President of the Treasury Board Appearance at the Standing Committee on Government Operations and Estimates (OGGO) – Bill C-15, Budget 2025 Implementation Act, No. 1 – February 2026
1. Comprehensive Expenditure Review
Responsible sector: Expenditure Management Sector
Issue
Can you provide an update on the Comprehensive Expenditure Review?
Response
The Government of Canada is committed to spending less on government operations to invest more in our country and grow our economy.
Budget 2025 introduced long-term savings through the Comprehensive Expenditure Review, with reductions beginning in 2026–27 to ensure fiscal sustainability.
The review will achieve savings of $9 billion in 2026–27, $10 billion in 2027–28 and $13 billion in 2028–29.
These savings are being achieved by restructuring operations, consolidating internal services and right-sizing programs, while bringing the size of the federal public service to more sustainable levels.
If pressed on impacts on Canadians:
The Comprehensive Expenditure Review required the government to make challenging but responsible choices to ensure that spending is cost-effective and delivers results for Canadians.
Savings are drawn from efficiencies as well as programs and activities that are no longer needed or aligned with the federal mandate.
If pressed on job loss:
To manage reductions to the greatest extent possible through voluntary departures, Budget 2025 proposes to offer an Early Retirement Incentive program through the public service pension plan.
Questions and answers
Q. Why did you decide to have lower reduction targets for departments such as National Defence, the Royal Canadian Mounted Police (RCMP) and the Canada Border Services Agency?
A. While we believe there are opportunities for efficiency and savings across government, applying a lower savings target to these organizations recognizes the importance of maintaining key investments and services in priority areas such as defence and security.
Q. Will services to Canadians be affected by these reductions?
A. Savings are drawn from programs and activities that were underperforming, not core to the federal mandate, duplicative, or misaligned with government priorities. In some cases, it was necessary to wind down or change programs to focus on more impactful investments elsewhere. This is about making sure that government operations are sustainable and cost-effective and deliver results that matter most to Canadians.
Q. How is information about reductions being shared with parliamentarians and Canadians?
A. Budget 2025 contains a 40-page annex detailing reductions across government. We have also published an online table identifying workforce reductions in implicated organizations. This information is being updated weekly.
As well, organizations have responded to requests from the Parliamentary Budget Officer by providing as much information as possible.
Q. Through the Parliamentary Budget Officer’s reporting, organizations said that their reductions will have minimal to no impact on service. How is it possible to cut up to 15% of a department’s budget and have no impact?
A. A core objective of the Comprehensive Expenditure Review was making sure that government organizations are focusing on core priorities.
Each organization was responsible for identifying savings by examining programs and activities that were underperforming, not core to the federal mandate, duplicative, or misaligned with government priorities. Therefore, reducing or eliminating in these areas would not be expected to lead to noteworthy impacts on services important to Canadians and core to organizations’ mandates. In addition, in many cases, savings were the result of restructuring of operations and internal efficiencies, which would not directly impact services.
Background
On , the President of the Treasury Board and the Minister of Finance launched the Comprehensive Expenditure Review by sending a letter to all ministers.
Organizations were required to submit, by , saving proposals totalling up to 7.5% in 2026–27, 10% in 2027–28 and 15% in 2028–29 of their review base (that is, voted operating and transfer payment budget as per the Main Estimates 2025–26).
Organizations were directed to target programs and activities that are underperforming, not core to the federal mandate, duplicative, or misaligned with government priorities.
The Cabinet Committee on Government Transformation / Government Efficiency was responsible for review department proposals and for making recommendations to the Prime Minister.
Savings across departments and programs vary, reflecting the need to protect the important mandates that some organizations have in delivering frontline services, social programs, and priorities such as defence and security.
- National Defence, the RCMP and the Canada Border Services Agency’s annual savings target was set at 2% of the review base. Given their essential role in keeping our country safe, this approach is also being taken with the Canadian Security Intelligence Service and Communications Security Establishment Canada.
- A resilient Canadian economy needs to advance research and attract and retain the top research talent to supercharge our growth. Recognizing this priority, the targets of the Natural Sciences and Engineering Research Council of Canada, the Social Sciences and Humanities Research Council and the Canadian Institutes of Health Research are also being set at 2% to protect the councils’ important contributions in improving our global competitiveness and contributing to the economy of the future.
- Women and Gender Equality Canada (WAGE) empowers women and 2SLGBTQI+ people through programs to eliminate discrimination and advance the rights of women and 2SLGBTQI+ communities. To support WAGE in continuing this critical work, its annual savings target is being set at 2% of its review base.
- The government remains committed to reconciliation. Crown-Indigenous Relations and Northern Affairs Canada and Indigenous Services Canada deliver important programs that are legally or constitutionally required, including child and family services, primary health care, and essential community infrastructure. To protect these important programs, the annual savings target for these organizations was set at 2% of their respective review base.
Budget 2025 includes high-level information about the proposed savings measures (Chapter 5) as well as more detailed information on planned reductions by organization (Annex 3).
All approved reductions will be reflected in the 2026–27 Main Estimates, and details will be communicated in Departmental Plans.
2. Workforce adjustments in the public service
Responsible sector: Office of the Chief Human Resources Officer
Issue
Is the government laying off employees across the public service?
Response
When programs, activities and budgets change, departments may need to reduce their workforce.
The government is committed to managing these reductions through voluntary departures and attrition to the greatest extent possible.
We will ensure that employees affected by workforce adjustment are treated fairly in accordance with their collective agreements, terms and conditions of employment, and the Values and Ethics Code for the Public Sector.
Through workforce adjustment or career transition provisions, permanent employees whose jobs are no longer required will either be provided the possibility of remaining in the public service by moving to another job or to pursue a range of supports, should they have to exit the public service.
Questions and answers
Q. How many public servants are currently subject to workforce adjustment measures, broken down by department and region?
A. To support transparency, the Treasury Board of Canada Secretariat (TBS) has made available on its website a detailed breakdown of workforce reductions announced by organizations to date. This information will be updated regularly as employees are notified.
