The Top Line
The House of Commons resumes sitting today (the Senate resumes next week) for what will be the first substantive session of the 45th Parliament.
A three-week Spring sitting allowed Prime Minister Carney just enough time to pass some high-profile legislation (Bill C-5, The Building Canada Act), keep some political promises (cancel the consumer-facing carbon tax), and put a new face on the Liberal government by appointing a new Cabinet. Unusually, he was able to do all that with virtually no political pushback, since the NDP were (and still are) leaderless and Conservative Leader Pierre Poilievre was not in Parliament after losing his seat in Election 2025
The Fall sitting will be the first opportunity for Prime Minister Carney to deliver a budget, fully set his legislative agenda and demonstrate progress on key issues. However, his government will have to do so in the face of more strident opposition and in the shadow of continued instability in the Canada – United States (U.S.) relationship.
The centerpiece of the Parliamentary session will be Budget 2025, which will play a large role in defining the Government’s economic and political identity. So far, Prime Minister Carney has signaled that the budget will tilt substantially towards “investment” spending (e.g., infrastructure and economic growth incentives) combined with reductions in “operational” spending (e.g., day-to-day spending of departments). He has also acknowledged that the budget will include a large annual deficit for this fiscal year.
In that context, key elements of the budget to watch are how much new spending the Government is prepared to introduce, how much of that spending will be offset by operational savings, and how the Prime Minister and Finance Minister will distinguish between “operational” and “investment” spending. Labeling as much new spending as possible as “investment” will be tempting, but for a Prime Minister seeking to demonstrate a disciplined, targeted approach to government, that will be a fine line to tread.
Beyond fiscal policy, the Liberals face the key political test of fully defining their new Government with voters. The Prime Minister won power by positioning himself as the best-qualified person to lead Canada’s response to President Trump. However, due to shifting voter priorities, the lack of success in ending the Canada – U.S. trade dispute, and the activities of the Official Opposition Conservatives, the Government will look to move the political discussion to other topics this Fall. Stakeholders should expect greater focus on the cost of living, housing, jobs and economic growth, immigration levels, and public safety. Meanwhile, Prime Minister Carney’s government will hope the Canada – U.S. trade file – including a review of the Canada-United States-Mexico Agreement (CUMSA) – proceeds in a more orderly, low-key fashion, but that is unlikely given President Trump’s style.
Finally, Conservative Leader Pierre Poilievre is returning to the House of Commons for this sitting, after his victory in a summer by-election. With Mr. Poilievre and his distinct rhetorical talents and style back in the limelight, the Conservatives will use this Parliamentary session to sharpen their critiques of Prime Minister Carney’s government. Look for the Conservatives to build a sustained, issues-based case for electoral change by criticizing the Government’s record on crime, affordability, and immigration issues.
A Deeper Dive
Stakeholders should expect this session of Parliament to be both policy-heavy and politically charged. With a minority government, the Liberals must balance legislative ambition with careful management of the House of Commons; navigating potentially tricky votes, Conservative Motions and Opposition Bills about politically sensitive issues, and the potential for opposition-driven Committee studies that could derail the Liberal agenda.
Budget 2025: The Early Defining Moment for the Carney Liberals
Finance Minister Champagne has stated that the Government will deliver Budget 2025 in “October”. This first budget for Prime Minister Carney is anticipated to:
- Show a medium-term plan for fiscal discipline by identifying operational savings from Federal spending in the coming years, including through program reviews, departmental cost-cutting mandates, and a much more targeted approach to new spending; and
- Focus – in terms of both new spending and political messaging – on housing, infrastructure, and natural resources and industrial development.
Prime Minister Carney will seek to use the budget to further signal his government’s break from Justin Trudeau-era Liberalism, through a focus on fewer priority issues, faster execution on those priorities, and a more stringent commitment to measurable outcomes. Most notably, by the end of Justin Trudeau’s government, budgetary fiscal guardrails had become functionally irrelevant and subject to change year-to-year. Look for Prime Minister Carney’s government to re-introduce some serious rigour in that area of fiscal forecasting.
Stakeholders should also expect a budget that aims to be both credible to financial markets and politically popular with voters who are feeling the pinch of higher costs. That is a tough needle to thread, and how the Prime Minister manages that challenge and communicates the associated trade-offs will be a key early test of his government’s political acumen.
