In his government’s inaugural budget, Prime Minister Mark Carney outlined an economic framework aimed at restoring growth in a sluggish economy, introducing targeted austerity measures, and positioning Canada to respond to tariffs from US President Donald Trump.

 

Summary:

  • As will be standard practice moving forward, the federal budget was announced later in the year, on November 4, 2025.
  • It is the first budget by the Carney government, and, given the government’s minority status, it is unclear if there will be sufficient votes to pass it.
  • If it passes, the federal government is set to add new spending of $89.7 billion, which is offset by $56 billion through cuts and savings.
  • The deficit will be $78.3 billion, but the Liberal government predicts that it will go down to $65 billion in the next fiscal year and $64 billion the year after that, in 2027-2028.
  • Spending focuses on the following primary areas: Infrastructure, Defence, Trade Diversification.
  • As key revenue drivers, the Carney government focuses on cutting some spending, specifically through slashing operational costs and reducing the public service.
  • GDP growth is estimated at roughly 1% per year over the next two years.

Fall Budget Overview:

Housing/Infrastructure/Labour:

  • A large chunk of the government’s spending, $115 billion, goes to infrastructure including:
    • $5 billion for trade and transport infrastructure.
    • $19 billion for Indigenous communities and municipal infrastructure.
    • $37 billion for other infrastructure and assets (i.e. health innovation).
    • $54 billion for core public infrastructure (e.g. water/ wastewater, transit).
  • A new $51 billion Build Communities Strong Fund will improve and expand community and regional infrastructure.
  • To qualify for the funds, provincial and territorial governments will need to cost-match the federal funding.
  • $25 billion will be spent on a housing plan to make housing attainable.
  • $40 billion are allocated for “nation-building” projects under the Major Projects Office.
  • Budget 2025 proposes to provide $5 billion over seven years, starting in 2025-26, to Transport Canada to create the Trade Diversification Corridors Fund.
  • Additionally, the Carney government announces the government’s intention for EDC to increase total business facilitated by $25 billion by 2030.
  • The budget includes spending of $75 million over the next three years to boost an apprenticeship training program focused on the building trades.

 Indigenous:

  • The 2025 budget allocates $2.3 billion over three years to renew First Nations Water and Wastewater Enhanced Program, maintaining progress on roughly 800 active projects.
  • The budget will also be exploring new financing tools for First Nation infrastructure including:
    • The creation of a bonding and surety backstop pilot project for First Nations contractors on reserve to enable on-reserve construction companies to bid for infrastructure projects, as well as a standalone pilot scheme to monetise federal transfers to support financing for First Nations infrastructure on reserve.
  • $2.8 billion is allocated to urban, rural, and northern Indigenous housing to be delivered rapidly in partnership with First Nations, Inuit, and Métis leadership.
    • A cross government Indigenous housing strategy will be coordinated by the Minister of Indigenous Services.
  • The Canada Infrastructure Bank’s Indigenous Infrastructure Target will increase from $1 billion to $3 billion, covering clean energy, broadband, and transportation.
  • The federal government will be expanding Indigenous tax jurisdiction through new value-added sales tax arrangements on fuel, alcohol, cannabis, tobacco, and vaping products to be concluded with interested Indigenous governments.
  • The budget includes funding to build the capacity of Indigenous communities to participate effectively in Crown-Indigenous consultation processes under the Federal Initiative on Consultation.

 Health and Social Services:

  • The budget includes $660.5 million over five years, with $132.1 million a year after that, for the Department for Women and Gender Equality.
  • The government says the funding is intended to support women’s participation in leadership roles, providing security for LGBTQ communities during Pride events, and supporting crisis hotlines and gender-based violence research.
  • This budget makes the national school food program permanent with $216 million in annual funding.

 Defence/Security:

  • Budget 2025 makes National Defence and Security one of its central pillars accounting for roughly $30 billion over 5 years under the theme of “Defending our Sovereignty.”
  • The federal government intends to spend $1.8 billion over four years to boost federal policing capacity across Canada to combat crime.
  • Additionally, to bolster border security, the government is planning on hiring 1,000 more Canada Border Services Agency officers – which is expected to cost $617.7 million over five years.
  • $82 billion will be allocated to rebuilding and rearming the military.
  • The budget commits $30 billion (2025 – 2030) in new defence spending the largest in decades with the key goals:
    • Modernise fleets, expand arctic and maritime surveillance, and strengthen cyber and space capabilities
    • Major investments in CAF personal pay, health supports, and training infrastructure
    • Create high-paying careers across Canada tied to defence manufacturing and logistics
  • The budget aims to establish a national defence industrial strategy to expand and modernise Canada’s domestic production base with a focus in building supply chain resilience and ensuring Canada can produce and maintain critical equipment at home.
    • This goal will be supported by a new federal Defence Investment Agency to manage procurement and investment more strategically.

