Prime Minister Mark Carney’s first budget, tabled Tuesday, is being hailed by the government as “transformational” but slammed by fiscal hawks as reckless. Budget 2025 unleashes $141 billion in new spending and predicts a $78.3-billion deficit for 2025–26, with total federal debt expected to reach $1.35 trillion by year’s end.Finance Minister François-Philippe Champagne said the plan is built on “resilience and autonomy” and would “supercharge” growth through $280 billion in infrastructure and innovation spending over five years. .The government hopes this will trigger $500 billion in private investment by 2030, a bet critics say is far from certain.The budget also includes $51 billion in cuts and savings, largely from a sweeping expenditure review and a reduction of 40,000 public service positions by 2029.Ottawa expects to save $13 billion annually by 2028–29 through attrition, early retirements and program streamlining..The federal government’s fiscal outlook in Budget 2025 projects persistent and sizable deficits stretching well into the next decade. Fiscal YearProjected Deficit (Billions)2024–2025–36.32025–2026–78.32026–2027–65.42027–2028–63.52028–2029–57.92029–2030–56.6The government attributes the prolonged shortfalls to unprecedented infrastructure and innovation investments, expanded defence commitments, and programs designed to attract private capital.Meanwhile, Canada’s total federal debt is forecast to rise from $1.35 trillion in 2025–26 to $1.59 trillion by 2029–30, leaving the debt-to-GDP ratio hovering around 43 % which is a level economists warn could constrain future fiscal flexibility if growth fails to materialize.“We’re going to be okay as a country,” Champagne told reporters. “I know there’s a bit of uncertainty. There’s a lot of concerns in families, on the shop floor, in the fields, but I would say tonight people will go to bed and say, ‘We’re going to be okay.’”“Canada is a strong country,” said Champagne. “We have a strong foundation, strong industry. The budget will really bring us forward as a nation.”.The immigration outlook marks one of the most significant policy shifts in Budget 2025. The Carney government’s new five-year Immigration Levels Plan slashes the number of temporary residents Canada will admit, part of what officials call a move toward “sustainable population management.” The government will admit 385,000 temporary residents in 2025, about 43% fewer than last year’s target of more than half a million. That figure will fall again to 370,000 in 2026, a level Ottawa plans to maintain through 2027 and beyond, with similar numbers anticipated for 2028 and 2029. The government argues the reductions will relieve pressure on housing, healthcare, and labour markets, while critics warn it could exacerbate labour shortages in key sectors. The plan comes as new data show temporary foreign worker arrivals have dropped 50%, international student admissions are 60% lower than in 2024, and asylum claims have fallen by one-third so far in 2025..Budget 2025 delivers sweeping reforms across Canada’s public safety institutions, pairing fiscal restraint with modernization efforts. The Department of Public Safety and Emergency Preparedness will see up to 15% in savings over three years through staff reductions, internal consolidation, and the elimination of smaller programs such as the Centre for Resilience and Continuity Management and the Public Safety Library. The Canada Border Services Agency faces a 2% cut to its operating base but will maintain border and customs operations while saving $52 million a year by extending vehicle lifecycles, retiring outdated IT systems, and trimming travel and overtime costs. The Correctional Service of Canada is slated to save $132 million annually by 2028–29 through modernization and efficiency measures. The RCMP will centralize administrative functions and trim costs by lowering medical cannabis reimbursements from $8.50 to $6.00 per gram and tying disability pension benefits to the Consumer Price Index. The government insists these changes will not compromise national security or emergency readiness but will create a leaner, more efficient public safety apparatus focused on core federal priorities..Budget 2025 confirms that the federal government will end the 2 Billion Trees program, a key environmental initiative launched to help Canada meet its 2030 climate commitments. According to the budget, Natural Resources Canada will honour existing funding agreements under the program but will return all uncommitted funds.The department reports that nearly 1 billion trees have already been committed for planting, but the cancellation means the remaining target will not be met.The government says the decision is part of a broader effort to streamline spending and refocus Natural Resources Canada on projects that directly support its new “climate competitiveness strategy,” including investments in critical minerals and clean technology.“We needed to find savings,” said Champagne. “I think Canadians have been tightening their belt for quite some time and if you want to be credible when you’re saying you are going to make generational investments you also have to have the discipline to look at how you can make government more efficient.”.The Canadian Taxpayers Federation blasted the Carney government for what it called runaway spending and weak fiscal discipline.“Budget 2025 shows the debt continues to spiral out of control because spending continues to spiral out of control,” said Franco Terrazzano, CTF’s federal director.“Carney isn’t close to balancing anything when he’s borrowing tens of billions of dollars every year.”.Debt interest payments are set to soar to $55.6 billion this year, more than the federal government will transfer to provinces for health care or collect through the GST.“Carney needs to reverse course,” Terrazzano said. “Every dollar Canadians pay in federal sales tax is already going to pay interest charges on the debt.”Despite the government’s claim that its cuts will “modernize” operations, Ottawa’s total spending will rise to $581 billion this year, an increase of $38 billion..“The government always tells Canadians that it will go on a diet Monday, but Monday never comes,” Terrazzano said.On defence, Carney is aiming to rearm Canada and meet NATO’s spending targets.The government pledges to hit the 2% of GDP NATO benchmark this year and climb to 5% by 2035, including 3.5% for core military needs and 1.5% for related investments by all levels of government..Defence investments include $6.6 billion over five years to strengthen Canada’s defence industry through a new Defence Industrial Strategy, $6.2 billion over five years for expanded partnerships including aid to Ukraine and training initiatives, and $805 million for intelligence and procurement agencies.Another $2.7 billion over three years will support Operation REASSURANCE in Latvia and $300.1 million will fund Operation AMARNA in the Middle East.The new Defence Industrial Strategy will fund innovation in artificial intelligence, quantum research and cyber technology, aiming to create thousands of jobs and boost domestic production of military hardware..Budget 2025 outlines plans for an Early Retirement Incentive to reduce the public service through attrition and voluntary departures.Public servants over 50 could retire early with full pensions, aiming to achieve reductions without mass layoffs.Ottawa will also consult on aligning public pension plans with CPP and QPP enhancements to reduce future costs..The budget also proposes tightening eligibility for the Pensioners’ Dental Services Plan, raising the minimum service requirement from two to six years, a move expected to save money but reduce benefits for shorter-term employees.The government recommitted to industrial carbon pricing, pledging to set a multi-decade carbon price trajectory toward net zero by 2050.The move has drawn criticism from industry groups who argue that rising carbon costs will erode competitiveness....with files from Blacklock's Reporter.“Carney’s hidden carbon tax will make it harder for Canadian businesses to compete and will push Canadian entrepreneurs to set up shop south of the border,” said Terrazzano.Economists remain divided on whether the government’s “supercharged” investment plan can deliver.With GDP growth forecast at only one per cent annually for the next two years and unemployment continuing to rise, Carney’s budget faces steep odds.The prime minister insists the plan will strengthen sovereignty and build resilience, but to critics, it is a massive gamble with taxpayers’ money. “Canadians don’t need another plan to create a plan,” Terrazzano said. “They need spending cuts now, not another trillion-dollar experiment.”