Q. How much are workforce adjustment measures expected to cost the government?
A. The cost per employee will depend on factors such as years of service and the option each individual employee selects under the applicable workforce adjustment measures in their respective organizations. As such, it is difficult to provide an overall estimate at this time.
Q. How much are career transition measures for executives expected to cost the government?
A. It is not possible to estimate how much these agreements will cost. Career transition agreements are negotiated between executives and deputy heads, based on a variety of factors, including age and years of service. They also include both cash and non-cash elements. This cost comes from operational budgets of each organization and is not centrally collected.
Q. How will you prevent the public service from growing to unsustainable levels?
A. Through the Comprehensive Expenditure Review, organizational budgets have been permanently reduced (unless the government decides to invest more in a particular organization). Their spending, including on employees, cannot exceed the budgets they have been allocated.
Q. What is to prevent employees whose positions have been eliminated from returning to work for the public service on contract?
A. In most situations, a former public servant contracting with the government is not an issue provided that the contract is in the public interest and the contracting process is carried out in a manner that bears the closest public scrutiny.
That said, we do not envision seeing a significant number of such situations following current public sector reductions. Reduced budgets will result in reduced spending going forward, and Budget 2025 announced that the government will reduce expenses on management and other consulting services by 20% over the next three years.
Background
In Budget 2025, the government has committed to returning the federal public service population to a more sustainable level of 330,000 from close to 368,000 in 2023–24. Reductions began in 2024–25 with a decrease of about 9,800 employees due to the Refocusing Government Spending initiative and attrition. Additional reductions are expected in 2025–26 because of attrition and funding that has not been renewed (exact figures will be available following the end of the fiscal year). The Comprehensive Expenditure Review will continue this downward trend over the next three years, further decreasing the size of the federal public service by an estimated 16,000 full-time equivalents. The government has also committed to reduce the executive cadre by 1,000 positions, 650 of which are included in the Comprehensive Expenditure Review.
When departments face budget reductions and must reduce their expenditures, they will generally complete a human resources analysis and consider ending non-permanent staffing, such as contracts, term employees, casual workers and students. As needed, departments may consider full-time permanent employees.
The Work Force Adjustment Directive and workforce adjustment appendices that form part of collective agreements outline the provisions for workforce adjustment for indeterminate employees.
Executives are subject to the career transition appendices (E, F and G) of the Directive on Terms and Conditions of Employment for Executives, which facilitate the career transition of executives in a workforce reduction situation.
The workforce adjustment provisions can be used when:
- the services of one or more indeterminate employees will no longer be required beyond a specified date due to a lack of work
- there is a discontinuance of a function
- a relocation of a work unit in which the employee does not wish to participate, or
- an alternative delivery initiative
For executives, career transition provisions can be used when there is:
- a lack of work
- a discontinuance of a function, or
- a transfer of work or a function outside those portions of the federal public administration named in Schedule I, IV or V to the Financial Administration Act
The aim is to ensure that indeterminate employees whose services are no longer required because of a workforce adjustment situation are, wherever possible, provided with alternative employment opportunities.
The department will confirm to an employee if they will:
- receive a “guarantee of a reasonable job offer” at the same level and skill set within the core public administration, or
- be provided four options:
- Option A: 12-month surplus priority entitlement – they will be referred to public service jobs
- Option B: Transition Support Measure (TSM) – lump-sum payment in exchange for resignation
- Option C(i): TSM and an education allowance
- Option C(ii): TSM, an education allowance and up to two years’ leave without pay
One of the key provisions under the workforce adjustment provisions is that organizations must establish a voluntary departure program for a minimum of 30 days in work units with five or more employees at the same group and level who are notified that their services are no longer needed. Departments may also choose to offer the voluntary departure program to smaller groups of affected employees. This allows public servants who wish to depart to do so and reduces the number of involuntary departures. These voluntary departure programs can only be initiated once employees receive a notice that their position may be affected.
For executives, the department will plan and leverage mobility provisions (for example, agreement to being deployed is a condition of their employment). Where a career transition situation exists, the department notifies the executive of their timelines and two options:
- Option 1: Leave the core public administration and seek employment elsewhere, or
- Option 2: Seek continuing employment in the core public administration
3. Early Retirement Incentive program
Responsible sector: Office of the Chief Human Resources Officer
Issue
When will the government implement the Early Retirement Incentive (ERI) program announced in Budget 2025, and how will it help manage workforce reductions?
Response
Budget 2025 identified 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 voluntary departures, Budget 2025 proposes a temporary ERI program.
This program would be funded from the public service pension plan and designed to maintain essential services and business continuity.
Questions and answers
Q. How will the ERI affect workforce capacity, particularly in critical and specialized areas of the public service?
A. The Treasury Board will be developing criteria for acceptance into the program, for example to ensure that critical services and business continuity are maintained. These criteria are in addition to age and years of service requirements.
Q. What is the estimated cost of the ERI?
A. The ERI would be sourced from the Public Service Pension Fund. It is estimated that it will cost $1.5 billion over five years, starting in 2025–26, while providing ongoing savings of $82 million per year.
Q. What level of participation is the estimated cost based on? What happens if the number of interested employees is higher than what’s been budgeted?
A. The estimated cost assumes that 25% of the approximately 68,000 employees who meet the proposed age and service parameters for the ERI will apply. Employees must apply and secure endorsement from their deputy head.
Q. How many public servants do you expect will take early retirement under the incentive? Will they all be accepted?
A. Approximately 68,000 employees in the core public administration meet the age, pensionable service and employment requirements for the ERI. Should the program be approved by Parliament, there will be additional criteria established to maintain essential services and business continuity.
Given that the decision to apply for the ERI is specific to each individual, it is difficult to speculate on the number of employees who may apply or be accepted.
Q. If the ERI is meant to prevent layoffs in the public service, why is workforce adjustment happening first?
A. The workforce adjustment process unfolds over several months, so should the program be approved by Parliament before the summer recess, eligible employees would have an opportunity to apply to it before most involuntary departures take effect.