Shift in Government Narrative
As mentioned, Prime Minister Carney’s government is looking to pivot away from Canada–U.S. trade being the dominant national political story, particularly because of how that issue has dragged on through the year. Despite a sustained effort at the highest levels of both governments, Mr. Carney’s Cabinet had little success in easing American tariffs on Canadian exports. The Prime Minister can no longer – and will no longer – define his government’s success based on its ability to neutralize President Trump’s trade agenda. Instead, the Liberals will seek to demonstrate action and progress on affordability, housing supply, economic growth, and law and order — all areas identified by polling as top priorities for Canadians. Immigration policy, especially around temporary resident/worker caps and service capacity, may also receive attention, as it has become a polarizing issue in key ridings.
A Fully Functioning Parliament
While the brief Spring sitting offered little political drama, this session promises more opportunities for political uncertainty. Key parliamentary dynamics to watch include:
- Active Committees conducting studies that may embarrass or distract the Government – especially given the lack of NDP presence on Committees.
- Private Members’ Business and more Opposition Days, giving Opposition parties room to frame debates, including the potential introduction of Confidence votes that will require careful management by the Government Whip and House Leader.
While the Government is significantly more stable than the final year of Justin Trudeau’s government, navigating any minority Parliament is volatile and this Fall will bring some unpredictable developments. However, as long as the NDP remains leaderless (which will be until March 29, 2026), the defeat of the Government via the loss of a Confidence vote is extremely unlikely.
Key Issues to Watch
Housing and Infrastructure
Prime Minister Carney’s government has made ambitious commitments on housing and infrastructure. So, this Fall will be critical for Housing and Infrastructure Minister Gregor Robertson, who just launched the $13-billion Building Canada Homes agency. That agency is tasked with building transitional, supportive, and deeply affordable housing through public-private partnerships – a significant expansion of the federal role in the housing sector.
In that context, expect Minister Robertson to have a greater profile through the Fall – both an opportunity and a risk for him, since addressing housing affordability is one of the Government’s key metrics for success and because housing prices are a searing political issue for the younger Canadians.
On infrastructure, in addition to the projects already designated as being of “national interest,” Minister Robertson will be under pressure to outline new or re-capitalized programs for public transit, trade, and municipal infrastructure.
Natural Resource Development and Environment Policy
To date, Prime Minister Carney has taken a dramatically different approach to Canada’s climate change commitments than Justin Trudeau’s government. So far, Prime Minister Carney’s government has been virtually silent on environmental issues and is apparently considering altering Canada’s 2035 and 2045 climate targets. At the same time, the Liberals have signalled a new eagerness to develop Canada’s light natural gas resources and an openness to increased oil production. That dynamic is beginning to elicit pushback, notably from a group of up to 50 Liberal MPs that attended the first meeting of a new Liberal Climate Caucus.
In that context, two potentially competing initiatives will be high-profile for the Government this fall:
- The Major Projects Office (MPO) for the development of natural resources – a major government initiative that is a personal priority for the Prime Minister and Minister of Energy and Natural Resources. The MPO will look to facilitate renewable energy and critical minerals projects that could drive decarbonisation, but it is also under extreme political pressure to support oil and gas development as the Liberal government seeks a bigger role for Canada in global energy markets.
- A new climate competitiveness strategy, which will be Team Carney’s first comprehensive climate policy, and should clarify the Government’s position on the oil and gas emissions cap, the Federal electric vehicle (EV) mandate, the industrial carbon price, and Federal support for the adoption of clean technologies. The Liberal government likely cannot politically afford to jettison all those initiatives, but is under pressure to do so for almost all of them.
Look for the Fall session to reveal how seriously Prime Minister Carney’s government intends to prioritize climate action within its economic agenda.
Managing the Relationship with China
Another major file for the Government is its economic relationship with China. Ottawa has imposed significant tariffs on Chinese EVs and steel — a move designed partly to address U.S. concerns about the integrity of the North American supply chain and partly to strengthen Canadian sectors threatened by President Trump’s tariffs. In response, China tariffed Canadian agricultural products, which has created a politically sensitive situation.
This issue plays differently across the country, including an urban vs. rural divide: Central Canada is focused on protecting manufacturing jobs and supply chains, while Western Canada is concerned about agricultural market access. Balancing – or choosing between – those trade relationships will be a major test of this government’s ability to triangulate economic security, trade diversification, and political risk.
What This Means to You
Stakeholders should prepare for an intense and fast-moving Fall Parliamentary session. Budget 2025 will dominate Ottawa’s attention for the first portion of the session, and it also offers the best opportunity to influence the Government’s economic initiatives. Beyond the budget, we can expect major government legislation regarding criminal justice and bail reform.
Organizations should be ready for the Budget – and likely a quick lead-in to Budget 2026 – with evidence-based proposals that align with the Government’s priorities of economic growth, trade diversification, and affordability. Early engagement is critical, as the Government will seek to show momentum and deliverables quickly, leaving little time for late-stage lobbying.
