The federal government is betting big on investments at home amid economic uncertainty and ongoing trade tensions with the United States.
Prime Minister Mark Carney’s 2026-27 budget, tabled Thursday and titled Masters of Our Destiny, plans to strengthen Canada’s economy and reduce dependence on its largest trading partner south of the border.
“We have what the world wants and what it takes to chart our own course. That is how we can become masters of our destiny,” the budget states.
The plan includes $151.5 billion in new spending over five years. Among the largest commitments are a $36-billion productivity-focused tax deduction for businesses, new measures aimed at “creating a path to end homelessness” and increased financial support for lower-income Canadians.
Overall federal spending is projected to reach $602 billion this fiscal year and climb to $686 billion annually by the end of the government’s five-year planning period.
The budget forecasts deficits of roughly $62 billion in each of the next two years, about 1.8% of Canada’s gross domestic product. By 2030-31, the government expects the deficit to fall to about $53 billion, reducing the deficit-to-GDP ratio to 1.3%.
The fiscal plan includes funding for new affordability measures.
The Canada Child Benefit will rise to a maximum annual payment of $15,040, while the Groceries and Essentials Benefit will provide up to $2,570 to eligible households. A temporary suspension of the federal fuel excise tax is expected to save drivers about $5.75 on a 50-litre fill-up. The Build Canada Workers Benefit will provide up to $3,143.
The spending plan directs 2% of Canada’s GDP towards defence projects. The government says these investments will “strengthen Canada’s military and Coast Guard while creating skilled jobs, supporting Canadian suppliers, and building more of what we need here at home.”
Over the coming weeks, MPs will debate the federal budget and the legislation needed to turn its measures into reality.
Some parts of the plan could still be changed before receiving final approval. However, with a majority government, the Liberals are expected to have enough support to pass their budget agenda.
