Finance Minister asks cabinet to cut spending by up to 15% by 2028. Carney’s fall budget aims to curb costs while investing in Canada’s economic strength.
Federal Ministers Ordered to Propose Major Spending Cuts
Finance Minister François-Philippe Champagne has formally directed federal cabinet ministers to identify “ambitious savings proposals” as part of a broad cost-cutting review ahead of this fall’s federal budget. The directive, issued Monday via letter, marks the beginning of a government-wide effort to curb operational spending and shift resources toward national priorities.
A Comprehensive Review of Government Spending
The review, described by officials as a “comprehensive expenditure review,” is being spearheaded by Champagne. Its goal: reduce day-to-day operating costs within the federal government to make room for strategic investments in infrastructure, trade, and national security. According to source, departments must now evaluate if their programs are essential to federal responsibilities, effective, and non-duplicative of provincial or municipal efforts.
Aligning with Carney’s Election Commitments
This push echoes Prime Minister Mark Carney’s campaign promise to “spend less so Canada can invest more.” Carney has committed to limiting annual spending growth to just two per cent until 2028–29. At the same time, he has pledged significant investments, including $9.3 billion in new defence spending this fiscal year.
Transport and Internal Trade Minister Chrystia Freeland, speaking to Power & Politics, said the cuts are about “streamlining government, not shrinking services.” Social programs such as dental care, child care, and provincial transfers will remain untouched.
Federal Workforce Growth Prompts Cost Concerns
Government data reveals that the federal workforce has grown by 40% since 2015, far outpacing population growth. The number of federal employees rose from 257,034 to 357,965 during that period. Critics argue this expansion has contributed to rising deficits, as operating costs continue to exceed revenue.
Champagne’s office confirmed that ministries are being asked to reduce spending by 7.5% in 2025, 10% in 2026, and 15% by 2028. While officials say this is “not a job cut exercise,” natural attrition through retirements or resignations is expected to trim the workforce — a move likely to be contested by public sector unions.
Efficiency, AI, and a Changing Public Service
In a nod to modernizing government, Carney and other G7 leaders recently endorsed the use of artificial intelligence to improve public service efficiency. Though no concrete plans have been announced, such technologies could impact staffing levels and streamline operations over the next few years.
Departments to Prioritize and Reallocate
To reshape how budgets are built, each department will be asked to present its top three funding priorities for the fall. Ministers must also explain how these priorities can be financed through existing budgets — a “pay-as-you-go” approach inspired by proposals from opposition leader Pierre Poilievre.
Any additional budget requests must align with seven government priorities, including reducing interprovincial trade barriers, boosting housing affordability, strengthening Canada’s military, and limiting public sector growth.
A Tightrope Between Cuts and Investment
While the government insists the focus is on efficiency rather than austerity, the coming months will test its ability to balance fiscal restraint with long-term economic goals. As the fall budget looms, Canadians can expect a sharper focus on “doing more with less” — and a recalibration of how federal dollars are spent.
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