Budget 2026: Big plans for Canada, little thought for the workforce delivering them

Budget 2026 promises a stronger, more competitive Canada, but the public service professionals needed to deliver those ambitions appear to be an afterthought.

The government is asking more of a shrinking public service, with little reassurance for PIPSC members facing growing workloads, job insecurity and the loss of internal expertise. The budget also raises new questions about billions in corporate tax breaks, pensions, outsourcing and how sweeping plans for AI and digital transformation will affect their work.

The government’s ambitions and its cuts are on a collision course. Here’s what Budget 2026 means for PIPSC members.

Workforce reductions: Turning unexpected losses into permanent cuts

While Budget 2026 announces no new public service cuts, the government continues to press ahead with workforce reductions under the Comprehensive Expenditure Review. It does so without demonstrating how departments will maintain services with fewer employees, which services may be lost as capacity shrinks, or how remaining workers will be expected to do more with less.

One particularly troubling example from Budget 2026 is the government’s approach to early retirements. In some departments, ERI departures exceeded planned workforce reductions. Rather than replace those unforeseen losses or demonstrate that departments can afford to lose added expertise, Budget 2026 accounts for the extra departures by permanently reducing departmental budgets to lock in the savings.

That means departments could be forced to operate with even fewer employees and lower budgets than originally planned under the CER, regardless of whether they have enough people left to do the work.

This reinforces what PIPSC has been warning for over a year: the government is bean-counting, not workforce planning. Cuts are being treated like numbers on a spreadsheet rather than an assessment of the expertise needed to deliver public services, keep critical systems running, and truly become masters of our destiny.

Cuts, Corporate Tax Breaks, and Affordability

Budget 2026’s approach to public services is a choice about priorities. While departments are being told to operate with fewer workers and tighter budgets, the government is committing tens of billions of dollars to business tax breaks.

The centrepiece is the Productivity Mega Deduction, which allows businesses to immediately deduct the full cost of a much broader range of investments. The government estimates the measure will cost approximately $36 billion over five years, while reducing the marginal effective tax rate on new business investment from 13% to 6.4%. 

PIPSC supports investments that create good jobs and strengthen Canada’s economy. But the government is finding room for billions in corporate tax breaks while cutting the public services Canadians rely on. Forgoing this revenue leaves less room to fund public services, unless the government raises revenue elsewhere or borrows more.

Public services are part of the solution to the affordability crisis. When Canadians are struggling with the cost of living, delays in benefits, reduced access to services and weakened protections only add pressure to households.

Building a stronger, more affordable Canada requires investing in the public service expertise that Canadians and businesses depend on – not treating it as an expense to be cut.

Artificial intelligence: Billions for private tech, but what about the workers?

Budget 2026 doubles down on the government’s AI ambitions, reiterating its previously announced $2.7-billion AI for All strategy and committing $1 billion over five years to a new Government Transformation Fund to accelerate IT modernization, digital sovereignty, and improve service delivery.

It also allocates $17.6 million to recruit private-sector experts through temporary fellowships and highlights its $1.6 billion investment in AI company Cohere, which is expected to create 1,000 Canadian technical jobs by 2030 – none of which are identified as public service positions.

Yet amid these investments, the budget offers no dedicated funding to develop AI expertise among existing public service workers, or meaningful commitments to training and reskilling employees whose jobs may be transformed by automation.

It also leaves unanswered how AI will affect jobs and workloads, what safeguards will protect workers, or when unions will be consulted on changes to their members’ workplaces.

PIPSC supports the responsible use of AI to improve public services. But investing in technology without investing in the people responsible for delivering it is not a workforce strategy. Public service workers and their unions must have a seat at the table, with meaningful investments in internal expertise, training and protections against the risks of AI-driven workplace transformation

Outsourcing: More record spending, new questions on IT contracts

Despite repeated commitments to reduce spending on contracting out government services, the budget provides no evidence of progress or reduced reliance on contractors. It also offers no details on how knowledge from temporary outside experts will be retained within government, or what role internal IT teams will play – if any – in the approximately $1-billion federal IT transformation over five years.

Meanwhile, government spending on private consultants continues to break records. This year’s projected outsourcing bill stands at $27.1 billion, surpassing last year’s record high, according to the government’s own estimates.

The government is cutting its own expertise while continuing to pay a premium for outside help. Without investing in its existing workforce or ensuring knowledge from temporary experts stays in government, it risks deepening its dependence on contractors rather than building lasting public service capacity.

Pensions: Changes could affect retirement benefits

Budget 2026 signals the government’s intention to change how federal public service pensions are coordinated with the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP).

Since 2019, enhancements to CPP/QPP have allowed public servants to receive increased benefits alongside their existing public service pensions — known as stacking.

The government now intends to eliminate stacking through full integration of the plans. While this would lower pension contributions for employees and the employer, it would also reduce combined retirement benefits compared with current arrangements.

PIPSC has advocated for maintaining stacking and will continue examining the proposed changes to protect members’ pension interests.

A stronger Canada takes public service experts

Across Budget 2026, a consistent pattern emerges.

It is promising greater efficiency without explaining how growing workloads will be managed, introducing new technologies without a clear plan for workers, and committing billions to corporate tax breaks while cutting public services as Canadians struggle with affordability.

For members, these decisions affect job security, workloads, working conditions and retirement planning. For Canadians, they raise serious questions about the government’s capacity to deliver on its promises. 

Public service professionals cannot be an afterthought in building a stronger Canada. They are essential to making it happen.

The government must stop cutting first and asking questions later. It must assess the consequences of reductions already underway, meaningfully consult workers and their unions, and invest in the expertise needed to deliver its agenda.

It takes experts to build a stronger Canada. Those experts need the resources, protections and support to succeed.