2026 Federal Budget

Competitive Business & Trade Environment  

Driving Investment, Innovation and Scale 

Budget 2026 commits to a permanent Productivity Mega Deduction, broadly expanding the range of assets – from fibre optic cables to mining properties to patents to bridges and roads – that businesses can immediately expense. The measure is expected to reduce Canada’s marginal effective tax rate on new business investment from 13 per cent to 6.4 per cent, carrying with it an estimated fiscal cost of $36 billion over five years. By 2030, the government estimates the measures could increase real GDP by 0.5% on its own. 

Budget 2026 also introduces the Canada Growth Incentive, which includes two measures intended to help high-potential businesses attract investment and grow: a tax exemption on up to $15 million in qualifying capital gains and an enhanced small-business rollover where proceeds are reinvested in another Canadian small business. The incentive will provide an estimated $715 million in tax relief over four years, beginning in 2027-28. 

The budget also proposes a $930-million, five-year expansion of the Scientific Research and Experimental Development (SR&ED) tax incentive program to help Canadian businesses commercialize new products and technologies. Eligible expenses will be expanded to include costs associated with bringing a new product or process to market, such as obtaining regulatory approvals or securing and maintaining intellectual property protection.  

Notably, Budget 2026 takes steps to simplify how Canadians interact with and navigate the tax system, including simplified filing and minimizing time spent with the CRA.  

OCC Analysis: As Canada continues to contend with lagging productivity and works to attract investment, the OCC welcomes measures that lower upfront business costs, create incentives to boost productivity, and encourage reinvestment in Canadian businesses. Expansions to the SR&ED program will also help bridge the gap between research and commercialization, providing greater support for Ontario firms looking to get new products and technologies to market. Collectively, these measures respond directly to the OCC’s calls to reward investment, mobilize capital and fuel growth. 

Budget 2026 does not raise the small business tax threshold or index it to inflation, missing an opportunity to better support the small businesses that are critical to job creation, investment, and economic growth.

With this Budget, the Government of Canada is also taking its first steps toward comprehensive tax reform. While this first package of tax simplification measures is welcome, the OCC continues to call for a comprehensive, expert-led and time-bound review of Canada’s corporate and personal taxation frameworks. In the meantime, the test will be whether these efforts are sustained, coordinated with provinces, and deliver long-term benefits to Canadians and businesses. 

Helping Businesses Reach New Markets & Navigate Trade Disruption 

Budget 2026 continues Canada’s objective of doubling exports to non-U.S. markets by 2035. The government identified $6.6 billion for trade-diversification and infrastructure strategies, including initiatives intended to strengthen market access and trade-enabling capacity.  

The budget also furthers regional and sectoral measures intended to help businesses respond to tariffs, diversify markets and navigate economic disruption. Building on more than $16.6 billion provided to trade-impacted sectors since the Spring Economic Update, Budget 2026 expands the ability for Canada’s regional development agencies to tailor support for smaller businesses and organizations.  

OCC Analysis: The OCC continues to support efforts to diversify Canada’s trade agreements and to enable Ontario businesses to engage with reliable, global partners. It also welcomes continued regional support for businesses affected by tariffs and trade uncertainty. The effectiveness of these programs will depend on whether they reach the smallest and most exposed firms, including sole proprietors, owner-operated businesses and businesses with fewer than 10 employees. With an expanded mandate, the OCC encourages Canada’s Regional Development Agencies to formalize partnerships with provincial and local chambers of commerce to help businesses navigate available supports. Businesses still need support to capitalize on procurement opportunities, attract regional investment, and participate in trade-diversification missions.  

Strengthening Homegrown AI and Business Adoption  

Building on its AI for All strategy announced in June 2026, Budget 2026 will provide $6.2 million over four years, starting 2027-2028, to support Innovation, Science and Economic Development Canada’s participation in the Global Partnership on Artificial Intelligence. The budget also advances access among Canadian AI companies to 500 MW of sovereign AI compute by expanding compute capacity through financial tools like backstops and offtake agreements.  

