Create A More Productive Government

Background and Motivation

Canada faces urgent and difficult decisions. Canada now has the lowest real GDP per capita growth in the G7¹. At the same time, federal government spending has ballooned in real terms over the last decade – increasing 45% from 2014 to 2024². Interest payments on national debt accounted for almost 10% of total federal government spending in 2024³. Our productivity has stagnated, our debt is climbing, and our economy is under threat from a trade war with the United States. 

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In addition, services delivered by the federal government are not meeting the standards Canadians expect or deserve. Less than 16% of Canadians feel they get great value from government services⁴. Policy experts, including former senior public servants, have been ringing alarm bells about challenges confronting the public service, highlighting the need for a reset^5,6. Dissatisfaction with service quality and value is leading to a growing lack of public confidence in government capacity and capability. 

In this context, it’s time to refocus. For our federal government, amongst other things, this means re-evaluating programs that may no longer serve Canada’s best interests. This process must be done urgently and with transparency. It should be led from within the government by courageous political leaders and with support from our public service. It should be informed by external experts from all parts of our economy and leverage the best talent and technology in the country. 

This memo offers some ideas for how to get started. It describes the approach that a program review should take and the ways Canada can start to increase productivity in government. Then, it looks at a series of specific decisions that could increase government efficiency, including identifying $35.1B in potential annual program and operational savings. This is nearly 7% of actual spending and over 50% of the $61.9B operating deficit in FY 2023-24. While more is likely necessary, this offers a relatively modest starting point. The complete line-by-line analysis is available here.  

Implementing this plan would mean making hard choices about priorities. But by making tough decisions now, we can ensure the social programs that Canadians value most – like health care, dental care, child care, children's benefits, and benefits for seniors – remain fully funded, while maintaining our commitment to core federal functions like defence and security. 

There may be some ideas in here that you disagree with. There are likely things that have been missed. There may be things you’d do differently. That’s okay. The intent is to start the conversation and outline a process and potential opportunities for adjustment that the government can consider. Now is the time for rigorous assessments and tough decisions. Canada’s economy depends on it.

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Real World Solutions

• Canada’s Program Review in the mid-1990s shows how we’ve tackled fiscal challenges before. With a $42B deficit and debt consuming 30% of spending, the Chrétien government launched a comprehensive review guided by six key questions, including whether programs served the public interest and required government involvement⁷. Unlike earlier across-the-board cuts, departments were assessed against clear criteria, with reductions based on strategic importance⁸. By cutting inefficient programs and protecting core services, the government eliminated the deficit two years early and delivered over a decade of surpluses. Federal spending fell from 17% to 12% of GDP in just six years⁹.
• Sweden’s Fiscal Consolidation in the 1990s shows how a country can recover from a crisis through targeted reforms. Facing a 6% GDP drop, 12% unemployment, and debt at 78% of GDP, Sweden implemented an 8% of GDP fiscal adjustment¹⁰. Rather than broad cuts, programs were assessed for public value¹¹. Sickness benefits fell to 80% of wages, pensions shifted to defined contribution, and the banking sector was restructured—while core welfare protections remained. In five years, the budget swung from -11.2% to +3.8% of GDP, spending dropped from 67% to 55%, and growth averaged 3.1%, five times the EU average¹². The approach improved fiscal health while preserving social cohesion.
• Estonia’s Digital Government Transformation shows how strategic digitization can cut costs while improving services. After gaining independence in 1991, Estonia had limited resources and a population of just 1.5 million. Instead of building traditional bureaucracy, the government reviewed all services to identify digitization opportunities, much like Canada’s Program Review but tech-focused¹³. This digital-first strategy assessed services based on potential for online delivery, cost savings, and citizen experience. The impact was dramatic: tax filing now takes five minutes, car sales can be completed remotely in under 15, and 95% of tax declarations are filed online¹⁴. By reducing paperwork, admin costs, and infrastructure needs, Estonia improved both efficiency and service quality—proving that digital transformation can deliver major fiscal and citizen benefits.