Q. Public servants already have generous supports available when facing downsizing. Why is the ERI needed?
A. The ERI provides an additional tool to help the government reach its reduction goals through voluntary departures to the greatest extent possible.
Q. You need to be at least 50 years old to qualify for the ERI. Doesn’t this disadvantage younger workers?
A. There are several supports available through workforce adjustment and career transition measures that apply to public servants of all ages.
The ERI recognizes that there is likely a specific demographic of employees for whom early retirement may be a viable and desirable avenue, considering the number of pensionable years they have likely earned. It is important to note that employees eligible for the ERI are not being provided an additional payment or benefit. Rather, they are being given the opportunity to have a penalty for early retirement waived. It’s also worth noting that maximizing the number of Comprehensive Expenditure Review reductions achieved through the ERI will help minimize job loss among younger employees.
Background
As announced by the Minister of Finance on , Budget 2025 proposes to amend the Public Service Superannuation Act and Income Tax Regulations to offer a temporary, voluntary ERI program through the federal public service pension plan. As part of the Comprehensive Expenditure Review, the government committed to manage reductions to the greatest extent possible through attrition and voluntary departures. The ERI program will support this objective by creating a voluntary mechanism for public servants to apply to receive an unreduced pension up to five years earlier than would otherwise be available subject to parameters set by the Treasury Board. These parameters would be designed to maintain essential services and business continuity.
Letters have been sent to approximately 68,000 employees who may meet the program’s age, pensionable service, and employment criteria to inform them that they may be eligible to apply. Further details about the program’s requirements, including final eligibility parameters, timelines and how to express interest, will be communicated should the legislation be passed. Given that the ERI program is not yet in place, and that the decision to apply for the ERI is specific to each individual and would require deputy head endorsement, it is difficult to speculate with precision on the number of employees who may apply or be accepted.
Typically, when an employee retires before the age and service requirements, their pension is permanently reduced. The reduction is 5% for each year of early retirement. Under this program, the pension reduction would be waived for eligible public servants who apply to depart the public service. If approved by Parliament, this voluntary incentive program would be available to certain federal public service pension plan members who are eligible to apply under the parameters set by the Treasury Board and who meet the following initial criteria:
- Group 1: Members who joined the public service pension plan on or before , and who:
- are at least 50 years old
- have at least 2 years of pensionable service
- have at least 10 years of employment in the public service
- Group 2: Members who joined the public service pension plan on or after , and who:
- are at least 55 years old
- have at least 2 years of pensionable service
- have at least 10 years of employment in the public service
Implementation would proceed when legislation receives royal assent, and the government intends to conclude the ERI process within one year.
This program, which will be sourced from the Public Service Pension Fund, is estimated to have a net fiscal impact of $1.5 billion over five years, starting in 2025–26, while providing ongoing savings of $82.0 million annually.
4. Reduction of executive positions in the public service
Responsible sector: Office of the Chief Human Resources Officer
Issue
Can you provide an update on reduction of executive positions in the public service?
Response
As the size of the public service adjusts, so too must its leadership.
Budget 2025 announced a reduction of 1,000 executives across the public service over the next two years as part of a broader effort to return the public service to more a sustainable level.
To manage these reductions to the greatest extent possible through voluntary departures, Budget 2025 proposes to offer an Early Retirement Incentive program through the public service pension plan.
Questions and answers
Q. Are executives being reduced at the same rate as other employees?
A. Budget 2025 announced that the government will reduce the executive cadre in the public service by 1,000 positions overall over the next two years. This includes the 650 executive positions being reduced through the Comprehensive Expenditure Review. To achieve this, deputy heads have been provided with targets to reduce their executive workforce by 12% by . This represents the same rate of reductions or more as the reductions in the employee population.
Background
Budget 2025 announced that the public service population is expected to reach roughly 330,000 by the end of 2028–29, representing a decline of about 40,000 positions (or 10%) from a peak of almost 368,000 in 2023–24. The Budget further specified that as the size of the public service adjusts, its leadership must also adjust, and that the government will reduce the executive cadre by 1,000 positions over the next two years. These reductions are inclusive of the Comprehensive Expenditure Review and early retirements.
Since 2018, the ratio of executives to employees has increased, resulting in a top-heavy public service. A reduction of the executive workforce will:
- help speed up decision-making
- flatten organizations and the public service as a whole
- more equitably and fairly distribute the work among executives
- ensure executives have responsibilities commensurate with their pay
- demonstrate to employees that workforce reductions are also being applied at the leadership level
A reduction of 12% of executives across the federal public service will be applied in the next two years. Deputy heads have access to the same mechanisms to implement these reductions as they do for Comprehensive Expenditure Review reductions. This includes career transition provisions included in the Directive on Terms and Conditions of Employment for Executives and the Early Retirement Incentive, once approved by Parliament.
5. Early pension eligibility for safety and security workers
Responsible sector: Office of the Chief Human Resources Officer
Issue
What is the government doing to deliver on its promise to provide early retirement for frontline safety and security workers?
Response
The Government of Canada values the important work of our frontline public service safety and security workers.
Bill C‑15, the Budget Implementation Act, proposes amendments to the Public Service Superannuation Act to expand early retirement eligibility for frontline safety and security workers that participate in the public service pension plan.
Newly eligible employees will include frontline firefighters, paramedics, correctional service employees, border services officers, parliamentary protection officers, and search and rescue technicians.
This will provide consistency across federal employee groups that support safety and security, recognizing the demanding nature of their day-to-day duties.
Questions and answers
Q. How much will expanding early retirement for frontline safety and security workers cost? Will it affect the long-term sustainability of the public service pension plan?
A. The cost of expanding early retirement eligibility is estimated to include one-time costs of approximately $163 million and ongoing annual costs of approximately $21 million shared between the employer and employee.
These costs would be covered by the public service pension plan, which continues to maintain a strong financial position and remains sustainable over the long term.
