Introduction

Today the Government of Canada released its 2025 Budget. The first for the Carney Government and by Finance Minister François-Philippe Champagne. Like this one, future budgets will now be released in the fall as opposed to the former procedure of releasing budgets in the spring-time.

This is a consequential budget as it outlines how the Canadian Government will fiscally manage the series of tariffs imposed by the United States Government. It will also outline the impact these tariffs have had (and will have) on the Canadian economy.

The Numbers

For this fiscal year the deficit is projected to rise to $78.3 billion – an increase of $38.5 billion when compared to last years’ deficit. For this year, the deficit-to-GDP ratio will be approximately 2.5%. The debt-to-GDP will remain steady at approximately 42.4%, though this could change if the economy worsens or larger deficits are implemented over the coming years.

The Parliamentary Budget Officer’s most recent debt estimate (September 2025), is $1.281 trillion for this fiscal year. Based on a population of 41 million, the estimate works out to a little more than $31,000 per Canadian. The debt-servicing costs are rising to $55.6 billion this year. However, according to the IMF, Canada is still among the lowest in the G7 when it comes to the debt-to-GDP ratio.

While this could be viewed as an austerity budget given there are few spending areas to lower the cost of living, the government has committed to spending $280 billion over five years on capital investments in new infrastructure, productivity and competitiveness measures, defence and security, and housing. Of that amount, $141 billion is new spending, offset by about $51 billion in cuts and other savings.

Themes

Defence

For this budget, defence is the priority item. Budget 2025 provides $81.8 billion over five years to rebuild, rearm, and reinvest in the Canadian Armed Forces. This investment will be guided by a Defence Industrial Strategy which will be a whole-of-government approach to building sovereign defence capacity. Approximately, $4.6 billion will be spent over five years to improve access to capital, drive research and innovation, bolster domestic supply chains, and grow critical resource stockpiles. The goal of this investment is to put Canada on a pathway to meet the NATO Defence Investment Pledge of investing 5% of GDP in defence by 2035.

Budget 2025 has allocated $184.9 million over four years, starting in 2026-27, and $40.1 million ongoing for Veterans Affairs Canada to stabilize their processing capacity for disability benefits applications and to modernize operational processes and IT infrastructure for their disability benefits program.

Infrastructure

The budget aims to accelerate the delivery of major projects whereby support is provided to fast-track nation-building infrastructure projects by streamlining federal review and approval processes. The execution of this initiative will be led by the Major Projects Office (MPO). A priority for the MPO will be to help more critical minerals projects get to final investment decisions within a two-year window. The budget will provide $213.8 million over five years, for the MPO. Funding will also support the Indigenous Advisory Council.

Tariffs/Trade/Investment

In response to the current trade environment, the government announced $25 billion for support for workers and businesses. The budget creates a Trade Diversification Strategy to boost Canada’s global footprint with the objective of generating $300 billion more in trade over the coming years. Access to overseas markets will be improved by investing in new port, airport, and railway infrastructure.

Other measures to encourage investment include $2 billion for a “critical minerals sovereign fund,” which will help unlock natural resources that are crucial for the development of new technologies.

Housing

Recently, Build Canada Homes was launched by the government with the mission to build and finance more affordable homes. An initial investment of $13 billion (over five years) is now available to: develop public land sites and prioritize innovative, factory-built housing; protect existing affordable housing; to build transitional and supportive housing for people who are homeless or at risk of homelessness; and partner with the Nunavut Housing Corporation to build over 700 public, affordable, and supportive housing units.

Will it be Passed by the House of Commons?

The governing Liberals (who have formed a minority government) need 3 more votes from the opposition (or a series of absences from opposition Members of Parliament). The vote on the Budget is expected to happen on November 17, 2025. Prime Minister Carney has stated that he would go to the Polls if he does not get the required support.

Opposition Reaction

The Official Opposition Conservative Leader Pierre Poilievre stated his caucus will vote against the budget unless it is amended. He says he will propose an amendment that “will get rid of the industrial carbon tax, cut the wasteful spending to bring down debt, inflation and taxes. It will open our country up to opportunity by developing our prodigious resources, clear away bureaucracy to build affordable homes.”

Bloc Quebecois Leader Yves-François Blanchet indicated that his party is leaning towards voting against the budget, calling it a: “Red-Conservative, Harper-like budget that contains nothing for Quebecers.”

The NDP Interim Leader Don Davies said it was too early to make a decision and that his party will review the budget and make a decision in the coming days.

Elizabeth May of the Green Party was emphatic that her party will in “no way” support the Budget as it is currently structured.

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Ivan Ross Vrána

Managing Partner