Budget 2025: Canada Strong

The big picture: context for today’s budget

Today’s budget, the first in 18 months, comes after a year of major political upheaval that saw the election of a new Prime Minister with a far-reaching agenda for new directions and an unprecedented set of economic challenges initiated by Canada’s largest trading partner. If today’s budget has an overriding narrative theme, it is the urgent need to diversify Canada’s economic and security relationships away from the country’s traditional dependence on the United States. The Trump tariff onslaught on Canada is inflicting significant and lasting damage to several key sectors. It has also shaken the underpinnings of our economy and destroyed the 36-year-old consensus on North American free trade.

Together, these developments have defined the contents and directions of today’s budget.

In preparing Budget 2025, Finance Minister Francois-Philippe Champagne started with the Carney Government’s new fiscal approach which is based on three pillars:

• Changing the composition of federal spending to shift it away from operational expenses and transfers to investments in productivity. Today’s budget divides the federal budget into two new categories – operating costs and capital investments. Using this approach, borrowing becomes a lever for future capacity and improved productivity, as opposed to a tool to support current consumption.
• Reducing the operating costs of the federal government by 15% over the next three years and balancing the operating budget by 2028, to free up the resources for the “generational investments” necessary to diversify the economy. Under the previous Trudeau government, federal operating expenses grew by a total of 89% between 2015 and 2024.
• While the Liberals committed to “capping” the size of the federal public service during the April election campaign, the finance minister’s tone shifted more to workforce adjustments, and getting the size of the public service down to near pre-COVID levels.

To begin these transitions, after reviewing their departmental spending over the past summer, ministers proposed spending cuts aimed at reaching the first 7.5% of the government’s three-year 15% reduction target. They also conducted a cross-departmental review of regulations to cut red tape and speed up decision-making.

After Trump levied 25% tariffs on auto imports from Canada in April, Mark Carney warned, “The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over.” More recently, he said that “our former strengths, based on close ties to America, have become our vulnerabilities.” In a pre-budget speech in Ottawa, Carney set a goal for Canada to double its non-U.S. exports to other countries in the next decade. Since becoming Prime Minister, he has spent significant time outside Canada personally building more diverse trade, security and defence partnerships with NATO and its members, the European Union, India and Asia-Pacific countries.

A hit…or a miss?

Most budgets are relatively straightforward with their probable impact being relatively easy to assess. They tend to be incremental in scope, gradually implementing the government’s political agenda over the length of its mandate. And though there are always pressures – internal and external – to be addressed, the budgetary response is seldom dramatic or transformative. Virtually all budgets over the past 30 years have operated this way without the underpinnings of grand unified economic field theory.

The government has said budget 2025 is different.

It is ambitious in aspiration, focused on rebuilding domestic capacity and reducing Canada’s reliance on what continues to be a malevolent US mercantilist approach to trade and economic dominance.  It appears to reflect the PM’s consistently (and perhaps overly) complex analysis of Canada’s economic and fiscal vulnerabilities. Since his election, the PM has worked at installing a new broad vision to cope with the changing geopolitical landscape. In doing so, his budget borrows heavily to fund his agenda, blows past previous guardrails, (and institutes new ones with the obvious credibility problem), downgrades or discards many of the Trudeau era priorities, and reallocates billions of dollars of current spending that support a myriad of programs and the jobs of thousands of public servants. “Reducing spending to increase investment” is this government’s communications phrase to try to give simple reallocation a higher standing and purpose.

As has become the new norm, virtually every aspect of this budget was leaked or announced beforehand. The purpose was to give profile to individual initiatives, respond to the urgency stakeholders have set for those initiatives and build a common narrative based on the proof points they represent.

Today’s budget brings together the measures designed to support the overall framing of the re-allocation efforts while spending billions on supports, subsidies and programs designed to kickstart the transformation of the Canadian economy while mitigating some of the damage caused by the likely illegal US tariffs.

Is it a generational change as touted by the government? Initial reaction says no. It is not clear that the sharp increase in the deficit is buying transformational change. And the aggregation of spending initiatives over the five year horizon of the budget and the blending of old and new spending distort what the actual intervention means.

