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Macdonald-Laurier Institute

The Provincial Productivity Crisis

How better measurement, management, and modernization can improve outcomes

December 18, 2025
in Domestic Policy, Latest News, Intergovernmental Affairs, Papers
Reading Time: 5 mins read
A A
Provincial Productivity Crisis.

By Stephen Tapp

December 18, 2025

PDF of paper

Executive summary | sommaire

Canada’s provincial structure offers a unique national experiment. As one of the most decentralized countries in the developed world, Canada effectively operates ten parallel public-service systems – each making different choices, facing different pressures, and achieving different outcomes.

Provinces operate our most critical services – health care, education, and social programs – and their choices fundamentally shape Canadian life. However, a new report confirms a troubling trend: taxpayers are spending more, but getting less.

This report – the final paper in a three-part series – examines the size and efficiency of the government sector across the provinces. Using two composite measures, we quantify how the size and productivity of government sectors vary across Canada and over time.

The results suggest a disconnect between spending and outcomes that should concern every Canadian:

  • Public sector size has grown in every province, with health care being the main driver.
  • The efficiency of public services – how much value we get per dollar spent – has fallen everywhere. Manitoba saw the largest drop in productivity, while Alberta saw the smallest decline.
  • The largest government sectors are found in Atlantic Canada, while larger provinces tend to have smaller government sectors.

Because government sector outputs are notoriously difficult to measure, we also turn to alternative performance indicators to measure the value taxpayers receive for their money. The results are troubling:

  • Health care crisis: Strains are visible in cripplingly long patient wait times across the country, led by sharp increases in Atlantic Canada. Client satisfaction surveys also paint a poor national picture.
  • Education slump: International test scores for secondary school students are disappointing and have declined nationwide (again, with the poorest results in Atlantic Canada).
  • Middling service: When it comes to government services, Canada’s performance is mediocre, ranking 13th out of 30 OECD countries in client satisfaction.

These results suggest that larger government sectors don’t necessarily equal better services or value-for-money. With aging populations and tight budgets, government efficiency is vitally important. Improving public-sector productivity is the only sustainable path forward.

We propose three key reform pillars:

  • Measurement: Provinces should more systematically measure performance across all services and embed this reporting into their budgets. Creating a permanent, interprovincial mechanism – perhaps led by the Council of the Federation – to compare performance would be an important first step to improve accountability.
  • Management: Link budgets and compensation more directly to measurable results, incentivizing managers and employees to achieve defined, positive outcomes for citizens.
  • Modernization: Harness digital transformation and new technologies like generative artificial intelligence to overhaul and streamline service delivery. This will cut red tape and free up staff for higher value work.

By learning from the best, focusing on results, and raising accountability, governments at all levels can deliver more for Canadians without demanding more from their wallets.

If productivity becomes a defining benchmark of public-sector success, Canadians will be better positioned to meet the fiscal, demographic, and social challenges of the coming decades.


La division du territoire canadien en provinces est une expérience unique. Le Canada, connu pour sa décentralisation parmi les pays développés, préside en réalité dix systèmes de services publics distincts, chacun confronté à des choix, des impératifs et des résultats qui lui sont propres.

Nos services les plus fondamentaux, à savoir la santé, l’éducation et les programmes sociaux, sont administrés par les provinces. Les choix qu’elles font façonnent en profondeur la vie des Canadiennes et Canadiens. Or, un rapport récent confirme une tendance préoccupante : les contribuables dépensent plus, mais reçoivent moins.

Ce rapport – le dernier d’une série de trois – analyse la taille et l’efficacité du secteur public au palier provincial. Nous utilisons deux indicateurs composites pour évaluer la mesure dans laquelle elles varient d’une province à l’autre au cours du temps.

Nos conclusions font ressortir une discordance entre les dépenses et les résultats, ce qui devrait tous nous alerter:

  • La taille du secteur public a augmenté dans chacune des provinces, surtout en santé.
  • Partout, l’efficacité des services publics – la valeur obtenue pour chaque dollar dépensé – a diminué. Le Manitoba a enregistré la plus forte baisse, alors que l’Alberta a connu la plus infime.
  • On trouve les secteurs publics les plus vastes dans les provinces atlantiques. Ils tendent à être proportionnellement plus petits dans les provinces les plus étendues.

Comme le rendement du secteur public est notoirement complexe à mesurer, nous nous penchons également sur divers autres paramètres pour estimer les avantages que tirent les contribuables de leur argent. Les résultats inquiètent :

  • Crise sanitaire : la pression est bien visible dans les temps d’attente extraordinairement longs à travers le pays – l’Atlantique est en tête des hausses. Les sondages clients dessinent également une image nationale peu réjouissante.
  • Dégringolade dans l’éducation : les performances sont décevantes aux examens internationaux pour les étudiants du secondaire, en baisse à l’échelle du pays (ici encore, les résultats sont les plus bas dans les provinces atlantiques).
  • Services médiocres : en matière de services gouvernementaux, le Canada présente des performances mitigées, occupant le treizième rang des 30 pays membres de l’OCDE pour la satisfaction client.

Ces conclusions montrent que l’élargissement des secteurs gouvernementaux ne garantit pas toujours une amélioration des services ou un meilleur rapport qualitéprix. Face au vieillissement de la population et aux budgets limités, l’efficacité gouvernementale est cruciale. Optimiser le secteur public est la seule stratégie viable pour l’avenir.

Nous proposons trois axes de réforme :

  • Mesure : il faudrait que les provinces évaluent régulièrement le rendement de tous leurs services et présentent les mesures dans leurs budgets. La création d’un mécanisme interprovincial permanent –possiblement supervisé par le Conseil de la fédération – pour comparer les résultats serait une avancée majeure vers plus d’imputabilité.
  • Gestion : on doit directement lier les budgets et rémunérations aux résultats quantifiables pour inciter les gestionnaires et le personnel à générer des retombées pour les citoyens.
  • Modernisation : tirer parti de la transition numérique et des technologies innovantes comme l’IA générative pourrait optimiser les services. Cela allègerait les obstacles bureaucratiques et permettrait de déployer les employés pour des missions importantes

En suivant les meilleurs, en se concentrant sur les résultats et en renforçant l’imputabilité, les gouvernements à tous les paliers peuvent mieux servir la population sans demander plus d’argent.

Si la productivité pouvait s’imposer comme un critère clé de réussite pour le secteur public, les Canadiennes et Canadiens seraient mieux préparés pour affronter les enjeux financiers, démographiques et sociaux des prochaines décennies.

Read the full publication link.

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  • Home
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