True Canadian independence requires a long-term plan—and a new economic model
Every now and then, an earthquake shakes the political landscape. The ground beneath our feet shakes, and the things that we believed to be solid crumble. In its aftermath, the landscape is radically altered, the assumptions we had made about political continuity left as nothing but piles of debris.
It certainly seems like we are in the midst of such an earthquake today. Over the past year, so much has changed in the Canadian political sphere that it has, at times, been difficult to keep up. A year ago, every smart political observer was expecting the Conservative Party of Canada, led by Pierre Poilievre, to win a historic majority in the 2025 federal election. Two years of consistent polling showed the party with a commanding lead across the board. It appeared that we were in a periodic, predictable swing between Canada’s two main governing parties, and observers were preparing for the predictable outcomes of such a swing.
Then the earthquake hit. Donald Trump was elected as president of the United States and began attacking Canadian sovereignty. Canadians began an unprecedented rally around the flag, as the United States declared a trade war and made increasingly loud threats of annexation. Justin Trudeau resigned as prime minister, as did many of the people in his inner circle. Mark Carney was elected Liberal party leader and swiftly called a general election. The Liberals won a minority, within a hair’s breadth of winning a majority. Canada’s economy began exhibiting symptoms of a crisis.
In the whirlwind of the past year, one thing is extremely clear: Canadians want greater independence from the United States. That question, more than any other, animated voters as they headed to the polls in the 2025 election. Canadians gave their government a strong, unambiguous mandate to stand up to the United States and chart a more independent path forward.
Doing so will require a complex, multifaceted plan that reorients the Canadian economy away from the direction it has been moving for generations. It will require transition plans for all of Canada’s major industries and will require that the Canadian state take on a significantly more assertive role in economic planning—a role it has largely abandoned over the past decades of neoliberal hegemony.
In the past, when the United States has undergone major restructuring—such as during the transition to neoliberalism in the 1980s—Canada has chosen to follow its lead and adapt in consequence. Today, Canadians are paying for that choice. This year’s Alternative Federal Budget (AFB) attempts to begin clearing a new path.
This year’s AFB provides the outlines of what true Canadian sovereignty and independence might look like. It does not seek to save the neoliberal model from external threats like Donald Trump but, rather, seeks to build a new model that is Trump-proof—one in which the Canadian economy is resilient, more self-sufficient, and less subject to the whims of the dying empire to our south.
Such a project will only be accomplished over the long term. Consider this year’s AFB to be the first steps.
Economic planning for the future
Since the onset of the neoliberal era, the Canadian state’s planning capacities have atrophied. Instead of engaging in proactive economic planning, the state has preferred to leave the market to plan itself. At most, the federal government has provided “incentives,” like tax credits, to encourage the private sector to accomplish social goals.
That needs to change. To engage in the broad and deep transformation of the Canadian economy that this moment requires, the federal government will need to get back into the business of economic planning.
Obviously, policy-makers cannot do so alone, or they risk unilaterally imposing an economic agenda that isn’t reflected in Canadians’ priorities. As such, the AFB will reinvigorate and strengthen the mandate of consultative planning bodies, like the sector councils program, to engage in long-term economic planning.
With a number of “nation-building” projects on the agenda, the AFB will attach labour and economic development conditions on projects, including wage minimums, union neutrality clauses, community benefit agreements. The AFB would implement an ambitious “made in Canada” procurement policy, using government spending to boost the Canadian economy and producers.
The AFB proposes to introduce new crown corporations to act as drivers of economic activity in key sectors—such as creating a new crown corporation to lead a new “moonshot” artificial intelligence project to assert Canada’s lagging role in a rapidly developing field and ensure that the technology is used for social good.
Social supports and strong public services
The nature of the economic transformation before us, like those of comparable transitions, means that much of the Canadian economy—and the workers who make it run—will be subject to medium-term fluctuations that could seriously hurt communities across the country. The AFB would remedy that instability with a robust network of social supports and strong public services that Canadians can rely on.
