As Prime Minister Mark Carney begins his government’s sweeping review of federal spending, experts say his ambitious plan to cut tens of billions from Canada’s operating budget is difficult — but far from impossible.
Finance Minister François-Philippe Champagne officially launched the cost-cutting mission this week, asking cabinet ministers to deliver “ambitious savings proposals” that would reduce operational spending by 7.5 per cent in 2026–27, 10 per cent the following year, and 15 per cent by 2028–29. The proposals exclude key social and health transfers to provinces and individual benefits such as pensions and Old Age Security.
According to former top federal bureaucrats, reaching these goals will require hard political choices, cross-ministerial unity, and strategic program reviews rather than blanket cuts. “There’s somebody in the public who’s going to be outraged by the cuts,” said Mel Cappe, former Clerk of the Privy Council. “This is going to require all ministers holding hands, saying prayers together.”
The federal government is currently working with a $570 billion budget, of which about $180 to $200 billion is considered fair game for savings after carving out protected areas like healthcare transfers and signature programs such as childcare, pharmacare, and dental care.
Sahir Khan, executive vice-president at the University of Ottawa’s Institute of Fiscal Studies and Democracy, noted that while a strong start, the review faces political and operational hurdles. One of the most sensitive areas is the federal public service. The Public Service Alliance of Canada (PSAC), representing about 240,000 workers, has expressed concern over job losses, urging the government to find alternatives that don’t burden public servants.
Government officials have stated that their plan includes eliminating vacant positions and reallocating existing staff, rather than enacting mass layoffs. However, with salaries, benefits, and pensions making up a significant portion of government expenses—$65.3 billion in 2023–24—analysts warn that avoiding job cuts entirely may be unrealistic.
Former clerk Michael Wernick dismissed reliance on attrition as a comprehensive strategy. “If your absolute key cybersecurity expert retires next week, are you not going to replace her?” he asked. “You have to be more mindful — you have to do layoffs and buyouts if you’re serious.”
Carney’s approach includes leveraging automation and artificial intelligence to reduce labour-intensive work — a method Wernick says is promising but will require upfront investment in training and technology.
Both Wernick and Cappe argue that success will depend not just on how much Ottawa cuts, but where. “Stop doing some things entirely, rather than trimming everything,” Cappe advised, echoing sentiments from Donald Savoie, a governance expert at Université de Moncton. Savoie emphasized reviewing outdated programs and agencies, and limiting reliance on outside consultants, provided internal capacity can be built to replace that expertise.
Drawing comparisons to former prime minister Jean Chrétien’s successful fiscal turnaround in the 1990s, Savoie sees hope for Carney’s strategy. Like Chrétien, Carney brings deep experience in government and is facing a moment of crisis — not driven by debt, but by global uncertainty, rising tariffs, and renewed economic pressure from a second Trump presidency.
“This feels like 1995 again,” Savoie said. “Canadians understand that tough decisions have to be taken. If Carney stays focused, and explains the mission clearly, there’s enough public support to get it done.”
While critics remain cautious, the consensus among seasoned insiders is that Carney’s plan is politically risky but structurally feasible — provided it avoids half-measures and embraces bold, targeted decisions.
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