Canada’s federal budget includes billions for sovereignty and tackling homelessness

Prime Minister Mark Carney has taken advantage of an oil revenue windfall to include tens of billions of dollars in new spending in his second federal budget, which focuses on building national sovereignty and addressing the high cost of living.

“That’s what this budget does: it’s the next big step in our action plan to make this country more independent, more sovereign,” Carney said on Thursday.

“It focuses on growth, on people and that sovereignty, so we can live our lives as we wish.”

The budget – titled Masters of Our Destiny – lays the groundwork for a Canada that is less reliant on the US for trade. It also aims to tackle the stubborn affordability crisis by promising billions to end homelessness and build new housing.

The C$142bn in new spending over the next five years is thanks to better than expected revenues from oil prices bolstered by the Iran War.

Canada’s deficit is over C$50bn ($36bn; £27bn), with no path to balance.

Despite new spending, the budget shows that Carney has kept his previous fiscal goals intact.

The country still expects its GDP to grow modestly in the next year, outpacing all G7 countries except the US. Its unemployment rate, while unsteady month-to-month, is overall lower than last year.

But as people continue to feel squeezed by inflation and unaffordable housing, pressure has been building on Carney to translate his major investments into relief for the average Canadian.

And some sectors of the economy are feeling deep pain due to US President Donald Trump’s tariffs on key Canadian industries, leading to thousands of job losses and uncertainty that has slowed business investment.

Here is a breakdown of some of the key takeaways for the 2026 federal budget.