My libertarian friend Max and I dealt with CSE in the early 1980s, before the election of Mr. Mulroney's Progressive Conservatives. They were a small group, very interested in the security of PC-class machines (this was the 286 era), and especially of machines sold to External Affairs and other customers who might be the subject of spying by foreign intelligence services.
At the time, TEMPEST was a huge concern, and they helped Max measure the emissions from his machines, and advised us on many other confidentiality concerns. This was understandable: we built ruggedized machines that External Affairs used in embassies around the world!
Looking at what they were concerned about, it was pretty obvious at that time that they didn't think we were living in a panopticon: the big bugbear was insiders, and they wanted to see the Orange Book used everywhere (:-))
Therefor: the rot started no earlier than Mr Mulroney's election in 1984, and probably much later. The budget is probably the best indicator. It was small and static until 2001, then doubled and redoubled in Mr Harper's era, from 2006 onwards.