OTTAWA
Prime Minister Mark Carney’s government tabled a $142.1 billion budget on Thursday, focusing on tax incentives for business and affordability measures while projecting deficits over $50 billion for the next four years.
Finance Minister Francois Philippe Champagne revealed the new tax incentives, spending and other measures over the next five years in the House of Commons.
“With this budget, we will build the strongest economy in the G7. We will make life more affordable for Canadians,” Champagne said in a speech. “And we will defend our sovereignty while celebrating who we are.”
The budget projects a $62.3-billion deficit for the current budget year, which is $3 billion lower than projected last spring.
However, it shows no path to balance, with deficits projected over $50 billion in each of the next four years.
According to the budget document, government revenues are much higher than previously expected, but the prime minister has chosen to spend the windfall rather than save it.
The most expensive new measure is the previously announced $36.1-billion productivity mega deduction, aimed at encouraging business investment.
Champagne described the budget as the “most comprehensive revamp of business incentives in generations.”
On affordability, the government plans to spend an extra $4.6 billion on the grocery rebate and $11.2 billion over five years to put Canada on a path to end homelessness within a decade.
It also proposes $26.6 billion in new money for Indigenous reconciliation, with much going toward water infrastructure, housing, education and children and families.
Debt charges to outpace health spending
Starting this year, the budget shows Canada will spend more to service the debt than on health transfers to provinces.
It projects $60.2 billion to service Canada’s debt this year, compared to $57.4 billion budgeted for health care.
By 2030, about 12 cents of every tax dollar will go to debt servicing charges.
Asked about the increasing costs, Champagne argued they remain manageable.
“Our public debt charge still remain low by historical standards,” he said. “The house is in order. We have a strong fiscal position, and that gives us the strength to build.”
Economist Don Drummond with Queen’s University said the growing debt burden will limit the government’s options.
“The government, on behalf of Canadians, is highly indebted, and this budget doesn’t do anything to reduce that,” Drummond said.
The budget also details a further $9.4-billion in new spending announced since the spring, including $1.5 billion over five years for the George Massey Tunnel Replacement Project in B.C.
The Old Age Security program remains the single most expensive line item, projected to cost $89.4 billion this year and rising to $109.5 billion in 2030-31.
Paul Kershaw, a University of British Columbia professor, said that spending limits big-ticket affordability measures for younger generations.
“The affordability investments actually are quite striking for the older loved ones in our lives, but markedly more modest for their kids and grandchildren,” he said Thursday.
The budget was criticized by both the official Opposition Conservatives and New Democrats.
“The minister would have more aptly named this budget ‘mastered by debt,’” Conservative Leader Pierre Poilievre charged, riffing off the official name “Masters of Our Destiny.”
“This is a costly credit card budget that Canadians can’t afford, and Conservatives will vote no,” he said.
NDP Leader Avi Lewis said the budget gave too much help to large corporations.
“Where is the mega deduction for my grocery bill? Where is the mega deduction on my cell phone bill, on my rent, or mortgage? It’s missing in action,” Lewis said.
The budget also de-emphasizes emissions reduction targets, focusing instead on incentives to grow the clean economy.
Green Party Leader Elizabeth May criticized the shift. “It almost completely ignores the need for climate preparedness, and quite explicitly says we’re not interested in targets anymore,” May said.
The budget follows calls from business groups for tax relief. e2gold.ca reported this week that small businesses were seeking tax cuts and tariff relief ahead of the budget.
This story was written by the e2gold.ca newsroom from reporting by BNN Bloomberg and CTV News. Quotes are checked word for word against that reporting.