Background
Further to an announcement by the Prime Minister on , Budget 2025, proposes to amend the Public Service Superannuation Act to expand the Operational Service Early Retirement Program (also known as “25 and out”) to frontline employees of the following additional occupational groups participating in the public service pension plan:
- firefighters (federal and territorial governments)
- paramedics (federal and territorial governments)
- correctional service employees (territorial governments)
- border services officers (federal government)
- parliamentary protection officers (federal government)
- search and rescue personnel (federal and territorial governments)
Participation in the operational service program would allow the newly eligible employees to access a special early retirement benefit. More specifically, they will be able to retire early with an immediate unreduced pension after completing 25 years of actual operational service, or at age 50 with 25 years of actual and deemed operational service combined (at least 10 years must be actual). This special benefit is currently only available to employees of Correctional Service Canada working in a federal correctional institution.
Implementation of the expanded operational service program will require amendments to the Public Service Superannuation Act, as well as the completion of additional actions, such as the finalization of regulatory amendments and changes in the pay and pension systems. The implementation date of the expanded program will be announced at a later date following the completion of all the required implementation actions.
The proposal in Budget 2025 mirrors a commitment made in the government’s most recent election platform. It also mirrors a commitment made by the former government, with that commitment being informed by a recommendation from the Public Service Pension Advisory Committee. The required amendments to expand the operational service program were previously included as part of the implementing legislation for the 2024 Fall Economic Statement; however, that legislation did not proceed due to the dissolution of Parliament on .
6. Hybrid work in the public service
Responsible sector: Office of the Chief Human Resources Officer
Issue
Is the government going to require all public servants to return to the office full time?
Response
The government has put forward ambitious plans to deliver on priorities for Canadians and to strengthen our country.
Working together onsite, with all hands on deck, is an essential foundation needed during this pivotal moment and beyond.
This is why we announced our intention to increase the onsite presence of public service employees.
As of , executives will be required to work onsite five days per week.
For all other employees, the intention is to have them work onsite four days a week as of .
Before proceeding, my officials will be engaging with bargaining agents to seek their input on implementing this plan. These discussions will focus on important elements, such as the potential for allocation of assigned seating and occupational health and safety.
Additionally, departments are working with Public Services and Procurement Canada to plan for any accommodation changes needed to support increased in-office presence.
Questions and answers
Q. What evidence is there that onsite work boosts productivity?
A. Increasing onsite presence is not about increasing individual productivity. It’s about increasing our organizational performance, building stronger teams and culture, ensuring public servants are well versed in our Values and Ethics Code for the Public Sector, and working together to deliver our mandates and serve Canadians.
Q. How are bargaining agents being engaged on the implementation?
A. TBS will be holding engagement sessions with bargaining agents to seek their input on the implementation of this plan in the coming weeks.
TBS is proposing to organize these discussions under the following three themes and is inviting bargaining agents to suggest additional themes and specific items prior to the first session and throughout the engagement process:
- implementation principles and timing
- office space and occupational health and safety and policy compliance
- duty to accommodate and the application of exceptions to the Direction on Prescribed Presence in the Workplace
Following these engagement sessions, TBS will provide further details to employees on how increased onsite presence will be implemented.
Q. What is Public Services and Procurement Canada’s (PSPC’s) role in the implementation of this plan?
A. PSPC is working with departments to ensure that their office space needs are met. PSPC will be in touch with those organizations where it provides or manages accommodation to seek to address their accommodation needs, recognizing that some sites may not have sufficient workstations to accommodate four-day requirement for all employees as of .
Q. How can you justify increasing the onsite presence of federal employees when you say you want to reduce operating costs?
A. The government has put forward ambitious plans to deliver on key priorities for Canadians and to strengthen our country. Working together onsite is an essential foundation of the strong teams, collaboration and culture needed during this pivotal moment and beyond.
Q. Given the Federal Public Sector Labour Relations and Employment Board’s recent ruling on telework with respect to the Library of Parliament, is the government reconsidering its position on making telework part of collective agreements?
A. The Treasury Board is not the employer for the Library of Parliament, and the core public administration operates under a separate act, the Federal Public Sector Labour Relations Act.
Our position remains that the employer has the exclusive management right to designate the location of work and to require employees to report to their designated worksite.
Background
Following the Clerk of the Privy Council’s message encouraging departments to explore hybrid work models, federal organizations began testing various approaches to support service delivery to Canadians. The Chief Human Resources Officer collected data through three questionnaires between fall 2022 and fall 2023, revealing a wide range of hybrid arrangements and a need for greater consistency. In response, TBS introduced the Direction on Prescribed Presence in the Workplace in , requiring eligible employees to work onsite two to three days per week by , with time-limited exceptions for certain groups based on specific work models (for example, call centre employees).
The Direction on Prescribed Presence in the Workplace sets out the requirement for deputy heads to implement and monitor a minimum requirement of three days per week in the workplace for all public servants eligible for a hybrid work arrangement. Workplaces vary from one organization to the other. Deputy heads are to use discretion and adapt to their operational requirements. This includes in the application of certain exceptions in a limited set of circumstances, which are explicitly outlined in the Direction on Prescribed Presence in the Workplace, and monitoring compliance within their organizations.
Further refinements to the Direction on Prescribed Presence in the Workplace were made in to increase the minimum onsite presence to three days weekly starting , with executives expected onsite four days, and previously exempt groups required to comply by . In , the Prime Minister indicated publicly that in the coming weeks the government will be engaging bargaining agents on the modalities of increased onsite presence for federal public servants given seniority, roles and capacity.
Bargaining agents have continued to express their dissatisfaction with the update to the Direction on Prescribed Presence in the Workplace in a variety of ways, including launching unfair labour practice complaints, grievances and a judicial review of the decision taken by the Chief Human Resources Officer.
Since summer 2025, bargaining units representing about 66% of employees have begun the collective bargaining process. As part of this round of collective bargaining, the Public Service Alliance of Canada (PSAC) has put forward bargaining proposals for the Program and Administrative Services Group (PA), which includes over 100,000 employees, that seek to enshrine telework in collective agreements. The employer continues to maintain its position that the location of work is an exclusive management right.
