Masters of our destiny

Key points

• Budget 2026 bets on an ambitious "Investment Supercycle" to lift lagging productivity. 
• Combined defence and security spending reaches 4.1% of GDP, but core military spending stalls short of NATO’s targets.
• Headline immigration intake targets remain unchanged as Ottawa pivots to domestic transitions, with few new measures to clear the skilled-trades bottlenecks standing in the way of project execution. 

As we covered last Friday in the Seven, the new federal budget, titled “Masters of Our Own Destiny,” follows a similar formula as the previous one, with the addition of a few initiatives. At its core, Budget 2026 wagers the country's economic future on an ambitious "Investment Supercycle" to revive languishing productivity and assert strategic independence. The risk pivots to project execution. 

Through the lens of expanding national sovereignty, today’s Twenty-Four will dive back into the budget. Here are a few areas that caught our attention:

The road to 5%

As part of Canada’s commitment to the NATO defence spending target of 5% of GDP by 2035, Budget 2026 outlines a trajectory to hit a 4.1%-of-GDP defence and security spending target from 2027-28 through 2030-31. 

As a reminder, this headline figure combines two distinct spending buckets—3.5% for core military spending–personnel, equipment, and training—and 1.5% on broader security needs.

Based on NATO’s definition, Canada’s core defence spending is expected to rise from 2.2% of GDP in 2026-27 to 2.6% in 2027-28, where it plateaus through 2030-31. The remainder of the 4.1% headline figure relies on a broader defence- and security-related bucket.

If the security-related bucket stays in place, closing that remaining gap will require core defence spending—currently sitting at 2.6% of GDP—to climb by roughly 0.9 points of GDP to meet NATO’s 3.5% core target. 

Major initiatives like the $7.6 billion for Operation REASSURANCE and the $2.3 billion Defence Drone Initiative are sourced partially or entirely from existing fiscal frameworks and National Defence resources. The most definitive injection of new money is the $6.0 billion over 10 years earmarked for the Canadian Security Intelligence Service.

A noticeable item within this is the Defence, Security and Resilience Bank (DSRB), which is billed as a first-of-its-kind multilateral financial institution dedicated to defence. The Canada-headquartered defence bank—with a European hub in Luxembourg—could help turn NATO pledges into action by giving allied governments and suppliers expanded access to long-term financing. 

Immigration targets

Canada’s 2027-2029 Immigration Levels Plan leaves headline admission caps untouched: 380,000 permanent resident admissions and 370,000 new temporary resident arrivals annually through 2029. The net-new element is a transition measure. Up to 200,000 temporary residents already in Canada would be able to become permanent residents by the end of 2027. In addition, there is $151.5 million allocated over five years to restructure the Temporary Foreign Worker Program to address regional market gaps. 

This section of the budget circles a question that we’ve been exploring at ATB Economics: Who is going to build the major projects aimed at jumpstarting Canada’s economy?

Ottawa’s ambitious "Investment Supercycle" hinges on delivering on a number of nation-building projects. The biggest risk to this ambition and the broader economy is execution. The budget's own projections estimate that Canada will face 450,000 job openings in industrial and construction trades by 2035, alongside a broader requirement for 1.4 million skilled tradespeople by 2033.

The federal government has pointed to a number of labour market strategies aimed at boosting participation in the trades, but it remains to be seen if these initiatives will be sufficient to mitigate the labour bottlenecks if the investment supercycle materializes.  

There will not be a Twenty-Four tomorrow, November 11, as we observe Remembrance Day and honour those who have served. 

Answer to the previous trivia question: The Nasdaq is the largest stock exchange in the world by market capitalization.

Today’s trivia question: Who is the highest-ranking military officer in Canada?