Liberal Platform Pledges $130B in New Spending, $225B Debt Increase Over 4 Years

The Liberal Platform has announced a sweeping four-year platform with $130 billion in new spending, pushing the projected federal debt up by $225 billion. Liberal Leader Mark Carney revealed the plan during a campaign stop in Whitby, Ontario on Saturday, describing the approach as bold but fiscally responsible.

Key Spending Areas: Taxes, Housing, Defence

One of the largest commitments is a cut to the lowest federal income tax bracket—from 15% to 14%. This 6.6% reduction is projected to cost $22 billion over four years.

On housing, the Liberals aim to double the pace of home construction with a new federal agency, Build Canada Homes (BCH). This lean development body would cost $3 billion annually. Other measures, including repurposing commercial buildings and cutting development charges, add another $22 billion in housing-related spending.

The platform also includes an $18 billion increase in defence spending to meet Canada’s NATO target of 2% of GDP. This will fund military equipment upgrades, CAF wage increases, recruitment modernization, and efforts to address sexual misconduct within the ranks.

The Four-Plank Budget Breakdown

The Liberal platform is organized around four core themes:

1. Unite

Focus: Arts, rural transit, Indigenous economic support, and CBC/Radio-Canada
Investment: $20 billion over four years

2. Secure

Focus: Military upgrades, trade-related spending, RCMP recruitment
Investment: $18 billion in defence, plus $5.7 billion for border and RCMP improvements

3. Protect

Focus: Health care reforms, mental health services, IVF program
Investment: $3.5 billion for youth mental health, doctor paperwork reduction, and medical residencies

4. Build

Focus: Housing, tax reforms, investment incentives
Investment: $22 billion in housing, $12.5 billion to cancel capital gains hikes, and $12.5 billion to extend accelerated investment incentives

Where the Money Will Come From

The Liberals say they’ll offset some costs with $51.8 billion in new revenue over four years. Of that:

$20 billion will come from tariffs in 2025–26 alone
$3.8 billion is expected from CRA penalties and fines
Up to $13 billion per year in long-term savings from government efficiency reforms

Carney emphasized that tariff revenues are a one-time forecast, not a long-term solution, warning against overreliance.

Budget Deficit and Debt-to-GDP Outlook

While the fall economic update projected a $42.2 billion deficit for 2025–26, the platform now puts it at $62.3 billion, or 1.96% of GDP. Still, the Liberals aim to shrink the deficit annually, reducing it to $48 billion (1.35% of GDP) by 2028–29.

Analysts predict operating deficits, excluding capital investments, will drop sharply from $9 billion to just $220 million over four years.

The platform reflects a high-spending, investment-heavy approach, aimed at tackling housing, healthcare gaps, national security, and economic uncertainty. However, the significant increase in federal debt and higher-than-expected short-term deficits could become key talking points during the election.

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