Prime Minister Mark Carney's first federal budget arrives at a pivotal juncture for Canada, one that three leading business leaders and experts agree represents nothing short of an existential challenge. As the nation faces unprecedented pressure from the United States and strong economic headwinds, the question that looms: Does this $280 billion investment strategy constitute the "generational shift" that the government promises, or merely a cautious first step?
During a recent Ivey Impact webinar moderated by Dean Julian Birkinshaw, Budget 2025: Insights for Business, panelists Perrin Beatty, Arlene Dickinson and Mahmood Nanji, dissected whether this budget creates the conditions for Canada to compete, defends its sovereignty, protects its national security, and attracts the investment needed for future prosperity, all while managing a staggering $78 billion deficit and growing national debt.
An existential crisis demands clarity
Beatty, former President and CEO of the Canadian Chamber of Commerce, didn't mince words about the stakes. "The very existence of our country is in challenge, the prosperity for our kids is very much in doubt at this point," he said, adding that "we have somebody there who doesn't believe that Canada should exist, and is determined to take large chunks of the Canadian economy and move them across the border into the United States."
His assessment of the budget? Directionally correct, but lacking the boldness required. Drawing parallels to the 1994 and 1995 Chretien/Martin budgets, Beatty argued Canada received the former when it desperately needed the latter. "What we needed was the 1995 budget, where Paul Martin was very clear about the problems, very clear about what the government was going to do about them. Instead, what we got was the 1994 budget."
Leveraging Canada’s trading relationships
While the need to diversify Canada’s trade is widely acknowledged, the panel emphasized the country must begin leveraging the free trade agreements it already has. Beatty pointed out that Canada’s challenge is not access but action: “We have more trade agreements with more people, perhaps, than any other country in the world… but a Free Trade Agreement opens the door for you. It doesn't guarantee that your business is going to pass through the door.” Canadian firms, he argued, must take fuller advantage of these agreements to reduce overreliance on the U.S. market.
Arlene Dickinson, Founder and General Partner of District Ventures Capital, echoed this point, emphasizing that industry, not government, has been slow to pursue new markets. “We've had expansive trade agreements in place for a long time… The doors weren't walked through by industry,” she said. “The issue wasn't a government issue. The issue was an industry issue that there was a complacency that said, we're going to only trade with our most available, readily, right-there neighbor.” She noted that while the $5-billion Trade Diversification Corridors Fund is promising, Canada continues to overlook “3 billion people in [the Asia Pacific] marketplace” in favour of its traditional U.S. trading relationship.
Balancing investment spending with fiscal discipline
The budget's $78.3 billion deficit for 2025-26, representing 2.5 per cent of Canada’s GDP raises serious concerns about fiscal sustainability. Federal debt will climb to approximately $1.6 trillion by 2029-30, with debt servicing costs consuming 13 cents of every revenue dollar.
Mahmood Nanji, Power Corporation of Canada Policy Fellow at Ivey's Lawrence National Centre, characterized the budget as "very ambitious and expensive" but credible. However, Nanji warned that the government hasn't gone far enough on spending restraint. "I think that the government could have gone much further on its Comprehensive Expenditure Review so that we generate the savings to pay for all of these other things," he noted, pointing out the need to examine programs like Old Age Security and Guaranteed Income Supplement, projected to reach $100 billion by 2030.
Defence spending: Strategic necessity
One area where the panelists found common ground was defence. The budget commits Canada to meeting NATO's 2 per cent of GDP defence spending target immediately and scaling to an unprecedented 5 per cent by 2035—$81.8 billion over five years. The creation of a new Defence Investment Agency signals the government’s intent to build domestic defence industrial capacity to boost Canada’s economy.
Dickinson stressed the geopolitical urgency: "Russia and China are circling the Arctic on a regular basis. And we have, if we care about our sovereignty, if we care about what we're doing, this strategic investment is incredibly important and I fully support the dollars that are going behind defense."
The entrepreneurial competitiveness gap
Where the budget falls short, according to the panelists, is in fostering Canada’s entrepreneurial ecosystem. While established manufacturers and infrastructure-focused businesses will benefit substantially from tax credits and capital investment incentives, early-stage startups face a different reality.
"If you're an early stage startup and you're an entrepreneur, you're going to struggle with this budget," Dickinson observed. "You're not going to get the type of resources and commitment you need to really expand your reach."
Mature businesses investing in manufacturing, capital expenditures, infrastructure, and defence will "do very well with this budget," Dickinson said. "You're going to be able to double down, you're going to be able to grow, you're going to be able to exceed expectations." But for entrepreneurs trying to scale innovative companies, the support simply isn't there.
The $46.5 million allocated for the SME Export Readiness Initiative drew particular criticism. "We've got 10,000 small businesses that are trying to scale. That's $4,000 each," Dickinson calculated. "It takes you 20 times that to go into another foreign market and try and do business."
A tax system in need of a comprehensive review
All three panelists identified tax reform as a missed opportunity.
Nanji was definitive: "The tax system is long overdue for a review. It's been six decades since we've done that. Our economy has fundamentally changed. We need to move from an income-based system to a consumption system if we want to retain our talent... we can't have talent that is paying 52 per cent of marginal tax rates at $225,000. We just will not be internationally competitive there."
A tough road ahead
Overall, the verdict was measured on whether this budget makes generational investments. Using a baseball analogy, Nanji suggested the government "didn't hit a home run, they didn't strike out either—they’re on base, and perhaps they're in scoring position." Dickinson praised the budget's recognition that "incremental change isn't going to move the needle and that we need bold action."
As the discussion turned to what comes next, Beatty offered a reminder that the real test lies not in the immediate outcomes of one budget, but in its endurance. “The changes that we need to make in Canada are systemic,” he said. “They’re very deep rooted, and it’s not going to happen in five years. It’s going to take at least a decade for us to do this, and governments will come and go. The challenge for us is to articulate a vision for the country and to maintain the national will as a people, as governments come and go, to make it happen.”
Yet the execution risks remain substantial, the timelines ambitious, and the fiscal constraints real. As Nanji cautioned: "I think that the government needs to be really clear with Canadians that there's a really, really tough road ahead. And that message, I don't think, has been heard."
For the full discussion on Canada’s 2025 federal budget and what it means for business, stream Budget 2025: Insights for Business on Ivey Impact or Ivey’s YouTube channel.
