The federal public service is about to face the worst cuts in modern Canadian history, and it’s the working class being told to foot the bill.
On July 7th, Finance Minister François-Philippe Champagne sent a letter to cabinet ministers directing them to develop “ambitious savings proposals” to slash spending by 15 per cent by the 2028-9 fiscal year.
The plan requires departments to find ways to cut spending by 7.5 per cent starting in 2026-7, followed by another 2.5 per cent in 2027-8 and 5 per cent in 2028-9, for a cumulative 15 per cent reduction over three years.
However, not all departments are being subject to the same treatment. The Department of National Defence, the Canada Border Services Agency and the RCMP are only being asked to find savings worth 2 per cent of their current budgets by 2028-9. This means that other departments, those providing essential public services, will bear the brunt of the cost.
While Carney has tried to frame these cuts as necessary to increase efficiency and “modernize” government operations, the reality is that the federal government is gutting social services in order to fund ballooning military expenditures and corporate tax cuts. Programs related to environmental protection, regulatory oversight, income support, and Indigenous services are especially vulnerable, having already endured years of underfunding.
Sending a clear message
The government claims these targets will be met through attrition, “rebalancing” the workforce, and capping growth. But cuts of this magnitude simply cannot be achieved without mass layoffs and a sharp decline in the quality of public services.
In fact, a report published by the Canadian Centre for Policy Alternatives in June revealed that even the $13 billion in cuts promised by the Liberals during the election campaign would result in across-the-board job losses and severely disrupted services. The current $25 billion in proposed cuts goes far beyond that. Since wages, benefits and pensions make up a large part of the operating budget, it is safe to say that this cannot be done without mass layoffs.
Departments such as Indigenous Services Canada, Employment and Social Development Canada, and Global Affairs Canada have already warned their staff of impending layoffs in a memo on July 9th. One such memo states plainly that workforce reductions are “inevitable” given the magnitude of the budget constraints, while offering no reassurance or transparency about what to expect.
Even Parliamentary Budget Officer Yves Giroux admitted that these cuts will only be possible by inflicting “pain” on public servants and the working class more broadly. Just how much pain, and who will be affected, is being decided behind closed doors.
Carney’s plan dwarfs Stephen Harper’s 2012 “Deficit Reduction Action Plan,” which resulted in approximately 26,000 public service jobs lost. It even rivals the austerity of Paul Martin in the 1990s, which saw the slashing of the public service by nearly 20 per cent.
It’s no coincidence that this mirrors demands made by the Business Council of Canada, which in 2024 publicly called for a review of government spending on par with previous austerity, explicitly in order to make room for greater “investment” in the armed forces. The Liberals have proven more than willing to do their bidding.
At the same time, the government has scrapped revenue sources that target the capitalist class. As soon as he came to power, Carney cancelled the planned capital gains tax increase that would have raised nearly $20 billion over four years.
Although the government has pledged to leave programs like dental care, early childhood education, and daycare untouched by these measures, it’s only a matter of time before these too are put under the knife. In a system driven by profit, no public good is safe forever. If austerity continues, these programs will be next on the chopping block.
While it’s the rich who demand cuts to fuel military spending, it’s the working class who pays.
Towards a working-class response
The reality is that despite Carney’s promises to “capping, not cutting” public service jobs, this announcement represents the most sweeping austerity program in recent memory. Whether Liberal or Conservative, a government of crisis relies on a single program: protect profits, no matter the cost inflicted on the working class.
The announcement has already sparked anger from public sector workers. The Canadian Union of Public Employees (CUPE) and the Public Service Alliance of Canada (PSAC) quickly released statements condemning the cuts, correctly viewing them as austerity in disguise.
However, while these condemnations are necessary, they are not sufficient. These statements offer workers no way out of the crisis. Thus far, union leaders have offered no clear path forward, begging Carney to reconsider where the axe will fall. Appealing to the very same capitalist politicians carrying out the cuts will do little to solve the crisis facing the public sector.
Our task is not to advise the capitalists on how to implement their cuts more “fairly,” nor to pit one group of workers against another. Austerity must be rejected in its entirety to expose it for what it is: a conscious attempt to make the working class pay for a crisis we did not create.
There is more than enough wealth in Canada to provide the services we need. The path forward lies not in appeals to the ruling class, but in the power of the working class organizing to defeat austerity and overthrow the system that demands it.