On , the Secretary of the Treasury Board, the Chief Human Resources Officer and the Associate Chief Human Resources Officer announced that as of , executives will be required to work onsite five days per week. For all other employees, the intention is to have them work onsite four days a week as of . They further announced that the TBS would be engaging with bargaining agents to seek their input on implementing this plan. The discussions will focus on important elements, such as the potential for allocation of assigned seating and occupational health and safety.
Directive on Telework
As part of negotiations with public service bargaining agents in 2023, the employer and certain bargaining agents signed letters of agreement on telework that sit outside of collective agreements.
Under the terms of the letters, joint departmental review panels were to be created within departments and agencies to address individual grievances where an employee is not satisfied with a decision made related to telework and hybrid work and chooses to refer the grievance to the joint departmental review panel. Each department is responsible for creating the panels and developing terms of reference with bargaining agents, with guidance provided by TBS.
Letters signed by PSAC, the Canadian Association of Professional Employees (CAPE), the Association of Justice Council, and the Professional Institute of the Public Service of Canada (PIPSC) included the provision of a Joint Consultation Committee (JCC) to support the review of the Directive on Telework. While CAPE withdrew from their JCC in response to the updated Direction on Prescribed Presence in the Workplace, the PIPSC and PSAC completed the consultation process in fall 2024.
As a result of the JCC work and consultation and engagement with other key stakeholders, the Office of the Chief Human Resources Officer implemented amendments to the Directive on Telework on , to better align with the hybrid work environment. The key changes to the directive included:
- clarification of the roles and responsibilities for managers and employees
- stronger language to reinforce occupational health and safety
- new considerations related to cyber security, material management, values and ethics, and conflict of interest for departments to assess and include as necessary
7. Public Service Pension Fund (non-permitted surplus) Issue
Responsible sector: Office of the Chief Human Resources Officer
Issue
Why did the government take funds from the Public Service Pension Fund?
Response
The Government of Canada is committed to providing federal public servants with a well-managed, stable and sustainable pension plan.
By law, the government must address a surplus in the pension fund above an allowable limit.
On , I tabled a report in Parliament confirming that the fund was in a non-permitted surplus position (approximately $0.9 billion and with a funding ratio of approximately 125.5%).
The non-permitted surplus was calculated after factoring in the cost of the proposed Early Retirement Incentive program and proposed expansion of the Operational Service Early Retirement Program (25 and out), which are both being funded out of the pension fund.
Non-permitted surplus amounts have been transferred the Consolidated Revenue Fund, which also contains the non-permitted surplus amounts from 2024. No decisions about the use of these funds have been made.
The public service pension plan is fully guaranteed by the Government of Canada. In the event of a shortfall, the government – not employees – would cover any deficit, as it did previously from 2013 to 2018.
Questions and answers
Q. Why did the government choose to take the non-permitted surplus from the pension fund instead of returning some of it to the employees who paid into the plan?
A. The government is legally required to address a non-permitted surplus and transferred these funds to the Consolidated Revenue Fund in line with the options provided for in the Public Service Superannuation Act.
Transferring the non-permitted surplus to the Consolidated Revenue Fund has no impact on the pension benefits of current or future public service retirees. The public service pension plan is fully guaranteed by the Government of Canada.
Q. Last year, you said that the $1.9-billion surplus was being held while next steps were decided. Has a decision been made and were relevant stakeholders consulted?
A. No decisions have been made yet. The non-permitted surplus amount is being held in the Consolidated Revenue Fund while next steps are considered and discussions with stakeholders will be held as appropriate.
Background
The terms and conditions of the public service pension plan are outlined in the Public Service Superannuation Act and its Regulations. Per section 113 of the Federal Public Sector Labour Relations Act, the terms and conditions of the plan cannot be negotiated through collective bargaining.
The funding position of the public service pension plan is regularly monitored through actuarial reviews. Among other things, the actuarial reviews establish whether the plan is in a deficit (funding ratio below 100%), surplus (funding ratio above 100%) or non-permitted surplus position (funding ratio above 125%). The funding ratio is calculated by comparing the plan’s assets in relation to its liabilities.
Legislation requires that, every three years, the Chief Actuary of Canada prepare an actuarial valuation report which provides information on the funding position of the pension plan and present this report to the President of the Treasury Board. The President is required to table the triennial actuarial report in Parliament. The President may also, at any time, request that the Chief Actuary of Canada provide him with a special actuarial report.
The President may form an opinion on the funded status of the plan based on reasonable and relevant evidence. When a non-permitted surplus exists in the Public Service Pension Fund, the Public Service Superannuation Act provides for its reduction through an employer contribution holiday, a full or partial employee contribution holiday, and/or a transfer of funds from the pension fund to the Consolidated Revenue Fund. In contrast, when the pension plan is in a deficit position, the government is fully and solely accountable for making the required deficit payments. From 2013 to 2018, the government made deficit payments totalling $2.8 billion, including interest.
Non-permitted surplus as at
On , a former President of the Treasury Board tabled in Parliament the Special Actuarial Report on the Financial Position of the Public Service Pension Fund as at which confirmed the pension fund to be in a non-permitted surplus position of approximately $1.94 billion and with a funding ratio of approximately 126%. The government subsequently transferred the entire non-permitted surplus amount to the Consolidated Revenue Fund. In her announcement of the decision, the former President stated that the amount would be held in the Consolidated Revenue Fund while considerations and next steps are explored, and that discussions with relevant stakeholders would continue.
Non-permitted surplus as at
On , the President of the Treasury Board tabled in Parliament the Special Actuarial Report on the Financial Position of the Public Service Pension Fund as at , as well as an update to this Report to take into consideration initiatives announced in Budget 2025, including the proposed Early Retirement Incentive (ERI). This report confirmed the pension fund to be in a non-permitted surplus position of approximately $0.9 billion and with a funding ratio of approximately 125.5%. In an announcement, the President stated that the government intends to transfer the entire non-permitted surplus amount to the Consolidated Revenue Fund, where it will be held while next steps are considered, along with the non-permitted surplus amount that was previously transferred. The President also reiterated that discussions with stakeholders will be held as appropriate.
