The size of the federal public service shows no signs of growth under the Liberal government and staffing costs are declining, according to a new report from Parliamentary Budget Officer Jean-Denis Fréchette.

Based on department projections and historical trends, the PBO estimates the number of full-time employees in the core public service will essentially stay constant, hovering between 339,000 and 345,000 from the 2017 to the 2023 fiscal years.

PERSONNEL, NUMBER OF FULL-TIME EQUIVALENTS In thousands +3% avg. growth -2% avg. growth PBO forecast 0% growth 400 375 350 325 300 2006 2008 2010 2012 2014 2016 2018 2020 2022 SOURCE: PARLIAMENTARY BUDGET OFFICER PERSONNEL, NUMBER OF FULL-TIME EQUIVALENTS In thousands +3% avg. growth -2% avg. growth PBO forecast 0% growth 400 375 350 325 300 2006 2008 2010 2012 2014 2016 2018 2020 2022 SOURCE: PARLIAMENTARY BUDGET OFFICER PERSONNEL, NUMBER OF FULL-TIME EQUIVALENTS In thousands +3% avg. growth -2% avg. growth PBO forecast 0% growth 400 375 350 325 300 2006 2008 2010 2012 2014 2016 2018 2020 2022 SOURCE: PARLIAMENTARY BUDGET OFFICER

Staffing is one of the federal government’s largest expenses, accounting for 40 per cent of direct program spending.

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While salaries are accounted for in the year in which they are paid, the government must also estimate the cost of future employee benefits, such as pensions. These calculations are highly sensitive to interest rates. The past decade of lower interest rates has forced Ottawa to put much more money aside to cover those future costs. Since the 2006 fiscal year, the annual cost of future benefits has grown to $9.6-billion from about $200-million.

Tuesday’s report projects that this spending trend will reverse now that interest rates are rising. It estimates the cost of future benefits will soon peak at $11.8-billion and then decline to $2.8-billion by 2022-23.

As a result, the PBO estimates that overall spending on personnel will decline to $46.4-billion in 2022-23 from $51.1-billion 2017-18, a $4.7-billion decrease.

However, higher interest rates will also mean higher debt-servicing costs for Ottawa.

A previous PBO report estimated that public debt charges will rise to $38.5-billion from about $24-billion over that same period, a $14.5-billion increase. The rising debt-servicing costs are a result of higher projected interest rates as well as the fact that deficit spending will increase the size of the federal debt to $718-billion from $652-billion during that time frame.

The federal work force covered by the PBO study includes the core federal public service and all Canadian Forces and RCMP employees. It does not include employees of federal Crown corporations.