The Decibel - Key takeaways from the Carney government’s first budget

Episode Date: November 5, 2025

On Tuesday, Finance Minister François-Philippe Champagne tabled the first federal budget from Prime Minister Mark Carney’s government. It had long been advertised as a fiscal plan that would make difficult decisions to put Canada’s economy on the right track.The Globe sent more than a dozen journalists to Ottawa to study the details and assess how transformative this budget actually is. We break down what it says in terms of the deficit, job cuts to the federal public service, defence spending, health care supports, immigration plans and other measures that will affect Canadians.Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It's been about a year and a half since the federal government unveiled a budget. And a lot has changed since then. Trump's tariffs, a trade war with our two largest trading partners, and now a slowing economy. It's in this context that finance minister, Francois Philippe Champagne, presented the new federal budget, titled Canada Strong. It's the first under Prime Minister Mark Carney. The Globe sent more than a dozen reporters, columnists, and editors to pick through the details in Ottawa, including decibel producer, Ali Graham. Today on the show, we bring you a buffet of budget news from six different reporters who looked at everything from the deficit to job cuts, defense spending, health care, to how this budget affects you. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail.

Hi, Stephanie. Thanks so much for coming on the show. I know it's a very busy day, so thanks for making the time. My pleasure. So, Steph, you're a senior reporter from our Ottawa team, and you were tasked with understanding the big picture of this budget. So what is the story this budget is telling us about Canada at this moment? The story that the budget tries to tell about Canada

is the idea that for too long we have done things that have not been necessarily in our economic best interest, which is to say making spending choices, program choices that many people would say actually did benefit Canadians and help them out on an everyday basis. But the macro effect of that was not juicing the economy to the extent that it needed to. What this budget is trying to do is saying, you know, in the words of Mark Carney and his finance minister, we have a plan. We have a plan that will strengthen the Canadian economy, allow us to stand more on our own two feet. And we're going to do that not in the way sometimes it's been conceptualized in the past, which is to say big government programs, lots of social spending, a focus really on climate and other issues.

We're going to do it largely by spending on the building blocks of an economy, less so people, more so literally the blocks, the infrastructure, the highways, the airports. And the federal government is going to spend money on that. But what the government really wants to have happen is for the private sector to spend money on that and to stop, you know, sitting on money that it has in store and start investing it in Canada. And we'll get into the private sector in a minute. But let's talk about the top line numbers here. We were primed to hear a really big number for the deficit. It landed at $78 billion around there. Can you put that into context? The context, I suppose, is this. Since the post-pandemic spending boom really receded. And that drove Canada into. a deficit position. There's been a lot of pressure on the federal government to bring that deficit number down because if it gets out of control, eventually people pay that off in the long

run in different ways, right? But enter Mr. Carney, who on the one said, agreed that government spending had gotten out of control, but he also believed it was being spent on the wrong things. And so in the earliest days of his tenure as prime minister after he became liberal leader in March and then won the general election, he's announced billions and billions and billions of new spending and has never quite explained, well, how does he intend to pay for it? So everyone was, as you point out, anticipating a very big deficit. It's not as big as some of the projections suggested. I think I heard some like $100 billion. Exactly. Like some people were saying it's $100 billion, it's going to be off the charts. It's not that big. You know, they're leaning really heavily

on spending reductions, program cuts. And so I guess, you know, that helps bring it down. They're also forecasting additional revenues, right? They think that some of these corporate measures that they're doing will help bring additional income taxes and other things into the federal government coffers that help offset things. We'll get into the cuts later on in the show. We're going to talk to Bill Curry all about how the government plans on paying for all of this. But let's talk about spending. Carney's government has earmarked $89 billion in new spending to counter U.S. protectionism. Where is that money going? Again, it goes back to what I was saying before, building blocks, right? And so they're spending, for example, I think it's upwards, just over $50 billion over