It is difficult to assess the collective impact today’s measures will have because of the long lead times some of them carry. In general, they are in line with many mainstream economists who think the economy needs this sort of intervention and who are untroubled by the growing deficit. Similarly, many business leaders and premiers have been calling for versions of these measures. Tax changes will likely win some business approval.

But there is another side to the coin. Media will likely focus strongly on the size of the deficit, raising it to a newsworthy controversy (although public opinion tends to be indifferent on the issue). Perhaps more important is the misalignment of timetables echoing the old phrase “short term pain for long term gain”. The cuts to jobs and federal programs (most of which will have their vociferous constituencies) will happen very quickly as will the increases in deficit and debt. Most of the restructuring initiatives will take longer as will some of the mitigation policies. And some of the new spending like increases in the military budget, while seen as necessary, have no real populist appeal. The dramatic cuts to immigration levels for temporary residents (workers and students) may have disproportionate impact among those who need temporary workers and post secondary institutions who need the tuition fees.

It is too early to assess which set of third parties who generally lead public approval or rejection will win the battle of the framing. Or put another way, is there anything likely to galvanize negative reaction and opposition enough to affect overall acceptance of the budget? Conversely, is there anything in the budget to attract progressive parties and voters? Historically, the reaction of opposition political parties is discounted unless it coalesces into a serious attempt to vote down the budget. It will take time to see whether any of the program cuts lead to significant public and third-party opposition. If so, they don’t have much time to build momentum for rejection — the final and critical budget vote is 13 days away.

The Carney government is banking on its ability to induce some abstentions among the opposition parties to get the budget passed and win enough time to highlight some positive impacts of the budget.

This budget will represent the first big test of the Carney government. It has chosen a difficult path to follow, and it is not clear that its preconditioning has been successful in convincing Canadians of the need for significant sacrifice given the reduced anxiety (warranted or not) over tariffs. However, passing the budget motion and beginning the complex process of implementation will likely solidify support for the government unless it has miscalculated the importance of some of the programs it has cut.

Internally, this has proven to be a very difficult exercise. Most players in the budget process have had little experience with the development of budgets and decisions came very late or contradicted earlier ones. Some departments and their leaders including ministers dragged their feet or resisted the cuts. There will be a price to pay for that which will become evident in likely shuffles of ministers and deputy ministers. Nevertheless, it has made it clear that the center (PMO and PCO) is fully in charge and willing to take on risk to implement its program.

Should the budget pass, it may well turn out to be the first stage of a two-stage process – much like happened in 1994 and 1995 when the second budget led to massive spending and job cuts. Interestingly, the size of the job cuts falls short of the 1995 precedent which eliminated 50,000 jobs and protects social programs in a way the 1995 budget did not.

Fiscal guardrails and targets

Fiscal guardrails are a set of benchmarks and targets designed to guide federal fiscal policy and serve as a roadmap for managing government spending, deficits, and debt. The current fiscal guardrails date from the November 2023 Fall Economic Statement (FES) and governed the fiscal forecast in Budget 2024:

• Maintaining the 2023-24 deficit at or below the Budget 2023 projection of $40.1 billion.
• Lowering the debt-to-GDP ratio in 2024-25, relative to the 2023 FES and keeping it on a declining track thereafter.
• Maintaining a declining deficit-to-GDP ratio in 2024-25 and keeping deficits below 1% of GDP in 2026-27 and future years.

Today’s budget resets the fiscal guardrails to match the revised numbers for deficits and rests on two fiscal anchors:

• Balancing day-to-day operating spending with revenues by 2028-29, shifting spending toward investments that grow the economy.
• Maintaining a declining deficit-to-GDP ratio to ensure disciplined fiscal management for future generations.

In addition to these anchors, Budget 2025 enables $1 trillion in total investment over the next five years through public spending and capital investment.

The key numbers

Chrystia Freeland’s Budget 2024 forecast a deficit of $38.9 billion for the 2024-25 fiscal year and this number was updated to $42.2 billion in last December’s Fall Economic Statement. Going into today’s budget, it was clear that these deficit numbers would be surpassed, after the Liberal election platform added new spending totaling $62.3 billion, the Prime Minister promised to reach the NATO spending target of defence spending equal to 2% of GDP and the government pre-announced several additional costly items ahead of today’s budget.

