GABRIEL GIGUÈRE
OTTAWA – Without a thorough review, federal personnel spending could cost taxpayers upwards of $76 billion per year by the end of the decade, highlights the MEI in reaction to the latest report from the Parliamentary Budget Office (PBO).
“Federal priorities are determined by federal spending, and it is clear that Ottawa’s priority has been expanding the size and scope of government,” says Gabriel Giguère, senior policy analyst at the MEI. “If Prime Minister Carney is serious about returning to sound public finances, personnel spending will need to shrink, and fast.”
Total personnel spending is projected to reach $76.2 billion by 2029-2030, if nothing changes, according to the new PBO publication released this morning. This is up from $65.3 billion in 2023-24, a 16.7 per cent increase.
Average compensation is expected to reach $172,000 per full-time employee by 2029-2030.
When Prime Minister Carney’s predecessor, Justin Trudeau, came to power in 2015, personnel spending was $39.6 billion—a bit more than half of what it is today. Over the course of his tenure, the federal bureaucracy grew by over 100,000 employees.
Certain departments have grown substantially since 2015, including:
- Employment and Social Development Canada: +15,497
- Canada Revenue Agency: +17,257
- Public Services and Procurement Canada: +6,362
“New spending, programs, and taxes have gone hand in hand with the expansion of the federal workforce,” says Giguère. “If Ottawa is serious about cutting wasteful programs, it should begin by cutting the bureaucracies responsible for them.”
The C.D. Howe Institute recently projected that Prime Minister Carney’s first budget could feature a $92-billion deficit for 2025–2026.
Carney’s government has pledged to reduce spending by 15 per cent in select areas by the 2028–2029 fiscal year, following reductions of 7.5 per cent and 10 per cent in the two previous years, by shrinking departments and cutting waste.
In its prebudget submission, the MEI recommended that the federal government be more ambitious in carrying out this pledge. It called on Ottawa to reduce the federal bureaucracy by 17.4 per cent, mirroring the Chrétien reductions of the 1990s, which would eliminate 64,000 positions and save $10 billion a year.
Rolling back Employment and Social Development Canada, the Canada Revenue Agency, and Public Services and Procurement Canada to their 2015 levels could cut more than 39,000 full-time equivalent positions, halfway to that 64,000 goal.
“The fact that personnel has gone up with no measurable improvement in services is an indictment of the current system,” says Giguère. “Restoring balance means ensuring Canadians receive fair value for their taxes, and for that to happen, Ottawa needs to stop seeing the bureaucracy as a job creation scheme.”
The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
