Scathing auditor general reports underscore political realities

Nearly 20 per cent of the SDTC projects examined by the AG were in fact ineligible (based on the government’s own rules) for funding, with a total price tag of $59 million. There were also 90 instances where the SDTC ignored conflict of interest provisions while awarding $76 million to various projects. Indeed, the AG found 63 cases where SDTC agency directors voted in favour of payments to companies in which they had declared interests.

If you needed more proof that the Trudeau government is misusing taxpayer money, the auditor general (AG) just released two scathing reports about improper contracting practices, conflict of interest, and funding provided for ineligible projects. Clearly, politicians and bureaucrats in Ottawa do not always act in the best interest of Canadians.

According to the first AG report, Sustainable Development Technology Canada (SDTC), the federal agency responsible for funding green technology projects, demonstrated “significant lapses… in governance and stewardship of public funds.” Nearly 20 per cent of the SDTC projects examined by the AG were in fact ineligible (based on the government’s own rules) for funding, with a total price tag of $59 million. There were also 90 instances where the SDTC ignored conflict of interest provisions while awarding $76 million to various projects. Indeed, the AG found 63 cases where SDTC agency directors voted in favour of payments to companies in which they had declared interests.

The second AG report focused on 97 contracts totalling $209 million awarded by the federal government to the McKinsey & Company consulting firm from 2011 to 2023. According to the AG, the government demonstrated “frequent disregard for procurement policies and guidance and that contracting practices often did not demonstrate value for money.” About 70 per cent of these contracts were awarded non-competitively—meaning no other companies were permitted to bid on the contracts.

These findings also follow an earlier report in February that found the federal government “repeatedly failed to follow good management practices in the contracting, development, and implementation” of the ArriveCAN mobile app, which cost Canadian taxpayers at least $59.5 million.

While the Trudeau government’s record-high levels of spending have made it clear that taxpayer money is being dished out left and right without much regard for the consequences for future generations of Canadians, the AG reports reveal chronic mismanagement, little accountability, and decision-makers acting in their own interests.

Government officials are handing huge sums of taxpayer money to people or companies who spend it without proper transparency or oversight. When considering these findings, Canadians should be skeptical of any politician or commentator who downplays government excesses or says we can’t reduce federal spending.

It’s also naïve to think that politicians and bureaucrats are benevolent civil servants who simply want to make the world a better place. In reality, like most people, they’re human beings motivated by self-interest.

James Buchanan, who won the Nobel Prize in economics in 1986, explained these concepts when pioneering a branch of economics called Public Choice Theory, which pays particular attention to the incentives policymakers face.

Politicians do not always act in the best interest of their constituents, and bureaucrats do not always act in the best interests of the public.

Why? Because it’s often in their interest to make decisions that benefit themselves, family members, friends or other cronies. If you decide to give money to companies despite a conflict of interest or if you award contracts to friends, you’re not making decisions in the best interest of society. People don’t suddenly become selfless when they enter the government sector. They respond to the same incentives as everyone else. The latest AG reports underscore this reality.

Author:

Jake Fuss

Director, Fiscal Studies, Fraser Institute

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Over two thirds of Canadians say Ottawa should reduce size of federal bureaucracy

Published on October 19, 2025

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From the Fraser Institute

By Matthew Lau

From 2015 to 2024, headcount at Natural Resources Canada increased 39 per cent even though employment in Canada’s natural resources sector actually fell one per cent. Similarly, there was 382 per cent headcount growth at the federal department for Women and Gender Equality—obviously far higher than the actual growth in Canada’s female population.

According to a recent poll, there’s widespread support among Canadians for reducing the size of the federal bureaucracy. The support extends across the political spectrum. Among the political right, 82.8 per cent agree to reduce the federal bureaucracy compared to only 5.8 per cent who disagree (with the balance neither agreeing nor disagreeing); among political moderates 68.4 per cent agree and only 10.0 per cent disagree; and among the political left 44.8 per cent agree and 26.3 per cent disagree.

Taken together, “67 per cent agreed the federal bureaucracy should be significantly reduced. Only 12 per cent disagreed.” These results shouldn’t be surprising. The federal bureaucracy is ripe for cuts. From 2015 to 2024, the federal government added more than 110,000 new bureaucrats, a 43 per cent increase, which was nearly triple the rate of population growth.

This bureaucratic expansion was totally unjustified. From 2015 to 2024, headcount at Natural Resources Canada increased 39 per cent even though employment in Canada’s natural resources sector actually fell one per cent. Similarly, there was 382 per cent headcount growth at the federal department for Women and Gender Equality—obviously far higher than the actual growth in Canada’s female population. And there are many similar examples.

