Canada to funnel oil windfall into corporate-friendly infrastructure and tax giveaways in second budget
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Prime Minister Mark Carney's second budget channels higher oil revenues into infrastructure spending, permanent tax incentives, and a token deficit trim, while leaving fiscal targets untouched and doing little to directly reduce public debt.
Ottawa unveiled a second budget that steers most of the recent surge in oil revenue toward infrastructure and permanent tax incentives, dressed up as a productivity plan while keeping Canada’s fiscal ratios on target. Finance Minister Francois-Philippe Champagne said the plan includes spending up to C$142.1 billion on projects such as an oil pipeline, electricity generation, a grocery rebate top-up, social-housing incentives and defence over the next five years.
The budget projects the fiscal deficit for 2025-2026 at C$39.3 billion, well below the C$66.9 billion forecast in April, and expects debt to rise to C$1.59 trillion by 2030-2031 while the debt-to-GDP ratio remains roughly flat thanks to higher growth assumptions rather than any serious shift in redistribution or restraint.
"This budget is a continuation of the same focus that (was) highlighted earlier," said Helen Lao, executive director of economics at CIBC Capital Markets.
"The government is hitting the right pieces in this budget," said Pedro Antunes, chief economist at Signal 49 Research, adding that rising bond yields could increase debt-servicing costs.
Economists noted the plan does not allocate any of the oil windfall to debt reduction, and warned that the projections rely on an optimistic outlook for continued GDP growth and revenue gains, leaving the public to absorb the risk if those rosy assumptions fail.