OCC Analysis: The OCC welcomes continued progress under its AI for All strategy and investment in Canadian AI capacity.  However, further action is needed to help businesses translate infrastructure and research leadership into economy-wide productivity gains. Bolstered support should help businesses assess appropriate technologies, test sector-specific applications, and access the implementation expertise required to integrate AI responsibly and remain competitive.  

Strengthening Strategic Industries 

Budget 2026 details Canada’s progress toward NATO’s Defence Investment Pledge. Starting in 2026-27, the government forecasts its defence investments will exceed $700 billion over 5 years. Building on February’s Defence Industrial Strategy, the budget directs $2.7 billion over five years in defence-related investments, including scaling Canada’s quantum computing capabilities, building capacity for space technology firms, and supporting smaller firms to enter or grow within defence supply chains.  

Budget 2026 also furthers efforts to increase the number of critical minerals that are brought from mine to market. It provides $424.4 million over four years, beginning in 2027-28, to renew the Canadian Critical Minerals Strategy. It also extends the Mineral Exploration Tax Credit and Critical Mineral Exploration Tax Credit for another five years, providing an estimated $956 million over five years in exploration support. These measures complement the previously announced Canada Critical Minerals Accelerator, delivered by Export Development Canada, to invest alongside industry in priority projects.  

The federal government also proposes to continue the $3.2-billion National Food Security Strategy, focused on strengthening Canadian production, processing, supply chains and competition. The strategy seeks to increase annual GDP growth in food processing from 1.6 per cent to 2.75 per cent between 2027 and 2035.  

Budget 2026 provides $1 billion over six years to the Strategic Response Fund to support large-scale R&D and innovation projects that strengthen Canada’s economy, from AI to agri-food to biomanufacturing. To provide greater certainty for long-term renewable energy projects, Budget 2026 proposes to extend the Clean Technology and Clean Electricity investment tax credits to the end of 2040. 

OCC Analysis: The OCC welcomes targeted measures to fortify Canada’s strategic industries, including extending the mineral exploration incentives and efforts to strengthen Canadian defence supply chains. On the latter, procurement processes should continue to improve access for SMEs, dual-use suppliers and Indigenous businesses. 

Government investment in food production, processing capacity and supply-chain resilience is essential to Canada’s sovereignty. To help scale Canada’s agri-food and processing sector, the OCC continues to recommend that the government establish a National Food Security Advisory Council. The council should be mandated to identify regulatory, infrastructure and investment barriers and publish implementation updates against the National Food Security Strategy. 

Qualified People, Diverse Talent 

Aligning Immigration with Workforce Needs and Top Talent Attraction 

Budget 2026 provides $56.9 million over four years, beginning in 2027-28, and $205.4 million in future years to Immigration, Refugees and Citizenship Canada to implement the 2027-2029 Immigration Levels plan. Budget 2026 provides $302.3 million over four years, beginning in 2027-28, and $90.6 million in future years to transition up to 200,000 temporary residents already in Canada to permanent residence by the end of 2027. 

Budget 2026 further proposes $151.5 million over five years to Employment and Social Development Canada to reform the Temporary Foreign Worker Program. The reforms are intended to better align the program with regional labour-market needs, improve processing times, and strengthen employer compliance.  

OCC Analysis: Budget 2026’s Immigration Level’s Plan takes steps to better align immigration with economic and regional labour market needs. However, Canada needs a more comprehensive approach to immigration reform that better integrates the system with skills development and workforce planning and responds to regional- and sector-specific labour shortages. This will be critical to ensuring immigration continues to support productivity, business growth, and long-term economic competitiveness.  