a period of time on infrastructure and trying to build up everything from community centers, airports, healthcare infrastructure is a big one. You know, more funding for hospitals, more funding for institutions to literally build the bricks and mortar, roads, highways, bridges, all of these things that tangibly are necessary in order, bottom line, I think, for Mr. Carney, to get more of our natural resources to market, because that's a big play for him as well. So some of the spend comes from there. Some of the spend comes from what the government frames is. investment, which is an interesting way of saying spending. But what they mean is that, you know, through tax measures, through incentives for allowing businesses to write things off a lot faster,

which therefore would, in theory, mean they'll build more factories faster or more productions lines faster or invest in new trucks or vehicles. The government takes a hit on that, right? So when they forego the tax revenue on those things, the government describes it as investment. It is, in fact, spending because it's a hit to the government's bottom line. I'd also be really remiss if I didn't mentioned defense spending. That is a massive piece of this new budget. It builds on previous commitments that started off at $9 billion. Now we're tracking north of $80 billion, which is a really big piece of the spending puzzle too. This budget is also saying that through its plan, it could result in $1 trillion in investment in the next five years. Who exactly is investing

that money? Are we talking about government, business? Yeah, where's that money coming from? It's a mix. They're really banking on the private sector to invest. You know, the government is thinking about when they allow, let's say, a company to write off their expenses for new production lines or new factories, what the government is saying is that that money adds up. That's investment in the Canadian economy. You know, it's a risky proposition politically because they're basically saying, well, we've done this to allow that investment, but what happens that that investment doesn't materialize. Yeah, I mean, you use the word banking on. I think that's a really important thing to say here because it does kind of feel like the government is putting a lot on the shoulders

of the private sector. I mean, what are they going to do to do to make sure that happens, especially when business investments are chilled because of the trade war with the U.S. I think that's an excellent question. They're going to have to sell this like nobody's business. But the question always comes, what if they don't? The government can only go so far if we're trying to eschew again getting away from government spending, which is to say direct grants to companies, right, handing them over money, which the government is doing too, saying here's some money to do this and here's some money to do that and we expect a return on investment. But we've heard that the economy isn't as productive as it could be. The government is trying to say,

we're going to make it easier for you to do things in the hopes that they're responding to what the corporate sector has, you know, asked for over the last few years. And it will be very interesting to see sort of in the next 24 to 48 hours what the response is like from corporate Canada. Do we hear, hey, you know, that new measure in the budget, well, that means I'm going to open three new factories in small town X and I'm going to create a thousand new jobs. Maybe that's exactly what will happen. You talked about how Carney is going to have to sell this budget. Do you think this government will be able to sell this to Canadians, especially since there isn't a lot for individuals in this budget? It's tricky, you know, and when it comes to what does this mean for

the average Canadian, I think we're all struggling to tell that story. And if we're struggling to tell it, then the government is absolutely going to struggle to tell it. What I think they're trying to do, what the narrative is perhaps they'll go with, right, is this is a version of the elbows up. This is the high level government policy. Steph, before this budget was released, I think it's fair to say there was a lot of hype surrounding it. Like the government described what would be in it as, quote, generational investments and that it would transform our economy. After what you've laid out, I'm wondering if it lives up to these big expectations. Like, is this budget actually transformative?

It's transformative in the sense of thinking about the role of the federal government in the economy and really changing the way the government organizes itself financially. It divides spending into capital and operational. It really focuses, as we've talked about, you know, getting the private sector to do a lot more heavy lifting than the government has done in the past. So in that way, it's a transformation of thinking. Whether it's a transformation of the economy, we've had governments again and again and again promise investment in infrastructure in roads and highways and ports and bridges and all of those things. They all take years to build. At the end of the day, do those have the potential to markedly change things from many communities in this country? Absolutely, they do. But it will take time. And so the faster

