8 Key Takeaways From the Carney Government’s 2nd Budget

The Carney government tabled its second budget on Nov. 5, announcing various measures that it says are intended to stimulate economic growth and increase affordability for Canadians, while boosting funding for cultural programs.

This includes proposals aimed at encouraging private-sector investment while also putting more funding toward infrastructure, housing, defence, and economically vulnerable industries, while also introducing measures with the stated goal of reducing household expenses and providing more support to lower-income Canadians.

The budget notes higher-than-previously projected revenues thanks in part due to higher oil prices, but reports a deficit as it maintains program spending and allocaes funding for programs it says will help grow the economy.

Here are eight key takeaways from Budget 2026.

Higher Revenues and Maintaining a Deficit

The government is forecasting a $62.3 billion deficit for the 2026-2027 fiscal year, roughly $3 billion lower than what it projected in its spring economic update.

The budget says higher oil prices and stronger economic activity have boosted projections for corporate profits and wages, increasing expected federal income tax revenues. As a result, Ottawa now projects collecting an average of $23.9 billion more in annual revenue between 2026–27 and 2030–31 than it forecast in the Spring Economic Update.

But the government is channelling the additional revenues in expenditure programs, saying it wants to boost long-term growth.

Ottawa says the deficit will decrease to $52.9 billion by the 2030-2031 fiscal year, though noting that federal debt is expected to rise over the same period from approximately $1.37 trillion to $1.59 trillion as the government continues to spend more than it takes in revenue.

The portion of federal debt represented by annual interest and debt-servicing costs is also projected to increase by roughly 42 percent from $60.2 billion to 85.5 billion over the same five-year period. 

Billions in Incentives Meant to Boost Business 

There are a mix of existing and new programs in the budget meant to help businesses.

It includes $36 billion in spending over five years to fund the Productivity Mega Deduction. The tax measure allows businesses to deduct the full cost of eligible equipment, technology, and machinery in the year they are put into use, rather than spreading the deductions over several years, allowing businesses to reduce their taxable income sooner.

The budget also proposes the creation of a federal investment fund which would receive $25 billion over three years in federal funding in order to spur investment in major Canadian companies and infrastructure projects.

The fund, termed the Canada Strong Fund, would be set up as a Crown corporation operating at arm’s length from Ottawa and would make investments alongside private sector investors. Canadians would be able to invest in the fund by buying Canada Strong Notes at financial institutions that lets them earn returns via the investments made in the fund.

Ottawa says Canadians who purchase Canada Strong Notes would be guaranteed the return of their original investment even if the fund loses value, but has not explained how that guarantee would work or who would cover any losses.

Military Expenditures and New CSIS Funding

The budget announces $11.2 billion in new defence spending over five years, which is below the five-year $84-billion defence spending plan it unveiled in the 2025 budget. The commitments show that Canada will fall short of meeting NATO’s target of spending 3.5 percent of GDP on core defence by 2035.

Budget 2026 makes several specific defence spending proposals, including $7.6 billion over five years from existing defence funding to extend and increase Canada’s military deployment in Eastern Europe under the ongoing Operation REASSURANCE, which is aimed at deterring potential Russian aggression against NATO allies.

The budget also proposes allocating $2.3 billion over five years to the Defence Drone Initiative, a program launched this past July with the goal of fast-tracking the development, purchase, and deployment of military drones and systems designed to detect and intercept enemy drones.

Separately, Ottawa is proposing $6 billion over 10 years, starting in the 2027–2028 fiscal year, to expand the capabilities and international operations of the Canadian Security Intelligence Service (CSIS), including its efforts to counter foreign interference, espionage, and terrorism.

Affordability Measures

When combined with the previously announced 50 percent increase to the benefit this past June and a 25 percent increase that started in July, Ottawa says the new raise would bring total payments up to $2,570 for an eligible family of four for the 2026-2027 benefit year.

The additional payment of up to $679 for an eligible couple with two children, is scheduled to be delivered in early 2027.

The budget also proposes lowering the minimum earnings threshold for the Canada Workers Benefit from $3,000 to $500, which it says will allow more low-income workers to qualify for the refundable tax credit.

Additional affordability measures proposed in Budget 2026 include $845 million in funding over four years to make the Canada Caregiver Credit fully refundable starting in the 2027 tax year, as well as $610.3 million over four years to support the federal program Nutrition North Canada, which works to lower food costs in remote rural communities in Canada’s north.

Funding for Arts and Culture

Budget 2026 proposes $783.1 million over five years to go towards Canadian heritage institutions and museums, including the National Arts Centre and Library and Archives Canada, as well as an additional $300 million in funding over two years for CBC/Radio Canada, which received roughly $1.4 billion in annual federal funding in 2024-2025.

The budget also proposes $134 million over four years in support of the Local Journalism Initiative, which was set up in May 2019 to help fund journalism that covers remote, underserved, and rural communities across the country.

In addition, Ottawa proposes developing a new Canada Creative Credit which it says could give tax relief on up to $45,000 of income from eligible artistic work.

Committing to End Homelessness

The budget lays out a goal of ending homelessness in Canada within ten years, proposing the allocating of $11.2 billion over four years starting in the 2027-2028 fiscal year, and $17.8 billion per year in subsequent years.

Measures covered in the funding include $1.8 billion over four years to create an Integrated Supports Fund that will offer addictions and mental health treatment along with housing assistance and social services for homeless individuals.

Another program funded in the initiative includes $3.6 billion over four years earmarked to build transitional and supportive housing, with further funding and support services expected to be carried on by the provinces and territories.

Another $2 billion in funding over two years as part of the overall $11.2 billion in funding would finance mental health treatment and addictions clinics across Canada, as well as replenishing funding for the Reaching Home Initiative and the Veterans Homelessness Program.

$50 B for Indigenous Programs

Budget 2026 proposes spending $50 billion on indigenous programs throughout varying lengths of time.

This includes $32 billion over 10 years for First Nations housing and infrastructure, $6 billion over six years for a program called Jordan’s Principle that helps First Nations children have access to social, educational, and health services, and $5.8 billion over five years for provision of elementary and secondary school funding on reserves.

The budget also includes $2.9 billion allocated over three years to keep providing health coverage for First Nations and Inuit people that isn’t covered by Canada’s public healthcare system.

In addition, it proposes $633.7 million over four years to go toward policing for First Nations and Inuit policing and other expenditure.

Opposition Reaction

Conservative Leader Pierre Poilievre was critical of the budget for raising the national debt.

“The single biggest item of spending growth in this budget is not seniors programs, not healthcare, not security, not sovereignty, but the opposite. It is interest on the national debt,” Poilievre said Nov. 5 in the House of Commons.

“He’s cooked the books. He’s divided the spending onto three separate credit cards: operational, capital and Crown corporations. The only problem is he has no rule to determine which expense goes where.”

Criticism also came from NDP Leader Avi Lewis who said the budget doesn’t do enough to help lower costs.

Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), said that despite the Mega Deduction the budget offers “no help” to small business owners.

The government says its budget will help raise Canada’s competitiveness, and that Canada “is projected to grow at the second-fastest pace in the G7 in 2027.”

“We are masters of our destiny. Budget 2026 is our plan to build a stronger, more united Canada where we are all free to live as we choose,” Prime Minister Mark Carney said.