2025 Federal Budget

On November 4, the Government of Canada released its 2025 Federal Budget. The following is a summary of highlights from the perspective of Ontario’s business community, organized according to the OCC’s four economic imperatives to drive inclusive, sustainable prosperity.

Business Competitiveness and Trade

Driving Productivity, Innovation and Scale

Budget 2025 proposes more than $110 billion in productivity-enhancing investments over the next five years. Notably, a Productivity Super-Deduction will enable businesses to write off a larger share of new capital investments when filing their taxes. The government suggests this investment will reduce the marginal effective tax rate by more than 2 per cent, positioning Canada well below the OECD average. These measures are expected to generate about $9 billion in economic output annually over the next ten years.

Budget 2025 reaffirms the government’s commitment to enhancing the Scientific Research and Experimental Development (SR&ED) tax incentive program through an increase in the enhanced rate expenditure limit alongside improvements to administrative processes. Together with $750 million earmarked to support Canadian firms facing early growth-stage funding gaps, Budget 2025 outlines a plan to enable entrepreneurs to launch and scale high-impact companies.

OCC Analysis:

Considering structural challenges impeding growth, the OCC welcomes measures to accelerate private investment in productivity-enhancing assets, encourage greater R&D, and help high-impact firms grow. These measures will lower the after-tax cost of capital for Ontario businesses, supporting greater investment and scale. Improvements to the SR&ED program will provide businesses with greater certainty and speed when making R&D decisions. Despite these promising steps to directly stimulate business investment and improve productivity, greater focus on corporate tax reform is needed to identify opportunities for simplification and to reduce administrative burden, particularly for SMEs.

Charting a Path to Net-Zero

Budget 2025 announces a Climate Competitiveness Strategy affirming a transition to net-zero by 2050. This includes continued delivery of, and enhancements to, the government’s clean economic investment tax credits. Notably, the Budget will extend the availability of the Carbon Capture, Utilization, and Storage (CCUS) investment tax credit. Collectively, these credits are intended to spur investment in net-zero energy projects. To support implementation, the government will communicate new metrics that will help businesses understand how they are reducing their carbon footprint, how the clean economy is growing, and how exports are tracking.

Budget 2025 further reaffirms the commitment to develop sustainable investment guidelines (also known as a taxonomy) by the end of 2026. This voluntary tool will help investors better identify “green” and “transition” investments, supported by a new Sustainable Bond Framework. This will be balanced by adjustments to anti-greenwashing provisions under the Competition Act, which have stifled reporting and corporate ambition. 

The government also announced clarity on greenhouse gas regulations, noting the importance of industrial carbon pricing in reducing emissions, while committing to improving the effectiveness of carbon markets. To that end, Budget 2025 commits to setting a multi-decade industrial carbon pricing trajectory and to continue leveraging tools like carbon contracts for difference.

OCC Analysis:

The OCC shares the view that climate action is an economic necessity, welcoming renewed commitment to a suite of predictable investment tax credits to make Canada a global leader in clean technology and clean energy. We commend the willingness to work with provinces to set a long-term strategy for carbon pricing and greater regulatory alignment (including on trading credits country-wide) – an essential condition for longer-term regulatory stability and attracting investment through a credit system.

International and Internal Trade

Budget 2025 recognizes the economic impacts stemming from a shift in our traditional trading relationships. Included are a suite of supports to help businesses navigate trade pressures and diversify their operations, such as $5 billion for the Strategic Response Fund to preserve industrial capacity through retooling, expansion, and new market access, and the introduction of the One Canadian Economy Act enabling a more integrated domestic market. The Regional Tariff Response Initiative intends to support businesses affected by tariffs across all sectors, alongside specific sectoral supports earmarked for agriculture, fish, seafood, steel, and forestry, among others.

OCC Analysis:

The OCC recognizes the impact of new tariffs and trade uncertainty on business confidence, exports, and their contribution to a broader slowdown in economic activity. We welcome ongoing commitment to the targeted supports required to preserve Ontario’s industrial capacity and to shield our businesses from the immediate impact of US trade policies.

