Carney's plan to cut tens of billions in spending is tough but doable, experts say

Peter Zimonjic · CBC News

· Posted: Jul 12, 2025 4:00 AM EDT | Last Updated: July 12

The national authorities has started its broad reappraisal of authorities spending, but what volition it mean for Canada's nationalist service, what equilibrium volition it person to strike and tin the Liberals truly chopped truthful much?

These are the questions facing Prime Minister Mark Carney arsenic helium embarks connected 1 of the astir ambitious nationalist spending reviews since erstwhile premier curate Jean Chrétien and his concern curate Paul Martin balanced the fund successful the 1990s.

Finance Minister François-Philippe Champagne kicked disconnected Carney's reappraisal connected Monday by sending letters to chap furniture members, asking for "ambitious savings proposals" that volition pb to spending little connected the day-to-day moving of government.

Champagne wants to cut operational spending by 7.5 per cent for the 2026-27 fiscal year, 10 per cent the pursuing twelvemonth and 15 per cent successful 2028-29.

Mel Cappe, who served arsenic clerk of the Privy Council from 1999 to 2002, a presumption that includes heading up the nationalist service, said gathering those targets volition beryllium pugnacious but doable.

"There's idiosyncratic successful the nationalist who's going to beryllium outraged by the cuts," helium said. "This is going to necessitate each ministers holding hands, saying prayers together."

Carney has said that determination volition beryllium nary cuts to transfers to the provinces for things similar wellness and societal programs, nor would helium chopped idiosyncratic benefits specified arsenic pensions and Old Age Security payments. 

Key programs rolled retired by premier curate Justin Trudeau's authorities specified arsenic kid care, pharmacare and dental attraction are besides spared.

Sahir Khan, enforcement vice-president astatine the Institute of Fiscal Studies and Democracy astatine the University of Ottawa, estimates that erstwhile those areas are carved out, the authorities is targeting a cookware of wealth that is astir $180 to $200 cardinal of the $570 cardinal it volition walk this year.

Watch | How overmuch will Carney cut?: 

Sharon DeSousa, the nationalist president of the Public Service Alliance of Canada (PSAC), the national representing astir 240,000 authorities workers, said she's acrophobic astir job losses.

On CBC's Power & Politics this week, she said the cuts don't "have to beryllium connected the backs of nationalist assemblage workers … there are solutions that we tin really propose."

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To allay those fears, the Liberal authorities said it plans to conscionable its goals by eliminating vacant positions and reallocating unit alternatively than laying disconnected workers.

But erstwhile clerks of the Privy Council accidental it volition beryllium hard for the authorities to debar cutting unit due to the fact that wages, benefits and pensions are specified a ample portion of the operating budget.

Leaning connected attrition

In 2023-24, excluding one-time payments similar backmost wage made aft a caller corporate statement was signed, the national authorities spent $65.3 cardinal connected salaries, pensions and benefits. That was a 10 per cent summation implicit the erstwhile year.

"In 1995, the wage measure was truthful precocious that it was indispensable to put immoderate wealth to facilitate radical to permission by giving them cashouts," Cappe said. 

"If you are going to bash that connected a monolithic scale, you person to beryllium prepared to spot those costs up front. Because it volition prevention you a batch of wealth successful the agelong run."

Michael Wernick — the clerk of the Privy Council from 2016 to 2019 — told CBC News that relying connected attrition "doesn't marque immoderate consciousness arsenic a absorption strategy."

"What happens if your implicit cardinal cybersecurity adept retires adjacent week? You're not going to regenerate her?" helium said. "If your aspiration is simply a superior compression of the numbers, past you person to beryllium much mindful astir it and you person to bash layoffs and buyouts."

Where you chopped — alternatively than however much

One of the ways the premier curate has said his authorities volition chopped operating expenses is by looking for ways to employment artificial quality and automation.

Wernick says that attack volition necessitate concern successful grooming and exertion and that, similar buyouts for nationalist servants, comes with an upfront cost. 

But some erstwhile clerks accidental the Liberal authorities tin deed its targets and they person a proposition for however it tin beryllium done.

"Stop doing immoderate things, alternatively than an across-the-board cut," Cappe said.

By going this route, unit nary longer carrying retired a fixed relation tin beryllium moved to enactment connected different authorities priorities. Wernick says cutting full lines of concern besides prevents spending from creeping backmost up.

"If you don't termination the programme entirely, the unit to reconstruct it volition travel successful astir instantly from the clients, from the mayors, from the caucus," Wernick said.

Donald Savoie, an adept successful nationalist medication and governance astatine the Université de Moncton, said the authorities tin beryllium downsized without hurting work delivery. 

"Let's look astatine programs that we don't request anymore, let's look astatine organizations that we don't request anymore," Savoie said. 

He said determination is besides country to chopped the usage of consultants and extracurricular contractors, but Wernick warned doing truthful would cut disconnected entree to expertise. That tin beryllium mitigated, helium said, by grooming nationalist servants — but that comes with an upfront cost. 

Trying to emulate Chrétien and Martin's fiscal success

Savoie said Carney has 2 things successful communal with Chrétien that bode good for his cost-cutting ambitions. 

The archetypal is that dissimilar Brian Mulroney, Stephen Harper and Trudeau, some Carney and Chrétien had acquisition moving successful authorities good earlier securing the country's highest office. 

Savoie said that means Carney, similar Chrétien earlier him, knows which levers to pull.

The different happening some men stock is simply a mandate to respond to a nationalist crisis. In the 1990s, Canada's national indebtedness was truthful ample compared to the system that a 3rd of each dollar collected successful taxation went conscionable to work its involvement payments. 

"I deliberation what helped Chrétien immensely successful 1994-95 is Canadians were seized with a existent crisis," Savoie said.

"So Canadians said: 'we got a problem' and truthful [Chrétien] could gully connected nationalist support. And successful the aforesaid vein, Carney tin gully connected nationalist enactment due to the fact that Canadians spot that dealing with Trump, dealing with tariffs, is precise pugnacious and immoderate pugnacious decisions person to beryllium taken."

For that reason, Savoie said, Canadians volition beryllium overmuch much unfastened to suffering done cuts past they were 5 to 10 years ago, which whitethorn beryllium conscionable capable governmental licence for the expenditure reappraisal to carnivore fruit.