David Macdonald, a senior economist with the left-leaning think tank, the Canadian Centre for Policy Alternatives, released a report, A Stiff Price to Pay: Predicting Federal Job Losses Due to Carney’s Cuts, on July 24, and it hit the National Capital Region like a hurricane. According to his analysis, the cuts are expected to be deep.

“The Trudeau-era cuts have already generated substantial layoffs, but they are only the beginning. The Carney cuts are the second axe to fall, and the pain will be deep. High quality service from a federal program will suffer. There will be fewer staff on the tax, EI and CPP call lines. Passport offices will lengthen wait times, which had been improving. Reducing staffing and service levels isn’t the right way to pay for a major military build-up and middle- and upper-income tax cuts,” Macdonald wrote in his report.

The public service ballooned during the pandemic, increasing by about 35,000, before and after the pandemic, and was at about 445,000 by the end of 2024-2025.

To pay for the extra $8.6-billion in military spending announced in June, the government has plans to cut 15 per cent across departments over the next three years, except the Department of National Defence, RCMP, Canada Border Services Agency, Supreme Court, and Parliamentary Budget Office. The report predicts 57,000 full-time job losses between 2024 and 2028. It predicts the Canada Revenue Agency, which has already lost 7,000 full-time employees, to double to 14,277. It estimates Employment and Social Development Canada to cut 2,000 next year, followed by 4,000 cuts by 2028. At Citizenship and Immigration, already victim to 1,944 jobs losses this year, it’s expected to lose 3,847 more by 2028.

The report shows the cuts will be a particular blow to the cities of Ottawa and Gatineau, the National Capital Region. Both cities could lose 24,421 full-time federal public servants by 2028, which is 45 per cent of all the public servants’ job losses across the country.

The total cuts across the country are forecast to reach 7.5 per cent in 2026, 10 per cent in 2027, and 15 per cent in 2028-29.

“The Canada Revenue Agency was hit particularly hard by the Trudeau cuts in 2025: employment fell by almost 7,000 positions. Staffing makes up 83 per cent of what’s on the line at CRA, so it will have little choice but to cut staff further as the transfers that it administers, like to seniors or the Canada child benefit, are off the chopping block. There is little the department can do to shift these cuts elsewhere,” Macdonald writes.

The Treasury Board, meanwhile, says all government departments are being asked to cut spending, under the government’s Comprehensive Expenditure Review. Prime Minister Mark Carney promised to save $25-billion and significantly boost military spending, but he and his government better make sure the cuts don’t affect vital services to Canadians, including services at the Canada Revenue Agency, as well as at Employment and Social Development Canada and Immigration, Refugees, and Citizenship—two departments that serve vulnerable populations. Carney’s emphasis on defence, policing, and nation-building projects can’t come at the expense of services Canadians rely on every day. The government is also setting itself up for another showdown with the public service unions.

The Hill Times