The Carney government will use next week’s federal budget to reduce the size of the public service through “workforce adjustments” that include layoffs, Finance Minister François-Philippe Champagne said. Government sources say the plan will right-size the workforce to cut operating costs and redirect money to priority investments.
Champagne told an audience at the National Gallery of Canada that the civil service must return to a “sustainable level” and be aligned with needs.
“Yes, we need to bring back the civil service to a sustainable level,” he said. “We’ll be very transparent with people, but we’re going to be very compassionate in how we do it as well.”
He added that Ottawa will find efficiencies by “better integrating tech into our processes,” alongside program mergers inside departments.
The minister’s press secretary, John Fragos, framed the approach as modernizing and streamlining to “spend less so we can invest more.” Government sources said the sequence will prioritize attrition, early retirement packages, and transfers to higher-need organizations before layoffs where required.
The Public Service Alliance of Canada said Canadians will be “shocked” by the scale, warning that a return to pre-pandemic levels could imply about 70,000 job losses and a weakened capacity to deliver services.
The Professional Institute of the Public Service of Canada said invoking workforce adjustment goes beyond attrition and cited the Canada Revenue Agency experience as evidence that reductions harm service.
Between 2024 and 2025, staffing headcount fell to 357,965 from 367,772. Over 2018 to 2023, however, the public service grew between 4.1% and 6.4% annually even as digital tools expanded.
The Parliamentary Budget Officer’s compilation shows 342,129 full-time equivalents in 2015 and 440,984 in 2023-24, more than 70,000 above pre-pandemic 2018-19. Departmental plans point to a pullback through 2025-26.
The government argues deeper savings are needed as the economy cools amid trade frictions with the US and China. Carney has said budget priorities are export-enabling infrastructure, national defence and tax cuts to improve long-term growth and investment.
Targeted spending items continue alongside restraint. Ottawa announced $382.5 million over five years for the Women’s Program, with ongoing funding after that. Separate materials outline $54.6 million over five years, then $10.9 million annually, to renew 2SLGBTQI+ programming.
The 2025 budget will be tabled Tuesday. Ministers were asked this summer to find ambitious program savings of 7.5% in year one, 10% in year two and 15% by 2028-29, which Desjardins estimates as $15 billion, $20 billion and $30 billion.
Information for this story was found via National Post, The Globe And Mail, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