 Cuts and Savings:

  • A number of federal departments have been exempted from any cuts, including Indigenous Services Canada, the military, Canada Border Services Agency, provincial health care transfers, and several research agencies.
  • The budget will reduce spending by about $58.2 billion over five years by cutting public service jobs and winding down programs.
  • The civil service will lose 4.5% of its workforce or 16,000 full-time positions.
  • The goal is to shrink the workforce by a total of 40,000 jobs by 2028-29.
  • The majority of the job reductions are expected to come through retirements and attrition.
  • Retirement rules for public servants are being tweaked to permit workers to retire as young as 50, depending on when they started working.
  • One of the biggest cuts is $5.8 billion over four years in disability pensions for RCMP officers, which will come from reducing the rate at which they increase annually by aligning with the way they are calculated with other federal pensions.
  • Another $4.4 billion in savings will come through reducing subsidies for medical cannabis for RCMP officers.
  • Foreign Aid will be reduced by $2.7 billion over four years.
  • $1 billion reduction in federal student loans and grants to private institutions.
  • $6.8 billion will be saved by scaling back funding for housing and infrastructure programs that have been deemed to be ineffective or made redundant by the new federal Build Canada Homes Agency.
  • The Two Billion Trees program will be phased out.

 Main Themes:

  • The Carney government is looking to reposition Canada to be less dependent on global trade systems and more self-reliant.
  • The budget calls this a “Generational Shift” moving from relying on others for growth to building domestic strength.
  • Due to pressure from investors and the opposition the budget imposes a new era of austerity measures on the public serves and measures to slash the government’s operating costs.
  • The budget highlights a deliberate pivot toward cutting operating costs and redirecting savings toward capital investments. Due to pressure from investors and the opposition the budget imposes a new era of austerity measures on the public serves and measures to slash the governments operating costs.
  • Budget 2025 is a blueprint for a leaner more productive government focused on rebuilding Canada’s economic and strategic strength through massive nation-building investments

Commentary:

  • Conservative Leader Pierre Poilievre commented on the budget by saying on X that “Mark Carney nearly doubled Trudeau’s deficit and kept Liberal taxes on groceries, work, energy, and homebuilding. Conservatives will continue fighting for affordable lives for Canadians.”
  • Following the budget announcement, Interim NDP Leader Don Davies released a statement saying, “It would appear on first review that there are measures in this budget that we welcome and indeed have advocated for. Measures such as providing additional infrastructure funding tied to union jobs, making an explicit commitment to co-op housing and referencing an East-West electricity grid.”

“Unfortunately, there are measures which we believe are a step in the wrong direction, including cutting public sector workers and the services they provide for Canadians, eliminating the Unused Housing Tax and reaffirming the government’s multi-billion dollar giveaway to US tech giants.”

  • Bloc Quebecois Leader Yves-François Blanchet called the budget a ““red-Conservative”, Harper-like budget that contains nothing for Quebecers.”

 Next Steps:

Confidence Vote

  • A budget is an automatic confidence vote, a risky proposition for a minority government.
  • The Liberals have 169 seats but need 171 votes to win a majority in the 343 seat House of Commons.
  • CPC Leader Pierre Poilievre has not completely ruled out supporting the budget but does have some measures that he wants to see included. The CPC has 144 seats.
  • However, prior to the budget release, Nova Scotia Conservative MP Chris d’Entremont said that he was considering crossing the floor to join the Liberal party.
  • He won by a very narrow margin of victory in the last election – just 1.1% and says that he is looking at what is best for his constituents.
  • The Bloc Québécois will not support the budget unless they see measures such as increased health transfer and Old Age Security payments. They have 22 seats.
  • The NDP only has 7 seats, but that is more than enough to get the Budget passed.
  • MPs also have the option of abstaining from voting.
  • If enough MPs abstain, the Liberals could pass the budget themselves.

 

Debate and Voting Procedures

  • Four days of debate are required before the vote.
  • The Official Opposition (CPC) can propose an amendment to the budget motion, which would most likely be critical of the government.
  • The Bloc would then be able to put forward a similar motion for the MPs to vote on.
  • The first two days are scheduled for Wednesday November 5 and Thursday November 6.
  • The Bloc’s motion could come up for a vote Thursday – marking the first confidence test for the Liberal government.
  • The third and fourth days of debate will be delayed since the House of Commons does not sit during the week of November 10th due to Remembrance Day.
  • That means that the earliest date for the third day of debate and the vote on the CPC motion is Monday, November 17th.

 

Select Media Coverage:

 

Globe and Mail: This budget is a Trump survival plan. Here are the highlights

National Post: Federal government slashes temporary immigration, freezes permanent resident intake

 

Global News: Carney’s 1st budget aims to balance ‘generational’ spending with cuts

 

CTV News: Budget 2025 goes big on capital spending, deficit projected at $78.3B