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What Needs to Be Done

• Launch a comprehensive Program Review modeled after Canada’s 1994 initiative. Establish a cross-government evaluation of every program against the six review criteria outlined in this memo, coordinated by the Department of Finance. Require each department to justify its programs' existence based on public interest, necessity of federal involvement, and efficiency. Give every Minister a strong mandate to execute on this within their first 6 months. Conduct the review with full transparency and include input from external experts from all sectors of the economy.‍
• Restructure or eliminate institutions that aren't delivering value. Restructure or wind down organizations that have either failed to meet their mandates or perform functions that can be delivered more efficiently through other means.
• Implement AI-First Government Operations across all departments. Embed artificial intelligence throughout government operations to handle repetitive tasks and service delivery. This will make operations more efficient, cut processing times, reduce external consultant costs, and decrease workforce requirements in areas such as processing tax returns, screening immigration applications, and managing employment insurance claims. Create a "Digital Civil Service Corps" to deploy high-caliber digital talent into the public service for 2-3 year terms to drive this transformation.
• Modernize procurement and restructure underperforming organizations. Normalize the use of Cost-Plus-Incentive-Fee contract models - where suppliers are paid for costs plus a bonus for strong performance - with standardized formulas to encourage better results. Adopt AI-driven procurement to dramatically speed up purchasing processes.

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Methodology

Below is an example of what this program review process could look like and the kind of reductions in spending that it would recommend. This review analyzed the programs and costs as set out in the 2024-25 Government Expenditure Plan and Main Estimates and used the criteria and framework below to identify programs that could be removed or reduced¹⁵. In aggregate, the identified reductions represent around $35.1B in program and operational costs. 

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Review Criteria

Each program was reviewed against the goal of improving Canada's productivity, economic competitiveness, and growth in the current geopolitical and economic environment. With this as a backdrop, we asked the same questions that were originally asked as part of the 1994 Program Review conducted by the Government of Canada¹⁶.

1. Does the program area or activity continue to serve a public interest?
2. Is there a legitimate and necessary role for the federal government in this program area or activity?
3. Is the current role of the federal government appropriate, or should the program be realigned with the provinces, the private sector, or other partners?
4. Could or should this program be transferred, in whole or in part, to the private sector, to voluntary organizations, or to other levels of government?
5. If the program continues, how could its efficiency be improved (e.g., streamlined operations, better service delivery methods)?
6. Is the program affordable within the government’s overall fiscal constraints? If not, what funding level or approach would be more appropriate, or should the program be discontinued?

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Recommendation Framework 

Recommendations were made for each program to keep a flat budget, re-prioritize funding, or consider an alternative approach (e.g., transfer to another sector). 

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Operational Efficiency Review 

Recommendations were made on operational efficiency based on observations from individuals with significant experience at senior levels within government and across multiple political parties and insights on best practices and opportunities.

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Results Overview

$35.1B: total amount for potential re-profiling‍

S️ee line by line review

• Re-align grants and contributions. Amount: $16.6B 
  
  • ⬇️ $16.6B. Reduce funding that does not pass the Review Criteria.
• Reduce operating + program expenses by ~20%. Amount: $13.6B
  
  • ⬇️ $12.7B. Reduce operating and program expenditures. This would be driven primarily by reducing the size of the workforce, consolidating departments, leveraging digital technologies, and revising procurement practices. 
  • ⬇️ $902M. Reduce contributions to employee benefit plans by an average of 20%. 
  • ⬇️ $4M. Reduce the size of the Translation Bureau Revolving Fund by 80% and leverage machine translation services.
• Eliminate or reduce federal funding to select organizations. Amount: $4.4B
  
  • ⬇️ $3.45B. Canada Infrastructure Bank. Eliminate this organization. 
  • ⬇️ $346M. Canadian Broadcasting Corporation. Reduce budget by 25% and focus on core priorities. 
  • ⬇️ $342M. Department for Women and Gender Equality. Eliminate this Department and reprofile $29.2M to Justice.  
  • ⬇️ $157.5M. IDRC. Eliminate federal funding to this organization. 
  • ⬇️ $49.9M. Canada School of Public Service. Eliminate the School. Reprofile $37.8M to deliver training via academic service providers, managed by the Treasury Board Secretariat / provide each department with a training budget. 
  • ⬇️ $33M. Invest in Canada Hub. Eliminate this hub. 
  • ⬇️ $9.0M. Canada Race Relations Foundation. Eliminate federal funding.
    
