Federal spending on personnel hit $71B in 2024-25: Budget watchdog
Canada’s Federal Government Personnel Costs Rise to $71.1 Billion
According to the latest report by the parliamentary budget officer (PBO), the federal government spent $71.1 billion on wages and personnel costs in the previous year. This represents a $1.5 billion increase from the previous year, despite a reduction of 10,000 jobs in the public service.
The new analysis, which provides more frequent updates on federal staffing, projects that personnel costs could reach $76.2 billion by 2029-30. This is two per cent higher than the previous projection and could contribute to an $8.5 billion increase in the deficit over the next five years.
The PBO report emphasizes the importance of understanding and scrutinizing personnel expenses, as they constitute the largest component of federal operating spending.
Impact on Federal Deficit
The higher spending on public servants is expected to have a cumulative impact on the deficit, adding $8.5 billion over the next five years. This projection does not include recent federal announcements such as pay increases for Canadian Armed Forces members and the comprehensive expenditure review.
Changes in Federal Public Service
Despite a decrease of nearly 10,000 members in the federal public service between 2024 and 2025, the government anticipates an increase of over 13,000 full-time equivalents compared to the previous year’s plans.
The average cost for full-time equivalents, driven by salaries, wages, and other compensation, is expected to rise to $139,400 by 2029-30. When factoring in pensions and benefits, the average cost could exceed $172,000 by the same fiscal year.
Expected Budget Cuts
Prime Minister Mark Carney has committed to balancing the federal operational budget by reducing operational spending. Finance Minister François-Philippe Champagne has requested “ambitious savings proposals” from cabinet members to decrease day-to-day government expenses.
The plan includes a 7.5 per cent cut in operational spending for the 2026-27 fiscal year, followed by reductions of 10 per cent and 15 per cent in the subsequent years. These budget cuts could impact federal wages, depending on the types of public service positions eliminated.
While the baseline projection does not incorporate these budget cuts, the director of parliamentary relations at the Office of the Parliamentary Budget Officer suggests that salary expenses could still increase if lower-level positions are eliminated.
