FIRST READING: Even with cuts, Carney's spending is still off the charts

National Post

14-07-2025

First Reading is a Canadian politics newsletter curated by the National Post's own Tristin Hopper. To get an early version sent directly to your inbox, sign up here.
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A series of leaked letters sent out by the Prime Minister's Office indicate that Prime Minister Mark Carney is seeking to slash government spending by 15 per cent over the next three years. If the targets are met, this could work out to about $25 billion in savings per year.
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The Canadian Centre for Policy Alternatives, for one, said that these would represent the 'worst cuts to the public service in modern history,' and would 'rival' the aggressive reductions to government spending that Canada undertook in the 1990s.
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But the spending of the Trudeau era was so profligate and so unprecedented, that even after these supposedly draconian cuts, the Government of Canada would still be spending money at record highs.
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Below, a cursory summary of how, even if Carney does meet his austerity targets, Canada would still be spending well beyond its means … and well beyond what was considered normal federal spending just a few years ago.
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The COVID-19 pandemic was the point when most world governments abandoned any notion of fiscal prudence. This was more true for Canada's Liberal government than almost anyone else. Even without accounting for the extraordinary expenses of the pandemic itself, the COVID-19 era witnessed an expansion of the federal service that really hasn't abated since.
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In the last full year before the COVID-19 pandemic (2018-2019), federal program spending was $338.5 billion. In the most recent fiscal year (2024-2025), it was $485.7 billion.
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If you slash 15 per cent from $485.7 billion, you're still looking at federal program spending of $412.9 billion. Thus, even if the Carney government met all their austerity targets, they'd still be overseeing a federal government that is 22 per cent more expensive than it was just six years ago.
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And that's if they just cut 15 per cent off the status quo. It doesn't factor in the massive spending proposals being proposed by Carney just in the last few months — all of which are hard to tally up because his government hasn't prepared a budget.
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In an email to National Post, Fraser Institute budget analyst Jake Fuss said he doubts the 15 per cent target will end up yielding a smaller government. 'Federal program spending will still likely increase year-over-year, but the 15 per cent savings will scale back the magnitude of the increase in spending,' he wrote.
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In the last year of the Harper government, federal program spending came in at $256.2 billion. Even when accounting for the inflation of the last 10 years, that's still equivalent to just $331.7 billion in 2025 dollars.
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Even if the Carney government can get annual program spending down to $412.9 billion, Canada would still be spending 25 per cent more than what was the norm under the Conservatives.
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As of the most recent count, there were 357,965 people working for the federal public service. When the Liberals first took power in 2015, that number stood at 257,034. In just 10 years, the number of federal bureaucrats has swelled by almost 40 per cent.
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Government employment has not only grown way faster than population growth, but public sector hiring has vastly outstripped hiring in the private sector. According to a December study by the C.D. Howe Institute, Canada has been hiring two government workers for every one worker getting a job in the private sector.
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This explains some of why government has gotten so expensive under the Liberals. The average federal civil servant is paid about $125,000 per year in salary and other benefits. So those extra 100,000 bureaucrats could be costing an extra $12.5 billion per year just in compensation.
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However, let's say that the federal civil service rolls are reduced only by the 15 per cent target now being proposed by Finance Minister François-Philippe Champagne.
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That would yield layoffs of about 53,700 civil servants. But the bureaucrats left would still number 304,265; a workforce that would still be 20 per cent larger than in 2015.
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Even if the 15 per cent target was met, Canada would still have a higher per-capita rate of civil servants than in 2015 — and a higher per-capita rate of bureaucrats than in peer countries such as the U.K. or Germany.
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Canada's population has massively increased over the past four years, almost entirely as a result of a record-breaking post-COVID immigration surge. From 2019 to 2025, the Canadian population grew from 37.6 million to 41.5 million — an increase of about 650,000 per year.
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This somewhat explains the expansion of government, but not entirely. On a per-capita basis, federal program spending in the last year before the COVID-19 pandemic was about $9,000 per person.
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In 2024, by contrast, per capita federal program spending topped out at $11,700 per person. So, even if that per-capita number goes down by 15 per cent, it's still going be to $9,950 per year — about $1,000 higher than it was in 2019.
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And the contrast is about the same when compared to the pre-Trudeau era.
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The Canadian population stood at about 35.8 million the last time there was a Conservative government in charge. So the $256.2 billion spent in 2014/2015 under the Harper government worked out to about $7,156 per person — or $9,265 per person if you're factoring in inflation.
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In other words, even the most streamlined version of the Carney government's spending plans is still going to represent at least $700 more per Canadian per year over what was typical just 10 years ago.