Digital transformation and Canada’s public sector

With Canada’s economy mired in a slowdown, its stagnating productivity has increasingly become a drag on growth. Nowhere is this more evident than in the public sector, which makes up a significant portion of the economy yet remains plagued by archaic systems that hamper service delivery and hold back economic growth.

If Canada is ever to live up to its potential for growth, the public sector needs nothing less than a digital transformation.

To understand Canada’s reliance on its public sector, consider job creation. The public sector accounts for 40 per cent of gross domestic product and 20 per cent of the nation’s jobs. And this reliance on the public sector is only growing. Over the past half year, jobs have decreased in the private sector as high interest rates have restricted investment, while government agencies have added workers. In one sense, the public sector is helping keep the economy afloat and out of a recession.

But many public sector employees work in jobs that have woefully outdated systems, which hampers productivity, hinders service delivery and poses cybersecurity risks.

Current state

Canada’s public sector is in dire need of a digital transformation. Many public sector systems are outdated and cannot support modern digital infrastructure. For example, Canada’s government operates 50 networks nationwide, many of which are not capable of handling cloud, video and voice services. This fragmentation makes it hard, if not impossible, to implement cohesive and efficient digital solutions.

The digital capabilities of Canada’s government now ranks 32nd in the world, according to the United Nations, down from third from just a decade ago. While all G7 countries slipped in the ranking, none had as steep a decline as Canada.

The good news is that Canada is making investments. In 2022, the government launched Digital Ambition, an initiative to invest in digital service delivery. This year’s budget includes a $2.4 billion package of investments in artificial intelligence.

For example, Statistics Canada is taking steps to modernize its data collection and processing, including operationalizing large language models and artificial intelligence.

Many of the government’s systems are archaic, relying on paper applications and time-consuming phone calls to complete even the simplest of tasks. Currently, more than half of the government’s IT applications and infrastructure are in poor health, hindering effective delivery of services to citizens.

An outdated system is also vulnerable to cyberattacks. Over the past few years, a series of high-profile cyber incidents among federal, provincial and city government agencies and services has exposed citizens’ private information and further underscored the need for Canada’s governments to invest in digital transformation and cybersecurity.

Benefits of digital transformation

The benefits of a digital transformation in the public sector are multifold, including improving productivity, service delivery and cybersecurity.

Productivity gains alone alone are more than enough to justify the investment, and they are just as important in the public sector as in the private sector. Over the past two decades, labour productivity in digitally intensive sectors grew by over three times of that in non-digitally intensive sectors. Digital transformation helps automate processes, which increases efficiency.

Digital transformation also enables more agile, user-centric service delivery and improves the experience for people accessing government services.

Canada’s Digital Operations Strategic Plan (DOSP) emphasizes the need to provide digitally enabled, client-driven services that are inclusive and accessible. This is critical for meeting the diverse needs of Canadians and closing gaps in service delivery.

Of course, digital transformation cannot leave out cybersecurity, especially as more data and processes migrate from in-person services to online. Investments in cybersecurity are crucial to protect sensitive information and ensure continuity of government operations.

Health care

Take health care as an example where the benefits of digital transformation are evident and where investments in the right place would yield immense payoffs. Talent shortages, coupled with the outdated IT infrastructure, have amplified delays and inefficiencies.

Read more of RSM Canada’s insights on infrastructure, the economy and the middle market.

When people spend time waiting for appointments, either on the phone or in waiting rooms, that is unproductive time. When they wait for treatment, that can lead for more time taken off work and worsening health conditions, further decreasing productivity. And while delayed treatment is costly to the economy, early detection keeps people healthy and lifts productivity.

In addition, investing in digital transformation helps to automate procedures, freeing up health care workers to treat patients instead of filling out paperwork.

Here are some ways digital transformation can improve productivity and service delivery in health care:

• E-health platforms: Implementation of e-health platforms in provinces without one and enhancing existing ones to give people better access to health data. Electronic health records keep patients and health care workers informed, enabling precise and timely care.
• Telehealth: An online system that allows people to book their appointments to reduce wait times. Telehealth saves time that would otherwise be spent commuting and in waiting rooms, as well as allowing the system to treat more patients in remote communities.
• Artificial intelligence: Technological advancements can aid health care practitioners in more efficient and accurate diagnosis and treatment, such as using AI in reading CT scans and X-rays.

Improved productivity means that the same amount of government spending in health care could keep more people healthy. A digital transformation of health care builds a healthy workforce, and a healthy workforce is a productive one.

The path forward

The digital infrastructure in Canada’s public sector needs a serious overhaul. Significant investments are needed to move toward paperless systems, online government services, cloud-based solutions and improved cybersecurity.

Reskilling and upskilling the workforce are crucial for workers to continually gain and maintain skills needed to make use of the digital infrastructure. Digital transformation can be successful only if there is a skilled workforce to implement and use new technologies.

Lastly, public-private partnerships can allow the public sector to leverage private sector technology and speed up the process.

The takeaway

Digital transformation can significantly enhance productivity and service delivery, making the sector more efficient and accessible for Canadian people and businesses. A well-functioning digital government well benefits everyone and uplifts society and supports the overall economy.