In the meantime, continued federal-provincial-territorial collaboration will be important to improve the predictability of immigration programs and ensure employers can access and retain skilled workers in sectors facing persistent labour shortages, including mining, tourism, agriculture, construction, manufacturing and health care. The OCC encourages predictable regional immigration pathways and distinct workforce needs in rural, northern, and remote communities to attract and retain skilled workers and provide appropriate settlement and retention supports.  

The OCC also calls for stronger coordination among governments, regulators, employers and post-secondary institutions to streamline recognition pathways, establish clearer processing standards, and help internationally trained professionals enter employment that reflects their skills and experience. 

Strengthening Youth Employment, Skills and Career Pathways 

As part of Budget 2026, Canada Summer Jobs, the Youth Employment and Skills Strategy and the Student Work Placement Program will provide 175,000 work and skills-development opportunities, including adding up to 100,000 Red Seal workers by 2031. Furthermore, its Youth Placements program is expected to provide 100,000 people with paid, hands-on skilled-trades experience over the next five years.  

Budget 2026 also proposes to raise the minimum number of Employment Insurance regular-benefit weeks for apprentices in full-time training from 14 to 18 weeks, at a cost of $5 million over four years beginning in 2027-28 and $1.1 million in future years. 

The budget also invests $162 million over five years in Mitacs to create 10,000 co-funded work placements for post-secondary students, graduates, and postdoctoral fellows, helping businesses adopt AI while building talent. The initiative reflects a major step towards 90,000 AI-related opportunities planned by 2031 under AI for All. 

OCC Analysis: The OCC welcomes investments and supports in youth employment, work-integrated learning, AI-focused training, and skilled trades. These incentives will also help SMEs overcome training costs and capacity constraints. Implementation should ensure equitable access across sectors and regions, including for youth in rural and northern communities and those from Indigenous, newcomer and other underrepresented groups. 

The OCC encourages the government to apply a consistent Match, Pay, Report model to improve work-integrated learning program outcomes. Programs should connect young people with suitable employers, paid placements and use reporting requirements proportionate to business size and administrative capacity. This would help more SMEs participate while strengthening skills development, employment outcomes, and youth-employer connections.  

Advancing Indigenous-Led Skills Development 

Budget 2026 includes launching a Partnerships for Indigenous Workforce Readiness Fund alongside the Indigenous Skills and Employment Training Program. The budget provides $451.8 million over four years, beginning in 2027-28, and $48 million ongoing to support Indigenous-led skills and employment training. The government will also develop an Indigenous-focused stream under the Team Canada Strong initiative to connect Indigenous workers with paid, entry-level trades positions.  

OCC Analysis: The OCC welcomes this investment and its emphasis on Indigenous-led delivery of workforce programs. By supporting skills development through Indigenous organizations, these measures can strengthen pathways to employment, apprenticeships, and high-demand careers, while advancing economic reconciliation. The OCC encourages continued partnership with Indigenous governments, Indigenous Institutes, employers, and educational institutions to ensure training leads to sustained employment, recognized credentials, and long-term economic participation for Indigenous communities.  

Supporting Workers Through Economic Transition 

Budget 2026 builds on the $3.5 billion in Rapid Response Supports for Workers and Employers introduced in August 2026, to include the Worker Retention and Retraining Program, to help trade-affected employers retain and retrain their workers. The budget also proposes $170 million in 2027-28 through the Workforce Tariff Response for training and employment services delivered in partnership with provinces and territories. 

OCC Analysis: The OCC welcomes support for workers and businesses affected by tariffs. The federal government should work with Ontario, employers, postsecondary institutions, and workforce intermediaries to streamline access to reskilling funding, respond quickly to layoffs, and connect training with employer demand. 

These measures should be complemented by broader Employment Insurance reform. The OCC recommends a tripartite-led review involving employers, labour organizations, and government, to ensure the system remains affordable, sustainable, and responsive to workforce transitions, while providing transparency about proposed implications of new benefits for employer and employee premiums. 

