Sign-up page. | Dec. 19, 2025 | Past editions
Hi all,
So, the long-awaited deputy-minister shuffle finally happened, and it’s big. Too late for this edition, but I’ll break it down in a story I'm writing for Policy Options. Look for it here. In the meantime:
No more Grinchy job-cut notices until the new year. Parliament rose for Christmas without passing the budget implementation act. That puts a hold on the Early Retirement Incentive that was dangled before nearly 70,000 public servants to encourage quick exits.
But here’s the twist: departments are already more than halfway to the government’s 40,000 job-cut target. “We cut 22,000 public servants and no one batted an eye,” says one veteran bureaucrat stunned by the number.
Meanwhile, the Carney government is shaping up as male-framed and female-executed in some key areas. Mark Carney’s inner circle is so male heavy it has inspired chatter. But there are plenty of women in roles not far from Carney’s orbit — many in the public service, where the agenda is actually delivered.
So it’s worth asking: who’s actually running the place? Is it the finance insiders with big ideas? Or the public-service leaders who understand how government actually operates?
Let’s dig in.
Today:
Downsizing, two ways: The complication of two tools.
The men in the room: Yes, the PM’s circle is male.
The women in operations: There’s a cadre of power there, too.
The singular-mindset risk: If everyone’s an investment banker….
And the big report: … with the very quiet release.
DOWNSIZING
The target – and the math
The goal is to reach about 330,000 full-time equivalents by 2028-29, a rollback from the public-service employment peak of 368,000 in March 2024.
But the government was already more than halfway there before the Nov. 4 budget was even tabled, according to the Parliamentary Budget Office’s tracking of monthly staffing levels. Roughly 22,000 positions were already gone by the end of September.
And it was done with barely a ripple. “Somehow, the sky didn’t fall,” the incredulous veteran bureaucrat said. “I’m only half-joking when I ask: what just happened — and how did it happen without anyone noticing?”
That was phase one. Now comes the harder part: the remaining 16,000 cuts identified in the expenditure review. They’re already beginning to surface. This month, a few departments notified staff that their jobs may be affected. The next batch goes out in January.
Now, a problem for unions is that the two tools meant to guide this downsizing don’t line up. PSAC is weighing its legal options, arguing the Early Retirement Incentive sidesteps negotiated workforce-adjustment rules written into collective agreements.
Any volunteers? After the Harper-era job cuts, unions negotiated a strengthened Workforce Adjustment to manage downsizing with fewer layoffs. (How it works is explained here.) It expanded the voluntary departure program. As a result, volunteers could raise their hand to leave and get negotiated perks — pension waivers, lump sums, retraining, job swaps, and priority placement.
The Early Retirement Incentive sits outside the workforce adjustment process but is also used to rustle up volunteers, offering an immediate pension waiver to 50-plus employees before they are formally declared surplus. Nearly 70,000 public servants have received letters saying they “appear to qualify.”
Unions see the message: leave now, or wait and see. Their concern is that employees who take early retirement could later discover they would have qualified for richer workforce adjustment benefits.
A new flashpoint this week. Treasury Board rankled unions Thursday by announcing it will transfer $900 million from the public-service pension surplus into the government’s consolidated revenue fund. The plan has been running a surplus large enough to exceed what’s permitted under law.
Last year, Ottawa moved $1.9 billion from the “non-permitted surplus” into government coffers. It tapped the fund to help pay for the Early Retirement Incentive and recent pension changes allowing some public-safety workers to retire after 25 years. But unions bristle: they argue pension funds are deferred wages and shouldn’t be treated as a fiscal backstop.
From their perspective, the Early Retirement Incentive is cheaper for departments. It’s funded from the pension surplus, while workforce adjustments costs hit departmental budgets. For managers under pressure to cut headcounts, that creates a clear incentive to rely on early retirement rather than follow the negotiated workforce-adjustment process.
The wildcard is uptake. A penalty-free early pension is tempting — but it also means walking away from a full salary. How many 50-plus public servants can absorb a 40-per-cent income drop overnight? Think kids still in university, people who joined the public service later in life, or those navigating divorce and pension division.
THE MEN
The PMO’s “too bro” circle
There’s been a lot of focus on Mark Carney’s male-heavy inner circle, a small, “too-bro” group who set priorities and decide what gets the PM’s ear.
That chatter picked up when Kirsten Hillman announced she would step down as Canada’s first woman ambassador to the U.S. Speculation for her replacement turned to financier Mark Wiseman, a close Carney ally who also sits on his Canada-U.S. advisory council. It looks like Wiseman has been chosen for the role.
And here’s what some inside government see: PMO without the “O”. There’s a quip making the rounds in the public service: it’s not just the usual concentration of power in the PMO, it’s the PMO without the “O.” In other words, the only pen that matters is the prime minister’s.
“There clearly is a perception that Mr. Carney is more surrounded by men — and that question came up as early as the election campaign,” says Marci Surkes, former director of policy and cabinet affairs in Justin Trudeau’s PMO, now chief strategy officer and managing director at Compass Rose.
“And it’s coming from a place where people are observing that there don’t seem to be as many women in the innermost circle of the PM. On its face, that’s difficult to argue.” But women populate the upper ranks of the public service, Surkes says.
THE WOMEN
A slow, steady building of talent in leadership ranks
Some key PMO staffers and chiefs of staff are women. Half of cabinet is women.
Until the latest shuffle, most deputy secretaries to cabinet in the Privy Council Office were women. Tushara Williams heads the pivotal Plans and Priorities Secretariat, a traditional grooming ground for future deputy ministers — and even clerks. Carney also had two deputy clerks: Christiane Fox, who doubles as deputy minister of intergovernmental affairs, and Nathalie Drouin. Fox is moving to National Defence, while intergovernmental affairs will become a full-time post for Alison O’Leary, who transfers from Finance.
