Prime Minister Mark Carney's government tabled its first federal budget on November 4, 2025. The timing marks a significant shift in Canada's fiscal approach, as the federal government transitions from a spring to a fall budget cycle. Finance Minister François-Philippe Champagne positioned this change as an effort to improve coordination with provinces, municipalities, and other stakeholders, better aligning with Canada's construction season and fiscal timelines.
The government is also introducing a new “Capital Budgeting Framework,” a notable change in its approach to fiscal reporting. For the first time, the federal budget will formally distinguish between day-to-day operational spending and long-term capital investments. Capital spending is defined as any federal expenditure that contributes to capital formation in the public or private sectors. Minister Champagne said this approach will "prioritize investments that generate long-term benefits for Canadians," such as clean energy, housing and infrastructure.
The Fall budget emphasizes “generational investments” and affordability, with previously announced measures including automatic benefit enrollment for low-income Canadians, expansion of the National School Food Program, and a renewal of travel and recreation rebates.
On the environment and climate policy front, the budget was rather muted. No new spending was announced for mass market programs aimed at decarbonizing in the heating sector. Indeed, some programs, like the $8 billion Net Zero Accelerator Fund, will be wound down. Early word from NRCan, however, is that programs like the Canada Greener Homes Affordability Program (CGHAP) and the Oil to Heat Pump Affordability (OHPA) Program will continue under current commitments until their planned sunsets in 2030 and 2027, respectively.
Meanwhile, tax-related measures like the Clean Technology Investment Tax Credit (CTITC), which can provide significant incentives for building owners to invest in low carbon solutions and efficiency upgrades, are being beefed up.
The federal budget does not include much in terms of new supports for tariff-hit sectors in Canada, but does reference previously announced funds, including 3.7 billion over three years to support workers, enabling them to “re-skill and retool” for the future, and some important changes to EI to enhance income support for impacted workers.
As for revenues associated with Canadian counter-tariffs, original estimates of $20 billion in revenue have been downgraded to $4.4 billion, due to reversals and exemptions that have occurred since March.
Minister Champagne has said that the budget will “tariff-proof” the Canadian economy of the future, through building and through tax measures aimed at stimulating private investment (e.g. enhanced and accelerated capital cost allowances for various business investments.
The budget also includes a significantly higher-than-anticipated deficit of approximately $78.3 billion, prompting concern from economists and opposition leaders.
The Official Opposition, led by Pierre Poilievre, has called the government's approach "reckless borrowing under the guise of growth" and warned of rising debt servicing costs and declining investor confidence. Conservatives confirmed they will oppose the budget, citing deficits that surpass those under former Prime Minister Trudeau and accusing the government of abandoning fiscal discipline.
On the day of the budget announcement, Nova Scotia Conservative MP Chris D'Entremont announced that he will cross the floor to the join Liberals, meaning the government will now be only two seats short of a majority.
In the meantime, the government is facing significant challenges in securing support for the budget in a minority Parliament. The Bloc Québécois has tabled a list of demands that the government rejected. The New Democratic Party ruled out supporting what it describes as an austerity budget. Minister Champagne has signalled a return to pre-pandemic public service staffing levels, confirming cuts across departments, an area of direct concern for the NDP. All parties have begun accusing one another of engineering a Christmas election. Given the timing of the budget, defeat would trigger an election during Christmas.
Budget Highlights:
While more analysis will be needed over the next few weeks in what is a quite comprehensive budget document, below are some of the more interesting elements that we will be exploring.
- $213.8 million over five years, starting in 2025-26, for the Major Projects Office (infrastructure).
- $75 million over three years, starting in 2026-27, to Employment and Social Development Canada (ESDC) to expand the Union Training and Innovation Program, which supports union-based apprenticeship training in the Red Seals trades.
- Intention for EDC to launch a $2 billion concessional trade finance envelope, on a cash basis, to encourage international partners to buy Canadian. This new financial tool will help exporters in key sectors—such as infrastructure and clean technology—to engage in projects in some of the world's fastest-growing developing economies, particularly in the Indo-Pacific region, and to participate in the reconstruction of Ukraine's critical infrastructure. This will be funded from EDC's existing capital envelope and Global Affairs Canada's existing departmental resources.
- $97 million over five years, starting in 2026-27, to ESDC to establish the Foreign Credential Recognition Action Fund to work with the provinces and territories to improve the fairness, transparency, timeliness, and consistency of foreign credential recognition, with a focus on health and construction sectors.
- $382.9 million over five years, starting in 2026-27, and $56.1 million ongoing, to launch new Workforce Alliances that will bring together employers, unions, and industry groups to work on ways to help businesses and workers succeed in the changing labour market and coordinate public and private investments in skills development.
- $594.7 million over two years, starting in 2026-27, to ESDC for Canada Summer Jobs to support around 100,000 summer jobs in summer 2026.
- $307.9 million over two years, starting in 2026-27, for the horizontal Youth Employment and Skills Strategy to provide employment, training, and wraparound supports (e.g., mentorship, transportation, mental health counselling) to around 20,000 youth facing employment barriers annually.
- $635.2 million over three years, starting in 2026-27, to Employment and Social Development Canada for the Student Work Placement Program to support around 55,000 work-integrated learning opportunities for post-secondary students in 2026-27.
- $40 million over two years, starting in 2026-27, to ESDC, to create a Youth Climate Corps to provide paid skills training for young Canadians, who will be trained to quickly respond to climate emergencies, support recovery, and strengthen resilience in communities across the country.
- The government will engage provincial and territorial (PT) governments in setting a multi-decade industrial carbon price trajectory that targets net-zero by 2050.
- New legislation to deliver the Clean Electricity investment tax credit and enhancements to existing investment tax credits (CTITCs) that have already been implemented (including for products of the HVACR sector). While legislation progresses, investors already have the certainty of retroactive eligibility: The Clean Electricity investment tax credit would be available as of April 16, 2024, for projects that did not begin construction before March 28, 2023.
- Expanded eligibility under the Clean Technology Investment Tax Credits (CTITC) to include systems that produce electricity, heat, or both electricity and heat from waste biomass and changed the eligibility requirements for small nuclear energy property under the Clean Technology investment tax credit, both measures would be available retroactively as of November 21, 2023, and March 28, 2023, respectively.
- For existing CTITCs, proposed to removal the conditions imposed on provincial and territorial governments for their Crown corporations to be eligible.
- $8 million over four years, starting in 2026-27, and $2 million ongoing, to Global Affairs Canada to deepen trade relations with European partners by undertaking new trade missions with Canadian businesses and supporting Canadian Chambers of Commerce in Europe.
Some of these proposed measures and expenditures are consistent with requests made by HRAI in its most recent Budget submission last August. To see that submission, click HERE.
Stay tuned over the weeks ahead for more information on Budget 2025 details that have bearing on the interests of HRAI members.
For more information, contact Martin Luymes at 416-453-5899 or email mluymes@hrai.ca.
