Introduction
The public service sector provides the support necessary for a healthy, productive, and happy population. Behind these supports are public service workers who ensure the operation of robust programs that deliver vital services for Canadians, including programs that combat socio-economic inequalities and help uplift vulnerable populations. Despite a strong public service being a key indicator of a successful population, the Canadian public service sector is at risk. It is under threat from massive job cuts, a lack of regulations on technology and surveillance, and ongoing discrimination and inequalities in the workplace. The necessity of the public service has grown with the reality of an aging population and worsening economic hardships for Canadian families. The Canadian public deserves top-quality services, and the public service needs strong federal support to be able to meet these needs and respond to contemporary challenges.
Overview
While economic fears grow due to tariffs and job losses, it is important to remember that public sector jobs are key to a strong economy.1Institut de recherche et d’informations socioéconomiques (IRIS), The Public Services: An Important Driver of Canada’s Economy (Montréal: IRIS, March 2021), PDF, https://iris-recherche.qc.ca/wp-content/uploads/2021/03/Public_Service_WEB.pdf. They are reliable economic drivers, providing stability and diversification to the communities in which they are located. Yet, following the last election, public service workers and the people who depend on their services have been threatened with major cuts. By the fall of 2025, ministries have been instructed to identify 15 per cent cuts across operational expenditures and transfers by 2028-29.2Alex Ballingal, “Brace for Layoffs, Budget Watchdog Says, as Carney Government Aims to Slash Spending by $25B,” Toronto Star, June 20, 2025, . This would amount to $25 billion dollars a year worth of cuts that would have a devastating impact on their capacity to provide services. These would be over and above the already implemented “refocusing government spending” cuts that will hit $3.4 billion in annual cuts in the 2025-26 fiscal year and are already resulting in significant job losses.
The Liberal government’s priority to cut spending by capping the size of the public service was announced at the same time as promises to deliver major nation-building projects in record time. Deep cuts to the levels promised would require across-the-board job losses and major service reductions, not just public service caps,3David Macdonald, “Liberals Will Need to Rethink Their Promised Budget Cuts,” Canadian Centre for Policy Alternatives, June 30, 2025, https://www.policyalternatives.ca/news-research/liberals-will-need-to-rethink-their-promised-budget-cuts/. leaving many workers wondering how so much can be accomplished with fewer people to get the work done. The government cannot meet its nation-building goals without a strong public service.
This Alternative Federal Budget (AFB) proposes measures to support and strengthen Canada’s public service so that it can effectively implement proposals presented in other chapters, ensuring that no one gets left behind. The AFB prioritizes building a strong, well-funded federal public service. From keeping our food, coasts, and borders safe, to preserving our parks, ensuring our roads, rails, and skies are safe for travellers, and delivering vital public services, the federal public service is the backbone of a strong and safe Canada.
AI, efficiency, and productivity
Prime Minister Mark Carney’s election platform promised he would be “relentless” in finding ways to make government more efficient. Artificial Intelligence (AI) is identified as a primary tool to find these savings. There are now three cabinet ministers with mandates that intersect over federal public service efficiency.4Joël Lightbound, minister of Government Transformation, Public Works and Procurement, Evan Solomon, minister of Artificial Intelligence and Digital Innovation and Minister responsible for the Federal Economic Development Agency for Southern Ontario, and Shafqat Ali, president of the Treasury Board. Combine these commitments with the promise to increase spending in defence and border security while, at the same time, capping the overall size of the federal public service, and it is obvious that deep cuts will be needed to achieve these goals. The overall operating budget for the federal government is stable at $130 billion a year and is not increasing. There is no growth to cut.
We risk a hasty and aggressive implementation of new technology without adequate guardrails. The need for AI could then become self-fulfilling in order to fill gaps created by the cuts required to meet the corresponding spending promises in the Liberal platform. This is a recipe for disaster.
