In Rare Televised Address, Carney Warns Canadians of ‘Sacrifices’ Ahead of Budget

Prime Minister Mark Carney makes a live address in advance of the 2025 budget, at the University of Ottawa on Oct. 22, 2025. The Canadian Press/Sean Kilpatrick

Prime Minister Mark Carney says while Canada’s economy is doing “reasonably well” and his government is working on diversifying the economy, there will be challenges ahead requiring sacrifice.

“We won’t transform our economy easily or in a few months. It will take some sacrifices, and it will take some time,” Carney said in a rare televised address related to the Nov. 4 budget, while speaking to University of Ottawa students on Oct. 22.

“Our government will work relentlessly to cut waste and drive efficiencies, and when we have to make difficult choices, we will be thoughtful, we will be transparent, we'll be fair, we will work collaboratively with our colleagues across the aisle to build, protect, and empower Canadians.”

The upcoming budget is expected to include steep deficit projections, with Government House Leader Steven MacKinnon saying the deficit will be “substantial.” The Liberal government so far hasn’t announced if there will be cuts to specific programs, saying key support programs such as national dental care and child care will be maintained.

Carney said his government will balance the “operating deficit” in three years, adding the focus will be on “reducing wasteful government spending,” citing as an example government initiatives to reduce red tape.

“The fact is that federal spending has been growing over the course of the last decade by more than 7 percent year-over-year. We’ve been spending faster than our economy was growing. We have to change that,” he said.

The Liberal government has said it will separate day-to-day operational spending from capital investment in federal budgets moving forward. The Conservatives say the Liberals are trying to “bury the deficit in new columns to trick Canadians,” while the Liberals insist they want to prioritize investments in major projects and infrastructure while providing a “clearer picture” to Canadians.

Priorities

Carney said the upcoming budget will focus on growing non-U.S. exports, getting major projects approved via the Major Projects Office, boosting the construction of affordable housing, and expanding a “buy Canadian” approach.

He said the budget will include a reduced immigration intake plan prioritizing skilled workers, and maintain a strong focus on reducing emissions while helping to grow the economy and making sure Canada is an “energy superpower.”

Carney also touted some of his government’s recently introduced legislation or soon-to-be tabled bills dealing with border security, tougher bail laws, new hate crime legislation, and removing federal barriers to internal trade.

Comments on US

Carney repeated comments he has made in the past about Canada’s changing relationship with the United States, which he has not emphasized in public addresses since the campaign leading up to the April election.

“Our relationship with the United States will never again be the same as it was, even though in this new world of protectionism we have the best trade deal of any other country, and we’re working to make it even better still,” Carney said, referring to the existing United States–Mexico–Canada Agreement.

“Many of our former strengths as a country ... strengths based on close ties to America, have become our vulnerabilities.”

Despite referring to a “rupture” in trade relations with the United States, Carney’s Oct. 22 remarks avoided singling out the Trump administration the way he did earlier this year during the federal election and the Liberal leadership campaign, when he accused U.S. President Donald Trump of “attacking Canadian families, workers and businesses” with “unjustified tariffs.”

In recent months, Carney has dropped counter-tariffs on U.S. goods, saying it was necessary to continue trade talks with Washington. Carney and Trump have had a cordial relationship, with Trump saying he likes Carney, and the Canadian prime minister calling Trump a “transformational president.”

In his Oct. 22 speech, Carney said his government is working on developing markets beyond the United States, with a goal of doubling non-U.S. exports over the next decade to generate $300 billion more in trade.

Pre-Budget Announcements

Carney also repeated some of the pre-budget announcements his government has made.

On Oct. 10, Carney unveiled several policies related to affordability, including an automatic tax-filing service for lower-income individuals who don’t usually file taxes and receive benefits.

He has also announced spending to extend the national school meal program and the Canada Strong Pass, which gives free and heavily discounted access to national historic sites and passage on VIA Rail. Expansion of the national dental care program was also announced earlier this year.

Carney has also announced the hiring of 2,000 additional law enforcement personnel and expanded security programs, including at the border.

Ottawa is also boosting defence spending to meet NATO’s target of allocating 2 percent of the nation’s GDP to defence.

In addition to significant spending on defence and housing, Carney has said he will offer tax cuts and substantial funding for Canadian industries which are facing pressure due to U.S. and Chinese tariffs. As well, the government has reduced the tax rate for the lowest income bracket.

Deficit

The Liberal government has faced growing pressure from the Opposition to explain how the deficit will be curbed. Carney has said his government will “spend less” in order to “invest more,” with Finance Minister François-Philippe Champagne promising “generational investment.”

The last official projection in the 2024 Fall Economic Statement said Canada’s 2025-2026 deficit would be $42.2 billion. In September, Parliamentary Budget Officer (PBO) Jason Jacques estimated the deficit would actually be $68 billion. Desjardins said on Oct. 22 that the upcoming budget could contain the largest federal deficit in the last 30 years, exceeding $70 billion and potentially reaching $100 billion. The C.D. Howe Institute earlier this year projected the 2025-2026 deficit would be $92 billion.

Speaking Oct. 1 before the Senate Finance Committee, Jacques described Carney’s plan to spend less while “investing more” as tenuous.

“The foot is on the gas and the foot is on the brake and the wheels are on the car. They’re hopefully navigating a very narrow road at 100 kilometres an hour,” Jacques said, adding that maintaining large deficits for an extended period is not feasible. Jacques noted it’s the first time in three decades the PBO has projected a rising debt-to-GDP ratio for Canada.

Opposition Stances

Carney’s Liberal government holds 169 seats in Parliament, three short of a majority, meaning it needs budget support from another party to avoid a vote of non-confidence.

The NDP, which supported the Liberal government in the last parliamentary session through a supply-and-confidence agreement, has not ruled out supporting the government, provided it doesn’t produce an “austerity budget.”

The Bloc Québécois issued 18 budget demands earlier this month, including spending increases for health transfers, infrastructure funding, and Old Age Security payments, as well as an $814 million payout representing Quebec’s share of the $3.75 billion federal carbon rebate sent to Canadians in other provinces. Quebec operated its own carbon tax system.

Conservative Leader Pierre Poilievre has repeatedly criticized Carney for not releasing a budget sooner and said the deficit under the current PM is nearly 70 percent higher than the one left by Justin Trudeau.

“Mark Carney has kept nearly all of Justin Trudeau’s economic policies that brought us backbreaking inflation, a mass exodus of jobs and investment and impoverished Canadians,” Poilievre said on Oct. 20. The Conservatives want the deficit kept below $42 billion in the upcoming budget and the government to invigorate the economy by removing taxes such as the industrial carbon tax.

Following an earlier meeting with Carney about the budget on Oct. 22, Poilievre said that while the two had a “good conversation,” he told the prime minister “we need this to be an affordable budget.”

Reuters contributed to this report.