Supporting Workers Through Affordable Childcare 

Building on previous federal investments, Budget 2026 highlights the four-year extension of the Canada–Ontario Canada-Wide Early Learning and Child Care Agreement announced in September 2026. Under the extended agreement, Ontario will receive nearly $12 billion in federal funding over four years to support continued access to affordable childcare.  

OCC Analysis: The OCC welcomes the extension of the Canada–Ontario agreement and the funding certainty it provides for families, childcare operators, and employers. The agreement will help employers attract and retain talent and provide greater stability for working parents. While additional funding and spaces are welcome, access can only improve with a workforce strategy to sustain operations.  

The OCC encourages the federal government to work with Ontario through the extended agreement to ensure childcare funding supports additional spaces and the development of a sustainable childcare workforce. 

Healthy and Sustainable Communities 

Mental Health, Addictions and Homelessness 

Budget 2026 includes significant new investments to improve access to mental-health and addictions services, expand supportive housing, and reduce homelessness. In 2027-28, the government will provide $1.2 billion to extend federal funding agreements with provinces and territories supporting mental-health and addictions services as well as home and community care. 

 The budget introduces the goal of ending homelessness within 10 years with significant new investments. Through Build Canada Homes, the government proposes $1.8 billion over four years, beginning in 2027-28, plus $3.2 billion in future years, for a new Integrated Supports Fund that will combine housing with health, mental-health, addictions, and social services. The budget further proposes $3.6 billion over four years, beginning in 2027-28, plus $6.4 billion in future years, to support the development of supportive and transitional housing across Canada. 

 To strengthen access to care, Budget 2026 proposes $2 billion over two years beginning in 2027-28 through the Health Infrastructure Fund to build and expand community mental-health and addictions facilities, with an emphasis on providing treatment and support before individuals reach a crisis point. Budget 2026 also renews the Canada Housing Benefit for 10 years, providing $1.7 billion over three years beginning in 2028-29, plus $3.9 billion in future years, to help low-income Canadians maintain stable housing. 

OCC Analysis: The OCC welcomes Budget 2026’s recognition that mental health, addictions, housing, and homelessness are interconnected challenges that impact the economy and require coordinated policy solutions. Investments in community-based mental-health and addictions services, supportive housing, and integrated care align with OCC priorities to strengthen access to prevention, early intervention, treatment, and recovery services. 

These investments could improve health outcomes, support workforce participation, and reduce pressures on hospitals, emergency departments, and first responders. However, the budget’s emphasis on infrastructure and program funding must be matched by sustained operational funding. It should also be coordinated with provinces, municipalities and community service providers. 

Accelerating Life Sciences Innovation 

Budget 2026 acknowledges the Pharmaceutical and Life Sciences Sector Task Force’s final report with 39 recommendations to improve access to medicines and support a strong and competitive pharmaceutical and life sciences industry.  

OCC Analysis: The OCC urges the federal government to swiftly apply the Task Force recommendations to speed approval of innovative medicines, vaccines, and health technologies, including improved timelines through Canada’s Drug Agency and the pan-Canadian Pharmaceutical Alliance, alongside new funding mechanisms to attract investment and support higher-risk innovation. The OCC also calls for dedicated commercialization capital and procurement pathways to help health systems test and adopt Canadian innovations while attracting greater R&D, clinical trial, and manufacturing investment. 

Growing Canada’s Cultural and Visitor Economy 

Budget 2026 makes substantive investments into Canada’s cultural sovereignty, through a new Canada Creative Credit. This non-refundable personal income tax credit combines with the Basic Personal Amount to provide tax recognition on up to $45,000 of annual qualifying net business income from original creative and artistic works. Additional details will be included in the 2027 Spring Economic Update.  