they can get this money out the door, and that's always the problem with federal government programs, right, is how quick that money can get out the door. How fast are programs identified, projects identified, shovels in the ground. Whether this budget is ultimately transformative of might take, you know, a decade or more to really answer. Just lastly, Steph, this budget still needs to pass a vote in House of Commons. And if it doesn't, then there will be another election before the end of this year. Given what you've read in this document, what are the chances this will pass? Well, I mean, that's a developing story here. And I'll tell you why. I mean, earlier, you know, Tuesday, there was word that

a conservative MP quit the caucus and is going to cross the floor to join the liberals, which adds another vote potentially for Mr. Kearney. We have the new Democrats who are saying they're going to sit on it and they're thinking. And, you know, that's not a flat no. And so I think there's wiggle room there. I'm not saying that all of the New Democrats, all seven of them will vote for the budget, but they also may choose to abstain, which would reduce the number of votes he needs to get it across the floor. So, you know, if I had a magic political eight ball and I shook it up and I looked at it right now, I would say, looks good that the budget is going to pass. The how it passes ultimately, I think we're a few days out from knowing that for sure. Steph, thanks so much for

are breaking this down. My pleasure. Take care. Up next, senior parliamentary reporter Stephen Chase speaks to producer Allie Graham about the details around defense spending. I'm here with Steve Chase and Steve you've been covering defense, which is a huge part of this budget. Could you tell me just top line, what's the number we're looking at? $84 billion over five years. This is the part of a largest increase in defense spending, I think,

since the 50s. So we are looking at an amount of money flowing to that department that we have not seen in generations. One of the things that's been going on is that our allies have been pressing Canada to spend more money on defense. And one of the ways this has come about is through NATO, the Western Military Alliance to which we belong. And in June, Mr. Kearney, the Prime Minister, committed us to what is this largest defense increase in more than 70 years. And so we are going to take defense spending up by as much as $80 or $90 billion over a period of 10 years. When I say $80 or $90 billion, I mean additional annual spending. This is being framed as an increasingly dangerous and divided world needing Canada to have more resources to defend its sovereignty

and also to be able to support allies, such as our NATO allies in Europe and the eastern flank facing Russia, which is the country they single out as being the biggest problem right now. How are we seeing the spending be broken down in the budget? What's being spent on what? One of the largest components, actually, is pay. About 25% of this money is to make it easier to retain soldiers, aviators, and sailors, and also to attract more. And then, of course, there is about $18 billion for new defense equipment, such as precision strike military, counter-dron defenses, armored vehicles.

There's another $1 billion Arctic infrastructure plan. They want to support the construction of more airports, seaports, all season roads in the Arctic, which is notoriously cut off from the rest of Canada. And they're citing that as also what we call dual use, which means it benefits both civilians and the military if it needs to use those places as well, those locations. So that's another aspect of this that's not part of the defense spending, but is really also about helping make our armed forces able to land, dock, or reach parts of the country that haven't been as connected as they should be.

What we don't see in the budget is an allocation for submarines, which we were expecting. Those are going to cost a billion dollars each. And even just last week, Mr. Carney was in Korea climbing into a sub. So they're holding off on some of the spending that they intend to make, and they're nowhere near the target yet that Mr. Carney set for us of... Defense spending equal to 3.5% of our gross domestic product, which, you know, we're talking about 90 billion a year as opposed to 62 billion today. Thank you so much.

You're welcome. Personal economics reporter Erica Alini was also in the lockup, and she talked to Ali about the measures that will affect everyday Canadians. So this was a budget. If I wanted to sum it up in a one-liner, there's, No big, bad surprises, no major tax increases, but also no major positive surprises. So the government is trying to move ahead with this idea of helping a small percentage of low-income Canadians to file their taxes for them or otherwise make you extremely easy for them to file. So the issue the government is getting at is this longstanding problem that you have to,

file your tax return to receive benefits like the Canada Child Benefit, the Canada Workers Benefit or the GSTHST credit. And for some of the most vulnerable Canadians, they don't get benefits that they're entitled to because they don't file their tax return. And so the government is saying when we think that we have enough information and you don't owe any taxes, we will file your tax return for you so that you get the support that you are entitled to. And this is a very small percentage of the population. How much is this change going to cost the government? So it's going to be 71 million over the next five years, with the then remaining 10.4 million that will have to be amortized across future years. And then sort of once the implementation phase is over 8.3 million ongoing.

