Canada’s next federal budget will “rein in spending” and promote large-scale investment at the same time, Prime Minister Mark Carney told reporters on Wednesday during the Liberal cabinet retreat.
“The federal government has been growing spending, as a whole, at over seven per cent a year on average for over a decade. That’s twice the rate of growth of the economy on average. It’s not a sustainable situation. We need to rein in spending,” Carney told reporters in Toronto.
He said the government would focus on reducing its operational budget, which is the day-to-day costs involved in running the government.
“The government needs to spend precious taxpayers’ dollars as carefully as possible,” Carney said.
Carney and his cabinet ministers began their two-day retreat in Toronto on Wednesday ahead of Parliament’s return in two weeks.
The Liberal cabinet is expected to focus on the government’s strategy for navigating the ongoing trade war started by U.S. President Donald Trump, which is set to continue to dominate the fall political and economic agenda. Carney said he had a “long and constructive conversation” with Trump on Monday.
He said the conversation was “on several subjects, geopolitical issues, and the economy and commerce between Canada and the United States.”
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Carney told reporters that the government will try to “find efficiencies” in federal spending, while also promoting major projects.
“In finding those efficiencies, we create the room for these big investments,” he said.
Conservative Leader Pierre Poilievre said Carney had not shown any indication that he would be able to bring the deficit down.
“Mark Carney is not a change. He’s worse. We need to cut consultants, bureaucracy, corporate welfare, foreign aid, handouts to fraudulent refugees and other wasted money. We need to bring down the cost of government to bring down the cost of living with lower taxes, inflation and debt,” Poilievre’s said in a statement to Global News.
In a statement, Carney’s office referred to the two-day retreat as a “Cabinet Planning Forum” and added that it would be “focused on building a stronger economy.”
The retreat and the return of Parliament come as Carney is ramping up plans for building more homes through a new government agency and also getting the new office for major national projects running.
The mandate of the Major Projects Office is to “advance projects of national interest through the Building Canada Act,” while Build Canada Homes will be a federal entity that would act as a developer by supporting builders with financing to build affordable housing.
Carney’s office said the cabinet will also discuss “boosting Canada’s defence industries.”
With the Canada-U.S.-Mexico Free Trade Agreement (CUSMA) up for review in 2026, the Liberal cabinet will also “advance the beginnings of Canada’s preparations for the CUSMA review process,” Carney’s office said.
On Monday, most of Canada’s retaliatory tariffs against the United States came down, in keeping with an announcement Carney made last month.
Carney announced in August that many of Canada’s tariffs on its biggest trading partner, on goods that comply with CUSMA, would come down starting Sept. 1.
He said this was after he and Trump agreed to “intensify” stalled trade talks.
Canada’s counter-tariffs on U.S. auto, steel and aluminum remain.
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