Budget 2025 Analysis

Parliament building details

November 6 2025

Contents

Overview

As NUPGE’s submission to the pre-budget consultations made clear, what people needed was a budget that invested in workers and strong public services and action to reduce inequality. What the Liberal government delivered sounds like the budgets the Harper Conservatives produced in the early 2010s. New spending will disproportionately benefit the wealthy and large corporations while the rest of us deal with cuts.

Cuts to federal public services

The federal government is planning to cut 10% of its workforce. This will disproportionately affect workers who are women, Indigenous, racialized, and have disabilities. These cuts will affect more than just the people and communities losing jobs. Staffing cuts hurt the services public employees deliver to the public. $17.5 billion of the savings are supposed to come from “recalibrating” or “right-sizing” services—euphemisms for “cutting.”

The continued funding for Women and Gender Equality is a welcome change to the government’s tone, but women, 2SLGBTQIA+ people, people with disabilities, Indigenous, Black, and racialized people are the most likely to be impacted by the cuts to both jobs and services. For example, Employment and Social Development Canada administers projects to help people with disabilities find and maintain good jobs—programs that could be hurt by the 15% cuts the department is expected to make.

The federal government is also claiming that it will be using artificial intelligence (AI) and other technologies to save as much as $25.2 billion. But as anyone who has seen what happens when new systems are rushed into service to save money knows, that could have serious consequences. When systems that were supposed to require less staff don’t work, the remaining staff are overwhelmed. And people having problems getting EI, their CPP, or a passport want to deal with a person who can fix the problem, not a chatbot.

Health Care

This budget virtually ignores the public health care crisis. The 3% increase in the Canadian Health Transfer is below both the rate of inflation and the increases in health care costs, meaning this is effectively a cut in funding. And there is no mention of the top-ups for things like mental health and seniors care, suggesting that this funding will be allowed to expire—effectively cutting funding for health care. There is alsono additional funding for Pharmacare, leading to concerns about the future of the program.

While the health care worker shortages have reached crisis levels, there is nothing on dealing with the health care worker shortages in this budget. The federal government should be taking a lead on a pan-Canadian health human resource strategy. Instead, the best they can do is fast-tracking foreign credentials and increasing labour mobility. Both measures are good, but they’re a drop in the bucket compared to what is needed.

While the PSW tax credit will benefit hundreds of thousands of underpaid health care workers, it is insufficient. For a full-time worker, the maximum credit will only be a 50¢ wage increase—and it won’t count towards EI, CPP, other pension or benefits schemes. We now have a patchwork where some provinces have committed to increasing wages and workers in other provinces are receiving tax credits.

Health Care Infrastructure

There is a new Health Infrastructure Fund starting in 2026–27 at $5 billion over 3 years. It must be cost-matched, so there is a chance these funds will be unevenly distributed or underutilized. There is a high likelihood that much of this spending will be implemented as public-private partnerships, which will fuel the privatization of our health care system. And without action on the workforce crisis, who is going to be staffing those new hospitals?

Post-secondary education

Despite the crisis in post-secondary education (PSE), Budget 2025 is absent on education funding.

NUPGE has called for the federal government to take on a bigger role in funding public PSE, including through a dedicated Canada Education Transfer to ensure sustained long-term funding, in addition to emergency funding to prevent (and reverse) the layoffs and program freezes and cuts we have been seeing.

The budget highlights the importance of an educated and skilled workforce as key to Canada’s competitiveness, yet does not invest in public education and training to match. The focus is on funds for attracting international researchers and some funding for physical infrastructure at colleges and universities, but this does not meet the program or staffing needs—a theme in this budget. The cap on international students as part of the broader cuts to immigration levels is also concerning not only for the vibrancy of our communities, but also for the impact on the PSE sector.

Child care

Budget 2025 fails to allocate needed funds to expand the Canada-wide early learning and child care program. It is not enough to not cut the program—further investment is needed to increase access to public and non-profit child care spaces and to address worker shortages. While the budget maintains the funding levels previously committed to, it does not allocate additional funding that is so needed. The budget claims to improve affordability, but expanding universal public child care would be an important way to reduce the cost of living for many families, as well as contribute to a strong economy.

Climate

Budget 2025 represents a clear step back from climate action in favour of oil and gas production. The budget focuses on industry “competitiveness”, not investing in reducing emissions or adaptation to the climate crisis. There will be cuts to areas like public transit funding and programs to support energy efficiency in homes. The budget indicated that the oil and gas emissions cap could be abandoned and that the government will weaken rules to curb corporate greenwashing.

Supporting workers and communities as we decarbonize our economy is a vital part of climate action, and something the federal government has committed to. And yet, there is no mention of a Just Transition, despite the Canadian Sustainable Jobs Act that was passed last year and the Sustainable Jobs Action Plan due before the end of this year. 

Indigenous people

With the budget, the federal government will continue to fall short on the Calls to Action and Calls to Justice. Indigenous programs will face a total of 2.3 billion in cuts. There is no new funding for an Indigenous Housing Strategy, and no commitment to programs such as Jordan’s Principle and the Inuit Child First Initiative. The budget does outline renewed funding for the First Nations Water and Wastewater Enhanced Program to maintain progress on existing projects, but does not include funding to prevent or end the 36 existing long-term drinking water advisories. 

