Question Period Note: Budget 2025 (Public Service Measures)

What public service initiatives are included in Budget 2025?

• Budget 2025 presents several initiatives that support a modern, efficient, and high-performing public service while delivering value for Canadians.
• It identifies savings that will contribute to returning the size of the public service to a more sustainable level of roughly 330,000 employees.
• To manage these reductions to the greatest extent possible through attrition and voluntary departures, Budget 2025 proposes to offer a voluntary Early Retirement Incentive program.
• Budget 2025 announces consultations to account for CPP and QPP enhancements and ensure that federal employees continue to receive the same pension benefits, without overcontributing.
• The Government will also consult stakeholders on making modifications to the Pensioners’ Dental Services Plan so that, going forward, the years of service required to be eligible to participate in the Plan in retirement would increase from two to six years. This will not impact current members.
• Budget 2025 proposes to introduce amendments to the Federal Public Sector Labour Relations Act to ensure the government can attract and retain the necessary talent for a high-performing public service, while respecting Canada’s fiscal circumstances relative to its stated budgetary policies and objectives.
• Finally, Budget 2025 announced a new Office of Digital Transformation that will drive innovation across government.

CPP/QPP Enhancements
Budget 2025 announces the government’s intention to initiate consultations with key stakeholders to account for CPP and QPP enhancements and ensure that federal employees continue to receive the same pension benefits, without overcontributing. This will save federal employees up to $1,100 in annual pension contributions, while maintaining their pension benefit levels. At the same time, this will achieve fiscal savings of $1.1 billion over four years, starting in 2026-27, and $384 million ongoing from lower pension expenses for the government.
Pensioners’ Dental Services Plan
The government will consult stakeholders on making similar modifications to the Pensioners’ Dental Services Plan so that, going forward, the years of service required to be eligible to participate in the Plan in retirement would increase from two to six years. This will not impact current members. With these changes implemented before the end of the 2025-26 fiscal year, net savings of $101.8 million over five years, starting in 2025-26, and $13.1 million per year ongoing are expected.
Other Budget Items related to TBS
Comprehensive Expenditure Review – TBS Reductions
Reductions of $28.9M in 2026-27, $38.5M in 2027-28, $57.8M in 2028-29 and ongoing, totalling 15% of its operating budget will be applied to TBS. To meet up to 15% in savings targets over three years, TBS will refocus on its core business functions and modernize its organizational structure and processes to enhance agility and efficiency.
Regulations
The government proposes to amend the Red Tape Reduction Act to provide all federal ministers with the authority to enable regulatory sandboxes through issuing temporary and limited exemptions from legislative or regulatory requirements to allow for testing of products, services, processes, or new regulatory approaches.
Buy Canadian Policy
Budget 2025 proposes to provide $98.2 million over five years, starting in 2026-27, and $9.8 million ongoing to Public Services and Procurement Canada and $7.7 million over three years, starting in 2026-27, to TBS to support the implementation of the Buy Canadian Policy.
Previous Decisions Included in Budget 2025
Budget 2025 also noted the funding already approved and accessed by TBS related to Pay Equity ($4M), Vote 20 ($596M – Included in Supplementary Estimates B) and HR Pay Administration (combined figure for PSPC, TBS and PSC of $786M in 2025-26 and $807M for 2026-27).

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