Budget 2025 Introduces 'Transformational' Changes to Federal Public Service
The 2025 federal budget aims to reduce the size of the public service while introducing new initiatives such as an early retirement incentive, decreasing reliance on external consultants, and deploying a Canadian-made AI tool across government departments.
Workforce Reduction Targets
The budget proposes cutting approximately 16,000 full-time positions over three years, representing about 4.5% of the current federal workforce. Up to 1,000 of these cuts will affect executive roles. By 2028-29, the government expects the public service to shrink by around 40,000 workers compared to the 2023-24 peak staffing levels.
Impact and Opportunities for Federal Employees
Many federal employees work in the National Capital Region, where the government is the largest employer. The budget document describes the period as a “transformational time” to reevaluate work methods, improve services for Canadians, and prepare for the future.
"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."
Early Retirement Incentive Program
An important proposal includes amending superannuation and tax rules to introduce a voluntary early retirement incentive (ERI) through the Public Service Pension Plan. Employees as young as 50 years old, with at least 10 years of employment and two years of pensionable service, would be eligible to apply.
Additional Changes
- Reduced dependence on external consultants to streamline costs.
- Introduction of a Canadian-built artificial intelligence tool for government-wide use.
These measures are designed to modernize the federal public service while managing workforce size efficiently.
Author’s Summary: Budget 2025 marks a pivotal shift in federal public service with planned workforce cuts, early retirement incentives, and new technological tools aimed at modernization and improved public service delivery.