Bank of Canada, Crown corporations set to align with Liberal cost-cutting plans

The Bank of Canada and most other federal Crown corporations will be looking to trim their budgets over the coming years alongside a wider government effort to cut costs.

A spokesperson said in a statement on Thursday that the central bank "intends to align with the spirit and objectives" of the Liberal government's cost-cutting plans.

Ministers are being asked to carve out savings of 7.5 per cent from their departments' operational spending starting in fiscal 2026. Cuts are expected to rise to 15 per cent over the next three years.

The Department of National Defence, Canada Border Services Agency and the RCMP all have lower savings targets of two per cent set over that timeframe.

The Bank of Canada is a Crown corporation responsible for monetary policy in Canada but it operates independently and is funded through its own operations — not directly from taxpayer dollars.

An internal email obtained by The Canadian Press shows Bank of Canada staff were informed Tuesday that the central bank's intends to follow Ottawa's lead in cutting costs.

"The approach for applying these reductions will be determined over the coming months," read the email, signed by Bank of Canada's governor and senior deputy governor.

"We recognize that this news will raise questions and concerns. We will approach this process thoughtfully and with care," the email said.

The Bank of Canada's spokesperson said that decisions about how the central bank will conduct the review have yet to be made.

A Treasury Board spokesperson confirmed in an email that most Crown corporations and other federally funded institutions are also subject to the Liberals' cost-cutting exercise.

The Toronto Star first reported Wednesday that Crown corporations such as the CBC and Via Rail also will be expected to find their own savings.

The Treasury Board spokesperson said agencies that don't fall under a minister's portfolio, those that are independent of the government and organizations that fund their own operations will not be explicitly included in the savings regime.

During the spring federal election, the Liberals campaigned on a pledge of "capping, not cutting, public service employment."

Prime Minister Mark Carney also promised during the campaign to balance the government's operating budget in three years' time while continuing to increase capital spending.

David Macdonald, senior economist with the Canadian Centre for Policy Alternatives, said in a report last month that even the savings goals outlined in the campaign would require "across-the-board job losses and major service reductions."

That analysis was published before the government announced the more aggressive savings targets last week.

Carney, who committed to rapidly expanding Canada's defence spending last month, has continued to tout a plan to "spend less" and "invest more" ahead of a planned fall federal budget.

Interim NDP leader Don Davies called on the Liberals to reverse the planned cuts, which he said are "damaging and wrong."

He argued in a statement Thursday that the cuts will harm Crown corporations at a time when "they should be strengthened and expanded."

"Taking away jobs and services Canadians rely on is wrong. Cutting people's livelihoods is wrong. Instead of cuts, Mr. Carney should focus on reducing expensive outside contractors and investing in the development of our public service," Davies said.

Davies compared Carney's approach to former prime minister Stephen Harper's Deficit Reduction Action Plan. That plan, unveiled in the 2012 federal budget, called for 19,200 job cuts over three years as part of a bid to eliminate the annual deficit.

This report by The Canadian Press was first published July 17, 2025.