Featuring insights from Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres
Nov 5th, 2025: The 2025 Federal Budget, presented by Finance Minister François-Philippe Champagne, marks the first under Prime Minister Mark Carney’s leadership — and it comes with bold ambitions to reshape Canada’s economy for the future.
With a focus on strengthening domestic industries, accelerating infrastructure development, and reducing reliance on trade with the United States, this year’s budget aims to “build a stronger Canada using Canadian resources and Canadian labour.”
A Shift Toward Self-Sufficiency and Growth
Prime Minister Carney’s economic plan calls for record investments in housing, infrastructure, and defence while tightening operational spending across government. The approach divides the budget into two categories:
- Operating spending — which covers day-to-day government costs, like salaries and interest payments; and
- Capital spending — which focuses on long-term investments to boost productivity and growth.
This new structure, already used in countries like the UK and New Zealand, aims to improve transparency around how public funds are spent.
Investing in Canada’s Future
Over the next five years, the government plans to allocate:
- $25 billion to housing,
- $30 billion to defence, and
- $115 billion to infrastructure.
The idea is to spur private-sector investment and help “supercharge” productivity through measures such as a productivity super-deduction, allowing businesses to write off capital investments more quickly.
Balancing Ambition with Fiscal Responsibility
Despite ambitious spending goals, the federal government acknowledges growing deficits — now projected at $78.3 billion, almost double last year’s forecast. The plan is to gradually reduce that deficit to $56.6 billion by 2029-30, with operational spending expected to balance within three years.
To offset costs, Ottawa will reduce the federal workforce by roughly 40,000 positions and implement a comprehensive expenditure review, targeting $60 billion in savings over five years.
Immigration & Labour Market Adjustments
Immigration levels are also set for recalibration, with lower targets for temporary residents to ease pressure on housing and healthcare. At the same time, the budget introduces initiatives to recognize foreign credentials more efficiently and attract top international talent — a move intended to fill critical labour gaps and strengthen innovation capacity.
Expert Perspective: Dr. Sherry Cooper
As Dr. Sherry Cooper, Chief Economist at Dominion Lending Centres, notes, “Nothing in this budget is surprising, as most of it has been telegraphed in recent weeks. This is a time for bold actions to bolster Canada’s competitiveness. We have products the world needs.”
Dr. Cooper highlights that Canada continues to hold one of the strongest fiscal positions among the G7, maintaining both a low debt-to-GDP ratio and a triple-A credit rating — key factors in keeping borrowing costs stable even amid heavy capital investment.
The Bottom Line
Budget 2025 is ambitious — prioritizing growth, investment, and self-reliance while walking the line between bold spending and fiscal discipline. With global trade uncertainty at a high and productivity lagging, these “generational investments” aim to ensure Canada remains competitive and resilient in a shifting global economy.
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