In this episode, we talk about the growing role of consultants in Canada, and why they re a problem, and what they can do to fix it. We also talk about why it s a good thing that Canada outsourced government.
00:01:57.080So, really, what we've done is, whether it be systems, whether it be consulting, any major industry right now or ministry has a consulting team side by side with that minister or that bureaucratic team.
00:02:13.620Now, for those of you, a lot of us know politics and we know politics in Canada was set up to basically the premise of parliamentary politics is to have the bureaucracy basically not fight, but to provide the tension against the government or the political people in the counterbalance, if you will.
00:02:33.820Our counterbalance in parliamentary politics is supposed to be that.
00:02:37.620And the state ongoing knowledge in the government is supposed to sit with the bureaucrats.
00:02:43.400So they're supposed to be your ongoing mainstay.
00:02:45.800So regardless of the policies of the government, which change off and on, there's supposed to be a counterbalance fight that maintains the state of the direction of the country for the good of the country.
00:02:59.180And that's why the counterbalance between bureaucracy and politics exists.
00:03:03.820Well, okay. So then you and I have this discussion, good or bad, indifferent. Well,
00:03:10.580you know, what is $24 billion going out the door? And that was annually, I think you said,
00:03:18.480So over the course of the term of a government that hangs in for four years, you know, you're
00:03:23.300looking at a pretty significant number there, you know?
00:03:27.260Now can I add just a couple of things, Mike, on that? That doesn't include IT services.
00:03:31.940It doesn't include what they call management, consultant, engineering, or temporary help.
00:03:38.160Well, and it's interesting that you say that because on the top list, governments increasingly rely on outside firms for, when I did my research, IT, digital transformation, procurement, HR, cybersecurity, data analysis.
00:03:53.240All of this is outside of that budget, you're saying?
00:03:56.960That's another $12-ish billion on top of the $23 billion.
00:04:01.320and then you add a couple more billion for consulting you know we all know the the liberal
00:04:08.300famous consulting contracts that went out which became justin trudeau's probably then one of the
00:04:14.200key factors to his demise was you know going through that and then um you know the temporary
00:04:20.740outsourcing just for jobs i think a lot okay so now you take a look at this and the critics will
00:04:26.700say, okay, this kind of consulting creates a dependency ongoing. And I think that's obviously
00:04:33.280illustrated. I can tell you that the names of the top six consulting firms, and we all know the
00:04:41.140names. It's the KPMGs of the world, IBMs, Pricewaterhouse, Coopers, all of these big name
00:04:47.000companies and consulting firms, of course, are big ticket winners of these contracts.
00:04:54.040It reduces in-house expertise to some degree, the critics will say.
00:04:59.320The critics will say it weakens accountability because there's no, you know, it's tough.
00:05:04.140And we've seen this time and time again that when they try to, the government tried to remove $500 million from the budget, as I recall, on consulting fees.
00:05:12.500But the problem was they didn't have the accounting backup to actually find where they could save that money.
00:05:19.420And then the other thing that creates a problem, the critics will say, is it's a revolving door influence.
00:05:26.940In other words, whatever consulting firms in there at the day will have an influence based on their other client base and so on and so forth.
00:12:25.520to get paid so much. So, you know, that's a, I just wanted to go back and know, but I,
00:12:29.380and I agree with that point entirely. Yeah. Uh, I do, I do see consultancy firms as fat cats to
00:12:35.620some degree oh yeah but you know we rely on them I guess for for the expertise that's not there
00:12:41.340what I think is concerning to me is the lack of transparency that comes with consulting so I would
00:12:46.700almost rather and I of course I've had a wackadoodle idea here potentially but the the mission
00:12:53.540behind it and the sentiment behind it is probably consistent with many Canadians which is okay if
00:12:59.260you're going to do something at least let us see behind the curtain what you're doing right because
00:13:04.760it would be better for all of us you would probably get better support from people we would
00:13:10.900see that you're employing people yeah you know what i mean i i really think that the other thing
00:13:16.200is if i was a politician i would want this i would want this because i would constantly be
00:13:20.980able to blame the consultants well you know the consultants yeah sure you know it gives you a
00:13:27.300safety net. Yeah. But you're being, I guess, in the, you know, our government is voted in not for
00:13:35.820safety nets. It's voted in to make decisions. So the more consultants we hire, the less we're,
00:13:41.700you know, they can go back and say that we were advised to do this. Well, we have, and I just
00:13:47.120checked before I came into the show, we have 448,000 approximate public service members.