Today’s budget forecasts that the deficit for the current fiscal year will be $78.3 billion. It’s projected to decrease to:

• $65.4 billion in 2026-2027
• $63.5 billion in 2027-2028
• $57.9 billion in 2028-2029
• $56.6 billion in 2029-2030

The budget also states that by 2028-2029, the deficit will entirely support investments that grow the economy.

The federal debt is expected to be 42.4 per cent of GDP in 2025-2026, 43.1 per cent in 2026-2027, 43.3 per cent in 2027-2028, 43.3 per cent in 2028-2029, and 43.1 per cent in 2029-2030.

The deficit-to-GDP ratio is expected to be 2.5 per cent in 2025-2026 falling to 1.5 per cent of GDP by 2029-2030.

Reflecting the shift in US trade policy, the outlook for GDP growth has been significantly downgraded since the 2024 Fall Economic Statement. The Budget projects real GDP growth of 1.1 per cent in 2025, 1.2 per cent in 2026, 2.0 per cent in 2027, 1.9 per cent in 2028, and 2.0 per cent in 2029.

Two additional highlights of today’s budget:

• The unemployment rate is expected to average 7.0 per cent in 2025 – and is expected to remain elevated, gradually declining to 6.0 per cent in 2029.
• Inflation is projected to average 2.1 per cent in 2025 and come down to 2.0 per cent in 2026 – and remain there until 2029.

Initial reactions from the opposition parties

Initial reactions from the parties were mixed. Opposition Leader Pierre Poilievre said in the House, “We Conservatives cannot support this costly Liberal budget. Bloc Quebecois Leader Yves-François Blanchet signaled his party is leaning towards voting against the budget, calling it a “red-Conservative”, Harper-like budget that contains nothing for Quebecers. Interim NDP Leader Don Davies said “New Democrats will take the time to study the budget and talk to Canadians. We will have more to say in the coming days.”

Next steps: the budget debate and votes

When the Minister of Finance rose in the House of Commons to present his budget speech today, he began by moving a motion approving the government’s budget policy.

After the Minister of Finance finished speaking today, there was a brief response by the Leader of the Opposition, who then adjourned the debate, which will be resumed tomorrow, November 5.

The House of Commons sitting calendar means there will be debate days on November 5, 6, 7 and 17 (the House is off the week of November 10 due to Remembrance Day):

The budget debate unfolds as follows:

• During the debate on November 5, the Leader of the Opposition will table an amendment to the Minister of Finance’s motion.
• The next speaker will be the leader of the Bloc Quebecois, who will table a sub-amendment to the motion previously tabled by the Leader of the Opposition.
• At the end of the day’s debate on November 6, a vote will be held on the Bloc sub-amendment.
• At the end of the day’s debate on November 7, a vote will be held on the Leader of the Opposition’s amendment.
• On November 17, the final vote will be held on the main motion tabled by the Minister of Finance.

New measures announced prior to the budget

As it did in advance of Budget 2024, the Prime Minister and ministers have pre-released several significant initiatives in advance of today’s tabling of the document:

Canada will meet the NATO benchmark target of spending 2% of national GDP on defence by March 2026

• Commitment by the Prime Minister and includes $9.3B in new current year spending includes military recruitment, pay increases for personnel.

Federal affordability package

• CRA will automatically file the taxes of 5.5 million low-income Canadians to ensure they receive government benefits, make the National School Food Program permanent to provide meals for up to 400,000 children, and renew the Canada Strong Pass for the holidays and for summer 2026: 25% discount on VIA Rail for young adults aged 18 to 24. Also allows Canadians to visit national, provincial, and territorial museums, historic sites, parks, and travel by rail for free or at a reduced cost.

Gender equity and equality

• Ongoing funding of $660.5 million over five years for the Department for Women and Gender Equality to ensure sustained progress toward equality and safety for women, girls, and 2SLGBTQI+ people.