The Budget also includes over $4 billion in investments to protect and celebrate Canada’s diverse arts, culture, creative industries, and tourism landscape. This includes $76 million in 2027-28 to renew the Canada Strong Pass for another summer, with expanded discounted access to Indigenous-led museums and cultural centres. The budget also outlines an additional $300 million over two years for CBC/Radio-Canada, $46.3 million over five years (plus $11.5 million ongoing) to make national museums free for youth under 25, $783.1 million over five years for national museums and key cultural organizations, and $60 million over four years to expand access to the National Gallery of Canada’s collections. 

Finally, the Government of Canada commits to a Federal Intellectual Property Review to help Canadian innovators protect, commercialize, and retain more intellectual property here in Canada, including stronger research commercialization and safeguards against abusive patent practices.  

OCC Analysis: The OCC commends the substantial support for Canada’s creators, cultural institutions, and visitor economy. Measures will support cultural participation, regional tourism and the ability of Canadian creators and cultural organizations to grow and scale their work in new markets.  

Advancing cultural sovereignty in Canada requires more than funding; it requires close collaboration with provinces and territories and coordination in developing cultural policy, trade, tourism, digital strategy, and economic development. Ultimately, creative growth should be inclusive, sustainable, and competitive. The OCC recommends that the federal government develop and implement a coordinated cultural and tourism strategy that embeds the sectors in economic action plans, including export strategies and trade missions. 

Growth-Enabling Infrastructure 

Advancing Housing, Community and Local Infrastructure 

Budget 2026 continues the federal government’s housing-supply strategy through Build Canada Homes, the Apartment Construction Loan Program, and the Build Communities Strong Fund, supporting affordable and non-market housing alongside the water, wastewater, transportation and other infrastructure required for new development. The budget sets out $44.7 billion over 11 years on a cash basis to address homelessness, expand non-market housing and increase housing supply. 

The previously announced Build Communities Strong Fund provides $51 billion over 10 years, including a $6-billion Direct Delivery Stream for regionally significant infrastructure, major retrofits, climate adaptation and community infrastructure. Its Provincial and Territorial Stream includes $5 billion over three years beginning in 2026-27 through the Health Infrastructure Fund. Budget 2026 also proposes $100 million over three years to support municipal e-permitting and AI adoption, and $67.7 million over four years, with an additional $101.2 million in future years, to modernize housing data and establish common standards for modern construction methods. Building on this, the budget also provides $1.5 billion over four years and $387.4 million in future years to convert underused federal lands for housing, enabling infrastructure like roads, wastewater, and water. 

Budget 2026 proposes $32 billion over 10 years for First Nations housing and infrastructure, including $18.5 billion for a new First Nations On-Reserve Infrastructure Program. It also proposes $1.5 billion over nine years through the Build Communities Strong Fund to build, expand, retrofit and rehabilitate community recreation facilities and ice rinks.  

OCC Analysis: The OCC welcomes continued federal investment in housing and the infrastructure needed to bring new supply online. Ontario communities cannot meet housing targets without sufficient water, wastewater, electricity, roads, transit and other enabling infrastructure. The OCC encourages the federal government to accompany these investments with predictable application and approval timelines, clear funding-disbursement schedules, common data standards and technical assistance for municipalities. Implementation should prioritize projects that demonstrate measurable housing, productivity and private-investment outcomes. 

Major Project Planning, Approvals and Delivery  

Budget 2026 continues implementation of the Major Projects Office and its “one project, one review” approach to nationally significant projects. It also proposes $187.4 million over five years, with an additional $24.2 million in future years, for a separate major-projects management entity that would initially support delivery of the Mackenzie Valley Highway and Taltson Hydro Expansion. 

To support major infrastructure investment, Ottawa proposes focusing the Canada Infrastructure Bank’s mandate on loans and loan guarantees and consolidating the Indigenous Loan Guarantee Program within the bank. 

OCC Analysis: The OCC supports a coordinated and more predictable approach to major-project approvals. Timely approvals are critical to converting announced investments into completed infrastructure, jobs and economic growth.  

