OTTAWA
Finance Minister François-Philippe Champagne tabled a budget Thursday that aims to balance the government's day-to-day spending with revenues a full year ahead of schedule, in 2027-28, while revealing it has already cut 36,000 public service jobs.
Budget 2026, titled "Masters of our destiny," also folds in the government's annual immigration levels plan, which maintains the target for permanent resident admissions at 380,000 a year through 2028.
"Being masters of our destiny is about having the confidence to build on our strengths and shape our own future," said Champagne, the minister of finance and national revenue.
The budget said the government has lowered direct program spending growth from eight per cent to two per cent.
It said the public service has declined by about 36,000 positions since its peak in 2023-2024, putting the government close to its goal of cutting 40,000 jobs by 2028-29.
"We took decisive action to return the public service to a sustainable level and refocus the priority on delivering for Canadians," the budget document said.
David Macdonald, senior economist for the Canadian Centre for Policy Alternatives, said the government likely wanted to "have the bad news happen quickly" and then "have it go away in future budgets."
The headcount numbers are net reductions, which include increases to workforces of some organizations such as the Department of National Defence, which has hired about 3,667 public servants since mid-2024.
Michael Wernick, former clerk of the Privy Council, said there will be pressure on the federal public service to implement at the speed Prime Minister Mark Carney demands.
"It’s clear that they’re asking more work at a faster pace from a smaller workforce, and so something’s got to give one of these days," Wernick said.
The budget also announced $1 billion over five years to set up a "Government Transformation Fund" to accelerate IT projects and make the public service more productive.
Macdonald warned that using AI to make decisions on benefits would create a "real minefield" for the government. "AI will absolutely make mistakes; it’ll make those mistakes really quickly, and then people have to clean up that mess," he said.
The budget includes several affordability measures, such as enhancing the Canada Groceries and Essentials Benefit with a 2027 supplement and expanding Nutrition North Canada.
It also proposes a new Productivity Mega Deduction and the Canada Strong Fund to attract global investors, and funding for the Canada Electricity Strategy to double grid capacity by 2050.
Before any new measures, the Parliamentary Budget Officer projects a deficit of $63.3 billion this fiscal year and $70.2 billion in 2027-28.
University of Calgary economist Trevor Tombe noted that oil near $100 a barrel is adding more than $1 billion a month to federal revenues, but cautioned that futures markets expect cheaper oil within a year.
The budget's immigration levels plan arrives after the Nov. 1 deadline set by the Immigration and Refugee Protection Act. The government cut its permanent resident target to 380,000 last year and planned to hold it flat through 2028.
Statistics Canada estimates Canada had 41,798,407 residents on July 1, 2026, up 189,425, or 0.5 percent, from a year earlier. That is the smallest July-to-July gain since 1944-45.
Non-permanent residents numbered 2,779,774 on July 1, down 154,614 over the year, the largest annual drop since comparable records began in 1971-72.
At a Canadian Club event Monday, Champagne said Canada had been bringing in more people than its public services could support. The government, he said, had brought immigration "to a more sustainable level for now, but also for the future."
The budget also includes more than $50 billion in investments to advance reconciliation with Indigenous Peoples and $1.5 billion to expand, retrofit and rehabilitate ice rinks and recreational facilities across the country.
Official debate on the budget is set to begin Friday.
This story was written by the e2gold.ca newsroom from reporting by Department of Finance Canada, The Hub | More Signal. Less Noise., iPolitics and Ottawa Citizen. Quotes are checked word for word against that reporting.