Sept. 25, 2026    |  Sign up + past editions    |    Unsubscribe  

An $18-million bill is the latest RTO chatter. But here’s a more esoteric question: what does early retirement do to a public service trying to change how it works?

The Carney government’s early-retirement incentive drew out thousands of public servants from a generation that came of age inside the rules, processes and oversight the government now says have made the public service too slow, risk-averse and cautious.

Now, this could be exactly what the government wants. It could also be exactly what the government can least afford to lose.

Both can be true. And probably are.

These early retirees are taking experience, corporate memory and operational knowledge with them. They could also be taking some of the caution and old thinking that came climbing the ranks in a play-it-safe culture of rules and controls that flourished in the 25 years after Canada’s 1995 fiscal crisis.

The government wants a public service that moves faster and is willing to take risks. Its clearest move yet is the creation of Digital Transformation Canada, with a big mandate: modernize how government develops, buys and uses technology, changing not just the technology but the nature of the work and how public servants operate.

Today:

Pitfall-spotting: Do it pre-policy, not post-.

Blame the triangle: Doug Guzman’s note to staff.

Next-level goals: Patrick Pichette’s note to staff.

Straight to industry: Where a wave of bureaucrats is going.

Start killing things: Amanda Clarke’s advice for DTC.

ERI EXITS
The generation they’re losing

About 69,000 public servants qualified for the Early Retirement Incentive. Fewer than 14 per cent of those applied and fewer than one per cent of applicants were denied.

But knowing how many are leaving doesn’t really tell us what skills the government is losing or where. So far, the Treasury Board Secretariat has released little to reveal the full impact.

Many came into government after the 1995 Program Review cuts, when there was little hiring or spending. A modernization act followed, loosening staffing rules and giving managers more hiring power. Then came the sponsorship scandal, the Gomery inquiry and the Federal Accountability Act.

They cut their teeth on ever-piling rules, processes and new watchdogs. Their careers unfolded through rapid technological change, tighter controls, the 2008 financial crisis, the growing influence of political staff and further centralization of power in the Prime Minister’s Office.

All of it could help explain why so many became timid, process-driven and risk-averse.

A financial bureaucrat who joined in 1998 said years of restraint gave his generation of public servants a “muscle memory” for doing policy without money, a skill some argue is needed today.

He was profoundly shaped by years of austerity: the Chrétien-era downsizing emptied offices. He was told then that fewer than 100 people were hired the year he was. Then came Paul Martin’s 2004 budget, Harper-era restraint and the cuts of 2012.

This is also the system that has produced people who know the machinery of government inside out. They know how to navigate complexity, whether dealing with the crises of the day or stickhandling a program to approval: they know the obstacles, which rules apply, who needs to sign off, how to manage central agencies and protect their ministers.

Those are the kind of people who need to be brought in before a policy is approved, say two former Treasury Board secretaries, Peter Wallace and Graham Flack.

Delivery and implementation are big weak spots in government, and implementation should be considered from the start, the pair argue in a recent paper.

That means bringing in people who know how the machinery works and can spot the legal, IT and procurement pitfalls early.

The pull of culture. Culture runs deeper than the events of any generation, says a bureaucrat who joined in the mid-2000s. “Culture is everywhere,” he says, and people aren’t the source. It’s the structures, rules and incentives to deal with problems that creates behaviour.

He argues every public servant is growing up under those same structures, so losing 9,438 to ERI isn’t enough to change behavior of a 345,000-strong workforce. But it could affect capacity. ERI appears to have been handed out indiscriminately whether or not employees held key “strategic positions.”

It’s not you, it’s the triangle. Echoes of that “it’s the structures, not the people” argument came through lately in a letter Doug Guzman sent staff to explain the problem he calls the “triangle of inertia.” News reports had speculated he was about to step down as Carney’s star recruit to head the Defence Investment Agency, frustrated by the slow pace of getting procurement approved and moving.

Guzman said he was staying and that the “triangle of inertia” was not a criticism of the people in government, but a diagnosis of the system the agency was created to change. As he put it, “the ‘triangle’ refers to a structure, not to its people.”

The Carney government is trying to change that by creating agencies around the public service and hiring heavyweights from outside to run them. It’s done it with Major Projects. Housing. Procurement. Defence Investment. Now digital.

THE MISSION
The digital boss Pichette

DTC folds together digital functions scattered across departments under the leadership of former Google CFO Patrick Pichette, one of the most experienced digital leaders ever recruited to run federal tech. Shared Services Canada, the government’s wiring and plumbing arm, will be the backbone of DTC. Pichette is formally SSC’s president but will be known as DTC’s CEO. Canadian Digital Service will also be rolled in.