The OCC encourages the federal government to translate the National Infrastructure Assessment into a rolling long-term infrastructure plan with regional investment priorities, and to publish service standards and an annually updated priority-project plan showing approval timelines, funding and permitting status, outstanding infrastructure dependencies and anticipated economic impacts. Federal and provincial governments should also align impact assessments, downstream permitting and Crown consultation wherever possible while maintaining environmental oversight and providing capacity funding for early, meaningful Indigenous participation. 

Electricity Infrastructure and Grid Modernization 

In support of Canada’s new National Electricity Strategy announced in May, Budget 2026 commits over $50 billion in investments to help double Canada’s electricity system by 2050, meet growing demand, and accelerate electrification. As part of this strategy, the federal government proposes nearly $4 billion over 10 years, starting in 2027-28, to support electricity infrastructure expansion, renewable energy development, and priority electricity sector projects across Canada. It also provides $6 billion over six years, earmarked to support the deployment of emerging electricity generation technologies, such as oxide fuel cells.  

The budget proposes $37 million in 2027-28 to support planning and cost-benefit analyses of interprovincial and interterritorial electricity interests, and $26.4 million over 10 years to strengthen electricity system modelling and planning capacity. The budget further invests $1.6 billion over 10 years, starting in 2027-28, to improve energy reliability in northern communities through renewable energy projects and to replace and upgrade aging electricity infrastructure. 

In addition, the Clean Electricity Investment Tax Credit will be expanded to include qualifying high-voltage intra-provincial transmission infrastructure, including transmission assets operating at 500 kilovolts or higher in Ontario. This measure is expected to represent part of a broader federal commitment that will cost $2.4 billion from 2027-28 to 2030-31 and $36.1 billion from 2031-32 to 2041-42. 

For electric vehicle (EV) charging infrastructure, Budget 2026 proposes $587 million over five years, starting in 2027–28, to renew the Zero-Emission Vehicle Infrastructure Program and support the installation of more than 55,000 additional EV chargers, and $45 million for charging research and development. The budget further allocates $22.9 million over five years to modernize the Clean Electricity Regulations and develop equivalency agreements with provinces and territories, where appropriate.  

OCC Analysis: The OCC welcomes the federal government’s recognition that reliable, affordable electricity is foundational economic infrastructure. Ontario’s competitiveness increasingly depends on access to affordable electricity to support housing growth, advanced manufacturing, critical mineral processing, electric vehicle production, data centres, and emerging technologies. 

Expanding the Clean Electricity Investment Tax Credit to Ontario’s highest-voltage transmission infrastructure is a particularly important measure. As electricity demand continues to rise, new transmission infrastructure will be needed alongside generation investments to ensure power can be delivered where it is needed. 

The OCC will continue to advocate for accelerated transmission development and planning certainty to ensure Ontario can meet rapidly growing electricity demand while maintaining affordability and reliability. 

Advancing Canada’s Nuclear Strategy 

Budget 2026 provides $518.5 million over five years beginning in 2027-28 to implement Canada’s Nuclear Energy Strategy and strengthen Canada’s nuclear research, workforce, supply chains, regulatory capacity, and export opportunities. The funding includes $261 million over five years for nuclear supply-chain development and research, $127 million over five years for research infrastructure and workforce development through Atomic Energy of Canada Limited, and $131.1 million over five years for the Canadian Nuclear Safety Commission to prepare for new nuclear projects and expanded regulatory responsibilities. 

In addition, the federal Indigenous Loan Guarantee Program, working alongside Ontario’s Indigenous Opportunities Financing Program, will provide an approximately $715 million loan guarantee enabling seven Ontario First Nations to acquire a significant ownership stake in the Darlington New Nuclear Project. 

OCC Analysis: The OCC welcomes the federal government’s commitment to strengthening Canada’s nuclear sector. Ontario is home to Canada’s nuclear industry and possesses globally recognized expertise in nuclear generation, engineering, nuclear manufacturing, and emerging Small Modular Reactor technologies. These investments support Ontario’s position as a global leader in clean-energy development. 

