Carney uses higher oil revenue to spend on tax incentives, infrastructure in second Canadian budget
SPY•Canada plans to spend up to C$142.1 billion over five years on tax incentives, infrastructure and social housing, using C$158.3 billion in additional fiscal room since April. The previous-year deficit fell to C$39.3 billion from C$66.9 billion projected in April.
1. Spending plans
Prime Minister Mark Carney’s second budget proposes using higher oil revenue to support productivity and infrastructure investment over the next five years while keeping key fiscal goals intact. The government plans to spend up to C$142.1 billion of C$158.3 billion in additional fiscal room since April, alongside C$10 billion announced since April 2026.
2. Deficit and debt
The previous-year fiscal deficit was C$39.3 billion, down from C$66.9 billion projected in April. The budget directs most new spending to a permanent business tax incentive, with funding also for infrastructure, a grocery rebate top-up, social housing incentives and defence. Federal debt is projected to rise to C$1.59 trillion in 2030-2031 from C$1.37 trillion in 2026-2027, while debt financing costs are expected to climb to 13.6% from 11%.
3. Economic outlook
Economists said the investments could ease affordability concerns and upgrade infrastructure, but warned that projections depend on continued GDP growth and rising revenue. The government expects to balance day-to-day operating spending against revenue by 2028-2029 and maintain a declining deficit-to-GDP ratio.
