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The federal government released its federal budget on November 5, 2026. They called the document Masters of our Destiny, and have framed it as a federal planning document to shore up sovereignty in the face of global uncertainty. In its introduction, the document says it is intended to trigger an “investment supercycle” and makes repeated references to the growing and widespread concern among Canadians related to the cost of living.
Once we get past that initial rhetoric, though, the actual budget shows something else—a restructuring of the Canadian state to serve big business.
A budget for oil & gas companies
This is a budget for corporate Canada—and specifically for its oil and gas companies, which have made money hand over fist on high gas prices. This budget delivers them by far the most of any sector in a massive new corporate tax cut, called the “productivity mega deduction,” which allows corporations to write off capital investments into things like machinery on their taxes. The budget highlights its purported benefits across many pages, but does not provide a breakdown of who will receive it. We calculated it, showing that 29 per cent would go to oil extraction and refining and another 10 per cent would go to mining.
These are massive capital spenders, so any tax deduction for capital goes to them. The goal of this type of credit is to have companies spend more on capital. The issue is that these companies would have engaged in much of that capital spending anyway, so we’re giving away tax money for nothing. But insofar that it does incentivize new spending, that spending is likely to be in extractive industries—places where we should have an excess profits tax, not more investment.
The budget reveals exactly how much the federal government will lose in tax revenue by year—and fully 14 per cent of the deficit in coming years will be due to this new deduction. It is so large that the tax writeoffs for extractive industries alone will make up 10 per cent of all new spending in this budget.
If we include all industries, a quarter of the entire budget is devoted to the mega deduction. Individual measures for Canadians, like the cut in the gas tax, the groceries and essentials boost, and child care spending makes up a third of this budget.
Modest improvements in income transfers
There were several notable changes in income transfer programs that will move the needle a bit—temporarily—on poverty rates. The biggest is a one-time 50 per cent boost in early 2027 to the Groceries and Essentials Benefit, a repeat of a boost from 2026. The result will be to move 120,000 people who are just below the poverty line to just above it.
The Canada Workers Benefit for low-income working Canadians will be slightly easier to get and its base amount will be higher. This will likely push some people out of poverty, although the budget does not estimate how many people this particular change will bring over the line—likely under 50,000 people.
The caregiver tax credit has also been made refundable. When caring for someone, it’s often quite hard to work, hitting families in their 50s and early 60s particularly hard since they are not yet eligible for big retirement programs to kick in. That change will move 15,000 people above the poverty line.
While not an income transfer program per se, the budget also contains an important $5.4 billion additional investment in child care. This measure was announced in June, so it isn’t news from today but it boosts the transfers to the provinces on child care by a third. It will help to continue the expansion of spaces and keep fees low, although in the big provinces outside of Quebec, they are still well over $10 a day. This investment should be made permanent now, rather than requiring the feds to renew it in two years. While there aren’t new strings attached, like actually hitting the $10-a-day mark, it at least continues the program for the next two years.
The projected end of homelessness
When it comes to housing, this budget has a strong focus on homelessness, and sets a target to eliminate homelessness entirely in 10 years. It’s great that a measurable target like this is being set, but this government has a poor track record on hitting social targets like this. It will miss the poverty reduction goal of 50 per cent by 2030, for example by a country mile.
There is new money behind this initiative though. The budget renews two well-received programs—the reaching home and the veterans homeless program. It also introduces new programs, as well with wraparound services and mental health and addictions treatment.
Food banks also see a renewal of funding. This is no long-term answer to insufficient income and homelessness, but it’s an increasingly used service over the past few years.
Goals that are a decade out generally become the next government’s problem. Let’s hope this one sticks.
The federal cuts continue
This budget doesn’t make further cuts to federal spending but there are plenty coming from last year’s budget through the Comprehensive Expenditure Review (CER). The feds figure they’re ahead of schedule with the staff cuts, hitting 38,000 of the planned 40,000 job cuts. The Department of National Defence (DND), for its part, is actually hiring and its headcount is up 3,700—as is the Communications Security Establishment (CSE), which isup by 500). So the net reduction in federal staff in the budget is 34,000, but it’s more like 38,000 in non-DND/CSE departments.
In some areas, we’re actually seeing reversals of cuts in this budget. Take Immigration, Refugees and Citizenship Canada (IRCC). The CER is forcing that department to cut $547 million next year, but this budget puts $228 million back in to counteract half of the cuts that last year’s budget just made. A similar situation is happening at Parks Canada, with $70 million a year in new capital dollars, while the CER cuts $75 million in those who might staff those new facilities.
As the full breadth of the CER cuts become clear, the feds may decide to put money back into other departments as well in order to keep the systems running.
Stuck between profits and affordability
While federal policy-makers are presenting this budget with a lot of fanfare around relatively limited affordability measures, the actual numbers show something different—a budget that is focused overwhelmingly on new cash and tax incentives for corporations, most notably the productivity “mega deduction.” The previous version—the “super” deduction—was applied more judiciously, an important mechanism for industrial policy and planning. But the new mega version is a general policy of tax giveaways to all capital-intensive industries, regardless of whether they are industries we actually want to develop or whether that capital spending would have happened in any case.
Over the last two years, this federal government has shown itself ready to order everything on the menu from the business lobby, and this budget is certainly not a break with that trend. While there are some hopeful measures in there—particularly the target to end homelessness—the actual spending shows a government prioritizing corporate profits over all else.
About the author
David Macdonald
David joined the CCPA as its Senior Ottawa Economist in 2011, although he has been a long time contributor as a research associate. Since 2008, he has coordinated the Alternative Federal Budget, which takes a fresh look at the federal budget from a progressive perspective. David has also written on a variety of topics, from child care to income inequality to federal fiscal policy. He is a regular media commentator on national policy issues, often speaking to the CBC, Globe and Mail, Toronto Star and Canadian Press. David received his BA from the University of Windsor and his MA from the University of Guelph, both in Philosophy. Follow David on Bluesky at @davidmaccdn.bsky.social