The OCC also welcomes expanded Indigenous participation in major energy infrastructure projects. Meaningful Indigenous ownership can strengthen project certainty, support economic reconciliation, and create long-term economic opportunities for participating communities. 

Expanding Regional Connectivity and Trade Corridors 

Budget 2026 provides more details on the previously announced changes to the airport ownership model and reinvestment in regional connectivity. $37.6 million is set aside over three years beginning in 2026-27 to develop the framework and select an operator for the first airport operating concession, while maintaining public ownership of airport assets.  

The budget also includes a federal commitment of up to $1 billion over three years for transportation infrastructure supporting critical mineral development in Northern Ontario’s Ring of Fire region. The federal and Ontario governments have additionally committed to coordinating permitting processes and strengthening engagement with First Nations. 

Budget 2026 proposes legislation to streamline expropriation and enable early preconstruction work for Alto High-Speed Rail. It also proposes $1.2 billion over three years on a cash basis for VIA Rail and confirms the previously announced investment of more than $6.6 billion to acquire and maintain new trains for long-distance, regional and remote services, with railcar manufacturing in Thunder Bay and La Pocatière.  

OCC Analysis: The OCC supports continued progress on Alto and recommends that implementation include transparent milestones, integration with regional transit systems and clear reporting on economic and ridership outcomes. The OCC also welcomes measures to modernize Canadian airports and strengthen connections between communities and markets. 

The OCC welcomes the emphasis on trade-enabling and northern infrastructure. Reliable northern transportation corridors are particularly important to mineral development, interprovincial trade, community connectivity and economic security. 

Dedicated federal funding for Highways 11 and 17 remains an important priority. The OCC recommends that Ottawa and Ontario co-fund upgrades to these Trans-Canada Highway corridors to ease bottlenecks and improve freight safety and reliability. The OCC also continues to call for a Great Lakes–St. Lawrence maritime strategy, developed with provinces and industry and backed by sustained investment in port and waterway maintenance. 

Building Climate-Resilient and Digital Infrastructure 

Budget 2026 supports climate adaptation and resilient community infrastructure through broader capital programs, including Build Communities Strong, which can support regionally significant infrastructure, major building retrofits, climate adaptation and community infrastructure. 

Building on measures announced in October 2026, the budget also provides $865.6 million in 2026-27 for the Emergency Management Assistance Program to respond to emergencies that occurred on reserve, along with $446.2 million in ongoing funding for future emergency response and recovery. 

On connectivity, the budget identifies broadband expansion as a possible use of future airport concession proceeds. The Productivity Mega Deduction, outlined earlier, also extend immediate expensing to eligible fibre-optic cable.  

OCC analysis: The OCC welcomes investment that strengthens the resilience of communities and critical infrastructure against climate-related emergencies and other disruptions. The OCC continues to encourage predictable, long-term support for climate adaptation and natural infrastructure that helps communities prepare for growing flood, wildfire and erosion risks.  

Resilience must also extend to Canada’s digital infrastructure. The OCC supports measures that lower the cost of fibre investment, but further action is needed to close remaining rural and remote connectivity gaps and strengthen network reliability and redundancy. The OCC recommends greater federal-provincial coordination to advance “dig once” policies that integrate conduit and fibre installation into road, electricity and other public infrastructure projects. This should be complemented by improved access to passive infrastructure and financial tools that encourage private-sector broadband investment in underserved communities. 

Canada’s Fiscal Outlook 

Budget 2026 includes approximately $146 billion in announced measures, with $98 billion for growth and investment and $48 billion for measures directed at people. The largest single measure is the Productivity Mega Deduction at $36 billion over five years, which lowers corporate income tax revenue in the near term. Stronger projected revenues, lower expected program expenses and savings from the Comprehensive Expenditure Review improve the fiscal outlook relative to the spring update. Before accounting for new measures, Finance Canada lowered its forecast for direct program expenses by an average of $12.4 billion annually, or 4.5 per cent, reflecting updated estimates of existing spending and its timing.  

