Cover letter by Prime Minister and Finance Minister

In an increasingly turbulent world, Canada is determining our future. We have the strength to build. The discipline to deliver. And the values to take care of each other.

Budget 2026 is the next step of our ambitious, pragmatic, generational plan to make Canadians maîtres chez nous, building our sovereignty and giving us the freedom to live our lives as we choose.

Sovereignty

Budget 2026 reinforces Canadian sovereignty through tough, prudent decisions to manage government spending, through ambitious measures to drive an investment supercycle that builds Canada strong, and through bold measures to diversify our trade and technologies, so no one can dictate our choices.

Canadians know that when they balance their household budgets, they are in control. In the same way, Canada's fiscal strength reinforces our sovereignty.

Budget 2026 reduces the growth of spending from over 8% per year during the last decade to less than 2% since Canada's new government took office. We will maintain that discipline over the budget horizon. The government is on track to reduce the civil service by 10%, and we will balance the operating budget next year, one year ahead of schedule. Canada has the lowest net debt to GDP in the G7, the highest credit rating possible, and borrowing costs that are well below that of the United States.

Unlike what we are seeing in other advanced economies, Canadians—not the bond market—will determine our choices.

People

This budget is for people: hardworking Canadians struggling to get by, Canadians taking care of a loved one, homeless Canadians who need long-term shelter, Indigenous peoples building their future, Canadian artists who want to tell our stories.

Budget 2026 improves the everyday lives of Canadians by boosting affordability, investing in our future and those of children, and improving how we can care for each other.

Sovereignty begins chez vous, in your home. It lives in the choices Canadians make every day: how we heat our homes, how we get to work, how much we pay for banking and broadband, and how we manage our grocery bills and essential expenses.

A boost today, a bridge to tomorrow

Building a stronger, more independent economy will deliver lasting benefits to all Canadians, but these structural gains will take time to be fully realised. That's why we are helping families facing affordability pressures with a boost today and a bridge to tomorrow. Since day one of forming government, we have focused relentlessly on making life more affordable for you and your family.

What we are already delivering

• A middle-class tax cut for nearly 22 million Canadians, saving a two-income family up to $840 this year
• Cutting the GST for first-time homebuyers, saving up to $50,000 on a new home
• Lowering prices at the pump by up to 28 cents per litre by eliminating the consumer carbon price and suspending the federal fuel excise tax
• Launching Automatic Federal Benefits, which will help up to 5.5 million low-income Canadians get the benefits they are entitled to – such as the Disability Tax Credit and the Canada Disability Benefit
• Lowering grocery costs for families of more than 400,000 children through the National School Food Program
• Delivering a new Canada Groceries and Essentials Benefit for more than 12 million Canadians, providing up to $1,890 for a family of four this year, and about $1,400 a year for the next four years.
• Making it easier to switch phone and internet providers and bank accounts, and helping independent grocers compete, so Canadians have more choices and lower costs

What's new in Budget 2026…

• Enhancing our Canada Groceries and Essentials Benefit with a 50% top-up in the new year. All told, a family of four will receive up to $2,570 within one year to cover the costs of groceries and other essentials
• Delivering a $2-billion investment to retrofit 1 million homes to save Canadians more than $1 billion per year in heating and cooling costs
• Making the Canada Caregiver Credit fully refundable to provide up to $1,260 to all eligible Canadians who are caring for a loved one
• Strengthening support for workers so they can keep more money in their pockets through the Build Canada Workers Benefit which would now provide up to $1,859 to individuals and $3,143 to families
• Building a housing market that works for all Canadians through an investment of $45 billion to build homes faster and more efficiently, using modern methods of construction and Canadian workers. In addition, the Canadian government is working with provinces to cut taxes, fees, and development charges on housing, reducing the cost of a new home by up to $200,000 in Ontario, for example.

More choice in everyday life

More competition means more choice, lower prices and a more affordable life.

Consumer-driven banking gives Canadians more options to save, transact and borrow. This budget introduces reforms to banking and telecommunications to further open those markets to more competition and make it easier for Canadians to switch providers. Already, a 60GB mobile plan that cost $105 a few years ago can cost as little as $50 today, but we can do even better. New rules in this Budget will end fees to activate, change or cancel plans, saving Canadians about $100 million a year.

At the grocery store, we're working with provinces to end property controls that keep new grocers out and taking on practices that stop stores from offering lower prices. We will act against surveillance pricing to protect your data and save you money.

