A Montreal-based economic think tank is calling on the federal government to establish an “ambitious plan” in the upcoming budget to reduce the size of the public service by 64,000 people.
In a pre-budget submission to the federal government, the Montreal Economic Institute (MEI) urges the government to “look to the approach of former Liberal Prime Minister Jean Chretien for inspiration,” noting the Chretien government reduced the size of the public service by 17 per cent over five years.
“For the present government to follow suit would require gradual reductions totalling approximately 64,000 civil servants, which we estimate would generate annual savings of approximately $10 billion in public funds,” the report says. “This would represent a significant contribution to restoring budgetary balance via better spending control.”
The MEI notes the size of the public service increased by approximately 100,000 people between 2015 and 2025.
To help reduce the size of the public service, the think tank recommends not renewing contract employees through the public service.
The finance department has invited people and organizations to submit their ideas and priorities as part of the pre-budget consultations for the 2025 federal budget. Submissions will be accepted until Aug. 28.
In July Finance Minister François-Philippe Champagne and Treasury Board President Shafqat Ali issued letters to the cabinet, directing ministers to identify savings of up to 15 per cent in all federal departments over three years. The government is aiming to find $25 billion in savings.
The Montreal Economic Institute says “better control of spending is needed to return to balanced budgets,” and calls on the government to reduce all government spending.
“So as not to place an undue burden on future generations, Canada’s new government must make fiscal discipline one of its priorities for the next budget,” MEI said in its report.
The report says the government’s reduction target of 15 per cent “seem insufficient given the government’s desire to increase capital spending.”
The pre-budget submission also calls on the government to consider abolishing “costly new programs” including the Canada Dental Care Plan and drug insurance, eliminate all subsidies to businesses and privatize Canada Post.
“In order to demonstrate sound management of public finances, the government needs to reduce all government spending, not just operating expenses,” the MEI said.
In May, the Montreal Economic Institute released a report calling for a “Chretien-style” review of the public service, which would result in the elimination of 64,000 public service jobs.
Last month, the Canadian Centre for Policy Alternatives issued a report predicting a total of 57,000 full-time equivalent positions will be eliminated in the federal public service by 2028 as the federal government looks for $25 billion in savings, with 24,421 full-time positions cut in the national capital region.
Statistics released by the Treasury Board of Canada Secretariat show 357,965 people worked for the federal government as of March 31, down from 367,772 people in 2024.
