Thank you.
As noted, my name is Jennifer Carr. I am the president of the Professional Institute of the Public Service of Canada. I am accompanied by vice-president Eva Henshaw. The institute represents over 65,000 public service professionals. Most of our members work for the federal public government.
Years of unchecked spending by government departments on contracting out has created a shadow public service of consultants and temporary staff operating alongside the government workforce. Contracting out means higher costs and lower quality of services for Canadians. There's less transparency, less accountability and a loss of institutional knowledge. When work is outsourced, the related skills and expertise leave the public service when the contract ends. The real cost of contracting out is way too high. We have wasted money. We have poor hiring practices. We erode the capacity and we create safety concerns.
The government, according to a Carleton University research project, spent an estimated $15 billion in the last fiscal year on contracts across the core public service departments and agencies. Our members, especially the 20,000 IT professionals, are calling out the government for its overreliance on contracting out. The institute has filed over 2,500 grievances concerning work that was outsourced rather than being assigned to already existing expertise inside the government. We have to ask why.
From our research, between 2011 and 2021 the federal government outsourced over $21 billion in IT work to IT consultants, management consultants and temporary help contractors. Spending on outsourced personnel increased from $1 billion in 2011 to nearly $2.2 billion in 2018, an increase of more than 113%.
Hiring contractors skirts all internal hiring practices and the goals of the government, including those regarding regional development, bilingualism, and equality and equity. Canadians cannot afford any more failed outsourced IT projects. We have only to look at the disastrous Phoenix pay system as a glaring example.
From our research, in the last fiscal year, we saw $2.3 billion spent on information technology service contracts, while at the same time the government spent $1.85 million on its own IT workforce. The bottom line is that it spends more on contracts than it does on public servants that deliver vital IT services. I want to share with you two clear examples of how this breaks down, how a contractor costs more than hiring a federal public service member does.
At the Department of National Defence they hired one IT architect. The cost was $360,000 per year. This contract was repeated for over eight years. The equivalent public service salary, including pension costs of 17%, would be $148,000 a year. The difference is $1.5 million, for just this one resource alone.
At Shared Services Canada, three IT resources for a contract of five years cost $14.1 million. This contract was tendered and posted for another four years. This would be an equivalent of three public servants, with pension costs of 17% calculated already of $1.85 million. The difference for this contract to the public purse was over $12 million.
IT is not the only profession that is seeing high numbers of costly contracting services. The federal government spent $2.1 billion on contracted out health services. With retention and recruitment being an ongoing issue, the federal government has been using contracting out to private nurse employment agencies as a band-aid solution for years. They're parachuting in nursing staff on a temporary basis to look after patients in remote and isolated first nations communities, which is one role for federal public servants, without offering them the consistency or quality of care they deserve.
There is no doubt that it would be far more cost-effective if we invested in a fully funded, permanent public sector solution. This opens the door to outright privatization in what should be publicly delivered health care for first nations communities. We urgently need plans that meet the needs of the Canadian northern population and give health care workers who care for these populations the support and resources they need to do their jobs.
Our call to action is that each one of us has a stake in the fight against outsourcing. This is about fairness. It's about giving Canadians reliable services and stopping the waste on outsourced projects like Phoenix. We need to modernize our hiring policies to create efficient timelines for hiring—