Canada's New Budget Spends Billions on Sovereignty and Homelessness

Canadian Prime Minister Mark Carney unveiled his second federal budget on Thursday, announcing more than C$142 billion in new spending over the next five years. The budget is called "Masters of Our Destiny," and it focuses on making Canada less dependent on the United States for trade. It also promises billions of dollars to fight homelessness and help Canadians deal with the high cost of living. Carney said the plan is a major step toward making Canada more independent and self-reliant.

The new spending is possible partly because Canada collected more money than expected from oil sales, boosted by higher prices linked to the Iran War. However, Canada's deficit — the gap between what the government spends and what it earns — has grown to more than C$50 billion. The government does not currently have a plan to fully close that gap. Still, Canada's economy is expected to grow more than most other wealthy nations in the coming year.

One of the biggest parts of the budget is C$11.2 billion set aside over four years to fight homelessness. This money will help pay for supportive housing, mental health services, and addiction treatment. Statistics Canada reported that one in eight Canadian families has experienced some form of homelessness at some point in their lives. The government also plans to increase a grocery benefit for lower-income families, giving a family of four up to C$2,570 within a year.

Many Canadians are struggling to pay their bills. Average wages have not kept up with rising prices, and food bank use has hit record highs across the country. While home prices have dropped about 22% in recent years — partly because Canada let in fewer immigrants — houses are still too expensive for many people, especially in cities like Toronto and Vancouver. The rising cost of fuel has also made everyday items like groceries more expensive.

Canada has significantly cut back on the number of newcomers it allows into the country. This includes limits on international students and temporary foreign workers. The government plans to keep its permanent resident target at 380,000 people per year until 2028 and slowly reduce temporary residents to 370,000. In the new budget, Carney chose to keep immigration levels the same rather than raise or lower them, even though there is pressure from different groups to do one or the other.

A major theme in the budget is reducing Canada's reliance on the United States as a trading partner. US President Donald Trump's tariffs — taxes on goods traded between countries — have hurt key Canadian industries like steel and forestry, causing thousands of job losses. Since March 2025, Canada has set aside nearly C$44 billion to support workers and businesses affected by those tariffs. The budget says that moving away from depending so much on the US "will take time," but that the shift has already begun.

The budget also includes spending to build up Canada's national identity and independence. Canada is the only G7 country that cannot launch its own rockets, so the government is spending C$2.7 billion to develop Canadian space technology. Artists will benefit from a new tax break on income earned from original creative work. A free national digital library will also be created for all Canadians, starting with at least 200 titles and growing over time.

On defense, Carney had already promised to increase military spending to meet a NATO goal of 5% of the country's annual economy by 2035. This budget shows some of where that money is going, including C$2.3 billion over five years for a marketplace selling Canadian-made drones. More funding will also go to Operation Reassurance, Canada's biggest overseas military mission, which helps deter Russian aggression in eastern Europe. Canada's opposition Conservative Party has criticized Carney for spending too much and not focusing enough on everyday issues that affect regular Canadians.