Canada's budget adds billions for affordability, sovereignty and cultural programs
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Prime Minister Mark Carney's second budget proposes $142 billion in additional spending over five years, funded by higher oil revenues, while projecting deficits through 2030 and introducing measures on taxes, GST rebates and a new sovereign wealth fund.
Prime Minister Mark Carney announced a second federal budget that adds tens of billions of dollars in new spending aimed at improving affordability and strengthening Canada's sovereignty. The plan includes tax incentives intended to spur an "investment supercycle," expanded GST rebates, an $11.2 billion cash injection for homelessness, and one of the largest recent investments in arts, culture and national identity.
Boosted by higher oil prices, the budget projects about $142 billion more spending over the next five years than the spring economic update, offset by an estimated $158.3 billion increase in revenue from the oil and gas sector and stronger-than-expected economic performance. Despite the revenue gains, the government still expects deficits, forecasting a $62.3 billion shortfall for fiscal year 2026-27, with the deficit-to-GDP ratio expected to decline as growth outpaces spending.
Finance Minister François-Philippe Champagne said the figures demonstrate fiscal prudence, noting the need for an "ambitious plan" amid global economic pressures. The budget also acknowledges rising public-debt servicing costs, with debt-service expenses projected to rise from $60.2 billion in 2026-27 to $85.5 billion by 2030-31.
Sahir Khan, executive vice-president of the Institute of Fiscal Studies and Democracy, said the government's fiscal sustainability remains intact, describing many new initiatives as "measured, means-tested, timely and targeted" and noting Canada's AAA credit rating and strong balance sheet.
To address affordability concerns, the budget offers a one-time 50 percent top-up to the GST rebate—rebranded as the groceries and essentials benefit—providing up to $2,570 for an eligible family of four, with about 12 million Canadians expected to qualify. The threshold for the Build Canada Workers Benefit is being lowered, and a more generous caregivers' benefit and expanded Nutrition North program are also included.
A "productivity mega-deduction" will allow businesses to immediately write off a wide range of capital investments, costing $36 billion over five years and projected to add roughly 0.5 percentage points to GDP growth. The Canada Strong Fund, a new Crown-controlled sovereign-wealth fund, will initially deploy about $25 billion in equity stakes, with individual investors able to purchase "Canada Strong Notes" from 2027.
Cultural spending is set to increase, with $300 million for CBC/Radio-Canada, $843 million for national museums, and $1.5 billion for hockey-facility upgrades. The budget also earmarks $50 billion over multiple years to expand the electricity grid, and $2 billion for infrastructure to address substance-abuse challenges linked to homelessness.
"This is an historic investment in telling our stories," Champagne said.
Overall, the budget combines higher spending with projected revenue growth, aiming to address cost-of-living pressures, bolster national pride, and support long-term economic competitiveness.