Advancing Canada’s AI Leadership

Budget 2025 commits $925.6 million over five years to establish large-scale sovereign public AI infrastructure, expanding access to compute capacity for public and private research. Of this amount, $800 million reflects previously announced funding. The Budget also provides $25 million over six years for the new Artificial Intelligence and Technology Measurement Program (TechStat) to assess AI use and its societal impact.

To strengthen Canada’s innovation and intellectual-property ecosystem, the government will invest $334.3 million in the quantum sector through the Defence Industrial Strategy, alongside $84.4 million over four years to extend Elevate IP, $75 million over three years for the IP Assist Program, and $22.5 million over three years to renew the Innovation Asset Collective’s Patent Collective.

Budget 2025 also mandates the Minister of Artificial Intelligence and Digital Innovation to engage with industry on new AI infrastructure projects and sign memorandums of understanding (MOUs), while enabling the Canada Infrastructure Bank to invest in AI-related initiatives. These actions, led by the Office of Digital Transformation and supported by Shared Services Canada, aim to scale home-grown AI solutions and strengthen Canada’s global leadership in trusted, sovereign AI.

OCC Analysis:

Budget 2025 signals progress in public-sector digital transformation through the new Office of Digital Transformation, advancing technology adoption and measurement within government. The OCC welcomes these investments and the introduction of TechStat, a structured framework to assess AI use and societal impact. However, the Budget includes no new funding for SME adoption supports, AI-focused upskilling, or cross-sector partnerships to strengthen responsible talent development and broader public adoption. SMEs remain the backbone of Canada’s economy and require targeted investments in digital infrastructure, skills, and capacity to fully leverage AI.

The OCC also welcomes federal commitments to sovereign data centres, Canada’s quantum ecosystem, and continued funding for IP programming that scales homegrown innovation. Yet, these investments must embed a ‘Buy Canadian’ strategy that prioritizes domestic AI firms in public procurement and be complemented by tax incentives, workforce training, and partnerships to translate infrastructure investments into widespread adoption. While these measures fit within a broader federal strategy, stronger integration between AI infrastructure and commercialization efforts will be critical to realizing Canada’s innovation and competitiveness potential.

Qualified People, Diverse Talent

Immigration and Talent Attraction

Budget 2025 announces an Immigration Levels Plan with admission targets at 380,000 per year for three years and an increased share of economic migrants (64 per cent of total). The budget also cuts temporary resident admissions by almost half by 2026 (from 673,650 to 385,000) while taking into account industries impacted by tariffs and the unique needs of rural and remote communities. The budget further prioritizes the transition of 33,000 work permit holders to permanent residency which will cost about $19.4 million over four years (in part offset by fee revenues) for processing.

Budget 2025 commits $1.7 billion toward new recruitment and talent mobility measures, including a $1 billion over 13 years for an accelerated Research Chairs initiative. Through Canada’s three granting councils, the initiative will help Canada recruit world-class international researchers. Additional funding will support relocation for leading international doctoral and postdoctoral researchers, and help universities recruit international assistant professors. Notably, the federal government will also launch an accelerated immigration pathway for U.S. H-1B visa holders in the coming months to take advantage of shifts in US immigration policies.

OCC Analysis:

The OCC welcomes the federal government’s stronger emphasis on economic immigration, recognizing its importance in addressing Canada’s long-term labour market needs. The OCC also supports new federal investments in research excellence and international talent recruitment, which will help position Canada as a global destination for innovation and advanced skills.

A clear path forward to addressing labour shortages in critical sectors such as construction, manufacturing, and healthcare through immigration is needed. To strengthen alignment between immigration and workforce priorities, the OCC recommends developing sector-specific immigration strategies that establish clear intake levels by industry and remain adaptable to shifting economic conditions, including those driven by AI adoption and global trade dynamics. Additionally, a more coordinated approach is needed to sustain growth in rural and northern regions. The OCC would welcome expansions to the Rural and Northern Immigration Pilot to better attract and retain skilled workers in under-served communities.

While aimed at stabilizing immigration levels, the Immigration Levels Plan may not fully consider the cross-sectoral impact on industries already facing labour shortages, such as tourism, agriculture, hospitality, and retail. The OCC urges the federal government to assess the sectoral impact of immigration target reductions on Canada’s workforce and streamline application processes for high-demand occupations.

