The federal bureaucracy shrank for the first time since 2015—will this continue under Carney? 

When Prime Minister Mark Carney first entered office, he brought with him a renewed focus on urgency and efficiency. An important test will be whether he can rein in Ottawa’s runaway bureaucracy. The latest data show some progress: the federal workforce shrank by just under 3 percent last year for the first time since 2015. But these cuts were not Carney’s doing. The public service headcount is tallied each year on March 31st, just two weeks after he became prime minister. The cuts to date indicate a deliberate reshaping. The Canada Revenue Agency (CRA) and Immigration, Refugees and Citizenship Canada (IRCC)—the two departments that expanded the most over the last decade—bore the brunt, with a total of nearly 9,000 jobs removed. Other departments, like the RCMP and Natural Resources Canada, saw a modest expansion in their ranks, continuing previous trends. The big question is what happens next. Returning employment to anything near 2015 levels would be a major feat. Today, the federal government employs roughly 39 percent more people than it did that year—an increase of about 100,000 workers. Growth in the federal public service has far outpaced both population growth and the hiring of teachers, nurses, and police officers. This year’s decline merely brings the federal workforce back to its already high 2023 level. Further cuts will be harder. Concerns are already being raised about recent reductions at the CRA, with the department’s secretary of state warning it is at “rock bottom.” Yet the fact that service standards remain so low despite significant staffing growth over the past decade raises its own set of questions. Nonetheless, the pressure to cut is real. A recent letter from the prime minister directed his cabinet ministers to find 15 percent in savings over the next three years. Given that most department costs are tied up in salaries, it’s likely that cuts will need to be made and that a “cap, not cut” approach of natural employee attrition won’t make enough of a dent. The government has already tied its hands to some degree on where those cuts can be made. The RCMP, Canada Border Services Agency, and National Defence were only ordered to cut spending by 2 percent. That, combined with Carney’s pledge to meet NATO’s defence spending target, suggests a deliberate tilt in the public service towards security and defence. Prime Minister Carney didn’t orchestrate the first cuts to Ottawa’s bureaucracy since 2015. But it’s up to him what happens next. A 1990s Chrétien-esque overhaul? Or just modest, piecemeal adjustments? Early signs point to the former, aligning with his promise of urgency and efficiency, but we won’t know for sure until we see next year’s headcount. A version of this post was originally published by the Business Council of Alberta. To learn more, read the commentary here.