His first day on the job he sent a letter to staff that their mission is to use digital innovation to deliver “easy and intuitive” solutions and services to Canadians, make better use of emerging technologies such as AI, and strengthen Canada’s digital sovereignty.

The prime minister has set an “ambitious direction,” he wrote. “Our task now is to work together to deliver step-function improvements in Canadian experiences with federal services.” Step function” is business jargon for a breakthrough jump to a new level, not inching along with slow, incremental improvements.

But some tech talent is already in short supply, and union leaders say it’s taking a taking a hit as thousands head for the door.

There’s been plenty of churn at SSC. The org chart released the day Pichette was appointed has been shuffled with moves still in play. There are IT gaps and movement in tech shops across government.

(The changing org chart: Shannon Archibald has since retired is moving to CMHC; Joe Waddington is filling in. Nutan Behki replaces retiring Patrice Nadeau at Connectivity and Security Services. Zeina Assad is filling in for Behki at Project Management and Delivery. Megan Olson has succeeded Darcy Pierlot as acting chief technology officer, with Pierlot moving to CSE as deputy chief. Chief audit and evaluation executive Begonia Lojk is retiring.)

The ranks of experienced digital leaders have been dramatically thinned by: ERI, pensions, job cuts, the push to de-layer executives, the lure of higher-paying private-sector jobs and the continuing of ordinary retirements. That gives the government an unusually clean slate to bring in new blood and rebuild digital leadership.

Several tech-industry officials say their LinkedIn feeds are chock-a-block with senior bureaucrats announcing their departures or taking jobs in the private sector.

“It’s like LinkedIn is a full-on retirement feed. So many of the people that industry worked with for the past 20 years are gone.”

Digital expert Ryan Androsoff says the loss of institutional knowledge is a concern, but a generational turnover that shakes up the workforce "may not be a bad thing."

He says "what really needs to change is the nature of work, and if IT jobs remain compliance-focused rather than innovation focused, it will be hard to make progress.”

And much of that institutional knowledge may only be a contract away.

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THE EXODUS
Have skills, will travel.

ERI is inherently attractive to the most marketable public servants, those whose skills can easily take them to the private sector or other levels of government.

The revolving door between government and the private sector is nothing new.

Public servants have long retired into consulting, joined firms that do business with government, or moved directly into industry. But industry watchers say ERI is creating an eyebrow-raising wave of senior bureaucrats moving across the street.

About 876 applicants are executives.

The Carney government has promised to rely less on outside contractors. But at the scale and speed it wants, it will need a mix: people who know the machinery from the inside and people who know what’s possible outside it.

It’s unclear how much IT and digital work has been hollowed out. There are about 25,000 jobs classified as IT, but more than 40,000 public servants do digital work, studies show.

“Frankly, I’d argue almost every job in government these days is linked to digital in some way, shape or form, including policy analysts, where the big challenge is the disconnect between policy and deliver,” says Androsoff.

Only 944 ERI applications came from people classified as IT. But digital work cuts across jobs. Engineers, economists and analysts wrangle data. Program staff run services. Administrative staff keep operations going. Procurement specialists buy the tech. And executives oversee it all. Those groups accounted for over half of everyone who applied.

The tech industry has long argued the problem goes deeper. Digital leaders are so buried in operational work there’s little room to think about big innovation. SSC’s leaders “worry so much about keeping the lights on… they can’t get their head up to even think about transformation, and nothing about this organizational change is going to change that,” says one tech-industry official.

That leaves two big questions for bureaucrats and the tech industry: where does Pichette find the talent government has chased for years without much luck, and will he have the muscle to force change across a digital function scattered throughout government?

What must die first? For Amanda Clarke, the big test for DTC’s launch is what it’s willing to kill. The Carleton University professor who studies digital government and its procurement, concludes another new agency isn’t reform if all the rules, contracts, incentives and leaders are the same. “The result is a new organization that behaves like its predecessors.”

“DTC will fail if Pichette simply divides responsibilities among the inherited leaders, who will default to what they know. Begin instead with the mandate, set the operating model, then choose the people equipped to lead. No sugar coating in her must-do list.

Pichette ended his first note to staff: “I am an optimist. My style is to listen, be fact based, bold, and drive with a bias for action.”

Achieving DTC’s vision, he wrote, will require collaboration, curiosity, candour and a willingness to challenge each other, “while always keeping an eye on the prize.”

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A bit about me. I write The Functionary as part of my work covering and analyzing the federal public service for Policy Options, where I am the Accenture Fellow on the Future of the Public Service. I've reported on the public service for more than two decades, covering parliamentary affairs and politics for the Ottawa Citizen and iPolitics. My work has been recognized with a National Newspaper Award and a Canadian Online Publishing Award.