Canada’s Prime Minister Mark Carney speaks during a joint press conference at the National Palace in Mexico City on September 18, 2025. (Photo by YURI CORTEZ/AFP via Getty Images)
Finance Minister François-Philippe Champagne tabled the new Carney government’s first budget on Nov. 4. The budget outlines a deficit of $78.3 billion this fiscal year and projects a debt-to-GDP ratio that will rise but then stabilize over the next few years.
The 406-page budget proposes $90 billion in new net spending over the next five years, and seeks to enable $1 trillion in total investments over the same period through “smarter public spending and stronger capital investment.”
Champagne said his government’s budget is a response to the “fundamental” changes in the international order and trading system, making an apparent reference to U.S. tariffs.
“The level of uncertainty is higher than what we have seen and felt for generations,” he said. “The challenges are great, but the opportunities for Canada are even greater.”
Champagne said the budget’s “generational investments” have four key priorities, including housing, infrastructure, defence and security, and productivity and competitiveness.
The budget plans to slash the number of public servants by 40,000 positions by the end of the 2028/2029 fiscal year, which is a 10 percent decrease. The budget says this will happen through “normal attrition through retirements, voluntary departures, and previous savings exercises,” as well as further measures the government is taking to slow spending and return the public service to a “sustainable size.”
The budget document says that 75 percent of measures the government is taking are intended to respond to “significant global economic shifts.”
A total of $12 billion is allocated for defence, responding to tariffs, and “building a strong economy.” Another $10 billion is set aside to address climbing living costs through tax cuts, building homes, and cancelling the consumer carbon tax, while $7 billion is for “additional actions to support Canadians.”
The budget includes $115 billion in planned federal infrastructure funding allocations over 5 years, targeting projects related to trade and transport infrastructure, indigenous communities and municipal infrastructure, and core public infrastructure like drinking water and transit.
A total of $81.8 billion is earmarked for the Canadian Armed Forces to over the next five years, as the government aims to hit NATO defence spending targets.
The government will also allocate $2 billion for a “critical minerals sovereign fund”, and $925.6 million over five years to support large-scale AI infrastructure.
The budget states that the government will find savings under tis Comprehensive Expenditure Review, saying the initiative will save $13 billion annually by 2028-29 alongside other savings and revenues, which will total $60 billion over the next five years. The budget outlines several initiatives that Ottawa previously announced in 2025, including an initial $13 billion over five years for the new Build Canada Homes agency, $5 billion over six years for a Strategic Response Fund intended to help Canadian industries respond to trade disruptions and supply chain volatility.
It will also include $3.7 billion over three years for temporary Employment Insurance (EI) measures to respond to U.S. tariffs, $2 billion for constructing small nuclear reactors, and $1.7 billion over the next four years to increase federal policing capacity across Canada. The budget also says that making the national school food program permanent, which Carney pledged to do in October, will cost $216.6 million per year beginning in 2029-2030.
This is a developing story, updates will follow.
Matthew Horwood is a reporter based in Ottawa.