POLITICS: Ottawa BUDGET (full version)

Canada’s 2025 Federal Budget: A detailed summary

They vote today
The House of Commons is voting today on Prime Minister Mark Carney’s first federal budget, which will determine both whether the fiscal policy can proceed and if the Liberal government can continue governing. This is the final vote on what’s called a confidence motion, meaning if it fails, Canada could be headed to another election just months after the last one.

Party numbers and budget positions
The Liberals need at least two opposition votes to survive, as they hold 170 seats in the House of Commons but are three seats short of a majority. As of this morning, the outcome remained uncertain, with the New Democratic Party (NDP) holding the balance of power after both the Conservatives and Bloc Québécois indicated they would vote against the budget.

The Big Picture
Budget 2025 proposes $141.4 billion in new spending offset by $51.7 billion in projected savings over the next five years, with the deficit projected at $78.3 billion this year. This marks a significant departure from the previous Liberal government’s fiscal approach and represents Prime Minister Carney’s vision for transforming Canada’s economy in the face of unprecedented challenges.

Budget label
The government calls this a “generational” investment plan, arguing that global shocks demand more than short-term fixes and require a bold down payment on the prosperity of future generations. The budget attempts to balance massive infrastructure investments with significant cuts to government operations.

Why This Budget Matters
Canada finds itself at a critical economic crossroads. The country is grappling with a trade war with the United States after President Donald Trump imposed tariffs on Canadian goods. The economy is slowing, unemployment is rising, and Canadians are feeling the strain of high costs for housing, food, and everyday expenses.

This budget represents the Carney government’s answer to these challenges: pivot away from relying on the United States as Canada’s primary trading partner and instead build economic self-sufficiency through massive infrastructure projects, increased defence spending, and tax incentives designed to attract private investment.

The Deficit: Bigger Than Expected
The budget projects a deficit of $78 billion for 2025-26, which is forecast to drop to $65 billion next fiscal year and then gradually fall to $57 billion in 2029-30. This is substantially higher than the $42 billion deficit the previous Liberal government had promised, and the deficit is far above what Conservative Leader Pierre Poilievre said his party would support.

Bafflegab or bullsh*t?
However, the budget pledges to balance operational spending in three years, meaning the government would only run deficits on capital investments like infrastructure, not on day-to-day program spending.

Major Spending Initiatives
Infrastructure Investment
The budget touts $115 billion in infrastructure spending over five years. The Build Communities Strong Fund will invest $51 billion over 10 years to revitalize local infrastructure including hospitals, universities, colleges, roads, bridges, water systems, and transit Prime Minister of Canada.

More bureaucracy: New govt ministry
The government has created a Major Projects Office to fast-track transformative projects in energy, trade, and transportation. Major infrastructure initiatives expected to receive approval in the coming months: high-speed rail, new ports, and carbon capture and storage facilities.

Defence Spending
Budget 2025 earmarks $81.8 billion for defence over five years, roughly $72 billion of which is new money. Canada is pledging to reach NATO’s target of two per cent of GDP spending by March 31, 2026, and 3.5 per cent of GDP on core defence requirements by 2035.

This massive increase in military spending includes a “Buy Canadian” procurement plan designed to build up domestic defence industries while strengthening Canada’s armed forces.

Housing (more bureaucracy)
The budget includes $25 billion for federal housing initiatives over five years, including plans to dramatically scale up home construction through a new federal agency called Build Canada Homes with an initial $13 billion investment. The government projects tens of thousands of units will be built by prioritizing factory-built housing and other affordable homes.

No GST
The budget also keeps Carney’s campaign promise to eliminate the GST for first-time homebuyers on new homes up to $1 million, while reducing it on new homes between $1 million and $1.5 million.

Productivity and Business Investment
The budget promises to invest $110 billion over five years in “productivity and competitiveness” initiatives, with measures the government hopes will help catalyze $500 billion in private sector investment by 2030.

The centerpiece is a “productivity super-deduction” that allows businesses to write off larger shares of capital investments more quickly. Manufacturing and processing buildings acquired on or after Budget Day and used for those purposes before 2030 can be written off at 100 per cent in their first year.

Major Cuts and Savings
Public Service Reductions
The public service will see a drop of about 40,000 positions over the coming years, with the budget projecting 330,000 employees in 2028-29, down from 368,000 counted last year. These reductions will come through buyouts and attrition rather than mass layoffs.

The government argues this “new discipline” will help protect social benefits while redirecting taxpayer dollars toward nation-building infrastructure, clean energy, innovation, and productivity rather than day-to-day operating costs.