When parliament dissolved in early 2025, so died the only federal bill attempting any AI regulation, the Digital Charter Implementation Act. Bill C-27 was weak: it provided guidelines for federally regulated workplaces but not the federal public service itself. It did not require accountability, oversight, consultation, or protections for impacted workers. But it was more than the nothing we have now. (See the AI chapter)
There are widespread critiques that forecast existential threats posed by AI. However, even among the tech optimists, there are recommendations about how AI should and should not be implemented. It should be done in a way that augments human capabilities and improves public services, not with the primary interest of replacing workers and finding cost savings. In this case, the federal government appears to be doing the latter. In a similar era of cost cutting, the Government of Canada implemented the Phoenix pay system to find efficiency and cost savings through technology. That was a debacle costing billions of dollars to fix and causing significant and ongoing harm to thousands of public service workers,5Public Service Alliance of Canada, “Cuts to Canada’s public service leading to overwork, burnout, and worsening conditions for workers,” PSAC News, July 2, 2025, https://psacunion.ca/cuts-canadas-public-service-leading-overwork. but the consequences of similar mistakes now could be worse by many orders of magnitude.
The federal public service has already shrunk by 10,000 jobs this year and layoff announcements continue without interruption.6Huston, Gabrielle, “Federal public service shrinks for 1st time in a decade Nearly 10,000 jobs shed over the last year, including more than 6,000 at Canada Revenue Agency,” CBC, May 23, 2025. https://www.cbc.ca/news/canada/ottawa/canada-public-service-size-jobs-cuts-2025-1.6302059 This is due to the rolling out of “refocusing government spending” cuts initiated in budgets 2022 and 2023 by the Trudeau Liberals.7Department of Finance Canada, Budget 2023: A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future, Section: Refocusing Government Spending to Deliver for Canadians, March 2023, https://www.budget.canada.ca/2023/report-rapport/chap6-en.html#:~:text=Refocusing%20Government%20Spending%20to%20Deliver%20for%20Canadians. Beyond the devastating human impacts of further job cuts and lost services, those who remain are dealing with increasingly dystopian surveillance in their workplace. There are concerns about robots roaming the halls8Arthur White-Crummey and Estelle Côté-Sroka, “Public Servants Uneasy as Government ‘Spy’ Robot Prowls Federal Offices,” CBC News, June 20, 2024. https://www.cbc.ca/news/canada/ottawa/robot-public-service-workplace-privacy-1.7221565. taking attendance, and departments using a measure called “connectivity” to assess whether workers are adequately anchored to their desks.
Contracting out and workforce adjustment
The conventional, yet mistaken, wisdom in public policy debates is that the public service is too large. The public service employment share—i.e., the aggregated general government share—having risen somewhat from the lows of the 1990s, remains below the norm of the 1970s and 1980s. Moreover, the government consumption expenditure share of GDP remains within historical norms, despite the recent pandemic-related cyclical peak, which has since subsided.9Statistics Canada, Table 14-10-0270-01, New settlements in collective bargaining units of 500 or more employee, https://www150.statcan.gc.ca/n1/en/catalogue/1410027001?wbdisable=true; Statistics Canada,Table 36-10-0104-01, Gross domestic product, expenditure-based, Canada, quarterly, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610010401.
Too few public sector workers lead to backlogs and growing wait times, which negatively impact vulnerable populations. For example, prolonged underfunded staffing has led to significant wait times for veterans seeking disability benefits (see Veterans chapter).
Cutting the government workforce beyond ending temporary employment contracts triggers the workforce adjustment (WFA) process. This process, agreed to by both the government and its bargaining agents, notifies affected employees that their position may be cut, and provides possibilities for maintaining employment or finding work beyond government with support for that transition. The program neither guarantees that the results will be equitable nor ensures that the federal public service will retain the talent and knowledge it needs to carry out its mission.
