Get Ready for Harper-Style Public Service Cuts, Says Analyst

The federal Liberals’ new budget proposes to cut about 10 per cent of government jobs over the next four years in an effort to bring the public service to a “sustainable size” — reneging on its election promises.

Finance Minister François-Philippe Champagne tabled a budget Tuesday that promised a 15 per cent spending cut for most departments and a boost in defence spending over the next five years.

“People might characterize this as an austerity budget, and that's true for some departments,” said David Macdonald, an economist with the Canadian Centre for Policy Alternatives.

“It's really a trade of austerity for most departments and a payday for defence.”

Indigenous Services Canada, the Department for Women and Gender Equality and research granting councils will be spared the 15 per cent cuts. The Liberals also plan to maintain spending for existing social programs, including $10-a-day child care, workers’ benefits and disability credits.

The proposed budget also includes commitments to adopt artificial intelligence tools in the public service and launch an audit of government spending to reduce inefficiency and rein in spending.

“It’s very much a Conservative budget,” Macdonald said. “It cuts about the same amount that Conservatives wanted to in their election platform six months ago, and it provides no olive branch to the NDP.”

Macdonald estimates the cuts to the public service are about 40 per cent higher than Prime Minister Mark Carney promised during the spring election campaign.

The federal Liberal party ran on a platform to cap, but not cut, public service employment.

The budget includes a commitment to cut 40,000 full-time employees from the federal public service over four years and launch the review of government spending.

Employee compensation is the federal government’s largest cost, according to the Office of the Parliamentary Budget Officer.

The PBO estimates personnel cost Ottawa about $71.1 billion last year — approximately 13 per cent of Budget 2024’s total $538-billion expenses.

Macdonald said the spending review would likely result in public service cuts enacted by former prime minister Stephen Harper’s government, rather than the drastic cuts made over the past year by the U.S. Department of Government Efficiency.

“They're in line with the Stephen Harper cuts that happened in the early 2010s,” Macdonald said. “But it isn't the same kind of capricious, chaotic cuts to the public service whose goal was not to cut some parts of service and move it to someplace else, but instead to cause chaos.”

The public service cuts are significantly higher than the Liberals proposed last year. Budget 2024 included a commitment to save $4.2 billion over four years through “natural attrition" of the public service.

The 2024 budget stated that Ottawa expected about 5,000 full-time employees to retire, be laid off or otherwise leave the public service over the next year, bringing the public service to about 368,000 employees by March 2024.

Budget 2025 says the federal public service peaked at about 368,000 employees in 2023 and 2024.

Budget 2025’s cuts aim to have the public service reach a size of about 330,000 by 2029.

Canadian Labour Congress president Bea Bruske called on the government to reduce the cuts, arguing that investing in public services and programs will make Canada more resilient in the face of U.S. tariffs. The Canadian Labour Congress is made up of unions representing more than three million workers, including the largest in the federal public sector.

“You can’t create jobs by cutting thousands of them,” said Bruske. “You can’t grow the economy by shrinking public services. Workers need a budget that invests in people and public infrastructure.”

Bruske said there are positive measures in the budget, like the infrastructure commitments.

Don Davies, the NDP’s finance critic and interim leader, said in an emailed statement that while the party opposes cuts to the public sector, it welcomes commitments to invest in housing and a cross-country clean energy grid.