By Kevin Page

November 5, 2026

Finance Minister François Philippe Champagne tabled Budget 2026 in the House of Commons on November 5. The overall budget theme, Masters of our Destiny, is unusually powerful.

Ten years ago, by comparison, the budget theme was Growing the Middle Class. The world has changed. Social scientists talk about polycrisis management. The governing philosophy has shifted from supporting household prosperity to national agency.

Increasing national agency to have control over things that determine prosperity and security requires big and bold steps. It is expensive and risky.

A political evolution is taking place. The government of Prime Minister Justin Trudeau wanted to help Canadians get ahead. Prime Minister Carney wants Canada to build capacity to determine its future.

Masters of our Destiny is a governing philosophy. Every major spending and tax initiative should be assessed accordingly – will it make Canada more economically capable, resilient, sovereign or prosperous? If not, why is it in the budget?

The new governing philosophy drives policy direction:

Fiscal strength → preserve Canada’s capacity to choose;

Productivity and investment → generate rather than import prosperity;

Major projects → regain the ability to build;

Energy and critical minerals → control strategic economic assets;

Trade diversification → reduce dependence on one market;

Defence and Arctic investment → defend sovereignty rather than rely excessively on others;

Innovation and AI → own more of the technologies generating future prosperity;

Infrastructure → connect the domestic economy and new export markets;

Implementation reform → demonstrate that the state can actually deliver.

Budget 2026 answers the call for a more explicit investment strategy, but it does not settle the harder questions about additional private investment, execution, cash borrowing and measurable results.

Budget 2026 is big. Scale is needed to build national agency. Total policy actions since the Spring 2026 Economic Update exceed $150 billion over the 2026-27 to 2030-31 period. In fiscal terms, it is bigger than Budget 2025 (about $130 billion in policy actions over a five-year period. The government is injecting, on average, $30 billion a year into the economy in budgetary transactions through deficit finance. In 2026, Canada will be a 3.4 trillion economy.

A political evolution is taking place. The government of Prime Minister Justin Trudeau wanted to help Canadians get ahead. Prime Minister Carney wants Canada to build capacity to determine its future.

The fiscal injection is larger when you consider non-budgetary transactions including growth in non-financial assets like defence purchases and loans, investments and advances from enterprise crown corporations like the Canada Mortgage and Housing Corporation and the Business Development Bank. Non- budgetary transactions require borrowing increases of about $95 billion a year.

The fiscal weight in Budget 2026 is titled toward growth and investment-type initiatives (two-thirds) rather than people-focused (affordability/consumption support) initiatives (one-third). The fiscal injections are relatively balanced across the medium-term with the affordability initiatives more front-end loaded.

Budget 2026 is bold. The tax measures to support business investment and development (e.g., productivity mega deduction; Canada Growth incentives) are breaking new ground to drive investment. Combined with planned private and public investments on major projects, the outlook for a major expansion in capital formation is strong.

Significant resources are set aside to address affordability pressures and quality of life (e.g Groceries and Essential Benefit supplement, caregivers, housing, Indigenous supports). There is a bold commitment with resources to work with other levels of government to reduce homelessness.

Budget 2026 is expensive. A fiscal planning dividend was generated from an improved fiscal outlook. The average private-sector forecast for GDP was bumped up by about $50 billion per year. This means more revenues. The government has significantly reduced planned direct program spending.

The fiscal planning dividend totals about $160 billion over five years. The government chose to spend the fiscal dividend, not to reduce budgetary deficits or borrowing requirements. National agency requires big, bold initiatives. It needs scale.

Planned budgetary deficits remain moderate – about $60 billion a year or a little less than 2% of GDP. These numbers compare well with other countries. The accumulated deficit hovers around 40 per cent of GDP – well below the peak during COVID but much higher than lows achieved by Prime Ministers Chretien and Martin.

Projected financial requirements that include non-budgetary transactions are over 4 per cent of GDP. These numbers raise fiscal concern. They drive public debt interest charges which are growing very fast over the medium term – about four times faster that program spending. Financing national agency comes with a price tag. Fiscal room is being used.

How much confidence should Parliament and Canadians have in the revised planning outlook? A case can be made that since the economic forecast is based on an average of private sector forecasts that there is no explicit bias. The government does provide alternative high- and low-growth scenarios with implications for budgetary deficits and debt.

The answer is about as much confidence as in past forecasts. Could growth be higher than anticipated because of an investment boom? Yes. Could the economy head into a recession from a geo-political event or market crash? Possibly. Onward through the fog.

Fiscal forecasts can be fickle. In Budget 2025, it was estimated that the budgetary deficit for 2025-26 would be $78 billion (2.5 per cent of GDP). In the 2026 Spring Economic Outlook, the budgetary deficit was estimated to be $67 billion (2.1 per cent of GDP). In Budget 2026, the budgetary deficit is estimated to be $39 billion (1.2 per cent of GDP). Nobody thought Canada would have a budgetary deficit close to 1 per cent of GDP for 2025-26 when party platforms were being assessed in the 2025 federal election.

In different times, fiscal observers and governments would be celebrating a budgetary deficit that dramatically beat estimates. Times have changed. The priority is building capacity in Canada to better control its future. We are at the beginning of the journey. It is going to be difficult, expensive and risky.

Contributing Writer Kevin Page is President and CEO of the Institute of Fiscal Studies and Democracy at the University of Ottawa. He was previously Canada’s first Parliamentary Budget Officer.