Federal audited financial statements released recently show the government spent almost $19.2 billion on external professional and special services in 2025-26.
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The federal government spent almost $19.2 billion on external professional and special services in 2025-26, according to audited financial statements released on Friday, despite a promise to reduce reliance on outside consultants.
The statements put 2025-26 spending at nearly $19.2 billion, compared with $19.5 billion on those services the year before. Organizations contracted by the government last year included Bell Canada, KPMG, Microsoft Canada Inc. and the City of Toronto.
Prime Minister Mark Carney had said during his election campaign that he would significantly reduce the government’s reliance on external consultants and build the public service’s in-house capacity to hire expertise. In a budget released last week, the federal government said it had already taken steps to cut spending on external management and other consulting services by 20 per cent, with hopes of reaching annual savings of $900 million by 2028-29.
Sean O’Reilly, president of the Professional Institute of the Public Service of Canada, said the figures do not match the pledge. “Despite a promised 20 per cent reduction, actual spending in 2025—26 was barely lower than the year before, and projected spending for 2026—27 is the highest on record,” he said. He added, “The government is cutting its own public service experts, then paying a premium to rent that expertise back. That's not efficiency. That's waste.”
The Liberals have also outlined a plan to slash the public service by 10 per cent by the end of the 2028-29 fiscal year to reduce spending. The parliamentary spending watchdog reported the federal public service has shed more than 23,000 staffers over the last two years.
An online tool released by the Office of the Parliamentary Budget Officer in September estimates there were 344,970 federal employees in the second quarter of this year, down 6.5 per cent from two years ago. The government’s financial statements also show that when external contracting and contracts signed with other government departments are included, total spending on contracted services last year was $22.8 billion, with an expected increase to $26.6 billion in 2026-27.
The Public Service Alliance of Canada said in 2023 that it negotiated contract language aimed at protecting public service jobs and reducing outside contracting. The union said the government and the PSA are taking part in contract negotiations again, with job security and the need to end “wasteful” contracting services among the issues the union raised.
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