The proposed reductions in public service expenditures from the Liberal election platform will surely lead to further staffing cuts. When departments need to increase staffing in certain areas, they often look to contracting out instead of internal solutions. While past budgets have implied the government will reduce contracting out, particularly on management consulting, there have been no obvious reinvestments in public services to indicate work will be brought in-house. The government could realize roughly 25 per cent savings on bringing work back in-house while it improves the quality of work.10Mark Creighton, Jill Giswold, and Kaitlyn Vanderwees, “Fiscal cost of task-based IT contracting,” Parliamentary Budget Office, January 2025, https://www.pbo-dpb.ca/en/publications/RP-2425-024-S–fiscal-cost-task-based-it-contracting–cout-financier-passation-contrats-ti-centres-taches.
GBA+ and DEI
Recent rollbacks of diversity, equity, and inclusion (DEI) programs in the United States and around the world raise concerns about the future of these same programs and equity goals in terms of Canadian government policy and programs, and in terms of their workforce.
The federal government has reported on employment equity in the federal public service for more than 25 years,11Treasury Board of Canada Secretariat, “Employment Equity in the Public Service of Canada for Fiscal Year 2022 to 2023,” https://www.canada.ca/en/government/publicservice/wellness-inclusion-diversity-public-service/diversity-inclusion-public-service/employment-equity-annual-reports/employment-equity-public-service-canada-2022-2023.html#ToC5. tracking its progress toward a public service whose diversity matches that of the Canadian population. The government has made slow but steady progress toward this goal; however, austerity measures, including workforce adjustment, threaten recent progress.
Many workers establish careers in the federal public service as term or temporary employees before becoming permanent employees. These employees are also the first to go when cuts are made to the public sector workforce. When it comes to the permanent workforce, younger workers with less experience will often be less able to compete for the remaining jobs when cuts occur. Measures should be taken to ensure that progress toward diversity does not reverse due to younger and more diverse workers being disproportionately laid off.
Equity and inclusion goals should remain front and centre in recruitment, retention and career advancement, and efforts to remove barriers to full inclusion in the federal public service for racialized, Indigenous, 2SLGBTQ+, disabled workers, and others, need to remain on track, regardless of the government’s short-term goals to adjust the size of the federal public service.
2025 marks the 30th anniversary of the federal government’s commitment to institute gender-based analysis into its policies and practices. This analysis helps to uncover the gendered impacts of policies, programs, and spending—and is used to help ensure federal initiatives provide equitable benefits to women and men. Updated in 2011 to reflect the impacts of policy and programs across more areas of difference, the framework can be used to ensure equitable treatment of different genders, racial groups, and cultures. However, early bills introduced under the current federal government show a strong focus on infrastructure, military spending, and energy projects, and do not show the same commitments to equitable benefits in federal policy and spending.
Equity is at the centre of all AFB recommendations. All supports for the public service will be approached through a Gender-Based Analysis Plus (GBA+) lens, with a focus on decolonization of the public service and an anti-racist lens that seeks to provide remedies for past and current inequities.
Actions
The AFB will implement AI without cutting jobs. Tasks completed should still require human review, and ensure human expertise remains essential.
The AFB will replace Bill C-27 with a stronger alternative that includes regulations and oversight within the federal public service. (See AI chapter).
The AFB will stop the job cuts being implemented as part of the “refocusing government spending” plan, so that people in Canada can access the critical services they rely on without delays. It will bring contracted services back in-house to ensure better oversight, improve service delivery, and achieve cost efficiencies in the federal government.12Recent data from Carleton University’s School of Public Policy and Administration show that contracting out cost the federal government $15.1 billion in fiscal year 2021-22; Carleton University School of Public Policy and Administration, Government of Canada Contract Analysis: Core Public Service Contracts 2021–22, accessed 2025, https://govcanadacontracts.ca/.
The AFB will abandon plans for radical 15 per cent cuts to operational expenditures and transfers that would substantially reduce service levels and seriously hamper the federal government’s ability to tackle major new projects in housing construction and reinvigorating the Canadian economy in the face of U.S. threats.
The AFB will maintain and enhance recruitment, retention, and advancement programs for diverse groups in the federal public sector workforce.
The AFB will track and report on the gender and equity impacts of workforce adjustment measures by department.
The AFB will ensure GBA+ analysis is consistently implemented on all new government spending and policy.