00:13:52.960Okay. So, you know, half a million people in public service. We had a lot of smart people
00:13:58.000in public service. Right. And again, that tug and pull is supposed to be between government
00:14:02.320and bureaucracy. That's, that's what keeps us on a straight and narrow path in the parliamentary
00:14:07.400political system that we're in today. We have to have that tug and pull now. And as you point out,
00:14:12.660government jobs are paying better at the consultancy and executive level. Sure. Now,
00:14:16.960Now, you know, if you look at and I've done this and math before I've done the calculation, if you look at like and when I was a consultant, great gig, I paid into a benefit plan that was set up and there was a match to the benefit plan and everything else.
00:14:33.920If you look at a government pension plan, your argument that you're not making as much money as the consulting team is a misnomer, to tell you the truth.
00:14:47.700So if your average age is, say you live to 80, quite frankly, you retire at 60-something because you factored out.
00:14:55.380Government workers traditionally factor out at three times the average of three times their last salary, times a factor.
00:19:23.820I'd be like, okay, the direction I'm getting to do a project here,
00:19:27.940is it based on a global strategy of this company
00:19:30.860or is it based on a Canadian strategy?
00:19:34.360And that's where you have to be careful
00:19:35.760Because once you start to, you know, once you start to outsource the government, you're outsourcing it to companies that have then, you know, created their own globals.
00:19:45.660They want, you know, if you're an IT company, now, and especially in this day and age with like AI, Quafer, think about it.
00:21:32.680And I think part of that is kind of why we get some of our wacky decisions.0.76
00:21:37.060And wacky to the point where we'll go over, we'll come up with an immigration policy that actually started in France somewhere, lasted 30 days, was a total bomb.0.58
00:21:49.160And we take it, we put it into Canada, and we leave it.
00:21:52.800and we don't touch it again because some consulting firm put their name on it and we're like oh that's
00:21:57.380okay they put their name on it like so i think the two things nobody wants to admit failure and
00:22:01.940secondly well that's the policy we chose it did not work over there it didn't and a lot of times
00:22:07.480we find in canada right now is these policies that we got from these consulting firms that
00:22:12.100we transferred over to our own country they've already stale dated in the other country they
00:22:16.660bombed and we let them go and we serve it and we let them go because we actually got comfortable
00:22:22.880that someone else's name was on that so we'd like yeah my name's not on let it run right i'm still
00:22:28.040getting my six weeks vacation i'm still getting my pension i'm still getting there so i don't have
00:22:32.480to worry about it and we've done a lot of that in the last 10 years right it's been that is true
00:22:36.660it's been a it's been a real travesty on how we've done it once again kind of behind the curtain
00:22:41.160yeah yeah we've done about it but but you know mike before the show i went in and i started
00:22:46.400looking around i said who has managed this really well so and and what i mean manage this so i'm
00:22:52.820gonna uh but who is actually took a look at their uh contracts and their outsourcing of projects
00:23:00.080really well and of course a country that we talk about quite a bit uh on the energy front which is
00:23:06.960Norway um has done it exceptional so I want to talk to you I feel badly that the more we talk0.55
00:23:12.660about uh this country the more I feel like we're jinxing them everybody stay away from Norway okay
00:23:17.140they've got it they've got it right many well I know my next trip I mentioned before the show I
00:23:21.140am going there I think it's fascinating an amazing country actually it is well you well you know as
00:23:26.700you look at this oil crisis and we go through it in everywhere around the world now it's impacting
00:23:31.360you see this country which is not a huge country population wise you know it's about a quarter our
00:23:36.620size um they just took a direction when uh the rest of the world didn't you know back in the 80s
00:23:43.380in the late early 80s and they started to strategize on an eight-year cycle so they didn't
00:23:50.580they didn't stick to the four-year election cycle right they started to create plans that were eight
00:23:55.560you know eight years long now we you know uh u.s president was just in china and there was a lot
00:24:04.180discussion on the airwaves about the difference between a communist and a you know a democratic
00:24:09.780and free capitalist society um and one of the discussions that you heard a lot about is how
00:24:15.140the long-term vision for china is the goal no matter who the leader is right norway have this
00:24:21.060long 100 year plan 100 year plan and they work at it and they're not in a hurry they don't have to
00:24:26.580you know you hear all these things norway is not the same it's a democratic society but but quite
00:24:32.660frankly, they take a longer approach and they do that through the way they've structured their
00:24:38.420government, which is interesting. So, and I took a look at a couple of things. So IT projects.
00:24:44.020So their IT projects are only outsourced to companies to add on to their centralized backbone.
