Government office buildings on Friday, July 29, 2022 in Gatineau, Que. THE CANADIAN PRESS/Adrian Wyld

By The Canadian Press

budget plans

Budget pledges to shrink size of public service by 40,000 over three years

Nov 4, 2025 | 1:18 PM

OTTAWA — The federal government intends to slash the public service by 10 per cent over the next three years — eliminating up to 40,000 jobs — as it strays from its election promise to cut the number of federal employees solely through attrition.

The cuts come as the government moves to slow the rate of growth in government spending on operating costs from eight per cent to less than one per cent, and make government programs more efficient through measures like the expanded use of artificial intelligence.

The budget document, tabled on Tuesday, says the goal is to aim for about 330,000 public sector workers by the end of 2028-29, down from a peak of almost 368,000 in 2023-24.

The plan also will see a reduction of 1,000 executive positions over the next two years. The Government of Canada website says there were 9,340 executives in the federal public service as of March.

The government says it also will reduce spending on management and other consulting services by 20 per cent in three years’ time.

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In the written text of his budget speech, Finance Minister François-Philippe Champagne said a more efficient government requires a streamlined public service.

“Since 2019, the federal public service population has grown at a rate far greater than the Canadian population,” he said.

“We must get the size of our public service back to a sustainable level that is in keeping with best practices.”

While some of the reductions will come from attrition through retirements, voluntary departures and previous savings exercises, the budget document acknowledges some positions will be cut.

Prime Minister Mark Carney committed during the April election campaign to “capping, not cutting” the public service.

The government is trying to boost the rate of attrition through early retirements by offering a one-time voluntary program to allow workers to retire up to five years early without incurring a pension penalty.

The budget proposes an early retirement option for people aged 50 or 55 and older, depending on their start date. The option would be available to those with at least 10 years of employment and at least two years of pensionable service.

The budget says the one-year program will begin by Jan. 15, 2026, or when the legislation receives royal assent.

The budget proposes to provide Public Services and Procurement Canada with $15 million over two years, starting in 2025-26, to administer the program.

The budget says government organizations will be communicating these measures to their employees and collective bargaining agents “in the coming weeks.”

The Public Service Alliance, the largest union representing federal public servants, has warned about job cuts. The union also has said the government should cut the number of executives and scale back spending on bonuses.

“There’s no doubt the executive ranks have grown much faster than the rest of the public service,” PSAC national president Sharon DeSousa said in an email Monday. “Over the past year alone, the federal public service has lost 10,000 jobs, while the executive ranks have grown by 185 positions.

“This government’s focus should be on investing in the front-line public services people in Canada depend on — not expanding the size of senior management.”

The budget says several departments have identified ways to use technology, like AI, to find savings by “streamlining workflows, reducing manual effort and optimizing service delivery.”

Following through on a promise outlined in the Liberal election platform, the budget says the government plans to launch an Office of Digital Transformation to identify and implement technology solutions across the federal government.

It also says Shared Services Canada, in partnership with the Department of National Defence and the Communications Security Establishment, will develop an internal, Canadian-made AI tool that can be deployed across the federal government.

Former clerk of the Privy Council Michael Wernick said the budget creates a big “to-do list” for the public service.

“I would say it’s a significant shift after seven or eight years of growth and expanding head counts and budgets to a period of downsizing and tight budgets,” he said. “But what’s really striking is most of the details are still to follow.”

Wernick said public servants across the country were living in “maximum uncertainty” over the last few months and they got “some” clarity from the budget.

“They’re still living with uncertainty about their particular department, agency or workplace, so that level of uncertainty is still there,” he said.

This report by The Canadian Press was first published Nov. 4, 2025.

Catherine Morrison, The Canadian Press