Liberals unveil federal budget with a deficit of over $70 billion

Lee Griffi, Local Journalism Initiative Reporter

The first budget handed down by the federal government in 18 months included a deficit of $78.3 billion with no sign of a balanced budget.

As expected, the two local members of parliament are divided on the effectiveness of the more than 400-page document and its impact on Canadians. Oxford Conservative MP Arpan Khanna said he hoped to see some pocketbook issues to make life more affordable for Canadians.

“A lot of folks are struggling to get by. My office gets flooded with emails and phone calls from people trying to get help. People are working two jobs, doing everything right, yet they are barely making ends meet. I don’t see anything to help in the budget.”

Khanna also expressed his frustration at the size of the deficit, which is expected to drop to $56.6 billion by the 2029/30 fiscal year and laid the blame solely on Prime Minister Mark Carney.

“He promised to be that expert banker who would be fiscally responsible, but he’s brought forward a budget worse than Trudeau’s in terms of spending. When you run major deficits, it fuels inflation, leads to higher taxes and at the end of the day, it’s Canadians who end up paying the price.”

Kitchener-Conestoga Liberal MP Tim Louis said the budget presented is the right one for the times we find ourselves in.

“This response to the global economic shifts, like tariffs from the US, is something we have to fight. At the same time, we have to protect our sovereignty, build infrastructure and housing, and support Canadians through these challenges.”

He added maintaining current social safety nets will play a role in the affordability of living in Canada today.

“The national school food program, dental care, affordable child care, those things will be untouched. We made sure those supports are there and they put more money in the pockets of Canadians.”

Louis also lauded the budget’s business incentives to spur private-sector growth in the country.

“Those things are going to grow the economy which means more jobs and greater affordability.”

As for the deficit, Louis said the budget found a way to make the necessary investments in the economy and protect Canadians. He also spoke highly of the way the budget was split into operational and capital sides.

“We are going to reduce our operational spending in three years to be balanced. That means any borrowing we do after that will go towards investments in infrastructure, housing and defence. We did an expenditure review over the summer and identified $60 billion in savings.”

The federal government is projected to spend $55.6 billion on interest payments in 2026 to service the national debt – an amount that surpasses the annual health-care transfer payments made to provinces and territories.

The government has pledged to greatly reduce the size of the federal public service by 40,000 jobs through job cuts, attrition and early retirements from its peak of 367,772 employees in March 2024, to 330,000 by 2028-2029, Louis said.

“We have to do this responsibly and a big part of that is going to be through attrition and efficiencies. It has been growing too fast, so we have to pull back on it. That’s part of the $60 billion in savings.”

Khanna agreed the public sector has grown significantly without delivering improved services for Canadians and expressed support for efforts to reduce its size – though he remains skeptical that meaningful action will follow.

“Any time we can have a smaller government that cuts out the fat, we have more efficiencies, so that’s something I do agree with and it had to be done. But I don’t think it will actually lead to anything and we will be watching very closely.”

Nova Scotia MP Chris d’Entremont resigned from the Conservative caucus on budget day to join the Liberals, the first floor crossing since 2018 when Leona Alleslev left the Liberals to join the Conservatives. She was re-elected in 2019 under the new party but then lost her seat in the 2021 election.

Khanna said he saw d’Entremont regularly as their offices are side-by-side. He believes his former colleague’s motivation is nothing more than sour grapes.

“This was a case of him not getting what he wanted. He wanted to be a deputy speaker as he was in the past, but he was not chosen by his colleagues. He blamed the Conservative team for that and this is him taking personal vengeance on the party.”

Louis said he’s been focused on the budget and didn’t see the move coming but appreciates his new caucus partner.

“We welcome anybody who wants to be part of the conversation. It shows our government has moved towards the centre and is appealing to more people.”

The House of Commons is off next week for Remembrance Day, but the work behind the scenes will involve opposition parties putting forward amendments. A vote on the budget is expected to occur the following week.