This must include, first and foremost, a series of fixes to Canada’s stagnating Employment Insurance (EI) system. This will include increasing the benefit rate to 66.6 per cent (from its current historic low of 55 per cent), introducing a benefit “floor” for all recipients, streamlining the acceptance process, and more. The AFB will commit $1 billion over 10 years to create a new Transition Benefit for workers displaced by climate policies or tariff mitigation and trade diversification measures.
Worker supports are an important line of defence against economic uncertainty, but just as important is Canadians’ access to functional and useful public services. The AFB would fund a dramatic increase in the amount of public, $10-a-day child care spaces across the country, increase coverage to public health care, and expand the pharmacare and dental care programs while removing means-testing.
If Canadians can rely on public services, they will be better able to weather the storms ahead. This year’s AFB will integrate public services into—and a key driver of—the broader economic transformation the country is embarking on.
Building out housing and infrastructure
Much has been made of the current federal government’s plan to engage in “nation-building projects.” While the nature of those projects remains unclear, it is encouraging to see the federal government attempt to act as a driver of economic development again—a clear break with decades of neoliberal consensus.
The federal government has even promised to return to the previously abandoned field of home construction to address Canada’s brutal housing affordability crisis directly.
The AFB builds on these developments and will deepen their scope and effectiveness. It prioritizes building non-market housing, tripling the existing investment to $18 billion to build one million non-market and co-op homes over the course of a decade. It proposes to provide favourable loan financing for a minimum of 100,000 non-market homes per year on a cost-recovery basis. The AFB will engage an ambitious retrofit program for existing homes, dedicating $12.5 billion to support energy efficiency construction projects.
The AFB will also kick off several other ambitious nation-building projects. It dedicates $20 billion over five years to build a cross-Canada clean electricity grid, with a focus on interregional transmission and targeted investments in rural, remote and Indigenous communities. It also proposes a publicly funded electric vehicle charging network across the country.
The AFB will develop the long-promised network of high-speed rail corridors in Canada—bringing this country up to speed with comparable jurisdictions elsewhere in the world and reversing proposed federal cuts to VIA rail.
Canadians deserve national projects that will improve their lives, not line the pockets of fossil fuel companies and mega-corporations. Nation-building projects should not just be about waving a maple leaf flag, they should also be about materially improving the lives of Canadians.
Reversing the militarization of Canadian foreign policy
Canada has, for much of its modern history, identified itself as a peacekeeping nation. Some of the greatest triumphs of independent Canadian foreign policy have been in our refusals to line up with the U.S. empire—refusals to join the American war in Vietnam and south-east Asia, to get in line with the U.S. backers of South African apartheid, to send Canadian troops to destroy Iraq.
Of course, such an image has always been selectively curated—Canadian troops have participated in a number of serious crimes, and Canadian foreign policy is overly focused on protecting the rights of corporations to extract resources at the expense of local populations. But that vision of Canada as a good actor on the world stage should serve as a goal to strive towards.
The federal government today is moving in the opposite direction, betraying the legacy of Canadian humanitarianism in favour of radically deepening militarism. It promises to nearly quadruple the share of war spending, from the current 1.3 per cent of GDP to a staggering five per cent—all while slashing and burning other forms of international aid and humanitarian assistance.
These goals are simply not compatible with maintaining Canada’s standing in the world, and its tradition of independent foreign policy. The AFB rejects them outright and reorients Canada’s defence spending and foreign policy towards peace-making.
To do so, the AFB will base defence spending on specific needs, rather than arbitrary targets set by bodies like NATO. It prioritizes dual-use investments (that is, investments that also can be used in a civilian capacity). The AFB will treat climate change as the national security threat it is and support dual-use climate/security programs up to $2.5 billion. It proposes to shore up arctic sovereignty by building infrastructure that supports strong communities in the North.
The AFB will build on Canada’s independent foreign policy by de-aligning with the U.S.’ support for Israel’s genocide in Palestine (such as by suspending the Canada-Israel Free Trade Agreement), increasing independent and green trade with African countries, and boosting Canada’s international climate finance commitments. It proposes to increase humanitarian funding in line with inflation, rather than cutting it.
