Budget ushers in 'transformational' era for federal public service
Budget 2025 seeks to reshape the federal public service through workforce reduction, early retirement incentives, and the integration of Canadian-made AI tools across government operations.
Key Workforce Changes
- The budget plans to reduce the federal workforce by roughly 16,000 full-time positions over three years, about 4.5% of current staff.
- Up to 1,000 executive roles are included in the cuts.
- By 2028–29, the government expects about 40,000 fewer employees compared to 2023–24 levels, when staffing peaked.
Modernization and Efficiency Goals
The initiative emphasizes reduced dependence on outside consultants, improved efficiency, and a stronger focus on innovation using domestic AI technologies.
"This is a transformational time for the public service to revisit how we work, how we can improve services to Canadians and how we can build for the future," according to the budget document.
Early Retirement Incentive
Budget 2025 introduces a voluntary early retirement incentive (ERI) under the Public Service Pension Plan. Employees aged 50 or older with at least ten years of employment and two years of pensionable service can apply, subject to specific eligibility criteria.
Impact on the National Capital Region
Many affected employees live and work in the National Capital Region, where the federal government remains the largest employer. The proposed changes mark a significant shift in Canada’s public sector landscape.
Author’s summary: The 2025 budget outlines major reforms to cut federal staffing and modernize operations through AI innovation and early retirement options, signaling a structural shift in Canada’s public service.