Measures to “protect, build, and transform” Canadian strategic industries

• A new reskilling package for up to 50,000 workers, making Employment Insurance more flexible and with extended benefits, and launch a new digital jobs and training platform.
• $5 billion for a new Strategic Response Fund to help firms in all sectors impacted by tariffs adapt, diversify and grow.
• Immediate liquidity relief to provide loans for SMEs up to $5 million, provide more flexible financing through the Large Enterprise Tariff Loan Facility
• $370 million support package for canola and agriculture producers.
• $1 billion Regional Tariff Response Initiative.

Ottawa and Ontario to spend $3 billion on mini nuclear power plant

• As one of the first “nation-building projects”, four small modular reactors (SMRs) will be built next to the Darlington Nuclear Station.

Notable measures announced in the budget

Comprehensive expenditure review

• The review will achieve savings of $9 billion in 2026-27, $10 billion in 2027-28 and $13 billion in 2028-29. Combined with other savings and revenues in Budget 2025, this will total $60 billion over five years, starting in 2025-26.
  • Modernizing government operations: $25.2 billion over four years.
  • Streamlining program delivery: $1.5 billion over four years.
  • Recalibrating government programs to deliver the ‘greatest impact’” $17.5 billion over four years.

The public service

Over the past ten years, Canada’s federal public service has seen significant growth, increasing by approximately 40% from about 257,000 employees in 2015 to nearly 368,000 in 2025, a rate that has outpaced population growth. In advance of the budget, Finance Minister Champagne said the size of the public service must become more “sustainable” and said the budget would include “workforce adjustments”, which suggests downsizing as opposed to capping the number of public servants.

Today’s budget announces a plan to return the size of the public service to a more sustainable level, with an estimated reduction of 16,000 full-time equivalents, or roughly 4.5 per cent of the workforce as of March 2025.

• Of these reductions, some 650 will be executive positions, representing about 7 per cent of the executive population.
• These reductions will continue the trend towards a more sustainable public service size of roughly 330,000 by 2028-29, a decline of about 40,000 or 10 per cent from the 2023-24 peak.
• The government will reduce the executive group in the public service by 1,000 positions overall over the next two years

Strengthening industrial carbon pricing

• The government noted outright in the Budget that “Carbon markets are not functioning as well as they should be.”, therefore the government will improve the effectiveness of carbon markets to provide confidence that credit prices will be predictable and sufficient to support clean growth investments without adversely affecting competitiveness or leading to carbon leakage. They will do so through the following actions:
  • Develop a post-2030 carbon pricing trajectory: The government will engage provincial and territorial (PT) governments in setting a multi-decade industrial carbon price trajectory that targets net-zero by 2050.
• Fix the benchmark and improve the backstop: The government will improve its application of the benchmark—the tool that ensures all PT industrial pricing systems are harmonised across the country in providing a common, strong price signal.
• Carbon contracts for difference: The Canada Growth Fund will continue to issue contracts as a means of further improving future carbon price certainty for investors making large, long-duration capital investments.

Clarity on GHG regulations

• Electricity: The Clean Electricity Regulations will aim to reduce emissions to protect the environment and human health from the threat of climate change. The government will work with provinces and territories to advance these goals and ensure that Canada’s grid is clean as electricity demand grows.
• Methane: Finalize enhanced methane regulations for the oil and gas sector and landfills and intends to work with provinces and territories to negotiate equivalency agreements as appropriate.
• Update on the oil and gas emissions cap: Effective carbon markets, enhanced oil and gas methane regulations, and the deployment at scale of technologies such as carbon capture and storage would create the circumstances whereby the oil and gas emissions cap would no longer be required as it would have marginal value in reducing emissions.
• Electric vehicles: In September, the government announced its intent to make targeted regulatory adjustments, which included the initial step of removing the 2026 target from the Electric Vehicle Availability Standard and launching a 60- day review of the overall regulation. Following this review, the government will announce next steps on electric vehicles in the coming weeks.
• Clean fuel: Targeted updates to the Clean Fuel Regulations will help reduce reliance on imported fuels, strengthen domestic supply chains, and support jobs in agriculture, forestry, and waste sectors.