The ERI program, once approved and implemented, would be paid directly out of the pension fund. As such, the ERI program would increase pension liabilities, which will reduce the funding ratio in the future, and in turn reduce the likelihood or size of a future non-permitted surplus.
There was moderate media attention of the non-permitted surplus announcement and its transfer to the Consolidated Revenue Fund. Bargaining agent and retiree associations continue to react negatively. Bargaining agents continue to advocate that the transferred amounts be used to benefit plan members or retirees, such as through pension benefit enhancements.
All decisions have been taken in accordance with the legislation and the governance structure of the pension plan, which sees the Government of Canada bear the full risk and responsibility for funding the pension benefits. Transferring the non-permitted surplus amounts to the Consolidated Revenue Fund has no impact on the pension benefits of current or future public service retirees.
8. Red Tape Review
Responsible sector: Regulatory Affairs Sector
Issue
What is the Government of Canada doing to address concerns about red tape?
Response
The Government of Canada is committed to cutting red tape.
Our Red Tape Review of regulations has identified nearly 500 initiatives aimed at streamlining services, eliminating duplication and reducing costs for Canadians.
For example, these initiatives will:
- introduce new medications for Canadians more quickly
- speed up decision-making and processes in economic sectors, such as transportation and agriculture
- support more efficient reviews of projects to drive economic growth
We are also proceeding with horizontal reviews to identify additional system-wide opportunities to reduce regulatory barriers for businesses and deliver an effective regulatory system for Canadians.
TBS’s Red Tape Reduction Office will continue to engage with regulators and stakeholders to deliver initiatives that eliminate unnecessary rules and reduce costs.
Questions and answers
Q. How many employees work in the Red Tape Reduction Office? What are they doing to reduce red tape?
A. There are 34 full-time equivalents in the Red Tape Reduction Office.
The office is overseeing the review of regulations across federal departments and agencies with regulatory responsibilities.
Their work will help accelerate the elimination of red tape by speeding up the removal of unnecessary or outdated rules.
The office is also responsible for establishing measures to track, assess and communicate results of regulatory action, and engage with Canadians and Canadian businesses for feedback on regulatory red tape.
Background
Red Tape Review
To advance objectives in the prime ministerial mandate letter and respond to platform commitments, you, as President of the Treasury Board, publicly launched a regulatory red tape review across the Government of Canada on .
Red tape is increasingly seen as a barrier to investment and growth and can include:
- outdated or unnecessary rules
- duplication or overlap with provincial rules
- inefficient or unpredictable regulatory administration or service delivery
Through the Red Tape Review, you asked ministers with regulatory responsibilities to launch reviews of the regulatory stock across their portfolio and issue progress reports outlining steps taken to date to reduce regulatory red tape, as well as short-, medium- and long-term plans and priorities to deliver additional progress.
On , departments and agencies published more than 30 progress reports outlining nearly 500 recent and forward-looking initiatives to streamline services, eliminate duplication and reduce costs for Canadians.
Since then, departments and agencies have made progress implementing commitments from their reports. TBS will publish a progress update in spring 2026 to keep stakeholders apprised of implementation status.
Red Tape Reduction Office
The Government of Canada committed to establish the Red tape Reduction Office (RTRO) in the 2024 Fall Economic Statement, to be funded from existing resources of TBS.
The RTRO was established to address regulatory red tape by:
- making the regulatory system more efficient
- reducing barriers to innovation, productivity and economic growth
- reducing regulatory costs for Canadians and businesses
The Red Tape Review is a key deliverable of the RTRO, which is providing leadership, coordination and guidance across government.
Building on the progress reports, TBS’s RTRO is engaging with regulators and stakeholders to drive cross-cutting red tape efforts that will continue to streamline regulations, reduce costs and boost efficiency. TBS is:
- undertaking horizontal red tape reviews to support key themes and priorities (supporting regulatory efficiency for project reviews, getting products to market faster, reducing barriers to business productivity, supporting international trade and greater efficiency at the border, and enhancing regulatory service delivery)
- coordinating a public consultation open until and stakeholder engagement across sectors, which will inform the horizontal reviews and other cross-cutting red tape reduction efforts
- engaging with provinces and territories to support red tape reduction across jurisdictions
- exploring the development of federal red tape reduction legislation to ensure lasting and meaningful improvements to the regulatory system
- developing a performance measurement strategy to improve the transparency of the regulatory system and give Canadians and businesses clear visibility into cost savings and productivity gains
These initiatives are expected to deliver sustainable improvements to Canada’s regulatory system, making it more streamlined, cost-effective and predictable.
9. Regulatory sandboxes
Responsible sector: Regulatory Affairs Sector
Issue
Can the government explain what exactly a regulatory sandbox is and why Canadians should believe this approach will actually keep pace with innovation and reduce red tape?
Response
To help regulation keep pace with innovation, the government is proposing to expand the use of regulatory sandboxes through amendments to the Red Tape Reduction Act.
Regulatory sandboxes permit new products or services to be tested in the marketplace under a temporary set of rules and controlled by regulatory supervision.
This can help a regulator safely decide whether to make any permanent changes to how that product or service should be regulated.
Regulatory sandboxes help support economic growth, reduce red tape, and improve Canada’s investment environment by permitting new products and technologies to get to market in both a safe and efficient manner.
Questions and answers
Q. How do regulatory sandboxes work?
A. Currently, only select regulators, including Transport Canada and Health Canada, have the authority to use regulatory sandboxes. The proposed Red Tape Reduction Act amendments in Bill C‑15 would expand the authority to all ministers.
The amendments would allow for temporary exemptions from certain legislative or regulatory requirements so that innovative products, services or processes can be tested under controlled conditions.