While in 2025 the number of federal public service jobs fell by three per cent, the cost of the federal bureaucracy actually increased as the number of fulltime equivalents, which accounts for whether those jobs were fulltime or part-time, went up. With the tax burden created by the federal bureaucracy rising so significantly in the past decade, it’s no wonder Canadians overwhelmingly support its reduction.

Another interesting poll result: “While 42 per cent of those surveyed supported the government using artificial intelligence tools to resolve bottlenecks in service delivery, 32 per cent opposed it, with 25 per cent on the fence.” The authors of the poll say the “plurality in favour is surprising, given the novelty of the technology.”

Yet if 67 per cent of Canadians agree with significantly shrinking the federal bureaucracy, then solid support for using AI to increasing efficiency should not be too surprising, even if the technology is relatively new. Separate research finds 58 per cent of Canadian workers say they use AI tools provided by their workplace, and although many of them do not necessarily use AI regularly, of those who report using AI the majority say it improves their productivity.

In fact, there’s massive potential for the government to leverage AI to increase efficiency and control labour expenses. According to a recent study by a think-tank at Toronto Metropolitan University (formerly known as Ryerson), while the federal public service and the overall Canadian workforce are similar in terms of the percentage of roles that could be made more productive by AI, federal employees were twice as likely (58 per cent versus 29 per cent) to have jobs “comprised of tasks that are more likely to be substituted or replaced” by AI.

The opportunity to improve public service efficiency and deliver massive savings to taxpayers is clearly there. However, whether the Carney government will take advantage of this opportunity is questionable. Unlike private businesses, which must continuously innovate and improve operational efficiency to compete in a free market, federal bureaucracies face no competition. As a result, there’s little pressure or incentive to reduce costs and increase efficiency, whether through AI or other process or organizational improvements.

In its upcoming budget and beyond, it would be a shame if the federal government does not, through AI or other changes, restrain the cost of its workforce. Taxpayers deserve, and clearly demand, a break from this ever-increasing burden.

Matthew Lau

Adjunct Scholar, Fraser Institute

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Federal Budget 2025: A responsible media would ensure Canadians know about the dismal state of federal finance

Published on October 17, 2025

Todayville

From the Fraser Institute

By Jake Fuss and Grady Munro

From 2014 to 2024, gross government debt (including federal, provincial and local governments) increased from 85.5 per cent of the economy (measured by GDP) to 110.8 per cent—a larger increase than any other G7 country. When debt grows faster than the economy, government finances are unsustainable.

Ahead of the Carney government’s long-awaited first budget scheduled for Nov. 4, a recent CBC commentary described the long-standing debate about the federal deficit and the state of federal finances as “something of a phoney war.” And that calls to balance the budget—expressed today and over the last decade—have lacked any serious discussion about the trade-offs between allowing deficits to persist versus balancing the budget.

While there’s certainly something to be said about the political theatre that regularly dominates the House of Commons—which we agree focuses too often on scoring political points instead of adequately assessing the merits of policy—it’s wrong to downplay concerns about the state of federal finances. Such concerns aren’t “phoney.”

Consider this. From 2014 to 2024, gross government debt (including federal, provincial and local governments) increased from 85.5 per cent of the economy (measured by GDP) to 110.8 per cent—a larger increase than any other G7 country. And federal gross debt increased from 53.0 per cent of the economy in 2014/15 to a projected 70.0 per cent in 2024/25. When debt grows faster than the economy, government finances are unsustainable. And the Carney government seemingly plans to continue this same approach.

In other words, the government plans to continue to spend more than it collects in revenue, continue to run massive deficits, and continue to rack up large amounts of debt.

Why should Canadians care?

Because the costs of government debt land squarely on their backs. For example, when government debt levels rise, the cost of debt interest often also rises. This year the federal government will spend a projected $54.5 billion on debt interest costs—equivalent to what it sends to the provinces for health care. Moreover, when governments borrow money, they can help drive up the cost of borrowing by increasing demand for the limited pool of savings that both government and the private sector compete for—making it more expensive for a family to take out a mortgage or businesses to attract investments. And to pay for today’s debt accumulation, governments in the future may raise taxes—a burden that will fall disproportionately on younger generations.

Again, given this alarming deterioration in the state of government finances over the last decade and the costs it imposes on Canadians, there’s nothing disingenuous about calling for more fiscal discipline from Ottawa.

Of course, getting federal finances back in order is no small task—the Trudeau government’s forays into areas of provincial jurisdiction (which carry huge price tags), combined with Carney’s massive new spending commitments for defence and other programs, mean the government cannot balance the budget without significant trade-offs. In the past, the federal government has overcome similar fiscal circumstances by committing to balance the budget and outlining a clear plan to achieve this goal. The Carney government should heed these lessons and apply them in its upcoming budget.