Investment tax credits

• The government will introduce legislation shortly to deliver the Clean Electricity investment tax credit and enhancements to the investment tax credits that have already been implemented.
• Confirms the government’s intention to proceed with the implementation of the Clean Electricity investment tax credit and proposes to remove the conditions imposed on provincial and territorial governments for their Crown corporations to be eligible.
• Extend, by five years, the availability of the full credit rates for the Carbon Capture, Utilization, and Storage (CCUS) investment tax credit, that would apply from 2031 to 2035. Credit rates would remain unchanged from 2036 to 2040.
• Expand the list of critical minerals eligible for the Clean Technology Manufacturing investment tax credit to include antimony, indium, gallium, germanium, and scandium, in order to support investments in the extraction, processing, and recycling of co-product and by-product critical minerals.
• The government will also consult on the possibility of introducing a domestic content requirement under the Clean Technology and Clean Electricity investment tax credits.

Critical minerals

• $2 billion over five years, on a cash basis, starting in 2026-27, to Natural Resources Canada to create the Critical Minerals Sovereign Fund.
• $371.8 million over four years, starting in 2026-27, to Natural Resources Canada to create the First and Last Mile Fund, which will absorb the Critical Minerals Infrastructure Fund and leverage its existing funding envelope to provide up to $1.5 billion in support through 2029-30.
• Expand eligibility for the Critical Mineral Exploration Tax Credit (CMETC) to include an additional 12 critical minerals necessary for defence, semiconductors, energy, and clean technologies: bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten.

Trade and trade diversification

• $5.0 billion over seven years, starting in 2025-26, to Transport Canada to create the Trade Diversification Corridors Fund.
• EDC will increase its total business facilitated by $25 billion by 2030.
• The new goal to double non-U.S. exports over the next decade.
• The Intention for EDC to launch a $2 billion concessional trade finance envelope, on a cash basis, to 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.

Infrastructure investments

• Planned federal infrastructure investments are expected to reach $115.2 billion over the next five years.
• Launch a new Build Communities Strong Fund, to be administered by Housing, Infrastructure and Communities Canada, with funding of $51.0 billion over 10 years, starting in 2026-27, and $3.0 billion per year ongoing in new and existing funding for this initiative, including through funding to provincial and territorial governments—and through them to municipalities.
• The fund will have three streams:
  • A Provincial and Territorial Stream that will provide $17.2 billion over 10 years, starting in 2026-27, to support provincial and territorial infrastructure projects and priorities.
    • Of this, $5 billion over three years, starting in 2026-27, will be dedicated for a Health Infrastructure Fund.
  • A Direct Delivery Stream, delivered by Housing, Infrastructure and Communities Canada.
    • $6 billion over 10 years, starting in 2026-27, to support regionally significant projects, large building retrofits, climate adaptation, and community infrastructure
  • Community Stream: Currently known as the Canada Community-Building Fund and will be rebranded.
    • $27.8 billion over 10 years, starting in 2026-27, and $3.0 billion per year ongoing.
• Arctic Infrastructure Fund: $1 billion over four years, to Transport Canada. starting in 2025-26. 

Defence

• $81.8 billion over five years on a cash basis, starting in 2025-26, to rebuild, rearm, and reinvest in the Canadian Armed Forces (CAF), includes over $9 billion in 2025-26 that was announced by the Prime Minister in June 2025.

The Defence Industrial Strategy:

• $6.6 billion over five years, starting in 2025-26, to strengthen Canada’s defence industry through a Defence Industrial Strategy.
• Of the $6.6 billion noted above, the government is already allocating $4.6 billion over five years on a cash basis, starting in 2025-26.

Key initial investments include:

• $68.2 million over three years, starting in 2025-26, to the Department of National Defence (DND), Innovation, Science and Economic Development Canada (ISED), the National Research Council (NRC), and the Communications Security Establishment to establish the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS).
• $1.0 billion in 2025-26 to create a new Defence and Security Business Mobilization Program at the Business Development Bank of Canada.
• $656.9 million over five years, starting 2025-26, to ISED to develop and commercialise dual civilian-military technologies in a range of industries, including aerospace, automotive, marine, cybersecurity, artificial intelligence, biodefence, and life sciences.
• $334.3 million over five years, starting in 2025-26, to ISED, NRC and the National Science and Engineering Research Council for a suite of measures to help anchor quantum technology companies in Canada and provide pathways to technology adoption in defence-related applications and industries.
• $443.0 million over five years, starting in 2025-26, to Natural Resources Canada and ISED to support the development of innovative critical minerals processing technologies.
• $182.6 million over three years, starting 2025-26, to DND to establish a sovereign space launch capability.
• The budget also set out the mandate of the Defence Investment Agency.

