BURST
The federal government is set to spend an estimated $71.1 billion on salaries, bonuses and other personnel costs in 2024-25 despite having shaved off around 10,000 workers from the public service last fiscal year, according to Canada’s parliamentary budget officer.
This was an increase from last year’s $69.6 billion spent on personnel, according to a new PBO report published on Aug. 28. Personnel costs are the largest part of operational spending and will present a challenge to the government of Prime Minister Mark Carney, which has promised to balance the operating budget all while capping and not cutting the size of the federal public service.
Last fiscal year, the size of the federal public service shrunk by 9,807 jobs, according to Treasury Board data . However, in July, the PBO released an analysis that showed the number of full-time equivalents in the public service has continued to grow.
A full-time equivalent is the labour of one full-time employee, or multiple part-time employees whose work adds to the work of one full-time employee.
In an interview, Giroux said the government can reduce the headcount of the public service but still increase the number of full-time equivalents if the jobs cut are those of students, part-time employees and temporary contract workers.
“So you can reduce the number of employees by thousands, but still increase your wage bill,” he said.
The PBO projected that the average cost per full-time equivalent when it comes to salaries, wages and other standard compensation will increase to $139,000 by 2029-30, growing in line with inflation. But the average projected cost balloons to more than $172,000 when benefits and other payments are factored in.
In the new report, the PBO also projected that federal personnel spending could reach $76.2 billion per year by 2029-30 if left unchecked. However, this projection did not include planned increases in defence spending, nor the potential savings in the government’s upcoming spending review .
Carney’s target is to increase defence spending to two per cent of Canada’s gross domestic product by the end of March 2025, which will require more than $9 billion in additional annual spending. The prime minister is eyeing subsequent increases in future years as part of commitments he’s made to NATO.
Meanwhile, his ministers have been asked to find up to 15 per cent savings in most departments and agencies over three years, culminating in 2028-29.
The spending review will start in earnest in 2026-27 with a 7.5 per cent cut across most departments, followed by another 2.5 per cent the next year, and an additional 5 per cent in 2028-29.
“As personnel expenses constitute the single largest component of federal operating spending, amore granular understanding is essential for effective parliamentary scrutiny,” the PBO wrote in the report.
The PBO’s report noted that the projected spending on personnel “provides a baseline for the anticipated policy changes to be announced in Budget 2025,” which is expected this fall.