Everyone knew it was happening, but no one knew how prevalent it was or how much it cost.

Economist David Macdonald decided to find out how many consultants, contractors and temporary workers the federal government was hiring and how much Canadians were paying for them.

It took him about a year. What he discovered was a burgeoning “shadow public service.” Last year it cost taxpayers $1.2 billion. That was 79 per cent higher than when Prime Minister Stephen Harper took power in 2006.

Despite a spending freeze in the federal bureaucracy, it is still growing by leaps and bounds.

“Without prompt corrective action, outsourcing costs will continue to soar,” said Macdonald, a research associate with the Canadian Centre for Policy Alternatives.

He sifted through 300,000 government contracts and pored over the five years’ worth of public accounts to find out what was happening, pinpoint the big spenders and track the trends. The deeper he looked, the more troubling the pattern became.

Not only had the cost of contract workers ballooned, the nature of their work had changed. No longer were they brought in for short-term projects or hired to provide expertise the government did not have. They did exactly the same work as public servants. They sat alongside them, had government email addresses and handled confidential government information.

“They look like government employees, but they’re not,” the economist said. They are exempt from the government’s normal hiring requirements such as bilingualism and proven ability to do the job. And they aren’t on the government payroll; their remuneration comes from a private outsourcing firm (which usually means they have no job security or benefits.)

Macdonald also discovered a large discrepancy between the value of the contracts the government signed and what it actually spent. Contracts were repeatedly revised, extended and modified driving up the final price by as much 700 per cent. Once an outsourcing deal had been signed, government managers had “considerable leeway” to reach back into the public purse to buy more services.

Most of the outsourcing was concentrated in four ministries — public works, national defence, human resources and public safety. Their personnel costs ballooned by 100 per cent over the five-year period, although their payrolls increased by only 9 per cent.

What this signifies, Macdonald said, is that the government is building a parallel hiring system to replace workers who leave or retire.

He can understand why department managers would prefer to go this route. They can bring in contract workers with a minimum of paperwork. There are no transparency requirements or frustrating delays. And it is up to the outsourcing firm, not the government, to manage these workers. “But it’s a lot more expensive to pay somebody else to manage your workforce than do it yourself.”

Macdonald never did find out how many outside workers are doing government jobs. “The number is not accessible,” he said. “I don’t think anyone knows how many there are.”

He doesn’t think it would be possible — or advisable — to ban outsourcing. What he recommends is that it be used a “as a last resort rather than the go-to alternative.” To make this feasible, Macdonald says, the government would have to overhaul its cumbersome, time-consuming hiring procedures. He also proposes that limits be placed on the discretion of department managers to change or extend signed contracts.

The day after Macdonald’s study was released, an Ottawa radio station asked listeners for their stories. They poured out. The economist now suspects the practice is more widespread than his study shows.

Why should taxpayers care?

First, the government is bulking up its own workforce, while preaching austerity. Second, outsourcing is expensive. Finally, Harper is weakening one of the pillars of democracy: an impartial public service that serves all governments regardless of ideology with professionalism and integrity.

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(The study is available at http://www.policyalternatives.ca/publications/reports)

Carol Goar’s column appears Monday, Wednesday and Friday.

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