Liberals' big-spending budget draws concern, praise from area MPs

OTTAWA – Local Conservative MPs say they won’t support the federal budget, arguing it adds to the national debt without a plan to balance the books.
The 2026 budget, titled “Masters of Our Destiny,” was tabled in the House of Commons on Nov. 5.

Running more than 500 pages, the budget proposes about $142 billion in new measures over five years and projects a $62.3-billion deficit for 2026-27, up from an estimated deficit of $39.3 billion in 2025-26.

Finance Minister Francois-Philippe Champagne said with the budget, “we will build the strongest economy in the G7.”

Last year’s budget passed by a vote of 170-168 with the minority Liberal government aided by a lone Green MP’s vote and two New Democrats and two Conservatives who did not vote.

This year, the Liberals have a majority, with 173 of the 343 seats in the House.

“The budget increases the national debt and has no plan to balance the budget, and that is very worrisome,” Wellington-Halton Hills North MP Michael Chong told the Advertiser by phone.

In an emailed statement, Perth-Wellington MP John Nater said rising national debt, to the tune of $1.36 trillion this year, will leave “a great burden on taxpayers for decades to come.”

Guelph Liberal MP Dominique O’Rourke said by phone the government is investing in the country while “supporting our industries and supporting affordability for people.”

Slow economic growth projected

The budget comes amid ongoing trade strife with the U.S. and economic instability.

The government has announced nearly $44 billion in tariff support for workers and businesses, including about $13 billion in loans, deferrals of corporate income tax and sales tax remittances.

The Canadian economy is expected to grow by just 1% this year, unchanged from a spring update, and by 1.7% next year, according to the budget.

In October, the general unemployment rate was 6.7%, and youth unemployment was 13.7%, according to Statistics Canada data and the budget.

Budget measures

New affordability measures, totalling nearly $22 billion over five years, include a one-time 50% increase to the Canada Groceries and Essentials Benefit, formerly the GST/HST credit, to be delivered in early 2027.

The one-time supplement is worth up to $339 for a single person without children, and $679 for a couple with two children.

The budget also proposes making the Canada Caregiver Credit fully refundable – worth up to $1,260 annually.

There’s also $124 million proposed over three years, starting next fiscal year, to renew the Local Food Infrastructure Fund, to help food banks and other organizations buy food and invest in community food infrastructure.

The budget also puts forward nearly $45 billion for housing over 11 years, including nearly $30 billion to try and end homelessness across the country.

One of the budget’s flagship tax breaks is a “Productivity Mega Deduction,” allowing businesses to immediately deduct the total cost of eligible investments.

About two-thirds of capital assets, such as office technology and farm machinery, will qualify – up from about 15% previously. The permanent measure is estimated to cost $36 billion over five years.

On agriculture, the budget proposes allowing farmers to pass farm properties to nieces and nephews, not just children and grandchildren, while deferring tax, along with amending the Canadian Agricultural Loans Act to improve farmers’ access to capital.

The government proposes spending $1.59 billion over five years toward a 10-year, $3.2-billion National Food Security Strategy,including a $1-billion Farm Credit Canada fund to help businesses expand food processing and $750 million to expand year-round fruit and vegetable production.

O’Rourke said the budget’s “generational investments” support large and small companies, meet NATO defence spending targets, support increasing electrification and enable housing supply.

Deficit vs. debt

As with last year’s budget, this one leans heavily on private investment in Canada to drive growth, pointing to nearly half a trillion dollars in financing and investment commitments announced at the Canada Investment Summit in Toronto in September.

The budget also restates a $500-billion goal for new private sector capital investment and $1 trillion in total capital investment over five years.

The government projects the deficit – a one-year shortfall where expenses exceed revenue – will fall to $53 billion by 2030-31, from $62.3 billion in 2026-27. As a share of GDP, it would drop from 1.8 to 1.3%.

The federal debt – what the government owes minus what it owns, built up over years of deficits – is projected to remain at about 40% of GDP from 2026 to 2031.
Chong said Canada’s debt “needs to be brought down in order to ensure that the federal government has the fiscal firepower to deal with a future crisis.”

He also noted the cost of interest on the debt, which eats up about 11 cents of every dollar the government collects.

“In four short years, the budget projects that they’re going to take up 14 cents,” he said.

Nater said debt charges, projected to increase to $67.3 billion next year, are “unfair and unsustainable.”

Chong and Nater argued the deficit understates government borrowing, because money spent through Crown corporations or on purchases such as ships and weapons isn’t counted toward the deficit in the year its spent.

The budget projects nearly $150 billion more cash going out than coming in during the 2026-27 fiscal year – more than double the reported deficit.

“It’s making the deficit an increasingly irrelevant number,” Chong said.

O’Rourke defended the government’s spending as “necessary” during U.S. trade turbulence and to “capitalize on the opportunity that’s before us.”

“We’ve changed how we’re spending money, spending much less on operations, so we can invest more in Canadians’ future,” she added.

Fiscal anchors

The budget retains two fiscal anchors set last year: balancing day-to-day operating spending with revenues and keeping the deficit-to-GDP ratio in decline.

The government now projects day-to-day operating spending will be balanced in 2027-28, a year ahead of the 2028-29 target. It also projects direct program spending growth will average under 2% per year from 2026 to 2031, down from an average of 8% over the previous decade.

“Through fiscal discipline, Budget 2026 keeps us on track to meet both fiscal anchors,” Champagne said in his budget speech.

“We are seeing what happens around the world when governments lose their fiscal room to manoeuvre ... Choices become harder.”

He added, “In Canada, our fiscal strength is giving us the freedom to live our life as we choose, to be masters of our destiny.”

Chong said the government should have adopted a declining debt-to-GDP ratio as its fiscal anchor.

“We want to see a plan to return the budget to balance over the medium term … that’s not in this budget,” he said.

“We need to deal with the affordability crisis that many people in Wellington County are facing.”

What’s missing, Chong added, is an environment for business investment and growth that would allow incomes to catch up to the cost of living.

Nater said support for rural Canada is lacking in the budget and the government is overly focused on urban issues.

O’Rourke said the budget empowers rural businesses to invest locally, provides investment for food infrastructure and proposes spending on rural community infrastructure.

Two budget amendments are before the House, which doesn’t sit again until next week. More debate will follow before MPs vote on whether to support the government’s proposed budget policy.

Budget measures then have to be passed separately through bills in the coming months in the House and Senate.