    
• Other. Amount: $0.5B
  
  • ⬇️ $0.5B. Other Misc. Amounts: $0.5B

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Detailed Results

1. Re-align grants and contributions. Anticipated Amount: $16.6B 

Each transfer payment program outlined in the 2024-25 Main Estimates was reviewed against a goal of improving Canada's productivity, economic competitiveness, and growth in the current geopolitical and economic environment.

The core review criteria noted above were applied through a line-by-line examination of each program’s purpose, funding mechanism, and overall impact (where known). These criteria were used to make a recommendation around whether federal involvement was necessary and cost-effective or if responsibilities could potentially be devolved to other levels of government, the voluntary or private sectors.

Program-specific recommendations are outlined in Tab 2. 

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2. Reduce operating expenses by 20%. Anticipated Amount: $13.6B

As part of a more thorough review process, we recommend a department-by-department approach to identify specific opportunities for reducing operating expenses. However, there are several additional core approaches to consider that could unlock savings government-wide:  

• Implement AI-First Government Operations. Embed AI throughout the government to handle repetitive tasks, policy analysis and memo generation, service delivery and translation. This will make operations more efficient, cut processing times for service delivery, and reduce the use of external consultants. Create a “Digital Civil Service Corps” that would deploy high calibre digital talent to the government for periods of 2-3 years. 
• Create a Unified Federal Data Intelligence Network. Create a unified data network so agencies can share information and stop duplicating efforts. Mandate real-time data sharing across all departments by 2026.
• Modernize Procurement. Formalize the use of a Cost-Plus-Incentive-Fee contract model with standardized formulas and adopt AI-driven procurement to drastically speed up and simplify purchasing.
• Reduce the size of the Public Service. Reduce the overall size of the workforce by 15-20% to align with a leaner operating model. This can be achieved through a combination of attrition, hiring freezes, voluntary departure incentives and other workforce adjustment approaches. Start with implementing some of the ideas here.    

3. Reduce / reprofile federal funding to select organizations. Anticipated Amount: $4.39B

• Canada Infrastructure Bank. Amount: $3.45B‍
  ‍Rationale: The CIB has deployed only 20.5% of its assigned capital since 2017 and taken an average of 34 months to approve new projects¹⁷. By eliminating this organization and shifting to more efficient provincial and private-sector models, taxpayers can get faster, more cost-effective, and more reliable infrastructure results.

• Canada Broadcasting Corporation. Amount: $346M (25% reduction in funding)
  Rationale: The CBC is no longer fulfilling its core mandate and is losing public support. Trust in its news content has dropped significantly, while only a fraction of its prime-time audience targets are being met. Despite receiving over $1.4B in government funding each year, the CBC continues to draw advertising revenue away from struggling private outlets and fails to maintain efficient operations—requiring $2.84 in taxpayer money for every $1 it generates on its own. Reducing funding by 25% and focusing on French-language delivery would enable the CBC to refocus on areas that continue to have public support. 

• Department for Women and Gender Equality. Amount: $342M
  Rationale: Single-gender strategies are less effective at tackling poverty and inequality than universal, needs-based approaches. Data shows universal programs reduce income gaps by 20%, nearly double that of gender-only initiatives, and help far more people¹⁸. Wind down this department and shift the majority of its budget into broader needs-tested services programs designed to address gender-based violence to the Department of Justice. 

• International Development Research Centre. Amount: $157.5M
  Rationale: The IDRC spends 87% of its $157.5M budget overseas while Canada lags behind other OECD countries in research investment (1.8% of GDP vs. 2.7% average)¹⁹. Existing federal programs already cover global health and climate needs at lower administrative costs making the IDRC largely duplicative. Finally, the IDRC’s grant-based model has weak private-sector leverage with little outside investment being made to multiply impact. End federal support to the IDRC. 

