Budget 2025 Ushers in a Transformational Era for Federal Public Service
The 2025 federal budget plans to reduce the size of the public service while introducing measures aimed at improving efficiency and innovation. The government intends to cut approximately 16,000 full-time equivalent positions over the next three years, representing about 4.5% of the current workforce. Up to 1,000 of these cuts will be at the executive level.
By the fiscal year 2028-29, the federal workforce is expected to shrink by about 40,000 compared to the peak in 2023-24.
Key Changes for Federal Public Servants
Many federal employees live and work in the National Capital Region, where the government is the largest employer. The budget describes this period as a transformative moment for the public service to reassess work methods, enhance service delivery to Canadians, and build for the future.
"This is a transformational time for the public service to revisit how we work, how we can improve services to Canadians and how we can build for the future,"
Early Retirement Incentive
Budget 2025 proposes changes to superannuation and tax rules to allow for a voluntary early retirement incentive (ERI) program within the Public Service Pension Plan. Employees aged 50 or older with at least 10 years of employment and two years of pensionable service would qualify to apply.
Additional Measures
- Reduced dependence on external consultants.
- Development and deployment of a made-in-Canada AI tool across government departments.
These initiatives are designed to modernize the federal public sector and improve operational efficiency while supporting workforce transitions.
Author's summary: The 2025 federal budget sets a course to reduce public service size by 4.5%, introduce early retirement options, and leverage Canadian AI to reshape government operations efficiently.