The term “productivity” came storming back into Canada’s political and economic discourse over the past year, generating a wave of op-ed pieces and conference panels.

The best overview of this debate emerged recently from the Centre for the Study of Living Standards, which has toiled away for decades on issues of productivity and well-being. (Full disclosure: I recently joined the CSLS board).

However, as is often the case, the output from this debate has skewed toward diagnosis rather than remedies.

Much of the discussion seems to recycle old orthodoxies from eras when the preferred terminology was “competitiveness.” Nowhere is this more evident than the disconnect with any serious discussion of the public sector.

It is rare to read anything deeper than references to total government spending and the total body count of public servants. In the dominant diagnostic, reducing these aggregate numbers will somehow unleash productivity gains. Here, regulation is usually posited as a barrier or impediment and taxes are always posited as a burden or drag.

Canada would be better served by a more mature framing of the connection between productivity and the public sector. The public sector could be well served by borrowing the language and constructs of the productivity debate to unlock serious attention to its long-term and future-facing capabilities.

To start, let’s discard the notion that the private and public sectors are locked in some zero-sum game.

On the contrary, they are interdependent. The private sector benefits from an effective public sector, with an emphasis on “effective.” The public sector matters to our prosperity, security and well-being – which means serious attention should always be paid to what can make it more effective.

Another way of putting this is that if we care about overall productivity, we should care about the productivity of the public sector, just as we do about other sectors such as manufacturing, construction, agri-food, financial services and so on.

The public sector employs about one in five Canadians and is the largest purchaser of goods and services. Talking about the productivity of the public sector is a discussion worth having because it would lead to a much richer and more useful set of issues than just trimming budgets and body counts.

There is a rich discussion to be had about how to properly measure the productivity of the public sector. The traditional tools used by productivity economists don’t do a great job. There was an attempt by Public Policy Forum a decade ago that could be revived. Some leading-edge work is emerging in the U.K. that could be replicated here.

One place to start could be the communities that have built up around evaluation and performance reporting.

Most externally facing services already have a range of metrics for output and service standards for timeliness, accuracy and customization. But there are also more elusive constructs to pin down such as the “effectiveness” of policy advice and legal services.

In the real world of public-sector management, the age-old challenge applies: one can manage time, cost and quality but rarely achieve all three.

Then there are the “public goods,” such as passing on to future generations cultural and natural heritage, safe communities and an inclusive open society with a vibrant culture.

Despite the limitations that would arise in fully assessing the contributions of the public sector, applying a “productivity lens” could open up a richer discussion of how to make the public sector more effective. This approach should appeal to those who assert that government should be run more like a business.

Borrowing the language of the productivity economists, the agenda that flows from a serious discussion of public-sector productivity would include:

• The quality of the labour input – and whether there is enough investment and effort put into training and enhancing skills;
• Management acumen – and the effort and investment put into developing the capabilities of middle and senior leadership;
• Substitution of capital for labour – and the effort and investment put into continuous upgrading of technologies used for external and internal services;
• Process efficiency – and the scope for gains in time and quality that are still to be harvested by pushing farther on end-to-end digital and harnessing artificial intelligence (AI) to assist humans;
• Stripping out layers of middle management but equipping those who remain with the training and tools to do their jobs;
• Shedding assets and right-sizing the physical footprint: spoiler alert: this will encounter stiff political resistance from MPs and mayors;
• Enhancing the quality and timeliness of information for decision-making;
• Streamlining the heavy burden of internal controls and reporting that has accreted over the years;
• Reviewing the oversight system of incentives and disincentives to intelligent risk-taking that shapes behaviours;
• Hacking away at barriers to faster hiring, redeployment and termination of staff;
• Reviewing which functions can be outsourced and which should remain in-house, while making sure there will be adequate training in effectively managing external contractors.

These happen to be many of the issues that a serious attempt at public-sector reform would want to tackle.

One key difference between a serious productivity-centred approach and the simple across-the-board austerity that governments tend to use is that it could draw attention to the high cost of neglecting the internal government-to-government functions such as finance, human resources, information management, procurement, comptrollership and oversight.

These are functions that in past periods of fiscal retrenchment have taken a heavy share of cuts because they are glibly labelled as “overhead,” with unfortunate consequences.

The growth in the number of people employed by the public sector, especially at the federal level, has drawn a lot of attention. There are better and worse ways to think about bringing the number down. Hoping for the best from random attrition isn’t a good one.

The best approach, in my view, would be to recognize that those numbers are attached to specific programs, services, functions, occupations and locations.

Simply ordering an arbitrary across-the-board cut to operating budgets may achieve short-term fiscal results but will be laden with unintended consequences, sowing dragons’ teeth and causing damage to the longer-term capabilities and effectiveness of the public sector.

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If the courage is there, the 2026 budget that follows the next federal election is the next window of opportunity for a thorough program review along the lines of the ones in 1995 and 2012.

Reshape the programs and the impacts on the public service would follow, but the impacts would be intended and proactively managed. There are many ways such a review could be designed.

Setting the table for this program review should be a serious exercise to delve into public-sector productivity that is honest about the longer-term goal of reducing staff numbers. Pretending that there won’t be job cuts in the next decade isn’t being honest with public servants or Canadians.

A bolder way to approach the inevitable downsizing would be to say clearly that we want the public service to be smaller, flatter and more agile.

The core idea could be to borrow the constructs from climate policy of setting targets that guide decision-making and investment, and incent technological innovation.

An ambitious version of this would be “20 by 30” – the government could set a goal to reduce the size of the federal public service by 20 per cent by 2030.

Using this target, it could then move on to seriously attack the issues of productivity and effectiveness, embrace the challenges and opportunities of AI and focus on strengthening the longer-term capabilities we need in our public sector.