A home for every Canadian

Being maîtres chez vous means little to someone who has no place to call their own. Canadians always care for each other, and the crisis of homelessness that has deepened since the pandemic strikes at the heart of Canadian values of fairness, solidarity, and human dignity.

Budget 2026 sets Canada on a path to end homelessness over the next decade through strong measures to provide help, housing and health to Canadians who are homeless.

• Help: We will work closely with provinces, municipalities and philanthropy to provide the help people need as they transition from experiencing homelessness and find a permanent home. This includes jobs, training, and income supports
• Housing: As part of this plan the Government of Canada is making a historic, multi-billion-dollar investment to build the transitional and permanent housing necessary to pragmatically ending the homelessness crisis
• Health: for those who need it, we will build the facilities needed to care for and support the most vulnerable in our society.

We will begin immediately in Winnipeg to break the cycle of homelessness and provide the care and permanent housing for the more than 2,000 people who are currently homeless in that city. We will work with public and private partners to build a new Centre for Mental Health and Addictions and add an additional 2,000 new transitional and supportive homes.

With an estimated 65,000 homeless Canadians, ending homelessness must become a national initiative. Everyone must play their role: the federal government by building transition housing and associated medical facilities, the provinces and municipalities by operating these facilities and providing the job, training, mental health, and income supports. Philanthropic partners can add their support throughout the journey from sleeping rough on the streets to reaching home.

Canadians take care of each other and ending homelessness will also make entire communities better and safer. Budget 2026 commits the Canadian government to this new model and opens the offer to every community across the country willing to play its role.

Building Affordable Housing for All

Over the past several decades, Canada simply did not build enough non-market homes to keep up with Canadians' needs. In September 2025, Canada's new government launched Build Canada Homes, a new federal housing agency to supercharge non-market housing construction across the country. Build Canada Homes brings together public land, financing, investment, and development expertise to build and catalyse affordable, non-market, supportive, and transitional housing – working directly with non-profit, Indigenous, public, and private partners to get more homes built.

Budget 2026 charts a new course to triple non-market housing construction in Canada over the next decade. By boosting capital in Build Canada Homes, unlocking more federal lands, leveraging private investment and working in partnership with provinces and territories, Canada's government will work to significantly increase non-market housing starts across the country. The goal is not simply to fund more projects, but also to build a permanent housing delivery system that produces affordable homes at large scale.

Housing affordability is beginning to improve, with the share of household income covering ownership costs falling from 55% to 41%, according to the Bank of Canada. Low-cost financing through the Apartment Construction Loan Program and lower development charges through the Build Communities Strong Fund are also lowering the cost of construction and getting new homes built. At the same time, we are keeping overall immigration at sustainable levels to allow housing supply gradually to catch up with demand.

This progress is encouraging, but it is not enough and many Canadians are still priced out of affordable housing. Building homes at a generational scale and speed to bring down costs for Canadians requires innovative new approaches to how housing is planned and constructed.

In Budget 2026, Canada's new government is creating the conditions to enable the supply and demand for modern methods of construction and our forestry sector, making more public land available, and boosting productivity in homebuilding through e-permitting and faster approvals.

These initiatives are a fundamental part of being maîtres chez nous: a home for every Canadian, and communities where everyone can live the lives they choose.

Culture

Being masters of our destiny will allow Canadian culture in all its diversity and creativity to flourish.

Budget 2026 provides unprecedented support to Canadian culture and recreation—more than five times last budget's record levels.

That starts with supporting our major institutions—our museums, galleries, granting bodies for film, music and art, and CBC/Radio Canada. It means using our Presidency of the Francophonie to promote the French language and culture in all formats, particularly in the age of social media and AI.

More fundamentally, it means giving Canadians access by making the Canada Strong Pass permanent so people can visit our museums and national parks for free and by making the greatest works of Canadian literature freely available for all Canadians.

It means record investment in our national parks, recreational facilities, sportsplexes and hockey rinks. It means supporting our local festivals and performing arts events to celebrate Canada's 160^th anniversary.

And it means unprecedented support for young Canadian artists and those creators who are just getting by. Canadian painters, sculptors, ceramicists, writers, musicians, actors are our storytellers. They are how we see ourselves and how the world comes to know us.

Budget 2026 proposes a bold innovation to promote a diverse, vibrant Canadian culture by making up to $45,000 of artistic earnings tax free. We're empowering creativity to tell great Canadian stories in our own voices, in our own ways.