We had heard that announced on October 10th, but I know that there are also some other things to do with personal finance and that could really benefit Canadians that are announced in today's budget. Could you tell me what stood out to you? Yeah, one other thing that stood out for me is proposed changes to the Canada Disability Benefit that kicked off in July. In order to receive this benefit, you have to be approved for the Disability Tax Credit, which has existed. for a long time, but it's kind of notorious for being hard to access. It can be a lot of paperwork, and so it can be expensive. And so the government is proposing for anyone who receives the disability benefit, that they will get a one-time payment of $150 for these expenses that they've incurred for the disability tax credit. So anyone who starts receiving the benefit will get

that $150. And that's because if you are receiving the benefit, at one point, you've had to apply for the disability tax credit. And anyone who has to apply for the disability tax credit again will get that $150 again. So if I'm understanding correctly, it's basically refunding people for having to apply after they've been successful. Exactly. And honestly, it's unlikely to cover expenses for a lot of people. These applications can cost hundreds of dollars.

And Erica, what else is standing out to you? Okay. So the underused housing tax, which was this very controversial. measure introduced by the Trudeau government was an attempt to tax property that was left mostly vacant and owned by foreign buyers, but ended up entangling a lot of Canadian residents. They're doing away with that. After the break, we dive into the public sector job cuts, health spending, and Mark Carney's immigration plans.

Hi, Bill. Thanks so much for joining me at the end of a very, very long day. Thanks for being here. My pleasure, Cheryl. So you're the Deputy Ottawa Bureau Chief for the Globe, and it was your job to understand how Mark Carney's government is going to try and save money over the next five years. And it seems the answer is cuts to some programs and a reduction in the number of people who work for the government. So, Bill, exactly how much money is a government trying to save? Well, the big headline number that they were trying to promote was $60 billion in savings through those kind of measures. And like you said, job cuts, whether that's attrition, people leaving, retiring early, that's kind of the bulk of where they're going to find that money. So how many jobs does Mark Carney want to lose? So 40,000 overall. Essentially, all the government departments were given targets, usually about 15% of their operating spending. Some departments actually did get lower targets, such as Indigenous Services.

So this will be a story that they're going to play out over the next few weeks and months as, departments make those decisions. It's pretty significant, especially when you consider that, you know, we're just a few months past a federal election when the Liberal Party promised that they would cap not cut the size of the federal public service. And so now the unions are saying, well, what on earth happened to that promise of cap not cut? Because these are clearly cuts, 40,000 of them. And in their view, it's going to have a real impact on services. Can we put that into perspective, like how many people currently work for the federal service? Well, there's about 357,000 or so that are in the public service. What they measure is the core public service.

It was actually 10,000 higher a year ago, so it's actually gone down a little bit. They want to go further down to 330,000 by the end of 2029, which would kind of bring them back to where it was around 2023 or so. So it's about a 10% cut. Also important to point out that there's other ways to measure it that would actually suggest the government is actually a larger in terms of headcount. And so you mentioned this a little bit, but let's get into it. Like, how exactly will this work? Like, will this be layoffs for people or a hiring freeze or is Mark Carney just counting on enough people retiring and leaving their jobs? Yeah, and that has evolved.

When they started to talk about this the last few months, they were giving the sense that it could all be done for by attrition, which is essentially when people leave a job or retire that they are not backfilled. but it's clear today that that's not going to be enough. So they do make reference to workforce adjustment, which is the technical term used in Ottawa when departments decide that they want to lower their numbers. It could involve layoffs when you have workforce adjustments. It can also involve other things like job swapping and then the other thing that was interesting that they added is that there's over a billion dollars to fund essentially buyouts.

