To the Point for the Week of November 2, 2025

To the Point for the Week of November 2, 2025

It was all money matters in Ottawa this week as the federal government tabled its much-anticipated 2025 budget, laying out what it calls a “Generational Investment Framework.” It is an ambitious plan that aims to boost productivity, competitiveness, and housing supply through more than $280 billion in new investments. But as with most budgets, the headline optimism gives way to a more complicated picture once you dig in.

For businesses, developers, and policymakers, this budget will be defined by its implementation rather than its intent. The question is whether Ottawa can turn large-scale capital commitments into real economic results before the fiscal pressure catches up.

FEDERAL

The 2025 Federal Budget: The Good, the Bad, and the Ugly

The government deserves credit for finally drawing a line between short-term operating costs and long-term capital investments. The introduction of a Capital Budgeting Framework, which separates day-to-day spending from long-term infrastructure and productivity investments, marks a significant step forward in fiscal transparency and discipline.

At the core of this framework is a $280 billion investment package over five years. That includes $115 billion for infrastructure, $25 billion for housing, and $110  billion dedicated to productivity and competitiveness. The new $5 billion Strategic Response Fund will help industries adapt to tariffs and trade disruptions, while a $50 billion Local Infrastructure Fund promises a new pipeline of federally supported projects across the country.

For medium and large businesses, these programs represent meaningful opportunities. The combination of accelerated capital cost allowances, a two-point reduction in the corporate tax rate for manufacturing and clean tech, and a 15 per cent investment tax credit for advanced manufacturing provides incentives for firms to expand, modernize, and invest in domestic supply chains.

The budget also takes aim at workforce challenges. It allocates $450 million toward digital and skilled trades training, along with renewed funding for the Union Training Innovation Program. For industries facing chronic labour shortages, from construction to advanced manufacturing, these programs could help alleviate some immediate capacity pressures. Together, they reflect a government attempting to align spending with competitiveness rather than consumption.

Where the plan starts to fray is in the timeline. Most of the new spending will not fully take effect until after 2026, meaning the government’s economic ambitions depend on future budgets and potentially future governments following through. That delay raises obvious execution risks and limits the short-term stimulus effect.

Businesses also face uncertainty around procurement, permitting, and cost-sharing. Federal programs like the Local Infrastructure Fund depend heavily on provincial and municipal participation, but the rules for matching funds and project approvals remain unclear. The “Buy Canadian” procurement policy may further increase costs and delay project delivery, especially in sectors already grappling with supply chain pressures.

The budget also leans heavily on tax incentives to drive productivity, but the structural barriers to investment, including red tape, municipal permitting delays, and regulatory fragmentation, remain largely untouched. Without meaningful reform, even well-designed incentives will struggle to deliver the productivity gains the government is banking on.

Housing remains the government’s most visible vulnerability, and the response in this budget has done little to change that. The Ontario Home Builders’ Association (OHBA) called the plan a missed opportunity to unlock market-based housing supply, warning that the focus remains too narrow on social and subsidized projects.

While the Build Canada Homes initiative and the $25 billion housing allocation are intended to accelerate construction on federal lands, much of that spending will take years to deploy. The GST rebate for first-time buyers applies only to homes under $1.5 million, which covers less than five per cent of Ontario sales, and the government chose not to extend that rebate to all new housing. The OHBA estimates that expansion could have generated 53,000 new units and $1.8 billion in construction activity.

Perhaps most critically, there is no clear plan to reduce or reform municipal development charges despite earlier commitments to do so. These charges remain one of the biggest cost drivers for new housing, especially in high-growth regions. The absence of federal leadership or incentive mechanisms on this front risks undermining affordability gains and stalling private-sector construction.

The OHBA warns the consequences could be significant, with up to 40,000 construction jobs at risk and a weaker pipeline of housing starts across the province. Taken together, the housing measures feel more like an extension of existing policy rather than the reset many in the sector were hoping for.

Fiscal outlook adds another layer of concern. The federal deficit is projected to reach $78.3 billion in 2025, nearly double earlier forecasts, and remain above $56 billion through 2029-30. Public debt will exceed $1.6 trillion by 2030, while annual interest payments climb from $53 billion to $76 billion, making debt servicing one of the fastest-growing spending items in the budget. The growth forecast, meanwhile, has been revised down to roughly half of what was projected a year ago.

For medium and large businesses, the budget’s infrastructure and industrial spending creates short- and medium-term opportunities in contracting, manufacturing, and clean technology. Firms that align with Ottawa’s priorities in critical minerals, advanced manufacturing, and energy transition will benefit most. However, strict domestic-content rules and regulatory complexity could limit how far the benefits spread and slow project rollout.

For developers and construction firms, the picture is less optimistic. Without expanded GST relief or municipal fee reform, the cost environment remains challenging, particularly in Ontario and British Columbia. Build Canada Homes could help in targeted areas but risks overlapping with existing private-sector efforts rather than enabling them. Unless regulatory streamlining and cost-sharing mechanisms follow, federal housing targets will remain out of reach.

At a macro level, the economy stands to gain from infrastructure-driven investment but remains constrained by slow execution and rising borrowing costs. The federal strategy depends heavily on the assumption that private capital will follow government spending. If that fails to materialize, Canada could end up with higher debt and only modest growth to show for it.

Politically, the budget leaves the government exposed on multiple fronts. Fiscal conservatives will focus on the rising deficit and expanding debt load, while industry groups question whether Ottawa’s industrial policy approach risks picking winners and losers. Progressives, meanwhile, argue that the budget’s affordability measures are too incremental to make a visible difference in the short term.

The government’s challenge now is one of credibility. Canadians have heard promises of “generational investment” before. Delivering visible progress, especially on housing and job creation, will determine whether this plan restores confidence or reinforces skepticism.

For the business community, the message is clear: the opportunities are real, but the payoff depends on execution. Firms that align early with the government’s strategic priorities will be best positioned to benefit, while those in excluded sectors may find themselves navigating yet another cycle of uncertainty.

Economically, the stakes are high. The federal government is betting that targeted investment, fiscal restraint, and industrial coordination can pull the country out of its low-growth rut. Whether that bet pays off will depend less on how much Ottawa spends and more on how effectively it delivers.

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