Federal consultancy costs expected to soar

$1.3B higher compared to earlier estimate

OTTAWA • Fees paid by the federal government for third-party consultants have continued to increase, with costs expected to be $1.3 billion higher this year compared with an earlier estimate just two months ago.

According to a government estimate released in March, the annual cost of outsourcing engineering, legal and other services would reach $16.4 billion in 2022, up from $8.3 billion in 2016. An updated document released on Thursday adds another $1.3 billion to that estimate, bringing the 2022 projection to around $17.7 billion.

The increase underscores ballooning costs for consultancy services that have occurred under Prime Minister Justin Trudeau over the last six years. The Trudeau government has faced calls from some observers to contain spending, particularly in areas like public sector wages or consultancy fees, which aren’t typically viewed as expenditures that create economic growth.

Federal governments have long tapped consultancy services, which allow departments and ministries to carry out research, design or other tasks on a temporary basis. They are often viewed as an efficient way to secure specialty services without overstretching the civil service.

However, the total cost of public sector salaries has also continued to increase under the current government. In its Supplementary Estimates on Thursday, the government expects public salary costs to rise $975 million compared with the earlier March projection.

That higher estimate will push annual costs for all federal civil servants to an estimated $48.5 billion in 2022, up from $39.6 billion when the Liberal government took office in 2015. Ottawa’s public service has swelled by roughly 10,000 bureaucrats per year under Trudeau, to roughly 380,000 today.

Costs for consultancy services have already been on a steep upward rise in 2021. According to the fiscal monitor, released Friday, Ottawa spent $14.1 billion on “professional and special services” between April and March this year, a 14 per increase compared with the same period last year.

In response to an earlier report by the National Post about rising consultancy fees, a spokesperson for Treasury Board Minster Jean-yves Duclos said the higher expenditures have largely been due to the COVID-19 pandemic, which has required some departments to outsource services at an uncommonly high rate. Medical services have been provided temporarily to communities in the North amid the pandemic, for example.

The $1.3-billion spike in consultancy fees include $528 million in additional expenses under the Public Health Agency of Canada (PHAC), and $493 million by Employment and Social Development Canada (ESDC). Other departments responsible for the leap include Indigenous Services ($87 million) and Infrastructure Canada ($11 million).

The Supplementary Estimates are documents published regularly by the federal government that detail new spending estimates that are in addition to the earlier Main Estimates.

The document released on Thursday detailed $41 billion in new expenditures, some of which had already been laid out in the 2021 budget.