So some of the experts I'd talk to about public sector management. had said they were hoping to see that because if you didn't have that in a unionized environment when there's layoffs off, and it's the last one, in is the first one out, and that tends to be young people. Had they not done the buyout route, there would have been a real concern that you'd really throw off the demographic mix, so that's how they're trying to deal with this by having a buyout package. Bill, how will these cuts affect Canadians' access to government services? Well, I think it's going to take time to figure that out. There's a lot of departments that are referencing AI.

So for the departments that have direct relationships with citizens like Canada Revenue Agency, it'll be interesting to see, you know, how far down the road do they go with AI when you call or email the departments. So it'll be interesting to watch for that. The Auditor General had been pretty critical of the Canada Revenue Agency recently for service levels and the unions that said that's partly due to cut back. So I would say it's hard to answer that immediately today. It's certainly something to watch for very closely.

You know, and hopefully our listeners and readers will let us know if they start coming across changes in service levels over the next few weeks and months as the departments try to cut back. Let's talk about programs. Could you give us an example of a program that's getting cut or changed to save money? There were not a whole lot. There was one, it was kind of surprising the way it was framed. It was actually a change that was tax. There had been a lot of attention a few years. years ago, the Trudeau government brought in a luxury tax on essentially private jets and

yachts. And it had got some attention because, you know, there's bombardier, Canadian companies manufacture some of these jets, so there's pushback on that. And there was questions as to whether it would actually raise much revenue. So that is being killed as part of a cost-saving exercise. And the finance minister was asked about that. He said that it was actually costing and more money to administer that than it was in terms of revenue that they were getting in. So that was one very specific thing that got some attention today. Yeah. And also I heard something about medical marijuana?

Yes, that was really interesting, especially the dollar amounts involved. So it turns out there's two federal departments, Veterans Affairs, and the RCMP that have a medical marijuana program. So one being for veterans and then others parts of the RCMP who have medical conditions. So what the budget said is that the reimbursement rate was around $8 a gram, and they think that that is well above going rates. And so they've reduced that to about $6 a gram. At one point, they say it could save over $4 billion. The people we spoke to said, you know, grain of salt with that because that's a cruel

accounting, which tries to kind of account for how much they're going to save over a long period of time because they no longer have these obligations in the future. but who knew we were spending all this money on pot rebates. Yeah, seriously. So, Bill, when we take all of these cuts and put them together, does this offset the new spending on this budget? No, it certainly does not. Yes, there's about $140 billion in new spending. And so this $60 some billion in savings offsets at a bit.

But yeah, by no means does it match? You know, the core campaign promise was spend less to invest more. They are spending less, but they are investing or spending a lot more than they are saving through reductions. Bill, thanks so much for making the time. Really appreciate it. Oh, my pleasure. Thanks. Up next, Allie chats with columnist Campbell Clark about what the budget says on immigration. Hello, Campbell Clark.

Hello. Thank you so much for speaking with us. So there was something in this budget that is not usually in a budget. Could you tell me about it? So the immigration levels plan, or at least the outline of the immigration levels plan, was in the budget. That's the targets for immigration. Usually for the year ahead, now a couple of years ahead, and it now includes temporary residents. Normally that's something that has to be presented in Parliament and the officially it will be, but they've outlined it in the budget this year.

So the targets are to reduce the number of permanent residents who come in each year to less than 1% of the population, which by historical standards is not low, that's relatively high, and to reduce the number of temporary residents to lower than 5% of the population, to sort of turn the corner on that surge that occurred because, you know, historically, the number of temporary residents has been much lower. What do you make of that? It's a reduction in immigration in Canada. Not so much the overall numbers of permanent residents, which were already being. reduced as of last year. But the real issue is that they're slashing the number of temporary residents that are coming into Canada every year. And in particular, they're going

to be slashing foreign students. That's going to have a big impact. How much are we seeing this change? So overall temporary residents cut by about half. They're cut by about 200,000 admissions from what the plan was because they were already planning reductions. But importantly, they're taking the number of foreign students, they're slashing that in half. And that's a big deal because the colleges and universities depend on the higher tuition fees they can charge foreign students. So it's going to be a gap in provincial budgets and in college and university budgets in Canada.

