Finance Minister François-Philippe Champagne is forecasting “tough choices” in this fall’s federal budget, as the government reviews billions of dollars in proposed spending reductions that he suggested would lead to job losses in the civil service.
Speaking to reporters a day after Prime Minister Mark Carney said his Liberal administration’s first budget would include both “austerity” and investments to grow the economy, Champagne said Thursday that the ongoing push to find $25 billion worth of annual spending savings across much of the federal government would lead to “adjustments” in the public service.
“I want to be straight with Canadians. The prime minister was straight yesterday: tough choices ahead but, you know, ambition when it comes to investment, rigour when it comes to spending,” Champagne said. “And yeah, there’ll be adjustments in different places.”
Champagne also echoed comments from Carney that overall spending since 2015, when his predecessor Justin Trudeau took office as prime minister, grew at a pace that is “not sustainable”and that the public service also added “a lot of people” in recent years.
The federal public service workforce grew to357,965 employees in 2025, an increase of about 40 per cent— or about 100,000 people — since 2015, according to .
“So you’re looking at adjusting, but at the same time, the point is really about using technology, delivering better services, making sure that Canadians find value for money,” he said.
Sharon DeSousa, national president of the Public Service Alliance of Canada, condemned the government’s plans and insisted cuts to the civil service workers her union represents will inevitably harm public services the federal government provides.
“Let me be clear: Prime Minister Mark Carney’s austerity agenda is lazy, reckless and short-sighted and puts everyone in Canada at risk,” DeSousa said in a statement to the Star.
“We need a government that is truly willing to work with workers and unions— not around them.”
In Mississauga, Conservative Leader Pierre Poilievre argued the government needs to reduce spending by cutting in areas from foreign aid to civil service consultants. At the same time, he said he doubts the spending restraint Carney is promising will actually happen, claiming the government is actually going to increase the federal deficit.
A report from the C.D. Howe Institute inJuly the budget shortfall could almost double to $78 billion on average over the next four years, largely because of plans to significantly increase spending on national defence.
“The government has become a big fat man, and the private sector is a skinny man carrying that fat man up an increasingly steep hill, and that skinnier man is about to collapse under the weight of the gargantuan Carney Liberal government. It’s time to put that government on a diet,” Poilievre said.
Champagne dodged Thursday when asked about the size of the deficit in the upcoming federal budget, but he insisted the government is intent on fiscal restraint.
In July, Champagne asked Carney’scabinet ministers to find annual spending savingsthat increase to annual reductions of 15 per cent of a significant part of federal spending by the 2028-29 fiscal year. Government sources told the Star at the time that this target amounts to about $25 billion in annual spending reductions within the next three years— almost double the $13 billion in annual savings within three years that the Liberals promised to find during the spring federal election campaign.
At the second day of this week’s cabinet meeting at a hotel in North York, Champagne confirmed to reporters that all ministers submitted plans to meet the reductions he asked for.
“It was not an option. Like I said, this was mandated by me and the prime minister to make government more efficient,” he said. “We need, all together, to make sure that we find the savings that we need in order to be able to invest.”
When the scale of the planned spending reductions was revealed, unions raised alarms about the prospect of layoffs; Yves Giroux, then the parliamentary budget officer,told the Star the exercise would likely require job losses beyond attrition and cuts to federal grants and contributions.
Even before the new round of reductions, the federal government had started making cuts in line with previous demands for savings starting as far back as the 2023 budget.
Several departments gave notice this week of “workforce adjustments.” The process for cutting full-time jobs in the public service is a lengthy one, with employees given time to find similar positions within government when they receive a layoff notice, as well as opportunities for job sharing. Library and Archives Canada was one of the departments that gave notice indicating it will be losing approximately 70 of its 1,156 positions.
Library and Archives Canada spokesperson Richard Provencher said ithopes to make these cuts without impacting the services it provides.
“Maintaining service standards for Canadians remains our priority. We currently are not eliminating any programs. However, given the reductions, some adjustments may be needed,” he said in an email.
Provencher said the new round of spending reductions currently underway could result in more changes at Library and Archives.
The Trudeau government planned a three per cent reduction in spending, along with reductions to consulting and travel budgets, in a bid to save about $3 billion per year— significantly lower than the reductions currently planned under Carney.
Public Health Agency of Canada spokesperson Mark Johnson said the agency toldits roughly 4,500 employees this week that it expected to lose approximately 320 positions.
“As part of PHAC’s post-pandemic recalibration and ongoing efforts to adjust to new salary allocations, the agency must focus resources on government-funded priorities. This means reprioritizing and streamlining some programs, and in some cases discontinuing work,” Johnson said.
Johnson confirmed that PHAC is looking at other ways to reduce spending to meet the 15 per cent reduction target.
The Department of Justice also started a process earlier this summer for 264 layoffs, andImmigration, Refugees and Citizenship Canadahas also announced significant layoffs.
At the same time, the Carney government is increasing defence spending, including a $9-billion injection of funding for the current fiscal year, and plans to add tens of billions of dollars over the next decade to build up the military and meet new commitments with the North Atlantic Treaty Organization.
The government is also cutting income taxes by one percentage point for the lowest earning bracket, has scrapped previous plans to increase capital gains taxes, and cancelled the long-planned Digital Services Tax for major online companies after U.S. President Donald Trump threatened to walk away from talks to end the tariff trade war over the policy.
The government has also signalled it wants to spend on boosting housing construction, and to support faster approvals and construction of major development projects like ports, mines and possibly fossil fuel infrastructure. With a new law and government agency responsible for fast-tracking approvals, Industry Minister Mélanie Joly said Thursday that a list of projects in the “coming weeks.”
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