Mark Carney ran on a simple, popular idea: stop renting expertise from outside firms and rebuild the public service’s own capacity. A year and a half later, the government’s own audited books tell a different story.
According to the federal financial statements released last Friday, Ottawa spent almost $19.2 billion on external professional and special services in 2025-26, Carney’s first full year in office. The year before, under Justin Trudeau, it was $19.5 billion. That’s a drop of roughly $300 million, about 1.5 per cent, on a bill that was supposed to shrink significantly. The Canadian Press reported the figures via CBC News.
The promise
The Liberals have been hammered for years over outsourcing, from the ArriveCan saga to the parade of big-firm contracts. Carney’s election platform pledged to significantly reduce the government’s reliance on consultants and to improve the public service’s ability to hire in-house expertise, as CBC News noted this week.
That pledge was the whole point. A new prime minister with a reputation for management discipline was going to stop the money pipeline flowing from Ottawa to the likes of KPMG. Instead, the contractor list for 2025-26 still includes Bell Canada, KPMG, Microsoft Canada and the City of Toronto.
The numbers that matter
Here’s where it gets worse. The $19.2 billion is only the external portion. Counting contracts signed with other government departments, total spending on contracted services last year was $22.8 billion. The government’s own estimates show that figure is expected to reach $26.6 billion in 2026-27, according to the same CBC report.
That’s not a cut. That’s an increase of about $3.8 billion, or roughly 17 per cent, in a single year.
The government’s answer, buried in last week’s budget, is that it has “already taken steps” to reduce spending on external management and other consulting services by 20 per cent, with the goal of saving $900 million a year by 2028-29. Even if that target is hit, it applies to one slice of the outsourcing budget and lands two fiscal years from now. Set against a $19.2-billion external services bill, $900 million is less than five per cent.
Cutting the experts, renting them back
What makes this especially hard to defend is what the government is doing at the same time to its own workforce.
The Liberals’ 2025 budget laid out a plan to cut the public service by 10 per cent by the end of 2028-29. The Parliamentary Budget Officer estimates the federal public service has already shed more than 23,000 staff over two years, falling to about 344,970 employees in the second quarter of this year, down 6.5 per cent.
Fewer public servants should mean the government is leaner. But if the work is simply shipped out to contractors at a premium, taxpayers lose twice: once on the severance and disruption, and again on the consultant invoices.
Sean O’Reilly, president of the Professional Institute of the Public Service of Canada, put it bluntly: “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.” He added that “projected spending for 2026-27 is the highest on record.” You don’t have to agree with public-sector unions on much to see that he has the arithmetic right.
Meanwhile, the basics are still broken
If all that outside help were fixing the machinery of government, there might be a case for it. The Auditor General’s commentary on the 2025-26 financial audits, released November 9, suggests otherwise.
Audit tests found that 18 per cent of federal employees had an error in their basic or acting pay, and 70 per cent of those errors were caused by delays in processing pay changes. The government missed its own target to clear, by March 31, 2026, the backlog of pay transactions more than a year old. Long-standing overpayments still haven’t been recovered.
For the fourth year running, the Auditor General flagged weaknesses in controls over who can access key government financial systems, noting that Shared Services Canada “made limited progress” and delayed its own timelines. And for the 23rd year in a row, National Defence couldn’t accurately account for its inventory, errors the Auditor General’s office says understated the deficit by an estimated $751 million.
So Ottawa is paying near-record sums for outside services while the core systems that pay its own staff and track its own spending keep failing the same audits.
“Spend less to invest more”?
Carney’s slogan was that his government would “spend less to invest more.” As The Hub’s analysis of Budget 2026 points out, program spending is set to rise $44.2 billion this fiscal year, an 8.9 per cent jump, and departmental operating and other spending alone is up $19 billion, or 14.5 per cent.
Consultant spending is a small window into that bigger problem. It’s the clearest, most measurable test of whether this government actually manages differently from the last one. On the evidence of its own audited statements, it doesn’t. It talks about discipline, trims a rounding error, and books a bigger contracting bill for next year.
What Canadians should demand
A real fix isn’t complicated. Publish a department-by-department breakdown of external contracts every quarter. Set a hard dollar cap on total contracted services, not a percentage target on one sub-category three years out. And before cutting another public servant, show that the job isn’t simply being handed to a consultant at a higher price.
Carney asked Canadians to judge him on results. On consultants, the results are in: $19.2 billion, barely changed, and rising.
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