Tasha Kheiriddin: Everyone's looking for a handout from this week's budget. Can Carney resist? - National Post

NP Comment Tasha Kheiriddin: Everyone’s looking for a handout from this week’s budget. Can Carney resist? Join the conversation Share Close Share this article

Copy URL Facebook Linked In X (Twitter) Loading account options Sign In Manage Account Close account menu Sign Out Prime Minister Mark Carney announces a federal investment of up to $1.6 billion in artificial intelligence company Cohere, on the sidelines of the EU-Canada summit in Montreal on Oct. 29. (Alexis Aubin / AFP via Getty Images) By Tasha Kheiriddin November 3, 2026 at 1:26 p.m. With Americans heading to the polls for their midterm elections, it feels like Thursday’s federal budget is getting a lot less media attention than usual. Ottawa might not mind this: every time U.S. President Donald Trump twitches, Prime Minister Mark Carney’s popularity rises. But while Washington commands the headlines, Canadians should check out the creeping sea of red ink below the fold — and just what it is funding.

Last year’s budget saw Ottawa rack up the biggest non-pandemic budget deficit in history, a whopping $80 billion; this year it is projected to top $63 billion. And while the government claims it will return its operating budget to balance in 2028-29, a revival of corporate welfare policies of governments past, repackaged as nation-building, promises big overall deficits for years to come.

Consider last week’s announcement of up to $1.6 billion in federal investment in the Canadian artificial intelligence company Cohere. The rationale is familiar: Canada must nurture domestic champions, retain intellectual property and compete with global technology giants.

Perhaps. But the move is already raising eyebrows about the cozy relationships between some of Cohere’s investors and the Liberal government. There’s also government’s failure to pick winners: consider the recent case of Northvolt, Quebec’s $650-million EV battery boondoggle or Ottawa’s long history of subsidies to Bombardier, which laid off employees nonetheless.

To his credit, Carney has also embraced less dirigiste approaches. His Productivity Mega Deduction, announced in September, would allow businesses to immediately write off a much broader range of capital investments. Ottawa estimates the measure will cost $36 billion over five years while reducing Canada’s marginal effective tax rate on new investments from approximately 13 per cent to 6.4 per cent — making Canada more tax-friendly than the United States.

Economically, that’s a better kind of industrial policy: rather than choosing corporate champions, government creates incentives for businesses across the economy to invest, innovate and compete, and makes us more competitive than other jurisdictions.

Politically, however, targeted spending remains irresistible. Billion-dollar announcements generate headlines and photo opportunities with workers and grateful corporate executives. Broad-based tax reform produces no ribbon-cuttings, even when its economic benefits are potentially much greater.

And with six byelections just called for December, three of which are in Quebec, watch for a lot of money to flow in an eastward direction. Already the French title of the budget, “Maitres Chez Nous” (“Masters of Our Destiny”), echoes the clarion cry of Jean Lesage’s government in the 1960s, when it established Hydro-Québec as a vehicle for Quebec’s economic development. The cover of the budget document even features an image of hydro lines soaring over Churchill Falls.

Meanwhile, business is also asking for tax relief. The Canadian Federation of Independent Business wants the small-business tax rate reduced from nine to six per cent and the deduction threshold increased from $500,000 to $700,000. Agricultural producers want changes to the tax code to smooth inter-generational transfers of family farms. The Canadian ETF Association wants Carney to create a “Maple Investment” tax-free savings account to incentivize investment in Canadian companies and is urging the government to bring back a pre-2022 taxation system for exchange-traded funds.

Ordinary Canadians want help, too: at the grocery store, gas pump and in the housing market. Conservative Leader Pierre Poilievre has called for an end to diesel taxes and spending restraint. The cost of living continues to be the top issue of concern, with a shocking one-third of Canadians saying they skip meals because they cannot afford groceries.

In Budget 2026, Carney faces a tough assignment: stimulating investment, helping struggling Canadians and satisfying the chorus of industries demanding tax relief. But borrowing more money to achieve these objectives isn’t the answer: it just kicks the can down the road for future generations, who already face a less prosperous future than the one before.

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