UPDATED - Federal Budget 2025: Social spending flatline and massive infrastructure money

Note: This story will be continuously updated as we uncover new things in the budget.

The federal government’s 500-page budget document was tabled in the House of Commons Tuesday, outling Prime Minister Mark Carney’s new agenda for Canadians.

In it, the budget contains both budget cuts to programs and massive deficit spending.

Budget 2025 calls for $141 billion in new spending, primarily focused on infrastructure, safety, and military spending.

For changemakers, there are several programs ushered in by former Prime Minister Justin Trudeau that François-Philippe Champagne, Canada’s finance minister, said would not be touched.

Those include things like the national daycare program, the dental program and the newly announced school food program. But there’s no additional money, and most departments have been told to find 15 per cent in savings.

In addition, the government said increased spending would be slowed.

“Our ambitious savings plan means Canadians can count on their government to be more efficient in delivering services that matter—while reducing operational costs. In fact, we are slowing growth in direct program spending from 8 per cent to under 1 per cent.”

The main (and slightly bewildering) message in the budget: Spending less to invest more, implying that deficit spending will be focused on nation-building infrastructure rather than social services.

Let’s break it down for changemakers:

Housing

• $51 billion over 10 years: This will be the new Build Communities Strong Fund, to support provincial and municipal governments for infrastructure. Some of the money will come from the former Canada Housing Infrastructure Fund.
• $17.2 billion over 10 years: For provincial and territorial roads and wastewater, so long as the provinces agree to cost-match federal funding. Of that amount, $5 billion will be dedicated to a health infrastructure fund specifically for hospitals, urgent care centres and medical schools.
• Developing public land sites, starting with six sites to build 4,000 factory-built homes with additional capacity of up to 45,000 units across Canada Lands Company’s portfolio.
• A new $1.5 billion Canada Rental Protection Fund under Build Canada Homes to protect existing affordable housing.
• Providing $1 billion to build transitional and supportive housing for people who are homeless or at risk of homelessness.
• Partnering with the Nunavut Housing Corporation to build over 700 public, affordable, and supportive housing units.

Indigenous programs 

• $2.3 billion over three years to renew the First Nations Water and Wastewater Enhanced Program. 
• A doubling of the Indigenous Loan Guarantee Program to $10 billion.
• A new Indigenous Advisory Council for the Major Projects Office to help Indigenous people have opportunities for equity ownership in major projects affecting First Nations.
• $2.8 billion is being confirmed for urban, rural, and northern Indigenous housing 
• Ending fuel, alcohol, cannabis, tobacco and vaping sales tax arrangements with Indigenous governments

The Canada Disability Benefit

• No new spending, but the government intends to bring in a law that would mean the Disability Benefit would not count as income under the Income Tax Act
• To help with the cost of applying for the Disability Tax Credit (which is needed to qualify for the benefit), the government plans to provide a one-time payment of $150 for each approved application or renewal. This payment will be retroactive, but there is no word on how this will be distributed.

Social finance, green finance and your money

• A review of fees charged by banks, including Interac e-transfer and ATM fees.
• A proposal to increase the minimum amount of immediately available cheque deposit funds from $100 to $150, and regulations to reduce how long banks can hold deposited cheque money.
• A boost for credit unions: an amendment to the Bank Act and the Canada Deposit Insurance Corporation Act to make it easier for credit unions to achieve scale or enter the federal framework.
• Raising the 35% public holding requirement from $2B to $4B, allowing smaller financial institutions to grow further before needing to alter their ownership structure.
• The potential to explore the development of a Sustainable Bond Framework that would allow for the issuance of both green and transition bonds to be aligned with a Canadian taxonomy, and to expand the Framework to incorporate economic sectors as the taxonomy is being developed.
• $71 million over five years and granting the CRA the power to file a tax return for low-income Canadians who do not owe money and do not file themselves.
• A new Buy Canadian Policy—moving from “best efforts” to a clear obligation to buy Canadian. When domestic suppliers are not available, purchases will be required to include Canadian content or be sourced from trusted partners.
• $109.2 million in 2025-26 to Agriculture and Agri-Food Canada to increase the compensation rate for agricultural producers from 80 to 90 per cent, along with raising the payment cap per farm from $3 million to $6 million.
• A commitment to tax exemptions for sales to Employee Ownership Trusts. 

Labour and jobs:

• Canada’s public service sector is taking the brunt. The Liberals plan to shrink the public service by 40,000 jobs over five years, achieved mostly through early retirements and attrition, although layoffs are also possible.
• $40 million for a Youth Climate Corps for paid skills training for young Canadians.
• $594.7 million over two years for Employment and Social Development Canada to help support 100,000 summer jobs.
• $307.9 million over two years for the horizontal Youth Employment and Skills Strategy to provide employment, training, and wraparound supports to around 20,000 youth facing employment barriers. 
• $635.2 million over three years,to Employment and Social Development Canada for the Student Work Placement Program to support about 55,000 work-integrated learning opportunities for post-secondary students.
• $370.5 million over five years, beginning in 2025–26, to expand temporary flexibilities in the Employment Insurance Work-Sharing program. An additional $18.5 million will be committed annually on an ongoing basis. This funding ensures eligible employees can receive EI benefits while working reduced hours—helping businesses manage downturns without resorting to layoffs.
• $3.7 billion over three years for temporary employment insurance measures for workers dealing with the fallout caused by foreign tariffs.

Climate and Environment

• The government plans to scrap the oil and gas emissions cap, saying it has “marginal value” in reducing emissions.
• A focus on methane emissions, which are not covered by carbon pricing. “The government will finalize enhanced methane regulations for the oil and gas sector and landfills, and intends to work with provinces and territories.”
• New legislative amendments to remove some provisions around the new greenwashing laws, but no specifics are provided.

Data and AI

• A new department to focus on the adoption of AI across the government, called the Office of Digital Transformation.
• A mandate to require the public service to buy and use made-in-Canada sovereign AI tools. 
• $25 million over six years and $4.5 million ongoing for Statistics Canada to implement the Artificial Intelligence and Technology Measurement Program (TechStat) to measure how AI is used by organizations and its impact on Canadian labour and society.

Health and Global Aid

• Most departments are under orders to find 15 per cent in cost savings this year. Global Affairs is one of them, and they say “there will be reductions in development funding to global health programming, where Canada’s contribution has grown disproportionately relative to other similar economies, and to some international financial institutions.” 
• Public Health Canada says they will find savings by streamlining “program delivery by consolidating grants and contributions programs into larger funds.

Arts and Culture

• $91.5 million over three to four years to Canadian Heritage to support local festivals, community anniversaries, performing arts series, community-initiated capital projects, Canada Day and Acadian Day celebrations.
• $9 million over three years to Environment and Climate Change Canada to support the Biosphère in Montréal.
• The Canada Cultural Spaces Fund will be reduced and will now focus solely on funding specialized equipment in the cultural sector.

Things that we’re surprised not to see in the budget

• While there is mention of collection of data around AI and how it affects workers, there is nothing in the budget about protections for workers or creative industries negatively affected by AI.
• No additional support is available for credential recognition for skilled immigrants, particularly medical professionals, who are underutilized in Canada.
• No new financial incentives (like RRSP or TSFAs) for everyday people to invest in community finance instruments
• No help for small or medium businesses ready for sale to prevent the business from being sold to a foreign operator or closed due to a lack of a buyer
• No changes to charitable disbursement quotas

-With files from Sharlene Gandhi, Diane Berard and Abigail Turner.

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