Individual grit can rarely compensate when earnings growth no longer keeps pace with housing costs.Cole Burston/The Globe and Mail
Branded cinematically as the Master of Our Destiny budget, Prime Minister Mark Carney’s government’s 2026 fiscal plan responds ambitiously to threats to Canadian sovereignty from the United States and an increasingly uncertain world.
But, like the government’s first budget, it does too little to address the affordability pressures Canadians face right now, especially younger generations. Seventy per cent of new spending on major cash transfers for individuals and nearly 80 per cent of new medical spending will go to seniors, who represent one-fifth of the population.
As a result, many young people increasingly feel their destiny is slipping out of their control. Individual grit can rarely compensate when earnings growth no longer keeps pace with housing costs. Mr. Carney’s 2026 budget does little to turn this around.
Within five years, Ottawa plans to spend $116-billion more than it did last year. Two-thirds of that new spending can be accounted for by just three budget lines: interest charges on the growing debt (up $32-billion); Old Age Security subsidies ($27-billion); and national defence ($16-billion). Mr. Carney’s Productivity Mega Deduction to attract corporate investments means forgoing $9.3-billion in revenue.
From a new tax deadline to a revamped RRSP, six ways the budget could affect your wallet
Compared to those four investments, all other budget increases are small. Housing is up $3.7-billion and child care is up $900-million, while postsecondary and youth employment saw no noteworthy change. Employment insurance will receive $6.2-billion; and the Canada Child Benefit subsidy will gain $5.6-billion.
The projected federal deficit at the end of the decade will be $52.9-billion. It is entirely accounted for by growth in OAS spending since 2014, when the Trudeau government reversed the Harper plan to raise eligibility to age 67 to contain costs. So OAS growth fuels rising debt charges, the only Budget 2026 line increasing more than OAS itself.
Given the priorities reflected in this budget, it’s no wonder that youth-led movements are gaining momentum. Ontario students held a province-wide strike earlier this week, echoing large youth-led protests in Serbia, France, Italy, Spain and India. Young people increasingly question whether the institutions they inherit can still deliver the opportunities and economic security previous generations enjoyed.
Pollster David Coletto and columnist Max Fawcett both highlighted the trend this week. Their analyses suggest traditional left-right divisions matter less as concern grows that governments work harder to protect the assets previous generations accumulated than to help younger people have similar opportunities.
This has important implications for Mr. Carney. As younger Canadians lose faith in today’s institutions, his government must show it can fix them. Or he risks young people’s frustration with democracy, and possibly an electoral reckoning as parents watch their children shut out economically.
Opinion: A plan with more questions than answers
On this front, Budget 2026 scored an own goal, because it did not modernize the federal government’s largest expenditure. At $110-billion within five years, OAS consumes over one in six tax dollars.
Rapid OAS growth might be defensible if it eliminated seniors’ poverty. But 400,000 seniors remain below Canada’s official poverty measure, even as Ottawa directs over $17-billion annually to retirees with household incomes above $100,000. Unlike the Canada Pension Plan, recipients did not fully pre-fund OAS benefits, leaving younger taxpayers to backstop the bill.
Three-quarters of Canadians, including three-quarters of retirees, support phasing out OAS faster once household incomes exceed $100,000 so the savings can be used to eliminate seniors’ poverty and improve affordability for younger Canadians.
That approach would strengthen, not divide, generations. The challenge facing Canada is to design an affordability plan that prioritizes need more than age. Budget 2026 falls short on that test. If political leaders refuse to fix flaws in their largest spending commitment, they should not be surprised when more voters look elsewhere for answers. The warning signs are already visible abroad, and increasingly visible here at home. Rebuilding hope must become a project in the national interest.
Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on X, Facebook, Bluesky and Instagram, as well as subscribe to Paul’s Hard Truths podcast.
