The squeeze has been on for a couple of years now. There were layoffs at Industry Canada last year, and it's been ages since I've seen a consultant. They're always the first to go.
Government waxes and wanes. The faster it grows, the sooner comes the chop. You can't spend more than you bring in. Well, actually you can, but the longer you do it, the worse the reckoning. Ottawa will be fine. A lot of the people that get 'laid off' in these cuts didn't exist to begin with - they're vacant positions that were funded but not staffed, because everyone knew what was coming. Then there's the legions of people that just retire earlier and take a buyout. Technically they are cut, but they don't leave town. And some people just get fed up and take a job outside government.
I actually got laid off by B.C.'s Gordon Campbell back in 2002 (within about six months of voting for him...

) and it turned out to be a pretty good career move. The severance package was nice, too.