Public safety and border security

• $2.7 billion over nine years, starting in 2025-26, with $57.4 million in remaining amortisation, to replace the MSC’s High-Performance Computing solution, put in place back-up systems in a separate location, and modernise the HPC operations.
• $55.4 million over four years, starting in 2026-27 and $13.4 million ongoing to Public Safety Canada to support a new National Public Alerting System model.
• $257.6 million over four years, starting in 2026-27, to Natural Resources Canada to lease four aircraft to bolster provincial and territorial aerial firefighting capacity.

Employment and social policy

• $594.7 million over two years, starting in 2026-27, to Employment and Social Development Canada 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.
• $635.2 million over three years, starting in 2026-27, to Employment and Social Development Canada for the Student Work Placement Program.

Immigration

• 2026-2028 Immigration Levels Plan will stabilize permanent resident admission targets at 380,000 per year for three years, down from 395,000 in 2025, while increasing the share of economic migrants from 59% to 64%.
• The new plan will also reduce the target for new temporary resident admissions from 673,650 in 2025 to 385,000 in 2026, and 370,000 in 2027 and 2028.
• Temporary Foreign Workers: the 2026-2028 Immigration Levels Plan will consider industries and sectors impacted by tariffs and the unique needs of rural and remote communities.
• The fiscal cost of this measure is $168.2 million over four years, starting in 2026-27, and $35.7 million ongoing.

Housing

• Increase the Canada Mortgage Bond (CMB) annual issuance limit from $60 billion to $80 billion. The increase will apply exclusively to multi-unit housing.

Investments in Indigenous and First Nations’ communities & businesses

• $2.3 billion over three years, starting in 2026-27, to renew the First Nations Water and Wastewater Enhanced Program.
• The government is also increasing the Canada Infrastructure Bank’s target for investments in Indigenous infrastructure that benefit First Nations, Inuit, and Métis communities from at least $1 billion to at least $3 billion across its priority sectors.

Industrial tax policy

• The government unveiled a new Productivity Super-Deduction—a set of enhanced tax incentives covering all new capital investment that allows businesses to write off a larger share of the cost of these investments right away.
• It will also introduce immediate expensing for manufacturing or processing buildings that are acquired on or after Budget Day and that are used for manufacturing or processing before 2030. This measure would be phased out over a four-year period between 2030 and 2033.
• Proposes reinstating accelerated Capital Cost Allowances for LNG equipment and related buildings, but only for low-carbon LNG facilities:
• Reinstatement of the Accelerated Investment Incentive, which provides an enhanced first-year write-off for most capital assets.
  • Immediate expensing (i.e., 100-per-cent first-year write-off) of manufacturing or processing machinery and equipment.
  • Immediate expensing of clean energy generation and energy conservation equipment, and zero-emission vehicles.
  • Immediate expensing of productivity-enhancing assets, including patents, data network infrastructure, and computers.
  • Immediate expensing of capital expenditures for scientific research and experimental development.

Major projects

• $213.8 million over five years, starting in 2025-26, for the Major Projects Office. Funding will also support the Indigenous Advisory Council. Of this amount, $19.8 million will be sourced from existing departmental resources.
• Intention to amend the Canada Infrastructure Bank Act to increase the Canada Infrastructure Bank’s statutory capital envelope from $35 billion to $45 billion and to enable the Canada Infrastructure Bank to make investments in any nation-building projects that have been referred to the Major Projects Office, regardless of sector or asset class, as long as they fall within the Bank’s legal mandate.

