The same reason why Zootopia would quickly crumble: predators versus prey.
In nature the prey has a high amount of children in the hopes of getting enough to adulthood and then in turn have children. When the population of prey grows the population of predators quickly grows after it as more predators can get enough food to stave off starvation. This causes the prey population to drop and in turn the predator population. This way the prey population never exceeds a certain limit.
Unfortunately if a crapton of animals have become sentient and work together this is going to backfire around lunchtime. The predators have to eat the dumb animals (assuming they are allowed), but hunting is an extremely exhausting business with a lot of failures so the predator cant start with "hey you sentient?". So the predators will face starvation or start eating any prey that comes along, sentient or dumb. Worse still: an unsuccessful predator that is going to starve to death will instinctively make sure that doesnt happen, and said predator will invite some sentient prey to a business meeting with the secret agenda point of "dinner".
But lets assume they can grow enough dumb livestock to keep the predators happy and fed. What happens? The prey will still have the same sexual urges (although modern distractions reduce some of that) and the same amount of children per birth. After 2 generations the prey will be so big that everyone is reduced to food production to prevent starvation.
But for one moment assume that population control is very well done, food production is great and predators+prey are fine with each other. Even then the entire thing would collapse. Any office work would be done by the smaller intelligent animals. Why build an office for an elephant when a dozen cats or dogs can do more work in less space? Maybe the mice are even as intelligent (despite the lower brain mass) and they would dominate the economical market: they can ask for less money as they require less food, space, electricity and other resources so why would you pick something bigger? And imagine an elephant accidentally stepping on a sentient cat or mouse, that would set the stage for a small animal vs large animal conflict that is both economical and about accidental deaths which will turn into purposeful deaths as conflict rises between them.
One way or another your dog is seeing his animal kingdom crumble. Overpopulation, starvation, predator vs prey relations are all disastrous and global war is ineviteable. Unless... humans take over again. Maybe the dog has a backdoor to keep humans in line, "if you dont take good care of the world and the animals a failsafe will release sentience amongst the animals again". Humans might not be perfect, but they might be better than the bloody wars that all those sentient animals are having/will have.