Source: Fraser Institute
The Fraser Institute has put out a useful reality check on the size of government in Canada. In 2024, 21.5 per cent of employed Canadians worked for government, up from 19.6 per cent in 2019. Total government spending across all levels — federal, provincial, and local — reached 43.6 per cent of the economy last year, compared with 40.3 per cent before the pandemic. The post-pandemic rebound in the size of government is the result of deliberate choices, not temporary emergency measures.
Why is this important? Because a larger government sector means higher taxes, more debt service costs, and less room for private activity. When a bigger share of the workforce is paid by taxpayers, the private sector must generate the revenue to support it. Interest payments on accumulated debt also divert money that could otherwise go to services or tax relief. Research cited in the piece suggests that economic growth tends to be stronger when government spending sits in a lower range relative to the size of the economy. Canada’s current level sits well above that range.
All levels of government share responsibility for the expansion. The Carney government has talked about shrinking the federal public service, and some provinces have made similar noises about fiscal discipline. Turning those intentions into actual reductions will require more than announcements. It will mean hard choices about staffing levels, program scope, and the long-term growth of spending.
Canadians can disagree about the ideal size of government, but they should start from an accurate picture of where things stand. The government sector is already large by historical and international standards, and it has grown further in recent years. Understanding the costs of that growth is a necessary first step before deciding whether the current trajectory is sustainable.
