Canada’s Growing Public Sector

Commentary, Frontier Centre, Role of Government, Worth A Look

Last week there came out Statistics Canada’s monthly employment report (once upon a time referred to as the unemployment report). It showed an amazing gain of 29,800 jobs for April and an amazing drop in the unemployment rate to 6.8%, the second-lowest ever. The Toronto stock market gained a hundred points and the Canadian dollar a quarter of a U.S. cent. My, what a marvellous economy we have, said the analysts and advisors. We are headed away from a recession, not into it.

Don’t these people read? How could these high-priced economists not lock on to what was really being shown to them?

During April 29,300 new full-time jobs were ‘created.’ The number of part-time jobs declined, probably because some graduated to full-time. But the gain in public sector employment (federal, provincial and local governments) was 37,800. That meant that private, tax-paying employers must have reduced their workforces by 8,400 jobs. Actually during the month 29,300 jobs were lost in manufacturing because goods-making value-added Canadian industries cannot compete on account of the insanely-overpriced Canadian dollar. Non-manufacturing jobs, in which people do things for other people (services, such as shining shoes) instead of making things, increased by 20,800. Government jobs outdid them almost two to one. Services are not exportable so do not feel the weight of adverse exchange-rate changes. Whatever rosiness there is in this employment picture has been put there by the new free-spending style in government. Thirty-eight thousand new civil servants is an enormous number of civil servants for one month. Governments are hiring with both hands, expanding a workforce that produces nothing except bigger government.

On the strength of this report it began to be speculated that the Bank of Canada will soon start raising interest rates again. If anyone there is even thinking about it, almost everyone there should be fired. Only a skeleton staff of tellers should be retained for the 14 days in which Canadians should be required to exchange their funny money for American dollars. I have become persuaded that Canada must ‘dollarize’ because (a) its economy is too tightly bound to the American economy to permit a genuinely independent monetary policy, and (b) it does not have the expertise or ability to operate one.

The three years that the interest-rate policies of the Bank of Canada caused the Canadian dollar to rise by a quarter have been catastrophic for the export-centred part of the Canadian economy. In the past year alone 72,000 manufacturing jobs have vanished basically because their employers have become non-competitive abroad. The effect on the farm economy because returns have been reduced from U.S.-dollar-denominated markets has been worse than the impact of mad-cow disease. Not counting the supply-management sector, which believes that world prices don’t count, the cumulative loss of Canadian farm cash income since 2002 has been between $10 billion and $13 billion. Think of what farmers could do with an extra $12 billion.

The resources governments consume are removed from the realm of market discipline. This employment trend represents not a healthier economy but one increasingly dominated by governments. Spending restraint is a thing of the past. Budget surpluses are not a signal to cut taxes but a signal to spend more. Now along comes the NDP to show a sputtering Martin government how to do it, with fresh ideas on how to spend tax money.

If there is an election soon, how many people will see it as an opportunity to bring sanity back to public affairs? Imagine this. The government spends months preparing a budget that it hopes will deflect opposition wrath. It holds consultations with interest groups. It packages everything in flowery language. It juggles and arranges the figures so that they show more or less than there is, depending on what image is required. Then the prime and finance ministers take off across the country to talk it up, explain how it will help absolutely everyone. Three months later, frightened of a snap election in the midst of daily revelations of the corruption, swindling and lawlessness of leading figures in its party, it converts the whole thing into an NDP budget and presents it as a new and improved version. Apparently the Liberals needed lessons from the NDP on devising newer and grander spending schemes and socially-engineered organisms. What was out in February is very in in May.

If the public wanted an NDP budget it would have elected an NDP government. It had the chance. What room is now left on any platform for the Liberal party to run on? Nil. Nada. Zilch.

Morris W. Dorosh is publisher of Agriweek, a weekly agribusiness newsletter. For subscription information contact