PIPSC advises the government to hone in on eliminating IT outsourcing and bolstering in-house capacity following the 2023 Fall Economic Statement

The mini-budget update – otherwise known as the Fall Economic Statement – given by Deputy Prime Minister and Minister of Finance Chrystia Freeland on November 21, 2023, heavily prioritized housing and affordability for Canadians.

We continue to strongly advise the government to tackle its goal of fiscal restraint by addressing the costly outsourcing within their IT departments. 

The government identified $691 million per year in new spending reductions at federal departments and agencies. These savings were found as part of their ongoing spending review, over and above the $15 billion already announced in Budget 2023. Few details were provided, and we remain concerned about potential job losses or service cuts. 

The FES ominously pledged to “return the public service closer to its pre-pandemic growth track.” This would be hard to achieve without a budget freeze and attrition, at the very least. The growth in the public service is on par with the growth in Canada’s population. On a per capita basis, Canada’s public service is at the same size as it was in 2012, despite providing more services to an aging population. It is misleading for the government to promote a narrative of unfettered growth when the public service has only been keeping up with the growth in the country’s population.  

The government’s dependency on outside IT Consultants is destructive and fiscally irresponsible. By reducing outsourcing and bolstering in-house capacity through employee empowerment and upskilling, we will reach the goals outlined in the Fall Economic Statement and improve services to Canadians.   

Now is the time for the government to hone in on our recommendations and work to develop a long-term, strategic approach to IT within the government.

Bright spots in the Fall Economic Statement include improvements to the Competition Act that will protect Canadians from price gouging by companies that have unfair monopoly power. Many of these changes are in line with recommendations made by PIPSC members at the Competition Bureau. If implemented accordingly, this will represent the most comprehensive set of reforms to the act since it was first instituted forty years ago.  

The FES also showed that “net actuarial losses” due to the government’s pension liabilities are now in fact surpluses, meaning public service pensions are a contributor to the government’s fiscal health. 

The government also announced its intention to continue with the implementation of the Digital Services Tax at the end of 2023. This measure will make it harder for the big tech companies to avoid paying Canadian taxes by booking profits in tax havens. Recently, there has been international pressure to stop or delay this change until an international solution can be implemented. Staying the course is the right response.