These sandboxes help regulators keep pace with technological change and assess real-world impacts before making permanent regulatory changes.
The goal is to foster innovation, competitiveness and economic growth while maintaining protections for health, safety and the environment.
Q. Why is the government proposing to allow exemptions from the application of Canadian law to any entity at the discretion of the minister, with no public oversight?
A. Bill C‑15 does not let ministers exempt people or businesses from federal laws for broad policy reasons, such as pushing through major projects. Exemptions could only be made to specific provisions that prevent the regulator from assessing new regulatory approaches. Exempting entire sectors of industry or fast-tracking entire major projects is not within its scope.
The legislation includes clear transparency and accountability measures. Ministers must publicly explain any exemption decisions while protecting confidential business information. In addition, each year the President of the Treasury Board must report to Parliament on all exemptions granted, with reasons and the responsible ministers named. This ensures Parliament and Canadians have ongoing oversight and prevents any misuse of these powers.
Q. How would Canadians be protected from the use of sandboxes to introduce new unproven foods or medicines into the marketplace?
A. Regulatory sandboxes help governments keep up with technologies while protecting Canadians and the environment.
Regulatory sandboxes would be run in a controlled environment under regulatory supervision.
Regulatory sandboxes can only be undertaken if the minister responsible has sufficient resources to maintain regulatory oversight of the testing and manage any risks.
Q. Is it true that the only law that cannot be bypassed via regulatory sandboxes is the Criminal Code? Isn’t this too wide reaching?
A. A minister may only authorize an exemption order from a law or regulation under his or her authority and under the specific conditions listed in the legislation.
The exemption would be narrow and targeted, applying only to the part of the law or regulation that prevents the product from being tested.
Laws or parts of laws that do not impact testing could not be excluded under the proposed legislation.
Q. What controls will prevent conflicts of interest when ministers are lobbied by companies for the use of sandboxes to assess their products?
A. The minister is not required to consider or approve a request for an exemption.
If a minister grants an exemption, they must make public:
- a description of the decision-making process
- a summary of reasons for the exemption order
- information on how stakeholders can submit comments or to request additional information related to the exemption order
Every year, the President of the Treasury Board will be required to submit a report to the Standing Committee on Government Operations and Estimates (OGGO) on the use of the authorities in this legislation.
This ensures ongoing parliamentary oversight.
The Policy on Regulatory Sandboxes directs the responsible minister to consult with provinces, territories, Indigenous communities and other stakeholders before issuing an exemption.
Q. Won’t this lead to situations where regulations are tailored to a specific product or business?
A. Information on all regulatory sandboxes must be made shared publicly.
A regulatory sandbox is used to test a specific product, process or procedure. Results of the regulatory sandbox will be used to amend or create new regulations to safely regulate that product, process or procedure in the market.
Any permanent changes to a regulation would follow the normal regulatory development procedures with their associated accountabilities.
Q. Are you aware of a time of when a sandbox has gone wrong?
A. As far we are aware, there have been no adverse outcomes. For the cases that we are aware of, sandboxes are developed to provide evidence that can be used to inform changes and improvements to regulations.
Background
Regulatory sandboxes are a tool that regulators may use to test real-world impacts of a new product or process in a controlled manner with regulatory supervision. The purpose of a regulatory sandbox is to safely test a new product or process; it is not to expedite permitting for projects.
Regulatory sandboxes can help support economic growth, reduce red tape and improve Canada’s investment environment by permitting new products and technologies to get to market in both a safe and efficient manner.
Example: Transport Canada ran a regulatory sandbox to test a new kind of light plane that was not certified for pilot training in Canada. Using the results of the sandbox, Transport Canada will amend its regulations to make it easier to adopt the new technology, reduce costs, lower pollution and make Canada more competitive.
Oversight and transparency
Amendments to the Red Tape Reduction Act would allow all ministers to run regulatory sandboxes. Some ministers already have this authority, such as the Minister of Transport through the Canada Transportation Act.
The responsible minister must ensure that compliance and enforcement are undertaken in accordance with the relevant statutes.
Ministers providing regulatory exemption orders under these provisions would be required to make public both the decision-making process and how the public can provide comments or request additional information.
The President of the Treasury Board would be required to publish and table in Parliament an annual report on the use of these authorities. The report will include:
- a list of the orders made under section 12 during the 12-month period of the preceding fiscal year
- a list of all orders made under section 12 that were in effect during that time
- the ministers who made those orders
Safeguards
The exemption orders are temporary: they are valid up to three years and can be extended up to a maximum period of six years.
This ensures there is time both to undertake the testing and to implement amendments to the regulatory regime without any market disruption.
The exemption order can only be made for specific projects, not entire sectors, and if the minister is satisfied that the exemption:
- is in the public interest
- would protect health, safety and the environment
- has an implementation plan in which it is demonstrated that the benefits outweigh the risks and that mitigation measures are in place for all identified risks
The regulators running a regulatory sandbox will be further governed by a policy under the Cabinet Directive on Regulation that requires impact assessments, consultations with stakeholders and Indigenous Peoples, and measures to ensure transparency and accountability.
10. Supplementary questions
Appearance on Bill C‑15, Budget 2025 Implementation Act, No. 1
Scheduled appearance date:
Responsible sector: Regulatory Affairs Sector
Public Servants Disclosure Protection Act (PSDPA)
Q. When will the PSDPA Review Task Force report and recommendations be published?
A. The PSDPA Review Task Force provided its report and recommendations in December. The government is carefully reviewing the recommendations of the task force and considering next steps.
The Working Group on Public Sector Productivity
Q. When will TBS be implementing the recommendations in the report prepared by the Working Group on Public Service Productivity?
A. The Working Group on Public Sector Productivity’s recommendations are well aligned with government priorities.
In fact, the government is already addressing recommendations made by the working group.
For instance, through the Comprehensive Expenditure Review, government programming was reviewed to ensure it was aligned with core federal responsibilities, wasn’t duplicative and that it delivered services efficiently and effectively.
