Finance Minister François-Philippe Champagne latest prebudget comments suggest deep staffing cuts are coming.Sean Kilpatrick/The Canadian Press
Public servants across the country are bracing for Tuesday’s federal budget, where Prime Minister Mark Carney’s references to austerity and sacrifice will be translated into hard numbers and job cuts.
Unions are already preparing their members, sharing information packages on the “work force adjustment” rules that kick in when departments decide to shed staff.
The budget represents Mr. Carney’s first real opportunity to reshape the federal government, spending billions more in areas such as defence and trade infrastructure while cutting back elsewhere.
The challenge for the government will be to make the case for cuts in some areas, while also defending major new deficit-financed spending overall. Staffing cuts also risk upsetting the demographic balance of the public service, as younger people on temporary contracts will likely be among the first to lose their jobs.
The size of the federal government has grown sharply since the Liberals formed government in 2015, and Finance Minister François-Philippe Champagne said Wednesday that the budget will bring those totals back to “sustainable” levels, hinting at a reversal of growth since the pandemic.
It has been more than a decade since the federal government went through an ambitious spending review. The Conservative government’s Deficit Reduction Plan, launched in 2011, eliminated more than 16,000 positions.
The steep budget cuts of the mid-1990s went even further, when then-prime minister Jean Chrétien’s government brought in budgets that ultimately reduced the public service by 45,000 employees.
Mr. Champagne’s latest prebudget comments suggest deep staffing cuts are coming.
“We need to bring back the civil service to a sustainable level,” he said Wednesday. Union leaders were quick to point out that returning to prepandemic levels implies a cut in the range of 70,000 jobs. “The people of Canada are going to be shocked,” said Sharon DeSousa, president of the Public Service Alliance of Canada, earlier this week.
Some former senior federal officials say Ottawa should learn from past cost-cutting exercises.
Michael Wernick, a former Clerk of the Privy Council, said hiring freezes or eliminating temporary positions is an easier option for departments than laying off more senior workers with permanent positions.
But that approach risks creating demographic problems, leaving the public service with fewer young employees with important skills the government needs.
“My view is the current toolkit is biased and skewed. The cuts will fall hardest on the newest, youngest workers,” he said in an interview.
Protecting those workers may involve spending more money to fund buyouts or other incentives for older workers, he said.
The government has not yet said whether it will be offering incentives for workers to leave the public service.
Mr. Wernick said ministers will also have to weigh the fact that in some cases, eliminating entire programs may be better than across-the-board cuts based on percentages. But eliminating specific programs risks stronger blowback by those who are affected.
“The more hawkish people in this area always argue that it’s better to kill a program or close a location completely, rather than just leave it wounded,” he said.
Mr. Carney pledged during the April election that he would “spend less” on day-to-day operational spending in order to “invest more” in large capital projects like port expansions that will support longer-term economic growth.
The cuts will inevitably have a significant impact on staffing, given that at $71.1-billion, personnel costs are the largest part of Ottawa’s operating budget.
There are two main ways of measuring the size of the federal public service. Both show significant increases since the Liberals formed government in 2015.
The number of full-time equivalent positions, which measures the extent to which an employee represents a full-time budget expense, stood at 440,984 in 2023-24, up from 342,129 in 2015, according to the Parliamentary Budget Officer.
Treasury Board also releases head count figures, which are slightly more current. It measures all active employees.
Those figures show the federal government’s ranks stood at 357,965 as of 2025, down about 10,000 from the year before but still about 100,000 above 2015 levels.
The Treasury Board totals are smaller than the full-time equivalents because they measure the “core” public service and separate agencies, which is a narrower definition of government workers.
The federal government spends about half a trillion dollars a year on programs and debt servicing, but Mr. Carney has declared much of that spending off-limits.
Transfers to the provinces and territories and core social programs won’t be touched, the government has said.
Mr. Champagne asked ministers in the summer to find “ambitious” spending cuts ahead of the budget. He said ministers should reduce program spending 7.5 per cent in the first year, followed by 10 per cent in savings the next year and 15 per cent in the 2028-29 fiscal year.
This works out to $15-billion in the first year, $20-billion in the second year and $30-billion by year three, according to a recent analysis by Desjardins.
An analysis of past spending reviews published this year by the government’s Canada School of Public Service said a clear lesson is to make sure the “review base” that is available for cuts isn’t too small to meet the overall targets.
Allen Sutherland, a former senior Privy Council Office official responsible for machinery of government who is now president and chief executive officer of the Institute on Governance, said the Carney government may have declared too many spending categories as off-limits to cuts.
“It may be that in future years, they’ll have to broaden it out and put other elements on the table that they’re not ready to put on now,” he said.
Union leaders say they are frustrated with the government’s focus on public servants, rather than on other options such as reducing the use of outsourcing or raising more tax revenue.
“We’re sick of being the scapegoat for deficits we didn’t cause,” said Nathan Prier, president of the Canadian Association of Professional Employees.
Another option for spending cuts is to simply not renew programs that are set to expire.
A report this week by the Canadian Centre for Policy Alternatives reviewed 84 federal departments and found 52 will likely use the non-renewal of programs to meet their spending reduction targets.
CCPA senior economist David MacDonald predicts specific cuts will be made via “stealth” over the coming months. He does not expect them to be clearly laid out on Tuesday.
Mr. Wernick, the former PCO Clerk, said history shows politicians need to weigh the potential for blowback. He points to the decision by the government of Stephen Harper to declare some lighthouses as surplus and to cut funding to a fisheries research centre in Northwestern Ontario as issues that generated stiff opposition.
“Change always brings resistance, and some of it’s going to be more painful than others,” he said.