Indigenous Services Canada warns 'difficult decisions' in budget cuts will impact programs

Indigenous Services Canada's top officials have warned staff that meeting Prime Minister Mark Carney's budget cut targets won't be easy and will impact jobs and operations.

In an internal email seen by CBC Indigenous, the deputy ministers informed employees about the initiative "to bring forward ambitious savings proposals" and reduce spending by up to 15 per cent over the next three years.

"This will involve difficult decisions that will impact our programs and activities, as well as our workforce," wrote deputy minister Gina Wilson and associate deputy minister Michelle Kovacevic on July 8.

The deputies said they'll be working on these proposals over the coming weeks, aiming to have them presented in spring 2026. But the deliberations and decisions will be subject to cabinet confidence until then, they added. That means they'll be kept secret.

"We recognize this news may be difficult to hear, and that uncertainty can create stress," the email said.

Carney has been repeating the mantra of "spend less, invest more" as he pledges to rein in government spending. The public service grew tremendously under the Trudeau government, to nearly 358,000 in 2025 from some 257,000 people in 2015, according to the Treasury Board Secretariat.

ISC hit an estimated $27.7 billion in spending last fiscal year and already forecasts a budget reduction. The deputies' email confirms ISC, like other departments, was asked to target "programs and activities that are underperforming, not core to the federal mandate, duplicative, or misaligned with government priorities."

Labour groups are already raising alarms, with one union representing federal government workers saying the cuts "look and feel like austerity and will hurt everyone in Canada who depends on vital public services."

"Cutting jobs means cutting services. Full stop," said Public Service Alliance of Canada national president Sharon DeSousa in a statement.

It's unclear from Wilson and Kovacevic's message whether there will be program cuts and job losses at ISC, which is responsible for the Indian Act as well as vital services like health care, education, infrastructure, drinking water and child and family services.

ISC's budget is already set to decrease over the next three years as program money spent by the Trudeau government runs out, or "sunsets." The department forecasts spending $25.3 billion this year, $21.4 billion in 2026-27, and $20.1 billion in 2027-28.

This means ISC is already in line for more than $5 billion in possible budget reductions, though it's unclear whether the 15 per cent in cuts would include the forecasted $5-billion reduction or not.

A spokesperson for Indigenous Services Minister Mandy Gull-Masty said the minister wasn't available to comment at this time and referred a request for comment to the department. ISC did not respond by time of publishing.

The changes don't stop there.

The day after announcing the spending review, ISC's deputy ministers announced a proposed internal restructuring in an internal email also seen by CBC Indigenous. The restructuring was in the works since February 2025, according to the email, and is billed as a "Sustainability Review Strategy."

While the reorganization seems unrelated to the cuts, the timing of back-to-back major announcements raises the question of how the two initiatives will work simultaneously.

According to the July 9 email, the restructured ISC would include at least five new sectors. Among the most significant changes would be the creation of a "Regional Delivery Sector" that will consolidate the First Nations and Inuit Health Branch with ISC's regional operations.

WATCH | Where the government could cut costs:

Prime Minister Mark Carney's cabinet has been tasked with finding 'ambitious savings,' aiming for a 7.5 per cent cut in federal spending next year and further cuts in the following years. Power & Politics asks Sahir Khan, executive vice-president at the Institute of Fiscal Studies and Democracy and former assistant parliamentary budget officer, where those cuts could come from.

The deputies said a Jordan's Principle team will remain in place to try and reduce the backlog and improve the quality of children's services.

"We believe that the changes announced today, along with a new focus on accountability, digital tools, litigation management, and governance, will help us better support and equip Indigenous Peoples to deliver their own services," they wrote.

They didn't say what sectors are being eliminated, if any, nor how the restructuring may impact jobs.