Explicit references to free, prior, and informed consent regarding the Building Canada Act (a first for this government) are welcomed to ensure Indigenous sovereignty. Building infrastructure in rural, remote, and northern communities without consultation and services needed to protect people will cause serious problems. The horrifying femicide along the highway of tears is an example of what could all too easily happen.

Privatization

There are two areas where measures proposed in the budget could lead to privatization. The first is plans to encourage private investment in infrastructure, including in areas that have traditionally been public. Canadians don’t want to pay higher user fees for at their community recreation centre or  at airports just so investors can make a profit. There is also a concern that making funding conditional on seeking private sector investment may lead to communities be forced to use P3 privatization schemes if they want to receive federal infrastructure funding.

Secondly, the federal government is proposing to save money by using AI to replace staff in the federal public service. In addition to concerns about the impact on service quality, there is the question of whether this will lead to privatization. While the government is planning to develop “a made-in-Canada AI tool”, it is far from clear if it will be public. And the use of private companies for other AI needs, along with the elimination of some procurement rules, leaves the door wide open to privatization and potential scandals.

Canada Disability Benefit

Budget 2025 recognizes that costs associated with applying for the Disability Tax Credit (DTC), which is\ mandatory to be eligible for the Canada Disability Benefit (CDB), can be prohibitive. However, the budgeted one-time supplemental CDB payment of $150 in respect of each DTC certification or re-certification falls short of meaningful assistance to many people with disabilities. Depending on the type of disability, a person’s DTC may expire after a certain number of years, and people with lifelong disabilities may be forced to apply for the DTC multiple times.

The commitment to bring in legislation to exempt the CDB from being treated as income under the Income Tax Act is positive, but the failure to increase it is not. The maximum amount paid by the CDB is $200 per month, which fails to lift people with disabilities out of poverty as defined by the government’s own Market Basket Measure. There is also no commitment to explore other ways to reduce barriers to the CDB, such as automatic enrolment for anyone who already receives provincial/territorial disability benefits.

Equity, Diversity, and Inclusion

The budget contains no mention of equity, diversity, and inclusion, or anti-racism, except for a lack of long-term funding for Inclusion, Diversity, Equity and Anti-Racism Secretariat, and Equity Diversity and Inclusion in Sport. As noted above, cuts to public service jobs and programs will exacerbate existing inequities.

Employment and Social Development Canada (ESDC) administers a number of projects to help people with disabilities find and maintain good jobs. There is a danger that the 15% cuts that ESDC is expected to make will impact these programs.

Young Workers

Budget 2025 recognizes the crisis in youth unemployment, which is the highest it’s been in over 20 years outside of a formal recession and the COVID-19 pandemic years. Continued support for programs that support young workers such as Canada Summer Jobs, Youth Employment and Skills Strategy, and the Student Work Placement Program are solid investments. The concept of the Youth Climate Corps is good in theory, but more details need to be released to make a concrete judgement on the program. How the federal government plans to administer these programs while cutting the department that delivers them remains to be seen.

Housing

Budget 2025 included the previously-announced $13 billion over 5 years in funding for the Build Canada Homes agency. The promise of support for some deeply affordable homes is welcome, but more information is still needed. The increase in the limit for Canada Mortgage Bonds should be positive, though how big an impact it will have isn’t clear. On the other hand, given the role property speculation has played in pushing up the cost of housing, it’s surprising to see the government ending the Underused Housing Tax.

Defence

The budget proposes increasing defence spending by $81.8 billion over 5 years. Some of the funding is for direct improvements to the military including increasing the pay of members of the Canadian Armed Forces, some of whom have been forced to use food banks. Other funding seems primarily directed at the corporate sector including $6.6 billion over 5 years for the defence industry.       

Tax Fairness

The budget lowers Canada’s marginal effective income tax rate on corporations from 15.6% to 13.2% with a collection of corporate tax credits packed as a “Productivity Super-Deduction.” This will cost Canadians $1.5 billion over the next 5 years. Also, two tax measures aimed at getting the wealthy to pay more were repealed.

While automatic tax filing for low-income Canadians (ensuring they get the benefits they’re eligible for) and plans to close two loopholes are positive, these measures are a drop in the bucket compared to what could have been done. One example that Canadians for Tax Fairness highlighted is a wealth tax on net worths over $10 million which would have raised $37 billion that is desperately needed to improve services like health care or education.

Shell game ignores importance of spending on services

Claiming tax breaks for large corporations are capital spending looks like a shell game

In this budget, the federal government is trying to treat capital spending as an investment in the future and operational spending as something that produces no lasting benefit and needs to be reduced. One problem with this approach is that operational spending makes a huge contribution to Canada’s long-term wellbeing. From college instructors providing in-class training for the tradespeople of tomorrow to the wildland firefighters who stop our communities from burning down, we depend on the services funded through operating spending. There is no point in having shiny new hospitals if there is no money to staff them.

A second problem is the announcement that much of the money going to large corporations, including tax cuts, will be treated as capital spending. Even a corporate think tank like the C.D. Howe Institute has described this as misleading. Normally governments only count items as capital spending if they will own the asset being built. To label funds that are helping corporations increase their assets as capital spending looks like an attempt to distract people from the fact that, at the same time they’re being asked to make sacrifices, large corporations aren’t.