Carney’s First Federal Budget Blends Bold Investment with Deep Cuts
Prime Minister Mark Carney has unveiled his first federal budget — and it’s being described as a “generational” one. The government says this plan is about preparing Canada for a new era of economic change, global uncertainty, and technological transformation. But the challenge is clear: balancing massive investments in the country’s future with some of the most significant spending cuts in years.
The 2025 budget, presented by Finance Minister François-Philippe Champagne, lays out an ambitious $141.4 billion in new spending over the next five years. This includes big pushes in infrastructure, housing, defence, and technology. At the same time, the government aims to find $51.7 billion in savings and reduce the size of the federal public service — a move expected to eliminate around 40,000 positions. Despite those savings, the deficit this year is projected to reach $78.3 billion, nearly double what was forecast a year ago.
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Carney’s government argues that the world has entered a period of rupture — wars abroad, supply chain shocks, and slow economic growth at home. Champagne described it as a “generational shift,” saying Canada must invest boldly now to prepare for the challenges ahead. Over $115 billion will go into rebuilding infrastructure, $30 billion will be spent on defence and security, and $25 billion will target housing projects to help address affordability concerns.
A major focus of this budget is innovation and productivity. Ottawa has committed $110 billion over five years to boost competitiveness, with a goal of sparking $500 billion in private sector investment by 2030. That includes $925 million to strengthen Canada’s artificial intelligence and cloud computing capacity — funding new “sovereign” data centres and homegrown AI tools that can be deployed across government. The new AI Minister, Evan Solomon, will play a key role in this strategy, working with Canadian companies to modernize government systems and attract global tech talent.
There are also new measures for research and innovation. Canada plans to spend $1.7 billion to attract top researchers from around the world, revamp the Scientific Research and Experimental Development tax credit system, and invest $334 million in quantum technologies. The government says this mix of spending will ensure Canada remains competitive and self-reliant in an increasingly digital world.
However, the reaction in Parliament has been sharp. Conservative leader Pierre Poilievre rejected the plan outright, calling it a “costly Liberal budget” that would worsen inflation and debt. The Bloc Québécois dismissed it as having “nothing for Québecers,” and the NDP, while cautious, has yet to decide whether it will support or abstain.
In short, this is a budget that tries to do two things at once — fuel long-term growth through big public investments, while trimming down government operations to prove fiscal responsibility. Whether Canadians see it as visionary or risky will likely depend on how the next few months unfold — and whether the promised economic renewal begins to take shape.
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