Canada’s new finance minister, François-Philippe Champagne, delivered that country’s biggest-ever budget by the dollar amount to the House of Commons. This budget addresses both significant economic uncertainties and direct challenges posed by U.S. tariffs. In a surprise move, the budget is progressive—and deeply so—by raising Canada’s deficit to an astounding C$78 billion. This is the second largest deficit in the nation’s history.
Champagne described the budget as an “investment budget,” placing an emphasis on using targeted spending to stimulate economic growth. The federal government has earmarked almost C$1 billion to accelerate the adoption of artificial intelligence. This incredible move is a huge step towards demonstrating their commitment and leadership to advancing this technology.
The budget – as presented – signals deep, damaging cuts. It intends to cut the federal workforce by about 10% over the next few years. This decrease is projected to result in an annual net loss of 39,891 jobs by 2029. Almost everyone, from the most conservative to the very liberal, has condemned this unilateral move. International aid is due for cuts, going back to pre-pandemic levels as part of the government’s overall plans to balance the books.
The Canadian government is clearly on a mission to unlock a trillion dollars in infrastructure investment. They’re going to do that by bringing C$1 trillion into Canada over the next five years with some targeted measures. In calling out the continued uncertainty caused by U.S. tariffs on Canadian exports, the budget doubles down on the call for protectionist measures.
The administration hopes to increase U.S. exports through the gov’s “Connecting U.S. Through Trade” initiative to modernize seaports and improve trade infrastructure. Their intent is to double Canadian exports to non-U.S. markets within the next 10 years. Direct finance will be extended to help firms negatively impacted by introduction of tariffs.
The budget includes sizeable increases of almost C$82 billion for new military spending over the next five years. That would be the biggest funding boost we’ve experienced in decades. This action is part of the broader effort to strengthen our national security in the face of growing threats across the globe.
The federal government recently announced an overall modest decrease in immigration targets over the next three years. This decision greatly impacts a multitude of industries that depend on foreign workers.
Opposition parties have been just as quick to criticize the budget. Rebekah Young expressed concern regarding the lack of new supports for Canadians, stating, “They’re going to open this budget and not see any new supports.” She pointed out that though the deficit is growing, affordability crises for the average Canadian have yet to be truly tackled.
Champagne acknowledged the tough road ahead. He reiterated the theme that we must have some bold and swift moves in order to chart a dangerous economic landscape. His remarks highlight the government’s recognition of the pressing need for effective policies amid a backdrop of rising costs and economic pressures.
Canada, for example, is aiming for a very high-level budget. It remains to be seen how effectively these strategies will address adverse outside economic forces and respond to internal pressures for greater affordability and aid.