00:24:52.580Okay. So what does that mean? That they already have created their own policy, procedures,
00:24:57.560uh process yes well and they they basically have so the government is there's one department that
00:25:05.480handles all the system systems for every ministry of government okay so and then the add-ons are
00:25:11.860projects the plugins are into that system so consultants are hired but they're hired like
00:25:18.480for example if we have the ministry of transportation and they're it actually reports
00:25:25.140all into the central hub which is the backbone system of the government and there's an uh there's
00:25:31.560an app or an addition or an extension of that system to take care of air traffic control to
00:25:37.200take care of highway planning to take care of all those things that system works within the same
00:25:42.220backbone and is secured the same by the bureaucracy of the country it's not outsource i understand so
00:25:49.840the systematic outsourcing is transparent to that system. Yes. And likely only hired on once the
00:25:58.960government has begun a project or has budgeted for this one specific part. They're not blanket
00:26:05.460handing off ministries by and large to consultants. Right. You know, we talked about the 448,000
00:26:12.700civil servants that we have on the federal level in Canada right now. I don't know. It's we did a
00:26:19.380thing on the show and i'm probably going to get the number wrong so forgive me but the project
00:26:24.300for payroll a new payroll system has gone on for a decade it's it's incredible tens of millions
00:26:30.720over budget and it has no apparent end again outsourced quite frankly has been a runaway
00:26:39.420program not getting to the end these are these are why our projects go the norwegians have taken
00:26:46.200another approach they have a longer term planning cycle for all their programs like i said the eight
00:26:51.160years they centralize their key technology and and it works for them the other thing they do that i
00:26:57.720thought was really interesting they have labor laws that only allow let's call it a one-for-one
00:27:05.400replacement of government workers so you can only replace one government worker with one consultant
00:27:11.400or international yes and so if you have a if you have a key uh government worker go off leave
00:27:17.160pregnancy whatever quite frankly you can bring in a consultant um i did that role i actually uh with
00:27:23.080the one company i was with uh which was it was for bad accountants who were outsourced to become
00:27:28.520cfos of companies who had lost their cfo okay so you can get a new cfo but you get one
00:27:34.520until that other new cfo gets located rehired or comes back so they have very strict laws
00:27:41.320uh the norwegians about how they don't get a team yes you get a person they're protecting
00:27:48.140the institutional memory of the state i love that line that's a great line it is a great line and
00:27:53.420very important to your uh because again the goals of your state won't necessarily align with the
00:28:00.420goals of the outsourced consulting companies. In other words, what's good for Norway stays
00:28:07.000what's good for Norway and doesn't necessarily have to plug into where consultants are in other
00:28:11.940parts of the world trying to handle scenarios for those countries. Exactly. State authored
00:28:18.220contracts. This is a really interesting approach. So we have the same thing. We don't use it. I
00:28:23.960don't know why we don't use it. Sorry, we don't do this? No, no. So for some reason, again,
00:28:28.500And I'm going to go off on a tangent for a minute, but a little bit of the outsourcing government.
00:28:33.120You have to ask yourself, and when I'm reading through this, I'm thinking, okay, our governments go on a large number of trips, so abroad and conferences to learn about other governments.
00:28:50.060so you think at some point in our history in our canadian history we would have figured out quite
00:28:55.560frankly that we need to approach this a little differently but we obviously decided not to do it
00:29:01.940and you got to ask yourself why do we like it the way it is because we know the way it is doesn't
00:29:07.740work very efficiently like we're not uh our productivity in canada isn't like raging we're
00:29:13.720We're not doing anything on a world record, world-breaking scale when it comes to manufacturing or mining or housing or anything else.
00:29:23.700So we've got to ask ourselves, is it the system of choice by the governments over the last 50, 100 years?
00:29:34.340Has it basically been something we've liked because it gives us more power on the political side?
00:29:43.720There has to be a rationale for it because no rational mind would think that the way
00:30:55.280that we could hire on full-time to do this in the government but we've lost control of that with
00:30:59.720only two times more of the population so i think there is where the problem stems now how do you
00:31:09.960unring the consulting bell how do you unring it well i guess you have to get people to commit to
00:31:16.100it you know and that's if the intention is i guess you know and i think as canadians as we
00:31:20.960get into the next phase of of what's going to happen in the country i think we have to ask
00:31:25.840ourself do we need to do that now like i think that's the question we have to ask of our
00:31:31.040governments do we need to stop this and do we need to internalize the talent and basically
00:31:36.840create the institutional state uh memory um here at home um you know still using consulting firms
00:31:46.440I'm not saying they're not, I was, I did it, I understand it, I think it does have value in places, but quite frankly, we can't dumb down our bureaucracy to the point where it doesn't have any powers or rights or, quite frankly, ability to alter change, figure out a long-term strategy for the country and enact it when we have a four-year voting cycle and we have consultants changing to and fro.