• Canada School of Public Service. Amount: $49.9M
  Rationale: Private-sector and provincial programs can deliver better, more cost-effective training than the Canada School of Public Service. Major consulting firms already work with colleges and universities to create government-focused skills courses, while private HR providers offer most of the competencies found in the School’s current curriculum. These private and provincial options emphasize flexible, skills-based learning and operate at lower costs. Reduce the current budget of $87.8M by 50% and redirect the remainder to private and provincial providers. Housing the function for delivering training within the Treasury Board or individual departments would maintain service standards and ensure that dollars are used more efficiently.

• ‍Invest in Canada Hub. Amount: $33M
  Rationale: The Invest in Canada Hub repeats work already carried out by the Trade Commissioner Service (with more than 1,100 global officers) and various provincial agencies. A 2024 audit found that 78% of the Hub’s investor services overlap with existing programs, providing little added value²⁰. The Hub’s “concierge” model is no longer necessary or efficient. Other countries, such as the UK, use AI-powered platforms (e.g., the “Investment Atlas”) to streamline these services at a lower cost. End funding for the Invest in Canada Hub.

• Canada Race Relations Foundation. Amount: $9.0M
  Rationale: Studies show needs-based approaches reduce poverty more effectively, build higher public trust, and help more people overall than race-specific programs. The programs of the CRRF largely duplicate existing services. End federal funding to this organization and focus on needs-based universal programs. This would enable the government to maintain essential community support while removing the administrative and equity problems tied to race-focused funding.

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Common Questions

• Won't these cuts harm crucial government services that Canadians rely on? The proposed approach carefully preserves essential programs like healthcare, dental care, childcare, and benefits for seniors and children as well as core federal functions like defence and security. $35.1B in potential savings were identified by applying rigorous review criteria to determine which programs truly serve Canada's best interests while eliminating those that duplicate efforts or fall outside federal jurisdiction.
  
  
• How will reducing the size of the public service affect service delivery? By leveraging digital technologies and AI throughout government operations, we can actually improve service quality while requiring fewer staff. Countries like Estonia and Denmark have demonstrated that digital-first governments can provide faster, more responsive services at lower costs. Our plan includes creating a "Digital Civil Service Corps" to ensure this transition enhances rather than diminishes service quality.
  
  
• Isn't this just an austerity program that will hurt economic growth? Our current approach isn't working – despite a 45% increase in federal spending over the last decade, Canada now has the lowest real GDP per capita growth in the G7. By reallocating resources from ineffective programs to initiatives that drive productivity and economic competitiveness, we're positioning Canada for stronger, more sustainable growth.

• Won't eliminating organizations like the Canada Infrastructure Bank and IDRC harm Canada's international standing and domestic development? The evidence shows these organizations aren't delivering results proportionate to their funding. The CIB has deployed only 20.5% of its assigned capital since 2017 and takes 34 months on average to approve new projects. Similarly, the IDRC spends 87% of its budget overseas while Canada lags in domestic research investment. We can achieve better outcomes through more efficient provincial, private sector, and existing federal programs.
  

• How will you ensure these changes don't disproportionately affect vulnerable populations? Our approach emphasizes universal, needs-tested programs that benefit everyone rather than specialized programs targeting specific groups. Research shows universal programs reduce income gaps by 20% – nearly double the impact of group-specific initiatives – while helping far more people. This approach will maintain essential community support while removing administrative inefficiencies and ensuring resources reach those who truly need them.

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Conclusion

Canada stands at a critical turning point. Our stagnating productivity, high debt, and shifting trade relationships demands urgent and deliberate action. This memo has outlined a process for responsibly reviewing spending priorities and has identified specific areas where spending can be reduced, reprofiled, or restructured—together totaling up to $35.1B in potential savings. By applying this approach and adopting a modernized, digital approach to operations, we can trim or eliminate programs that no longer serve the national interest while investing in priorities that will help us grow.

Change will require courageous leadership, transparent processes, and close collaboration with experts inside and outside government. Now is our chance to catalyze thoughtful debate and spark a systematic review of Canada’s budget priorities, equipping us to navigate today’s challenges while building a stronger, more resilient nation for tomorrow.

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