Enhancing Domestic Talent Pipelines

Budget 2025 introduces workforce and skills investments to strengthen Canada’s labour market resilience and support workers through economic transitions. This includes $75 million over three years to expand the Union Training and Innovation Program, enhancing union-led apprenticeship training in Red Seal trades and a $97-million Foreign Credential Recognition Action Fund to tackle workforce shortages in health and construction. Through Labour Market Development Agreements, the federal government will provide $570 million over three years to help workers affected by tariffs and global market shifts access training and employment supports.

Canada will also invest $382.9 million over five years to establish new Workforce Alliances that unites employers, unions, and industry associations to coordinate public and private skills investments. This includes a Workforce Innovation Fund to support local, sector-specific projects that strengthen recruitment and retention. Finally, $50 million over five years will be dedicated to developing a digital job-matching tool and launching a national online training platform in partnership with the private sector.

Budget 2025 strengthens youth workforce participation through targeted employment and training supports. It allocates $307.9 million over two years to expand the Youth Employment and Skills Strategy, and introduces a Youth Climate Corps, with $40 million over two years to deliver paid skills training that prepares young Canadians to respond to climate emergencies, assist in recovery efforts, and build community resilience nationwide.

Budget 2025 allocates $635.2 million over three years to expand the Student Work Placement Program, creating about 55,000 work-integrated learning opportunities for postsecondary students in 2026-27. It also proposes eligibility changes to Canada Student Grants and Loans, restricting access primarily to students at public and not-for-profit institutions to address integrity concerns with private colleges, expected to generate $1 billion in savings over four years.

OCC Analysis:

The OCC commends the federal government’s continued investments in broader training and work-integrated learning (WIL) initiatives that address labour market shortages in high-demand sectors. These initiatives are vital for organizations like the OCC that continue to support students’ transition into meaningful work opportunities through its Talent Opportunities Program (TOP), which delivers WIL experiences in partnership with employers across Canada.

The OCC strongly encourages the federal government to implement a Pan-Canadian AI Skills and Education Strategy that provides dedicated investments in AI-related skills development programming across all levels of education and in partnership with the training ecosystem. As industries increasingly integrate AI into their operations, targeted funding for AI skilling, reskilling, and employer-led training programs is essential to ensure Canada’s workforce remains competitive and prepared for the future of work.

Employment Insurance (EI)

Budget 2025 introduces temporary flexibilities to the EI Work-Sharing program to help employees work reduced hours instead of facing layoffs, at a cost of $370.5 million over five years. Additionally, it provides $3.7 billion over three years for enhanced EI income supports to aid workers impacted by economic uncertainties and trade disruptions.

OCC Analysis:

The OCC welcomes the temporary flexibilities to the EI Work-Sharing program and enhanced supports for workers affected by economic uncertainty. However, broader EI reform remains essential. The OCC recommends a tripartite-led approach involving employers, labour, and government to ensure the system is sustainable, inclusive, and responsive to current labour market realities. Continued dialogue with employers and private insurers will also be key to improving the Premium Reduction Program and driving meaningful uptake.

Healthy and Sustainable Communities

Driving Innovation in Canada’s Life Sciences Ecosystem

Budget 2025 includes $1 billion over three years for the Business Development Bank of Canada (BDC) to launch the Venture and Growth Capital Catalyst Initiative. This is designed to attract more private venture capital by encouraging participation from pension funds and other institutional investors. The initiative will focus on supporting emerging fund managers and strategic sectors, including life sciences.

In addition, $656.9 million over five years will be given to ISED to develop and commercialize dual civilian-military technologies in a range of industries, including aerospace, automotive, marine, cybersecurity, artificial intelligence, biodefence, and life sciences.

OCC Analysis:

Ontario is home to more than 2,000 life sciences companies contributing $65.2 billion every year in GDP and supporting over 72,000 high-paying jobs. The OCC supports the federal government’s continued investments in life sciences innovation, collaborating with industry, researchers, and investors to accelerate opportunities in the sector.

