Canada’s Liberals bet big on budget 2025 as confidence vote looms

The federal government has delivered a bold economic blueprint but whether it becomes reality now depends on a tense parliamentary vote.

Prime Minister Mark Carney’s government has tabled its first federal budget, a sprawling $141-billion spending package pitched as a “generational investment” in infrastructure, housing and national defence. But in a minority Parliament and an uncertain economy, the road from announcement to implementation is anything but guaranteed.

“This is not a transition, it’s a generational shift,” the Canada Strong: Budget 2025 reads. “One that challenges our assumptions, tests our institutions, and demands a fundamentally different response.” That response, according to Finance Minister François-Philippe Champagne, is bold investment — paired with spending cuts and a plan to stimulate long-term growth.

If passed, the budget’s impacts will be felt over years. For small businesses, capital write-offs and workforce programs may offer new tools for growth. For job seekers, especially youth and skilled immigrants, new pathways are opening — including the addition of 100,000 subsidized jobs and the Foreign Credential Recognition Program, which allocates $50 million over two years to improve credential recognition for internationally trained workers. 

But the balancing act is delicate. Public service workers face cuts. Debt-servicing costs are rising to $55.6 billion this year. And a potential election would halt parliamentary progress on the budget and delay any legislative action on its measures. The next few weeks will decide whether Budget 2025 becomes more than a document. 

At the heart of the 405-page document is a promise: that big, strategic spending now will help Canadians weather global headwinds and come out stronger. The plan includes $51 billion for infrastructure, including high-speed rail, hospital construction and clean tech projects. Another $81.8 billion is earmarked for rebuilding the Canadian Armed Forces; a pivot toward industrial self-sufficiency and a response to growing geopolitical tension.

The budget forecasts a $78-billion deficit for 2025–26, reflecting the scale of the proposed investments. The government says nearly half of that new spending will be offset by $60 billion in “cuts and savings,” including a 40,000-person reduction in the federal workforce over the next four years.

Some programs are being wound back: Ottawa will spend less on medical cannabis for veterans, dial down its tree-planting program and freeze foreign aid at pre-pandemic levels. “To weather the storm of uncertainty, we will not lower our sails, that would be un-Canadian,” Champagne said during his budget speech, in a video posted to CBC News’ YouTube channel. “Quite the opposite. We will raise them to catch the winds of economic change.”

Immigration slashed, defence surges

One of the budget’s most significant changes is a sharp reduction in temporary immigration. The number of international students and temporary workers allowed into Canada is being cut by nearly 50 per cent, with total temporary resident numbers expected to fall from 673,000 this year to 370,000 by 2028.

Permanent resident targets have also been revised down, to 395,000 in 2025 and 380,000 per year through 2028. The government says the goal is to stabilize growth and ensure newcomers can be better integrated into communities and the workforce.

In the same breath, the budget promises to fast-track 33,000 work permit holders to permanent residency next year, and invest $97 million in credential recognition — especially for health care and construction roles.

Meanwhile, the $81.8-billion military commitment is the largest in decades, with a “Buy Canadian” strategy baked in. The money will go toward equipment, personnel and base upgrades, including carbon capture systems and port expansions. “There’s an enormous injection in just a five-year period,” defence expert Dave Perry told CBC News, calling it a major reallocation of federal priorities.

Political tightrope: can it pass?

Parliamentary approval is required before any part of the budget can be implemented. The Liberals currently hold 169 seats, just shy of the 172 needed for a majority. To survive a confidence vote, the government must secure support from at least two opposition MPs or hope others abstain. As of Tuesday, neither the Conservatives nor the Bloc Québécois were on board.

The stakes are clear: if the budget is defeated, it could trigger a federal election. That risk is real and immediate. With a minority government holding a slim seat margin, even a single defection or abstention could shift the outcome. The coming days will determine not only the fate of this fiscal plan, but potentially the future of the government itself.

A budget is a delicate balancing act. Public service workers face cuts. Debt-servicing costs are projected to rise to $55.6 billion this year. A failed confidence vote would pause all legislative progress on the budget and delay implementation of its proposed measures. Budget 2025 remains a proposal before Parliament. Its passage will depend on the outcome of a pending vote—one that could determine whether the government continues or Canadians head to the polls.