CARNEY PLANNING MAJOR CUTS TO GOVERNMENT SPENDING STARTING SOON
Prime Minister Mark Carney campaigned on promises to reduce the government's operating budget, but amid increases in defence spending, cuts could hit the public service deeply, according to a report from the Canadian Centre for Policy Alternatives. The Hill Times photograph by Andrew Meade
But Will Spend Billions More on Military and Subsidizing Corporate Projects
Prime Minister Mark Carney is beginning possibly one of the largest cuts to public spending since prime minister Jean Chrétien brought in major cuts to program spending in the 1990s to pay for large corporate tax cuts. Chretien's actions led to the federal government getting out of the business of 'building homes' and turned the housing industry over to the private sector ... which began to underbuild homes as a way of pushing up rents, home prices, and mortgages .... and we all know where that has gotten us, huge profits for investors and others, paid for by millions of average Canadians who just need a place to live.
Canada's Finance Minister François-Philippe Champagne (a former corporate executive) has sent letters to cabinet members asking for major savings proposals that will lead to spending less on the day-to-day running of government. Carney plans to cut spending by 7.5 per cent for the 2026-27 fiscal year, an additional 2.5% the following year and 5 per cent more in 2028-29 for a total of about 15%.
Carney has said that there will be no cuts to transfers to the provinces for things like health and social programs, nor would he cut individual benefits such as pensions and Old Age Security payments. Key programs of Justin Trudeau's government such as child care, pharmacare and dental care are also spared. Sahir Khan, executive vice-president at the Institute of Fiscal Studies and Democracy at the University of Ottawa, estimates that when those areas are carved out, the government is targeting a pot of money that is about $180 to $200 billion of the $570 billion it will spend this year, and is looking at a 15% cut to that 'pot'.
Staff Cuts: The government said it plans to meet its goals by eliminating vacant positions and reallocating staff rather than laying off workers. But officials say it will be difficult for the government to avoid cutting staff because wages, benefits and pensions are such a large part of the operating budget that Carney plans to cut.
The Public Service Alliance of Canada (PSAC) represents a lot of federal employees. They say the sweeping 15% budget cuts look and feel like 'austerity' and will hurt everyone in Canada who depends on vital public services. PSAC says more than 10,000 federal public service jobs were lost last year alone with no plans to maintain the services those workers provided. Thousands more cuts have already been announced — including at the Canada Revenue Agency and Employment and Social Development Canada.
