Hello, welcome to Politics Insider.
And now come the numbers. Today the federal government is releasing a budget that will add specifics to the fiscal priorities Prime Minister Mark Carney has talked about since winning April’s federal election.
Carney has said Canada needs to dramatically change its economic strategy in response to a shift in Washington’s approach to international trade. That shift has led to sustained conflict with the administration of President Donald Trump.
The Prime Minister has spoken of the challenges facing Canada in stark terms has and promised swift action. “We won’t play games. We won’t waste time. And we won’t hold back,” he said in a televised address last month.
It remains to be seen if the opposition will support the budget. Carney has said he would be prepared to fight an election on this budget if it were voted down.
Among the things to watch for today:
Defence spending
At a NATO summit in June, Carney pledged the biggest increase in military spending for Canada in more than 70 years.
This budget will give Canadians their first look at how he intends to meet this commitment.
For instance, Canada has yet to allocate money in the fiscal framework to buy as many as 12 new submarines. The subs will cost as much as $2-billion each, and that does not include all the weapons systems and associated costs of operating the boats. Over their operating lives, they will cost more than $100-billion when maintenance, parts and upgrades are included.
At the June, 2025, NATO leaders’ summit, the Prime Minister vowed that Canada will spend as much as $150-billion annually on defence within a decade – equivalent to 5 per cent of the country’s gross domestic product – up from about $63-billion, or 2 per cent of GDP, this fiscal year.
Immigration
Ottawa was due to publish its annual immigration levels plan in the past week but put off announcing its targets for how many temporary and permanent residents it plans to admit in the next three years until today’s budget.
Carney has said he wants to restore immigration to “sustainable levels” while attracting “the best talent in the world to help build our economy.” The Globe and Mail reported today that the budget is expected to include as much as $1-billion to attract high-quality talent and researchers from the United States and elsewhere.
Last year, the Trudeau government reduced its targets for the number of permanent residents to reflect falling public support for immigration and to address a shortage of affordable housing.
Experts expect the government to freeze its immigration targets or lower them further until 2028.
Public-sector cuts
Finance Minister François-Philippe Champagne has said that the federal public service has to be brought back to what he called “sustainable” levels.
Governments have previously looked to cuts to the federal public service to help with their fiscal priorities. Jean Chrétien’s Liberal government in the 1990s reduced the public service by 45,000 workers. In 2011, the Conservative government led by Stephen Harper launched a deficit reduction plan that cut 16,000 positions.
Treasury Board figures suggest government employees 357,965 as of 2025, down about 10,000 from the year before but still about 100,000 above 2015 levels.
And at $71.1-billion, personnel costs are the largest part of Ottawa’s operating budget.
Public-sector unions are sounding the alarm about the size of potential cuts. “Public services are already stretched thin – cuts will only make these problems worse,” the Public Service Alliance of Canada said in a statement issued Monday by communications officer Gina Grattan.
The deficit
How big will it be?
Carney and Champagne have signalled that the budget will focus heavily on “investments” to spur economic growth. Those investments will be coupled with savings aimed at reducing the cost of day-to-day government spending.
But the investments are expected to push the size of this year’s deficit beyond the government’s previous forecasts, with economists projecting it could be in the range of $70-billion to $100-billion.
Business investment
Carney told reporters last month that the budget will give Canada “a highly competitive corporate tax system,” so the business community will be watching for new tax measures related to business investment, especially a reduction in the corporate tax itself.
Canadian business leaders have mostly applauded Carney’s early steps to improve the country’s business climate. This includes legislation to tackle interprovincial trade barriers and a new office to fast-track major infrastructure and resource projects.
With reports from Steven Chase, Marie Woolf, Bill Curry and Mark Rendell
Prime Minister Mark Carney arrives at Parliament Hill ahead of the release of the federal budget on Tuesday.Sean Kilpatrick/The Canadian Press
What else is going on
China approves group tourism travel to Canada: The potential boon for tourism follows Prime Minister Mark Carney‘s efforts to repair relations with Beijing.
New Yukon premier: Currie Dixon, leader of the Yukon Party, is set to become the first premier born in the territory.
Calls for Andrew’s name to be removed from Canadian landmarks: MPs and senators say Canada’s map should be cleansed of references to the disgraced former prince, now known as Andrew Mountbatten Windsor.
MPs vote to reverse Conservative changes to Lost Canadians bill: The Conservatives wanted security screening and language requirements before children born abroad to foreign-born Canadians could qualify for a passport.
Food inspectors monitor U.S changes on assessing food: Concerned about deep cutbacks at the U.S. Food and Drug Administration and “a move away from science-based decision making,” the Canadian Food Inspection Agency has quietly struck a “U.S. Risk Task Team” to monitor the impact of regulatory changes on food imports.
On our radar
Prime Minister’s day: Mark Carney chaired the weekly cabinet meeting and was scheduled to meet with Finance Minister François-Philippe Champagne ahead of joining him in the House of Commons for the tabling of the federal budget.
Party leaders: On Parliament Hill, Bloc Québécois Leader Yves-François Blanchet was scheduled to hold a news conference to respond to the federal budget. Green Party Leader Elizabeth May attended the lockup for the release of the federal budget and was scheduled to hold a news conference in the foyer of the Commons. Interim NDP Leader Don Davies also attended the lockup and was scheduled to attend the Commons for the release of the budget. No schedule released for Conservative Leader Pierre Poilievre.
Quote of the day
“We are going to be very compassionate.” - Finance Minister François-Philippe Champagne responds to a media question about how the government will reduce the size of the public service.
Question period
How much were government expenditures in Canada’s first budget, released in 1867?
Scroll to the bottom of this newsletter for the answer.
Perspectives
The hottest job in Calgary is working for Dawn Farrell’s Major Projects Office
The pay stinks. The hours are brutal. Job security is non-existent. Yet ambitious young executives are beating down Dawn Farrell’s door to win positions at the Calgary-based Major Projects Office.
— Andrew Willis, Business Columnist
Canada risks complicity in the high-seas killings committed by the U.S.
Now that the Americans are blowing up boats rather than interdicting them, it is possible that information shared by Canada could be used to identify potential targets – making this country complicit in violations of the laws of war and international human rights.
— Michael Byers has taught the laws of war at the universities of British Columbia, Duke and Tel Aviv.
The Supreme Court used a far-fetched hypothetical to axe minimum sentences for child pornography
The members of Canada’s Supreme Court have such wonderful imaginations. They are able to look at the facts of a case – or a couple, as recently brought before them regarding prison sentences for accessing and possessing child pornography – and invent an entirely unrelated and far-fetched scenario in order to strike down a mandatory minimum sentence as unconstitutional.
— Robyn Urback, Columnist
Go deeper
- The Decibel - Yves Giroux, the parliamentary budget officer from 2018 until early September, is on the Globe and Mail podcast to talk about what to watch for when the budget drops later today.
- Follow along for our stories on Canada-U.S. relations as news develops
- Get the latest insight and analysis from our political opinion writers
- Take a look at the history of immigration reporting and great political scandals from A Nation’s Paper, a book about The Globe and Mail’s role in Canadian history
Got a news tip that you’d like us to look into? E-mail us at tips@globeandmail.com. Need to share documents securely? Reach out via SecureDrop.
The answer to today’s question: In 1867, finance minister John Rose said the estimated expenditures for the year were $14.3 million, according to the Library of Parliament.