The budget announced by the Liberal government of Prime Minister Mark Carney on November 4th was approved by Parliament on the 17th. It includes investment plans and spending cuts to promote growth and productivity amid trade uncertainty and an economic slowdown.
The Carney administration has placed a strong emphasis on economic growth and competitiveness, including allowing businesses to quickly depreciate a larger portion of their capital investments, creating new deductions for manufacturing and processing facility buildings, and new capital cost deductions for liquefied natural gas (LNG) equipment and buildings.
During the presidential election, Prime Minister Carney also pledged to speed up domestic projects. He pledged to inject $214 million over the next five years into the Major Projects Office (MPO), which is already operational and is the core of this initiative. He also pledged to take the approval of critical mineral projects to the next level, and to shorten the construction of a high-speed rail line between Toronto, Ontario, and Quebec City, Quebec, from the previous eight-year plan to four years. He also pledged to invest $51 billion over the next 10 years in regional infrastructure development, including housing, roads, water supply, and medical facilities.
One item that drew attention was the significant expansion of defence spending. Prime Minister Carney has already pledged to increase defence spending by $9.3 billion to meet the NATO (North Atlantic Treaty Organization) target of 2% of GDP by March 31, and a further 5% by 2035. The 2025 budget allocates $81.8 billion to defence over the next five years, of which approximately $72 billion will be new spending.
The deficit is expected to reach $78 billion in fiscal 2025, far exceeding the $42 billion promised by the former Trudeau Liberal government. It is planned to gradually reduce it to $65 billion the following year and to $57 billion in fiscal 2029, with the aim of balancing operating expenses within three years. The government also plans to incur new spending of $141 billion over the next five years, but some of this is expected to be offset by spending cuts and other measures.
Government size will be reduced through spending cuts. The government’s ongoing cuts in daily operating costs are expected to result in annual spending reductions of $13 billion by fiscal year 2028. Additionally, the number of civil servants will be reduced by approximately 40,000 over the next few years.
He said he would invest more taxpayer money in “nation-building infrastructure, clean energy, and innovation” and protect the social security system.
On the other hand, some of the measures to address environmental issues have been abolished, such as the abolition of greenhouse gas emission restrictions on companies and the elimination of the budget for reforestation.
In terms of immigration policy, against the backdrop of housing problems and pressure on the healthcare system, the government will drastically reduce the number of new temporary residents admitted from 673,650 (2025) to 385,000 (2026). On the other hand, it will introduce a temporary measure to transition up to 33,000 work visa holders to permanent residency in 2026 and 2027, citing them as “critical players who have deep roots in local communities, pay taxes, and support the Canadian economy.”