I'm curious what you think about why this was included in the budget. I think it was included in the budget for a couple of reasons. I think one is they wanted this to be part of the economic plan. They wanted the budget to have that sort of angle on the politics as well because there's a backlash against immigration and certainly against temporary residents. And when they're talking about training and human capital, they also wanted to talk about immigration. I think another reason was they were just late getting the immigration levels planned together as they often are. And they threw it into the budget as sort of a way of getting it out there.

How do you think these targets fit into this overall budget plan and Carney's kind of economic view? So I'm not sure that they completely fit in, but there is sort of a thematic fit. One is, you know, we are going to control what happens in Canada. So that's part of the sort of economic logic of the budget, but it's also part of the sort of Canada's taking back control social aspects of the budget. We're going to control our borders. We're going to control our destiny.

We're going to control our security. You know, borders by border guards, security through more RCMP, more defense, more military spending. There is that whole sort of thematic aspect to this budget. But there is also economically an element of human resources planning, right? In the budget, there is a, you know, while we're lowering temporary residence, there's also a plan to attract top-notch foreign talent. But I think really here what the Levels plan is doing is kind of a sharp shock to immigration that is on the one hand aimed at sort of reforming a system that's got out of control, but on the other hand it's responding to a political backlash that's occurred in the last

couple of years. And it's a pretty dramatic response. The Liberals put the brakes on some of the temporary immigration last year. This is much, much harder. And our last update comes from Christy Kirkup, who spoke to Allie about what this budget says about health care spending. Christy, could you tell me what stood out to you today? What is the big picture messaging from this government on health? Well, I think going into this budget, there was this fear, I think, going into this budget that health perhaps was not going to take center stage.

And what I have really noticed is that I think that the government is clearly being quite strategic, if you will, in terms of the type of spending that it is prioritizing in the realm of health. And by that I mean specifically they're proposing to spend $5 billion over the course of three years. And this would be for what they call a dedicated health infrastructure fund. And this is a fund that is being pitched at a time when there have been. been organizations that have frankly been sounding the alarm about the state of health infrastructure in different parts of the country. And by that I mean aging hospitals. We're talking about access to things like urgent care centers, the state of emergency rooms. And mechanically, how they're proposing that it works is that this is funding that would be given

to the provinces and territories, again, to help to address challenges with health, infrastructure. What has the Carney government said, if anything, in this budget about what they will do about staffing? Something that does stand out to me is the emphasis that is placed in this budget on efforts to recruit international talent to help to address some of these labor shortage issues, if you will. The government in this budget is saying that it's planning to launch what what it calls an accelerated pathway for specific work visas. They're called H-1B visas. And they're saying this is part of an effort to strengthen innovation, to address labor

shortages. But in September, U.S. President Donald Trump had made a proclamation that he was going to be requiring companies to pay a fee of over 100,000 U.S. for such a visa. And there was also a call at that time for the Canadian government to essentially do more to try and capitalize on this moment, if you will, when the U.S. was applying such a large fee to be able to allow for people to come and to work in Canada and in recognition of needing to address that central issue of a labor shortage. and, of course, that dovetailing with health workers, if you will, being able to actually have those human resources in order to do some of these really critical jobs. That was Christy Kirkup, Bill Curry, Stephanie Levitz, Steve Chase, Erica Alini, and Campbell Clark,

just a sample of the globe's team of journalists that covered the budget this year. That's it for today. I'm Cheryl Sutherland. Our producers are Madeline White, Michal Stein, and Ali. Graham. David Crosby edits the show. Adrian Chung is our senior producer and Angela Pichenza is our executive editor. Thanks so much for listening and I'll talk to you soon.