures and protections that are afforded to other workers. Furthermore, this legislation does not say that workers must be paid properly—an omission that has far-reaching implications in light of the Phoenix pay disaster.

Artificial Intelligence and automated decision-making

AI and automated decision-making are being adopted in almost all federal departments to a greater or lesser extent. Although this transformation can sometimes have positive effects for both workers and Canadians, if not carefully regulated it can also have negative effects.

In other jurisdictions, AI decision-making is riddled with instances of unfairly denied benefits and lack of citizen recourse.12,13,14

Typically, the introduction of AI in federal public services is accompanied by equivalent cuts in federal public sector personnel. Although proponents argue that it leads to better jobs, it almost always cuts jobs too, especially when introduced by governments with an austerity agenda.

Moreover, it’s very difficult to appeal findings of an algorithm, especially if there is limited capacity for human intervention. A worrisome example, Bill C-47, the Budget Implementation Act, makes changes to the Customs Act that will permit the replacement of border officers with kiosks or similar automation. This gives reason to expect scenarios of discrimination as well as security breaches at borders.

Treasury Board’s Directive on Automated Decision Making can be a tool to promote transparency, accountability, and fair and inclusive treatment of members of the public, as well as public service workers.

Departments entertaining AI solutions must conform to its requirements, however. The government must ensure that departments and agencies that deviate from the directive’s requirements are subject to the most serious penalties possible under the Financial Administration Act.15

The directive opens opportunities for unions that are impacted by AI to be consulted early in the process. Departments and agencies must not squander this opportunity to ensure that automation strategies are informed by the workers who do the work.


The AFB will implement a legislated analytical process to objectively determine the adequacy of public service staffing levels. Analysis must prioritize the populations that are being served and the needs of those populations. This should be determined by transparent consultation with all stakeholders.

The AFB will create an independent and non-profit consultation body in the federal public service to provide services that are currently provided by contracted private consultants. Outside contractors will not be engaged unless this body determines that it does not have the skills to complete the work. In situations where the body comes to this conclusion, it will immediately take steps to create those skills internally.

This AFB will implement a comprehensive review of the FPSLRA, with an eye to making amendments that eliminate the discrepancies in legislation and provide federal public service workers with measures and protections afforded to other workers. It also recommends including language that ensures that the government pay workers properly and on time.

The AFB will ensure that the recommendations of the current internal review of the Public Service Disclosure Protection Act (PSDPA) be adopted and that the Act be amended accordingly.

The AFB will create resources within the Treasury Board to communicate all steps in the automated decision-making proposal process to all stakeholders or stakeholder representation groups as early as possible and in strict accordance with the terms of the directive.

The AFB will fully fund settlements for the Black class action ($2.5 billion) and the Indigenous class action ($25 million) suits. It will establish an equitable representation policy for executive and management positions to address the under-representation of Indigenous, Black and other racialized federal employees in these positions, and it will address all forms of oppression within the federal public service, making anti- oppression and discrimination training mandatory for all employees and managers.

The AFB will support the decolonization of the federal public service. The colonial practices that are embedded within the structure of the federal public service make the already challenging goal of reconciliation even harder to achieve. The AFB will take tangible steps to deconstruct these practices with initiatives that include: hiring more Indigenous workers and decision-makers, giving prominence to traditional Indigenous languages as a staffing requirement over colonial languages, requiring all public servants learn about Indigenous issues, regardless of their function, creating an Indigenous centre for learning staffed by Indigenous employees, decentralizing decision-making and creating funding mechanisms that give full authority to Indigenous communities.

The AFB will provide sufficient funding to recruit, train and retain enough compensation advisors to reconcile all public service pay problems within a year and prevent problems moving forward, prioritizing ensuring that employees are compensated for pay discrepancies before pursuing overpayment recoveries. The AFB will ensure that funding is sufficient to pay all of its employees accurately and on time.

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