OTTAWA — The Canadian government has unveiled a new budget, described as a transformative plan to strengthen the nation amid a volatile global economy. The budget, presented on Tuesday, allocates significant funding for national defense, infrastructure, and tax reforms.

This year’s federal budget deficit is projected at $78.3 billion. This figure is nearly double the shortfall estimated in the government’s fiscal update from a year ago. It also exceeds the $68.5 billion deficit forecasted by the independent Parliamentary Budget Officer in September.

Over the next five years, the budget outlines $141.4 billion in new spending. This includes nearly $59 billion earmarked for defense, which does not account for the planned acquisition of up to 12 new submarines. Additionally, the government plans to reduce the lowest income tax bracket from 15% to 14%, costing $27.3 billion over five years.

Infrastructure investments are also a priority, with over $12 billion allocated to support strategic industries, $5 billion for hospital construction over three years, and $4.2 billion for trade-related infrastructure, including ports and rail lines.

To offset spending, the government aims to cut federal expenditures by $58.2 billion over the next five years. This will involve reductions across various departments, including cuts to disability pensions for RCMP officers. The federal civil service is expected to decrease by about 40,000 jobs, or 10%, from its peak in 2023-24.

The budget introduces a new effective tax rate of 13.2% for businesses, which includes a “super deduction” for investments in capital such as manufacturing equipment and clean energy. This change is intended to enhance Canada’s competitiveness compared to other G7 nations.

The government claims its policies will facilitate $1 trillion in public and private sector investment over the next five years. This initiative is part of a broader strategy to encourage business investment and production, aiming to reduce Canada’s economic dependence on the United States. As Mark Carney stated, the goal is to make Canadians “masters in our own home.”