The federal government allocated over $19 billion to external consultants last year, contradicting its vow to limit the use of outside contractors.
The audited financial records from the government for the previous year, made public on Friday, reveal that spending on external professional and specialized services reached nearly $19.2 billion in the 2025-26 fiscal year.
This figure is close to the $19.5 billion spent on such services the prior year.
Entities that were contracted by the government last year include Bell Canada, KPMG, Microsoft Canada Inc., and the City of Toronto.
The Liberal government has faced criticism for an extended period regarding its consulting expenditures. Prime Minister Mark Carney, in his election campaign, pledged to substantially decrease the government’s dependency on consultants and enhance the public service’s ability to recruit internal expertise.
In the budget released last week, the federal government announced that it had begun measures to cut expenditures on external management and consulting services by 20 percent, aiming for annual savings of $900 million by the 2028-29 fiscal year.
Sean O’Reilly, president of the Professional Institute of the Public Service of Canada (PIPSC), criticized the government for cutting public servants while not significantly reducing consultant fees. (Justin Tang/The Canadian Press)
Sean O’Reilly, the president of the Professional Institute of the Public Service of Canada, remarked that while the federal government continues to claim it will reduce outsourcing, Canadians are still bearing the costs.
“Spending for 2025-26 was only slightly less than the previous year, and the expected expenditure for 2026-27 is projected to be the highest ever,” he stated. “The government is downsizing its own public service professionals, yet paying a premium to rehire that expertise.”
“This is not efficiency. It’s waste,” he added.
Public Service Cuts
The Liberal government’s budget for 2025 included plans to reduce the public service workforce by 10 percent by the conclusion of the 2028-29 fiscal year.
According to Canada’s parliamentary spending watchdog, the federal public service has eliminated more than 23,000 jobs in the last two years.
An online tool launched by the Office of the Parliamentary Budget Officer in September estimates that there were 344,970 federal employees in the second quarter of this year, reflecting a 6.5 percent decline compared to two years ago.
The government’s financial statements indicate that total expenditures on contracted services last year amounted to $22.8 billion, which encompasses external contracts and agreements with other government departments.
Government projections suggest that this amount will rise to $26.6 billion in 2026-27.
The Public Service Alliance of Canada announced in 2023 that it had negotiated contract language aimed at safeguarding public service jobs and curbing external contracting. It also indicated that the government had pledged to engage in a consultation process regarding the issues related to outsourcing in the federal public service.
Currently, the government and the Public Service Alliance of Canada are again in contract discussions, with job security and the cessation of what the union deems “wasteful” contracting services among their primary concerns.