Program Spending
Beyond cutting public service jobs, the budget delivers on a Comprehensive Expenditure Review to modernize government and improve efficiencies, including an initial $60 billion in savings over five years Prime Minister of Canada.

Immigration reduction
Immigration is getting slashed, with temporary residents like students and foreign workers to be cut by nearly 50 per cent. The plan will reduce temporary resident admissions targets from 673,650 in 2025 to 385,000 in 2026 and 370,000 in 2027 and 2028.

At the same time, the government is increasing the share of economic migrants to 64 per cent from 59 per cent, focusing on attracting skilled workers and international talent who can contribute to economic growth.

Energy and Environment
In a significant policy shift, the budget said effective carbon markets, enhanced oil and gas methane regulations, and the deployment at scale of technologies such as carbon capture and storage “would create the circumstances whereby the oil and gas emissions cap would no longer be required”. This suggests the controversial emissions cap could potentially be scrapped if certain conditions are met.

Measures to Win Opposition Support
The budget includes targeted spending designed to appeal to specific opposition MPs and their ridings:

• $40 million over two years for a Youth Climate Corps, which will provide paid skills training for young Canadians — an NDP request
• $150 million in new funding for CBC/Radio-Canada to modernize and strengthen its mandate, which the Bloc Québécois has demanded
• Funding for a Filipino Community and Cultural Centre in Metro Vancouver, which would benefit NDP Leader Don Davies’s riding with its large Filipino population
• Various local infrastructure projects in ridings held by Conservative and Bloc MPs

National School Food Program
The budget also makes the National School Food Program permanent to provide meals to 400,000 more children every year, and renews the Canada Strong Pass for upcoming holidays and summer 2026 Prime Minister of Canada.

Tax Changes for Individuals
The budget includes a middle-class tax cut and proposes making it easier for Canadians to access federal benefits. The Canada Revenue Agency will prepare pre-filled tax returns for about 1 million individuals with simple tax situations starting in 2027, scaling to 2.5 million in 2028 and approximately 5.5 million by 2029.

The Political Drama
The path to today’s vote has been filled with intrigue. The minority Liberals gained a seat after Nova Scotia MP Chris d’Entremont announced he was resigning from the Conservative caucus to join the government. Conservative MP Matt Jeneroux also announced he was quitting Parliament altogether following rumours that he was planning to join the government.

Green Party Leader Elizabeth May said she is open to supporting the government in the confidence vote “because I know how much Canadians don’t want another election right away,” though as of yesterday she remained undecided.

The budget has already survived two preliminary confidence votes last week on amendments proposed by the Conservatives and Bloc Québécois. Today’s vote is the final test.

The Opposition Response
Conservatives: Leader Pierre Poilievre has been clear his party opposes the budget, calling it “Carney’s costly credit card budget” that will drive up the cost of food, housing, and living for Canadians. The Conservatives had demanded the deficit stay under $42 billion and that the government scrap certain taxes — neither of which happened.

Bloc Québécois: Bloc Leader Yves-François Blanchet called this “a red conservative budget which Mr. Stephen Harper might have signed”, making it clear his party doesn’t support the fiscal plan. The Bloc had called for increases to Old Age Security payments and more health transfers to provinces, which weren’t fully addressed.

NDP: Interim NDP Leader Don Davies said his party has “serious concerns” and “questions” about the budget but would weigh its options. Some NDP MPs could opt to abstain from voting rather than voting directly for or against the budget.

What Happens If It Fails
If the budget is defeated today, Canada would be forced into a federal election — the second in just seven months. This would plunge the country into political uncertainty at a time when it’s already dealing with a trade war with the United States, a slowing economy, and rising unemployment.

The Bottom Line
This budget represents a fundamental shift in Canadian economic policy. Rather than focusing on social programs and direct support for individuals — hallmarks of previous Liberal budgets — this budget focuses on corporate measures and infrastructure spending and contains few of the pocketbook promises or sweeping new social programs that were often centerpieces of the previous Liberal government led by Justin Trudeau.

The gamble is that massive infrastructure spending, tax incentives for businesses, and increased defence spending will spark private sector investment, create jobs, and build long-term economic resilience — even if it means running larger deficits in the short term and cutting government jobs.

The government insists the measures they intend to advance will boost average wages and create revenue that helps support health care and lower taxes, though critics argue there’s very little in the budget tailored toward everyday Canadians’ immediate cost-of-living concerns.

Final word
Whether this vision succeeds or fails may depend less on its economic merits and more on whether enough opposition MPs decide that avoiding another election is worth holding their noses and letting this budget pass. Canadians will have their answer by the end of today.