The federal deficit is projected at $62.3 billion in 2026-27 (1.8 per cent of GDP), $3 billion below the spring forecast but $23 billion above the preliminary deficit for 2025–26. It is expected to remain broadly stable at $62.5 billion in 2027-28 before narrowing to $52.9 billion by 2030-31 (1.3 per cent of GDP). Across the six years from 2025-26 to 2030-31, the cumulative deficit is projected to be about $34 billion lower than forecast in the spring, largely reflecting a $28 billion improvement in 2025-26. The improvement, however, is driven primarily by forecast revisions rather than policy changes. Before new measures, Finance Canada projects baseline deficits of $43.8 billion in 2026-27 and $24.8 billion in 2027-28, compared with the Parliamentary Budget Officer’s estimates of $63.3 billion and $70.2 billion. About 70 per cent of the upgrade comes from stronger revenues, predominantly linked to oil prices. 

Federal debt is projected at 39.9 per cent of GDP in 2026-27, rising to 40.4 per cent in 2028-29 before easing slightly to 40.1 per cent in 2030-31. While the ratio remains broadly stable and below the spring forecast, public debt charges are projected to rise from $60.2 billion to $85.5 billion over the same period, increasing from 1.8 to 2.2 per cent of GDP. Higher debt-servicing costs, along with borrowing requirements that run well above the deficit, leave less room to respond to economic shocks, fund other priorities, and grow provincial transfers.  

The private-sector forecast underpinning the budget projects real GDP growth of 1.0 per cent in 2026, 1.7 per cent in 2027, and 2.0 per cent in both 2028 and 2029. CPI inflation is expected to ease from 2.8 per cent in 2026 to 2.2 per cent in 2027, while unemployment is projected to decline from 6.6 per cent in 2026 to 5.8 per cent by 2030. Further trade disruption or a prolonged oil price shock could weaken the outlook. Faster project delivery and stronger business investment could lift productivity and revenues.  

Under the Capital Budgeting Framework, Ottawa projects that revenues will cover day-to-day operating spending by 2027-28, one year ahead of schedule. Direct program expenses are expected to grow by an average of 1.5 per cent annually from 2026-27 to 2030-31. The framework’s credibility will depend on clear reporting on which measures are classified as capital investments and what results they deliver.  

Provincial fiscal outlooks also depend on federal transfers. Budget 2026 projects the Canada Health Transfer to increase from $57.4 billion in 2026-27 to $67.7 billion in 2030-31, supported by the existing funding formula, including a 5 per cent growth guarantee through 2027-28 and a minimum annual increase of 3 per cent thereafter. While this provides provinces and territories with a more predictable source of health funding, the expiry of targeted health funding after 2027-28 may create pressures in priority areas. In Ontario, this could reduce flexibility to sustain public health services as demand grows. The OCC encourages alleviating system pressures through sustained investments to improve health outcomes and support long-term economic growth. 

The OCC welcomes the budget’s emphasis on productivity, private investment, business tax measures, and growth-enabling infrastructure. The fiscal outlook has improved since the spring, but annual deficits are projected to remain above $50 billion through 2030–31, and debt-servicing costs continue to rise. Overall, Budget 2026 funds an ambitious investment agenda by counting on a stronger economy rather than cutting spending. The OCC encourages Ottawa to maintain fiscal discipline and work with provinces, municipalities, Indigenous partners and industry to set clear delivery timelines and service standards. Public reporting should show which projects are moving ahead, how much private investment they attract and what economic results they deliver. 

For more details, refer to the Ontario Chamber of Commerce’s 2026 Federal Budget Submission.