Financial institutions

• Government will review fees charged by banks and other federally regulated financial institutions including Interac e-Transfer fees and ATM fees.
• Budget 2025 proposes to introduce a voluntary Code of Conduct for the Prevention of Economic Abuse for federally regulated banks.
• Intention to develop a whole-of-government National Anti-Fraud Strategy.
• Announces the government’s intention to amend the Bank Act and make relevant regulations to:
  • Require banks to have policies and procedures to address consumer targeted fraud.
  • Allow consumers to adjust maximum transaction amounts, and require banks to obtain the express consent of consumers to enable certain account features and permit consumers to disable features they do not need, with these features to be prescribed in regulation.
  • Require banks to report data on consumer-targeted fraud to the Financial Consumer Agency of Canada, with the specific data points to be prescribed in regulation.
• Amending the PCMLTFA and its regulations to address the most prevalent forms of cash-based money laundering by restricting: large cash transactions of $10,000 or more; and the depositing of cash by one person to another person’s account.
• Budget 2025 announces the government’s intention to propose legislative amendments to the Bank Act to enable the review of certain types of investments in Canadian businesses by foreign banks and their affiliates for national security risks.
• Financial Institution Competitiveness
• Unlocking Capital: Budget 2025 proposes to catalyse investment by insurers and financial institutions by repealing the limits on borrowing and portfolio investments in the financial institutions statutes and replacing them with more flexible guidance from the OSFI.
• Budget 2025 proposes to amend the Bank Act and the Canada Deposit Insurance Corporation Act to make it easier for federal credit unions to achieve scale and for provincial credit unions to enter the federal framework.
• Commitment to advancing open banking by introducing legislation to complete the Consumer-Driven Banking Act, and provide a data-mobility right in the Personal Information Protection and Electronic Documents Act to facilitate economy-wide data sharing.
• Intention to delegate oversight of the Consumer-Driven Banking Act to the Bank of Canada, building on its oversight activities of payment service providers.
• Intention to introduce legislation to regulate the issuance of fiat-backed stablecoins in Canada.
• Budget 2025 announces that the government intends to amend the Canada Labour Code to restrict the use of non-compete agreements in employment contracts for federally regulated businesses. The government will launch consultations on proposed legislative changes in early 2026.

Science and innovation

• The government is proceeding with the following previously proposed enhancements to the SR&ED program:
  • Increasing the prior-year taxable capital phase-out thresholds for the SR&ED program’s enhanced 35-per-cent tax credit.
  • Increasing the annual expenditure limit on which the enhanced credit can be earned, from $3 million to $4.5 million.
  • Extending the enhanced credit to eligible Canadian public corporations.
  • Restoring the eligibility of SR&ED capital expenditures.
  • Budget 2025 also proposes to further increase the annual expenditure limit on which the SR&ED program’s enhanced credit can be earned from $4.5 million (as previously announced) to $6 million, effective for taxation years that begin on or after December 16, 2024.
  • To improve predictability and streamline administration of the program, the government intends to direct the CRA to:
    • Implement an elective pre-claim approval process to provide businesses with an up-front technical approval of their eligible SR&ED projects, before businesses undertake any work or incur costs.
    • Increase the use of artificial intelligence in the program’s administration, which will enable the CRA to avoid subjecting low risk claims to unnecessary audit interventions, allowing them to be processed faster.
    • Streamline the review process by eliminating unnecessary steps and reducing burdensome information requirements that can delay the final determination of claims.
  • The CRA intends to engage in targeted consultations to further improve the administration of the SR&ED program, including by reviewing the SR&ED claim form.
• The International Talent Attraction Strategy and Action Plan proposes to provide $1 billion over 13 years, starting in 2025-26, to the Natural Sciences and Engineering Research Council, Social Sciences and Humanities Research Council, and Canadian Institutes of Health Research to launch an accelerated research Chairs initiative to recruit exceptional international researchers to Canadian universities.

Artificial Intelligence

• $925.6 million over five years, starting in 2025-26, to support a large-scale sovereign public AI infrastructure that will boost AI compute availability and support access to sovereign AI compute capacity for public and private research.
• Intention to enable the Canada Infrastructure Bank to invest in AI infrastructure projects.

Health

• Intention for the Minister of Health and the Minister of National Defence, in collaboration with the Minister of Indigenous Services and the Minister of Northern Affairs and Arctic Affairs, to undertake a comprehensive assessment of health care and health infrastructure needs in the North.
• As noted above, as part of the Build Communities Strong Fund, $5 billion over three years, starting in 2026-27, will be dedicated for a Health Infrastructure Fund.