Ottawa spent $19.2B on outside services last year, down just 1.5% despite promise to cut back

The federal government spent almost $19.2 billion on external professional and special services in 2025-26, barely less than the $19.5 billion a year earlier, according to its audited financial statements released Friday.

That is a drop of about 1.5 per cent, by Canada News Media’s calculation. Prime Minister Mark Carney promised in his election platform to significantly reduce the government’s reliance on outside consultants and build more expertise in-house.

Last week’s federal budget said Ottawa had already taken steps to cut spending on external management and other consulting services by 20 per cent, aiming for annual savings of $900 million by 2028-29. That target covers a narrower group of services than the full line in the financial statements, so the two figures do not line up directly.

Organizations paid by the government last year included Bell Canada, KPMG, Microsoft Canada Inc. and the City of Toronto, The Canadian Press reported. Including external contracting and contracts with other government departments, spending on contracted services reached $22.8 billion.

Sean O’Reilly, president of the Professional Institute of the Public Service of Canada, said the government is cutting its own experts and paying to rent that expertise back. “That’s not efficiency. That’s waste,” he said.

The staffing side

The 2025 budget set out a plan to shrink the public service by 10 per cent by the end of 2028-29. The Parliamentary Budget Officer’s online tracker estimated 344,970 federal employees in the second quarter of this year, down 6.5 per cent from two years earlier.

With files from The Canadian Press.

Photo: The Peace Tower on Parliament Hill in Ottawa, Oct. 20, 2026. THE CANADIAN PRESS/Justin Tang