Decarbonization and climate resilience
If there is a thread that unites all government priorities, it must be that all projects—from infrastructure to public services to economic resilience—act in defence of our increasingly threatened ecosystems. The AFB will finally do away with the notion that we must choose between the environment and the economy.
First, the AFB will impose “green strings” on all federal spending—including infrastructure spending and public procurement—to ensure that no federal spending is worsening the climate crisis.
The AFB promotes ambitious programs to adapt to climate change, which is already locked in, while mitigating future damage. This includes investing $66 billion over eight years to a National Adaptation Strategy (NAS) to help affected communities, cutting subsidies to the fossil fuel industry and helping municipalities deal with climate impacts. The AFB will also create a new Employment Insurance stream to be applied in the aftermath of increasingly frequent natural disasters.
To drive the twin goals of climate resilience and economic growth, the AFB will invest $1 billion per year for the rapid development of a Youth Climate Corps (YCC), a new agency that will act as a jobs organization for young people looking to work in climate-forward industries and environmentally sound national projects. The AFB will increase funding for job reskilling programs, to help any worker who wants to find employment in a green industry.
A fair distribution of resources
These ambitious projects—and the transformative agenda that they represent—require significant amounts of money and resources. The federal government, after decades of neoliberalism, has hollowed out its own fiscal capacity by reducing revenues consistently, leading to periodic panics around the deficit.
The major beneficiaries of the past decades’ fiscal regime have, of course, been the wealthy and the corporations they control. While wealthy individuals and companies are able to hide their income and engage in legal tax avoidance, regular working Canadians feel the squeeze.
The AFB will rectify this historic imbalance and use the state as a vehicle to promote a more equal distribution of resources. The rich have been on a free ride for too long—it is time they pay their fair share, particularly in a moment of national crisis. During the Second World War and in the decade that followed, we asked the rich to step up and they did—they paid historically high taxes, which helped Canada build a post-war social consensus and grow our middle class. The AFB will mobilize the rich and rich corporations to act in service of our country in this hour of need.
The AFB will create a new tax bracket for the highest-income earners (over $1 million annually) to be taxed at 37 per cent. While this is significantly lower than the former top tax bracket (80 per cent as late as 1971), it is a start. The AFB will also implement a progressive wealth tax on fortunes over $10 million, crack down on corporate profiteering during crises, and make the corporate tax system more progressive so that large corporations pay more into the system than medium-sized businesses.
The AFB will use the tax system to raise revenues and to accomplish social goals of greater stability, sustainability, equality, inclusion. Implementing punitive taxes on profiteering, for example, is an effective way to discourage price gouging in the aftermath of a disaster. The AFB will use taxation as part of a holistic strategy to accomplish the broader social goals.
Canada is more than a flag—it is our institutions and infrastructure
Our vision—written by a coalition of social movements across the country—stands in stark contrast to the current federal government’s vision of implementing aggressive cuts across the public sector and gutting the services that Canadians rely on.
In Ottawa, the federal government proposes to enact the most brutal cuts in a generation—across most of the public service, government transfers to others and to major crown corporations like CBC and VIA Rail—to pay for tax cuts and ballooning military spending. That’s exactly what Donald Trump wants.
We have seen how that scenario played out before. Privatization of public infrastructure, slashed budgets for public services, weakened rules protecting workers. These are the steps to a weaker Canada, more vulnerable to interference from a belligerent U.S. empire. The institutions the federal government are cutting are cornerstones of the Canadian national project. Without them, political rhetoric around defending Canada rings hollow. What is this country, if not the institutions and infrastructure that we collectively hold?
The AFB lays out a path to genuinely shore up those institutions and prepare them for the conflicts and crises to come. None of the proposals in this document are utopian dreams—they are realistic proposals for what we could accomplish if we wielded the power of the state towards social and economic transformation. This year’s AFB is a blueprint for the transformation that Canadians are asking for.
