Canada stands at a fiscal crossroads. In early September 2025, Prime Minister Carney reported that federal spending had risen by over seven per cent annually in the past decade. This is twice the rate of economic growth. He said this trend is unsustainable.

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The Parliamentary Budget Officer’s (PBO) outlook (Sept. 25, 2025) sheds light on the fiscal challenges facing Canada. Since the 2024 fall economic statement, the federal plan has already added $115.1 billion in new investments. This excludes the planned NATO defense spending increase from two to five percent of GDP by 2035, as well as the comprehensive expenditure review. Fiscal pressures were building up even before these new commitments. The federal deficit was projected to rise from $46.5 billion in 2024-25 to over $68.5 billion in 2025-26.

Recently, economist Stefane Marion of the National Bank warned that federal deficits could reach $100 billion this year.

Fiscal clouds are gathering. With the budget release this week, the fiscal narrative is evolving. The government has pledged fiscal prudence while planning to increase spending over the next decade, despite rising deficits and debt. This paradox lies at the heart of the upcoming budget.

Prime Minister Mark Carney advocates both austerity and investment. Yet, while stressing fiscal caution, he has set the stage to accelerate the unsustainable federal expenditure trend of the past decade, which he acknowledged in September 2025. This is supposedly........

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