Federal personnel expenses are projected to increase by more than $10 billion this fiscal year, according to new projections from the Parliamentary Budget Officer, despite government commitments to exercise greater fiscal restraint.
The PBO’s latest economic and fiscal outlook projects personnel expenses will rise to $79.4 billion in 2026-27 from $69.2 billion the previous year, an increase of approximately $10.2 billion. The watchdog projects those costs will continue growing, reaching $86 billion by 2030-31.
The same report projects the federal deficit will climb to $72 billion in 2025-26, up from $36.3 billion the previous year.
The figures come as Ottawa continues expanding administrative programs, including plans to broaden automatic tax filing for lower-income Canadians with simple tax situations. Finance Canada says the initiative will begin with approximately one million people for the 2026 tax year before expanding to roughly 5.5 million people by 2028.
The government says the measure is intended to ensure more Canadians receive benefits and tax credits for which they qualify.
The projected increase in personnel expenses has renewed scrutiny of federal spending at a time when Canadians continue to face affordability pressures and the government is running large deficits.
At the same time, Ottawa continues to make significant spending commitments overseas. In May, Prime Minister Mark Carney announced an additional $270 million in military assistance for Ukraine during a European Political Community summit in Armenia.
The funding, intended to help Ukraine acquire military equipment identified through NATO priorities, brought Canada’s total monetary support for Ukraine since Russia’s 2022 invasion to approximately $25.8 billion.
Carney has defended the support as part of Canada’s commitment to Ukraine and the broader international security framework.
As Ottawa expands programs at home and commits billions abroad, the latest PBO projections indicate the federal payroll is moving in one direction: up.
Fiscal restraint is difficult to defend when both the federal payroll and the deficit are moving in the opposite direction.