An Investment Supercycle

Sovereignty is built on strength at home and diverse partnerships abroad. We are strengthening our economy through greater investment and rising productivity. And we are developing a web of reliable partners abroad who will create new opportunities for our businesses and more choice for Canadians.

For too long, our investment and productivity have lagged, we have relied too heavily on one market and too often on immigration to fill gaps in our workforce.

That's all now changing. The government of Canada has taken back control of immigration, with material reductions of newcomers to return immigration to sustainable levels. Spurred by renewed confidence, purpose and a more attractive investment environment, Canadian businesses are investing and hiring again, productivity and wages are rising, and Canada now attracts the highest foreign direct investment per capita in the G7.

Canada is turning global uncertainty into national opportunity. Investment is growing. Major projects are advancing. New trade and investment agreements are opening new markets abroad. More Canadians are finding rewarding, well-paying careers in the industries that will drive growth in the decades ahead. Canada is working again and we are just getting started.

To build on this momentum, Budget 2026 puts three engines to work to create an investment supercycle:

• Investment: the Productivity Mega Deduction lets businesses of every size deduct the full cost of a new investment. It reduces the tax on a new investment to 6.4%, less than one half the rate in the US and by far the lowest rate in the G7.
• Entrepreneurship: the Canada Growth Incentive encourages founders, employees and investors to reinvest up to $15 million in capital gains from a successful startup into the next Canadian success story, and enhancing the small business rollover to incentivise builders to reinvest their gains back into their companies.
• Innovation: a $930 million expansion of SR&ED commercialisation, renewed support for clean technology through IRAP, a $1 billion investment into the Strategic Response Fund to support large-scale R&D projects, and a review of intellectual property helps turn good ideas into great Canadian companies.

Together, these measures will have a major impact today on jobs and growth while creating a positive legacy for generations. Our current legislation to simplify project approvals while maintaining high Canadian standards will unleash enormous economic activity and create hundreds of thousands of jobs.

Canada is now the best place in the world to invest. And we're just getting started.

Electrifying Canada

Our forebears built the iron spine, a railway, that connected this country from east to west. Budget 2026 builds the electricity grid that links Canada together and powers our homes, cars, factories, and technologies with clean, affordable power. Because we are all connected.

Through the National Electricity Strategy, we are investing $50 billion to double Canada's electricity generation. This means new transmission on the North Coast of British Columbia, new nuclear at Darlington Ontario, new hydro at Churchill Falls and Gull Island, Labrador, on the Taltson River in BC and in Iqaluit, and new offshore wind projects in Nova Scotia.

We're making a pragmatic double switch:

• First, Canada is switching to energy we generate and control, with prices that are set here, not by outside forces. Budget 2026 takes major measures so that Canadians won't have to worry about the impact of foreign conflicts when they heat their homes or drive their cars. That's sovereignty in action.
• Second, Canadians can choose to make a switch at home. We're helping retrofit one million homes, and the National Heat Pump Rebate will help up to 820,000 households save more than $1 billion a year. We're adding more than 55,000 federally supported chargers for electric vehicles, roughly doubling the network.

Our mission will give Canada more power and Canadians better choices, saving them on energy costs, while Canada reinforces our energy independence.

Climate

For too long, climate action was about targets without a practical plan and adequate investment to achieve them. Investments – more than punitive regulations – will allow us to build a clean economy.

Our new approach is a bold, pragmatic plan with four pillars:

• Build: more clean, affordable power, made in Canada, to double the grid
• Switch: moving the car, the furnace and the factory onto that power
• Transform: waste less energy so homes and businesses can run more efficiently
• Innovate: close the gap by backing Canadian clean technologies and sell them to the world, to become a global leader in low-carbon competitiveness.

Budget 2026 takes major steps as part of this plan, from $50 billion in investments in a clean and affordable electricity grid to an investment in one million heat pumps that help Canadians lower their energy bills, to more than double public charging stations for EVs, to $400 million in support for industrial and manufacturing businesses to slash their energy costs and boost competitiveness.

Every step is high impact, lowers costs and creates Canadian careers while cleaning our air. This is a credible path to net-zero, powered by energy no one can take from us.

An Ambitious, Pragmatic Approach to Being Masters of Our Destiny

Investment that builds our sovereignty. Entrepreneurs empowered to grow. Ideas that become companies. Artists who tell our stories. Energy we generate and control. More choices and lower costs for you. A home for every Canadian.

This is what it means to be Maîtres chez nous. A sovereign Canada, where we take care of each other, where we create opportunities for all, and where we are free to live our lives as we choose.