Prime Minister Mark Carney is set to unveil his second federal budget on Thursday, outlining the Liberal government's strategy to navigate an affordability crisis and ongoing trade tensions. Finance Minister François-Philippe Champagne emphasized the budget's focus on economic growth, sovereignty, and investment, stating, "You need to invest in growth, you need to invest alongside businesses. You also need to invest in sovereignty."
Economic indicators suggest progress: the Bank of Canada and the International Monetary Fund forecast roughly two per cent GDP growth next year, while the OECD predicts Canada will outperform all G7 countries except the U.S. Unemployment rates have improved, and foreign direct investment remains strong. The government's "productivity mega-deduction" aims to further stimulate economic activity by allowing companies tax-advantaged write-offs on investments.
Affordability remains a top concern for Canadians, with rising living costs exacerbated by the Bank of Canada's recent interest rate hike. Wage growth has lagged behind inflation, and food bank usage has reached record highs. The government has curbed immigration to ease housing pressures, resulting in a 22 per cent drop in national average home sale prices since March 2022 and a nine per cent decrease in rent from May 2024's peak. The budget will reveal immigration targets for the next two years.
Opposition parties have criticized the government's handling of affordability. Conservative Leader Pierre Poilievre demands further tax relief on energy products, while NDP Leader Avi Lewis proposes a wealth tax on assets over $10 million and government-run grocery stores. The budget will also address deficit management, with the parliamentary budget officer projecting a $63 billion deficit this year, rising to $70 billion next year. Additionally, details on defence spending and potential airport privatization will be revealed.