The OCC also welcomes the federal government’s investments in healthcare, spotlighting health as a national asset. To bolster long-term healthcare resiliency in Canada, the OCC calls for faster approval of innovative medicines and health technologies by working with provinces and territories to streamline review processes for drugs, devices, and other products. This includes accelerating timelines at Canada’s Drug Agency and the pan-Canadian Pharmaceutical Alliance and exploring expedited access pathways to ensure Canadians receive life-saving treatments without unnecessary delays.

Tackling the Health and Human Resources (HHR) Crisis

Already announced in October 2025, Budget 2025 proposes to provide $97 million over five years, starting in 2026, to establish the Foreign Credential Recognition Action Fund. Employment and Social Development Canada will work with provinces and territories to improve the fairness, transparency, timeliness, and consistency of foreign credential recognition, with a focus on health and construction sectors.

The previously announced Personal Support Workers Tax Credit will also allow eligible personal support workers employed in the remaining provinces and territories the ability to claim a refundable tax credit equal to 5 per cent of their eligible earnings, providing support of up to $1,100 per year.

OCC Analysis:

Over 6.5 million Canadians lack access to a family doctor or nurse practitioner. Regulatory barriers also limit the ability for domestic and international health professionals to work to their full potential. Announced measures are key to addressing the health human resources crisis and supporting diverse providers in delivering quality care.

The OCC urges the federal government to continue expediting scope of practice for interdisciplinary healthcare teams, where applicable, to allow health professionals to deliver greater value from their expertise, while improving patient outcomes.

Equitable Access to Health Care

Budget 2025 proposes a joint review by the Ministers of Health, National Defence, Indigenous Services, and Northern and Arctic Affairs to assess health care and infrastructure needs in northern communities. The aim is to find innovative ways to improve care access and reduce medical travel costs, with meaningful engagement from Northern and Arctic Indigenous Peoples.

OCC Analysis:

The OCC supports the commitment to review healthcare and infrastructure needs in northern communities, aligning with the Truth and Reconciliation Committee’s Call to Action 19 to close health gaps. The federal government should continue working with Northern and Arctic Indigenous communities to remove systemic barriers and improve access to quality care despite geographic challenges.

Arts, Culture, Tourism and Creative Industries

Budget 2025 has made several financial commitments to Canada’s creative industries, including: $21 million over three years to Canadian Heritage for the Building Communities through Arts and Heritage Program, supporting local festivals, community anniversaries, and community-led capital projects; $46.5 million over three years to the Canada Arts Presentation Fund; $48 million over three years for the Canada Music Fund to strengthen artist careers and the music sector’s competitiveness; $150 million over three years to Telefilm Canada to bolster Canada’s film industry; $150 million in 2025-26 for the CBC to continue delivering English and French programming across Canada; $127.5 million over three years for the Canada Media Fund to support audio-visual content creators; $26.1 million over three years to the National Film Board to produce and share Canadian stories globally; $38.4 million over three years for the Canada Periodical Fund to help small and community news outlets deliver content; and $6 million over three years for the Canada Council for the Arts to support professional artists and arts organizations.

Lastly, Budget 2025 proposes amending the Copyright Act to introduce an Artist’s Resale Right, allowing Canadian visual artists to benefit from future sales of their work. This supports artists, key contributors to Canada’s cultural supply chains, who are often among the lowest income earners.

OCC Analysis:

In 2024, Canada’s arts and culture sector generated $65 billion in direct GDP, outpacing growth and creating more jobs per dollar than major sectors such as oil and gas, manufacturing, and agriculture. The OCC welcomes the federal government’s significant investments in Canada’s arts, culture, and creative industries. These sectors are foundational assets that drive economic growth and global competitiveness, regional economic development, and revitalize local communities.

The OCC also commends the federal government’s pursuit of amending the Copyright Act to create an Artist’s Resale Right, supporting artists monetizing their work.  Continuing to align Canada’s current framework with other jurisdictions by prioritizing consent, accountability, privacy, transparency, and Intellectual Property (IP) protections, can help strengthen compliance while fostering responsible innovation and supporting the Canadian economy.

