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Fiscal Policy and Government Productivity

Government spending and public sector performance both shape Canada’s productivity. A growing debt burden can crowd out private investment and, at current levels, limit the country’s ability to respond to the next crisis. Public sector productivity has fallen even as public sector employment has grown much faster than the private sector, a divergence that drags down Canada’s overall productivity numbers. Addressing both problems would free up resources for higher-value use across the economy and boost productivity.

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Fiscal Policy and Government Productivity Recommendation Summary

Recommendation Area of Reform Level Source Document
1 Reduce net public debt by 10 percentage points of GDP Reduce debt and rein in spending
FederalProvincial
Canada’s Debt Problem: What Can Be Done? A Report on the Institute’s 2024 Debt Conference
2 Restore program spending to its 2003–2020 share of GDP, reducing spending by roughly $66 billion by 2030 Reduce debt and rein in spending
Federal
The Endgame: Time to Act on Canada’s Economic and Fiscal Challenges
3 Present realistic fiscal baselines and a four-year path to balance Reduce debt and rein in spending
FederalProvincial
Fiscal Fantasy: Believe It or Not, Fiscal Reality Hasn’t Gone Away
4 Bring tax-delivered spending into the performance framework Reduce debt and rein in spending
Federal
Minding the Purse Strings: Major Reforms Needed to the Federal Government’s Expenditure Management System
5 Require value-for-money assessment for all spending programs Reduce debt and rein in spending
Federal
Minding the Purse Strings: Major Reforms Needed to the Federal Government’s Expenditure Management System
6 Adopt binding multi-year spending plans Reduce debt and rein in spending
Federal
Minding the Purse Strings: Major Reforms Needed to the Federal Government’s Expenditure Management System
7 Adopt the comprehensive public sector productivity measure a federal working group already proposed Raise public sector productivity
Federal
2025 Labour Market Review: Trade Uncertainty, Structural Pressures, and Policy Priorities for Canada
8 Use AI-assisted hiring and ease internal staff mobility for public servants Raise public sector productivity
FederalProvincial
Unlocking Productivity in the Public Sector: Focusing on Internal Services
9 Modernize internal government data systems Raise public sector productivity
FederalProvincial
Unlocking Productivity in the Public Sector: Focusing on Internal Services
10 Train staff on existing technology already purchased Raise public sector productivity
FederalProvincial
Unlocking Productivity in the Public Sector: Focusing on Internal Services
11 Build managerial capacity for change management Raise public sector productivity
FederalProvincial
Unlocking Productivity in the Public Sector: Focusing on Internal Services
12 Consolidate overlapping program streams, such as in immigration and Employment Insurance Raise public sector productivity
Federal
Unlocking Productivity in the Public Sector: Focusing on Internal Services
13 Establish a national centre of excellence for healthcare payment reform Reform healthcare payment models
FederalProvincial
Integrated Funding: Connecting the Silos for the Healthcare We Need
14 Engage physicians directly in payment reform design Reform healthcare payment models
Provincial
Integrated Funding: Connecting the Silos for the Healthcare We Need
15 Expand road pricing on highways where feasible, to fund spending and relieve congestion, following Ontario’s tolled-lane model Infrastructure funding
Provincial
Getting More Buildings for our Bucks: Canadian Infrastructure Policy in 2016
16 Adopt consistent infrastructure accounting standards for cities Infrastructure funding
Municipal
Getting More Buildings for our Bucks: Canadian Infrastructure Policy in 2016
17 Target federal infrastructure spending toward projects with spillovers across governments, using public-private financing where it lowers the cost of raising taxes Infrastructure funding
Federal
Getting More Buildings for our Bucks: Canadian Infrastructure Policy in 2016
18 Sell select government assets, such as municipal parking and airport infrastructure, to fund projects that cannot attract sufficient private investment Infrastructure funding
FederalProvincialMunicipal
How to Kickstart the Infrastructure Spending Boom

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