Budget 2025 also announced that government would be adopting regular reviews to:
- continually optimize resources
- consolidate program administration
- scale up and implement artificial intelligence (AI) in the public service
- attract private sector expertise to the public service
- streamline administrative burden
Several working group recommendations could inform future work by the Cabinet Committee on Government Transformation, such as recommendations related to upskilling, performance management and ongoing investment in technology (including AI).
Work continues across government to modernize government operations to deliver better results for Canadians, which will in turn reduce costs, duplication and inefficiencies, and realign activities towards the core federal mandate.
Q. Why are some recommendations from the committee not being considered? Why didn’t TBS commit to measuring productivity?
A. Many of the working group’s recommendations support the government’s agenda and align with work completed, underway or planned. However, some recommendations, while of interest, are not being pursued at this time for various reasons, though they may be considered in the future. These include recommendations related to the following:
- measuring productivity across Canada’s public sector
- establishing an independent organization to exercise a leadership function for evaluation in the public service
- re-sequencing the Cabinet decision-making process
- appointing a senior official whose full-time function would be to oversee the general management and ongoing reform of the public service
Access to information
Q. Minister, why has the government failed to implement any of the 38 recommendations made by the Standing Committee on Access to Information, Privacy and Ethics?
A. Since the last review in 2022, the government has taken steps to improve access to information. We made several changes to be more open and accountable, including:
- releasing updated guidance for access to information and privacy (ATIP) practitioners on how to make more information available through proper use of redactions, removing security labels (declassification), or lowering the level of information when it is safe to do so
- improving how the online ATIP portal works to make it easier to submit requests
- establishing functional communities to improve training, recruitment and capacity
In the 2025 review, we are building on previous conclusions, including feedback from the previous review and the recommendations of the Standing Committee on Access to Information, Privacy and Ethics. All feedback will be carefully considered to help guide the how the government improves the federal access to information system.
Q. Minister, when will the access to information review be complete?
A. Compared to the previous review, TBS will use a simpler and more focused way to collect feedback so that this review can be completed as quickly as possible.
Q. Minister, media reported on a draft discussion paper presenting proposals that will make the access to information system even worse. Where is this document and when will it be released?
A. The Government of Canada is committed to improving the access to information regime.
TBS intends to publish policy proposals and conduct formal engagement with stakeholders and Indigenous partners in the coming months. The engagement process will ensure all interested parties can provide views on the proposals.
Q. Minister, is the government considering rolling back the powers of the Information Commissioner?
A. Enhancing transparency, accountability and public participation are core to the purpose of the Act and the 2025 review. TBS intends to publish policy proposals and conduct formal engagement with stakeholders and Indigenous partners in the coming months, and we look forward to receiving input from all interested parties.
Q. Minister, do you think it’s appropriate for government records to be automatically erased after 15 days, thereby hiding important information from Canadians, parliamentarians and media?
A. Each institution is responsible for setting their own retention period for information and data, under Treasury Board policy.
Good information management, which involves deleting transitory records, helps the government efficiently and effectively respond to access to information requests. It requires that public servants keep information that documents activities and decisions of government (information of business value). This includes information from any application or format, including email, meeting records, handwritten notes or instant messaging.
11. Treasury Board of Canada Secretariat measures in Bill C‑15, Budget 2025 Implementation Act, No. 1
Responsible sector: Regulatory Affairs Sector
Comprehensive Expenditure Review
The review will achieve savings of $9 billion in 2026–27, $10 billion in 2027–28 and $13 billion in 2028–29.
Proposals were received from 102 organizations.
Other organizations, including National Defence, the Canada Border Services Agency, the Canadian Security Intelligence Service and the RCMP were asked to find 2% savings, recognizing the essential nature of their mandate.
All organizations have responded to the Parliamentary Budget Officer’s request for information, providing as much information as possible.
Savings will be achieved by restructuring operations and internal services, realizing efficiencies, and in some cases moving away from programs that are not meeting their objectives.
Workforce adjustments
We are returning the public service to a more sustainable level, reducing from a high of 368,000employees in 2023–24 to 330,000 by 2028–29.
About 9,800 jobs were reduced in 2024–25, with additional reductions expected in 2025–26 due to attrition and expiring funding.
Through the Comprehensive Expenditure Review, another 16,000positions will be reduced over three years. These are being reported on Canada.ca.
These reductions will be managed to the greatest extent through voluntary departures.
Early Retirement Incentive
Budget 2025 proposes an Early Retirement Incentive (ERI) program to help reduce the public service through voluntary departures following parliamentary approval.
This program, funded through the Public Service Pension Fund, is expected to cost $1.5 billion over five years starting in 2025–26 and save $82 million annually going forward.
Between 68,000 and 70,000employees in the core public administration meet the age, pensionable service and employment criteria for the ERI program.
The Treasury Board will develop additional parameters for acceptance into the program, for example, maintaining service continuity.
Reduction of executive positions
The government will reduce the executive cadre by 1,000 positions over the next two years. All organizations have been asked to reduce their executive workforce by 12%.
Early pension eligibility for federal workers
Budget 2025 proposes to expand early retirement eligibility for frontline safety and security workers.
These employees would be able to retire after 25 years of operational service without a pension penalty.
This is estimated to include one-time costs of approximately $163 million and ongoing annual costs of approximately $21 million shared between the employer and the employee.
This would apply to the following federal employees:
- firefighters
- border services officers
- parliamentary protection officers
- search and rescue technicians
Red Tape Review
In TBS launched a regulatory red tape review across the government.
Nearly 500 initiatives were identified to streamline services, remove burden and reduce costs.
TBS will publish an update in spring 2026.
Regulatory sandboxes
Budget 2025 expands the use of regulatory sandboxes to departments and agencies beyond Transport Canada and Health Canada, which already have sandbox authority.
Sandboxes help regulators test new ideas safely before deciding on permanent rule changes.
They can only be used for time-limited, specific situations and must operate under strict guardrails, including public reporting and measures to protect health, safety and the environment.