00:32:14.680otherwise what we're doing is we're just creating a we're creating a sub industry of government
00:32:19.460what we're doing is we're creating two two government industries one is an outsourced
00:32:24.380which is almost as big as the insourced and therefore the two are battling constantly
00:32:30.020the institutional memory is lost quite frankly because you got to think about it like i've
00:32:35.540talked about my story i left the i left the country it's right i picked up and decided okay
00:32:40.780i've seen that now i've globally understood what's going on i've decided to move off and
00:32:45.420do other things you know before i came back and so you know as a young man it only made sense to
00:32:50.620me that i had to learn more about the world so are these people that we're actually bringing in
00:32:55.340to actually outsource to and they're creating these reports and projects and make things go
00:33:00.060forward are they going to leave and and that's not good for canada that's the brain drain that
00:33:04.300that we're trying to avoid. And that's really, we have no view on that. We have no eyeballs on
00:33:11.820who comes and goes from a consulting firm because it is private. I think maybe somewhere in the
00:33:17.520middle here, Paul, between my wackadoodle idea and how nicely it's been executed in Norway,
00:33:24.660we have to find our way back to that center where we are. There is more transparency. We have
00:33:31.280a longer institutional memory that would be a great thing for the next government to bring in
00:33:37.080instead of telling us that you want more privacy for the conversations between government officials
00:33:42.180and less privacy for Canadians why don't we focus on we're going to create something that gives us
00:33:48.540longevity like Norway not something that's a flash in the pan idea that we're taking from
00:33:53.920some country that helps us maintain a better UV rating I don't know yeah why don't we take
00:34:00.380and reset this a little bit right in front of the eyes of Canadians saying here's where we've been
00:34:07.560here's what we need to do to create it here's where it's working and here here are the pain
00:34:12.080points to get us there but we're going to do it over eight years and we're going to pass it into
00:34:17.140law so that no matter who comes in after us they're going to continue that strategy right well0.67
00:34:22.720it's interesting and also your contracting scenario so this is something the Norwegians
00:34:28.440do really well they have a public and financial management board that forces vendors to standardize
00:34:37.800risk shifting contracts so what they do it's a little different than we do so you sign a contract
00:34:42.840with the government and for example arrive can that's one you sign a government that goes to a
00:34:49.560centralized now we did have you know we do have this we don't do it very well and it's probably
00:34:54.440because of discipline versus structure, but we don't do it very well. They do it very well. So
00:34:59.740they centralize their contracts. They offload the risk. So as a consultant, you can get paid very
00:35:05.360well, but you have to perform very well. So you couldn't have this payroll scenario where the
00:35:10.660payroll system never gets built. You can't have this arrive can scenario where it starts at 64,000
00:35:16.260or hands at a hundred million dollars, right? None of these can happen because you would not get
00:35:21.200paid right these contracts are these contracts are very well written very preferred they're
00:35:26.820centralized right so they come out of a centralized source um and they go forward so you know this has
00:35:32.840been traditionally what they've done that's interesting because you know why paul if a
00:35:36.580contract goes bad the same division of the government's going to handle it in court they're
00:35:42.080going to have experts that know how to handle that on behalf of the government yes it becomes a very
00:35:47.140tidy fairly transparent process for outsourcing yeah that's a really clever idea yeah no and but
00:35:57.560but again these are around right and each of these now the interesting part is is it's is
00:36:02.920it's assigned to a outsourced group and the norwegians actually assign a project manager to
00:36:09.860it from the central source so not only does the the ministry that's working with the consulting
00:36:16.920team but there's someone who comes in this i've seen this on the premier level a few times in
00:36:22.400canada and i've seen premiers do this effectively where they create like these a team of people
00:36:27.320yes and they assign them to major projects as they assign them to their ministries i think this
00:36:33.000is an excellent idea it's an excellent idea when you want to get stuff done on a on a fast-paced
00:36:39.100basis and and not in a crazy over budget you know bad timeline where do these people come from
00:36:45.980They usually come from consulting firms, so they usually are older gentlemen and ladies that actually have retired or are retiring, have moved on and are finishing their career, and they come to work inside governments.
00:37:01.640They can be lawyers, accountants, doctors, people kind of at the end of their career.
00:37:54.500Like, by having central surveillance on the projects, they actually run the projects in an organized way like you would in a business, which, you know, our prime minister.
00:38:02.380Sort of at 30,000 feet, but with a full view.