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.