Finance minister Champagne confirmed headcount cuts are coming, citing a return to “sustainable” staffing
Canada’s federal government is preparing to shrink its civil service, with Finance minister François-Philippe Champagne confirming that the upcoming budget will include measures to reduce the size of the public sector workforce.
“We need to bring back the civil service to a sustainable level,” Champagne told reporters in Ottawa, emphasizing the need to align staffing with pre-pandemic levels and the evolving needs of Canadians.
The federal public service, excluding military and police, stood at 357,965 employees this year. That's a 24% increase from 2019, according to Treasury Board data.
Despite a reduction of about 10,000 employees in 2025 compared to the previous year, personnel spending still rose by $1.5 billion, as highlighted in an August report from the Parliamentary Budget Officer.
“If you look at how many people we have today, and what we had before COVID-19, we need to get back to something more sustainable,” Champagne said.
Champagne stressed that the government would be “very transparent” and “very compassionate” in managing workforce reductions.
“Would there be workforce adjustments? The answer is yes,” he said, referencing ongoing efforts to improve processes, merge programs, and leverage better technology.
Sources close to the budget process indicated that cuts would come through both attrition and targeted adjustments, including possible incentives for early retirement, CTV News reported. However, the budget is still being finalized, with the government weighing the balance between new investments and operational savings.
Public service unions and policy analysts have questioned whether attrition alone can achieve the government’s ambitious savings targets.
Interim Parliamentary Budget officer Jason Jacques warned, “For the order of magnitude that you’re looking at, it would be highly unlikely that you’d be able to close a deficit or reach a number that big without the path going through personnel costs, so without some sort of reduction or substantial changes in the composition of the public service.”
Balancing austerity and investment
The upcoming budget—Prime Minister Mark Carney’s first—has been framed as both an “investment” and “austerity” document.
The government has pledged to deepen the deficit to fund infrastructure, housing, and competitiveness, while simultaneously promising to balance operational spending by 2028 or 2029.
Over the summer, Champagne and Treasury Board president Shafqat Ali directed ministers to find 7.5% in savings for 2026-27, ramping up to 15% by 2028-29.
Industry impact and broader context
For mortgage professionals, the planned workforce reductions and fiscal tightening could signal slower processing times for federal programs and regulatory approvals, as well as shifts in housing policy priorities.
Federal budget decisions ripple through the housing and lending sectors, particularly when operational cuts coincide with new spending pledges.
Meanwhile, Ottawa’s plan to curb the use of non-compete agreements in federally regulated sectors may set off a wave of change across Canada’s mortgage ecosystem, from lenders and broker networks to technology providers.
The proposed reform, likely to be included in the upcoming federal budget and scheduled for consultations next year, would amend the Canada Labour Code to restrict most clauses that prevent workers from moving to competing firms or starting their own businesses.
