Canada's Government Sector Grows to Alarming Size

Canada's government sector has grown significantly in recent years, according to a new study by the Fraser Institute. In 2024, 21.5% of employed Canadians worked for government, up from 19.6% in 2019. This means that private-sector workers and taxpayers have been paying for a larger number of government employees.

The total government spending as a share of Canada's economy has also increased, from 40.3% in 2019 to 43.6% in 2024. While the pandemic did contribute to an increase in government spending, by 2022 it had declined to 40.0%, slightly below pre-pandemic levels.

The researchers argue that large governments come with significant costs for taxpayers. When Canadians must support a large government, they keep less of their hard-earned money than they would otherwise. Furthermore, when governments borrow money, taxpayers pay interest on that debt, which goes to bankers and bondholders rather than essential public services.

The ideal size of government for maximizing economic growth is between 24 and 32% of a jurisdiction's economy, according to research cited in the study. Canada's current size of government (43.6%) is well above this range.