Growth Enabling Infrastructure

Major Projects Office and Nation-Building Infrastructure

Budget 2025 confirmed the establishment of the Major Projects Office (MPO) with $213.8 million to coordinate and accelerate nation-building projects through a “one-project, one-review” process. The aim is to remove bottlenecks in federal project delivery, boost investor confidence, and support the Indigenous Advisory Council. A new Capital Budgeting Framework will also separate long-term investments from operating costs, ensuring transparent infrastructure financing.

OCC Analysis:

We welcome these measures as closely aligned with our call for an expedited and better-coordinated federal approach to major infrastructure project delivery. The OCC particularly welcomes the government’s focus on accelerating nation-building projects such as the Darlington Small Modular Reactor (SMR), which exemplify how timely regulatory processes and coordinated investment can advance Canada’s clean-energy transition and industrial competitiveness. The MPO’s establishment is a positive step toward unlocking private capital and reducing regulatory duplication, though the OCC notes that details on provincial participation, Indigenous partnerships, and the criteria for project selection will be essential to maximize impact. Continued intergovernmental coordination and accountability will be key to ensuring Ontario receives equitable access to these nation-building investments.

Housing, Community, and Local Infrastructure

The Build Canada Homes initiative launches with $13 billion in initial federal funding, leveraging public and private capital to expand affordable and non-market housing supply. This is complemented by an expanded $80 billion annual Canada Mortgage Bond limit, which will unlock new financing for multi-unit rental and purpose-built housing construction. In total, the budget allocates approximately $25 billion in new housing-related measures over five years, including additional investments in rental protection, supportive housing, and Indigenous-housing programs.

The budget 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. This will be done through the Indigenous Housing Strategy following engagement with First Nations on reserve, Inuit Treaty Organisations, Métis governments, and Modern Treaty holders and Self-Governing Indigenous Governments.

Under the complementary Build Communities Strong Fund, valued at $51 billion over ten years, the federal government intends to invest in community infrastructure that supports local economic growth, such as housing-enabling transportation, water, and health-care facilities, while streamlining and modernizing delivery across departments. Within the fund’s Provincial and Territorial Stream, $5 billion over three years (starting in 2026-27) is specifically dedicated to a Health Infrastructure Fund to support construction of hospitals and medical schools. Also included is a Direct Delivery Stream that will provide $6 billion over 10 years (starting in 2026-27) for regionally significant projects, large building retrofits, climate adaptation, and community infrastructure, with proponents required to seek private investment (including via the Canada Infrastructure Bank, whose mandate is expanded) before applying.

At the same time, the government will scale back or consolidate underperforming programs – including winding down the Canada Greener Homes Grant – to focus resources on initiatives that demonstrably increase housing supply. The budget also eliminates the Underused Housing Tax as of the 2025 calendar year, ending payment and filing requirements and signalling a policy pivot toward domestic, supply-side solutions.

OCC Analysis:

These measures respond directly to the OCC’s recommendations to prioritize housing-enabling infrastructure and outcome-based funding. By consolidating programs and focusing on projects that tangibly expand supply, the federal government is aligning policy more closely with business and labour-market needs. Ontario communities stand to benefit from renewed investment in transportation, housing-related infrastructure, and health-care capacity – critical enablers of productivity and population growth. The OCC encourages the federal government to provide clear allocation criteria and work with provinces and territories to ensure funds are deployed swiftly and equitably, particularly in fast-growing urban and regional centres where housing and infrastructure gaps are most acute. For health infrastructure, this includes aligning operating and capital funding models to support long-term, sustainable healthcare and infrastructure planning (e.g., hospitals, long-term care homes, community health facilities, public transit, housing-enabling infrastructure, etc.).

Energy and Critical Minerals 

Budget 2025 advances Canada’s resource-development and clean-energy priorities through targeted investments in mining, critical minerals, and industrial decarbonization. The government will establish a Critical Minerals Sovereign Fund, capitalized at $2 billion over five years (starting in 2026-2027), to make strategic investments — including equity, loan guarantees, and offtake agreements — in projects that strengthen domestic supply chains. Complementing this, a new First and Last Mile Fund will finance critical-minerals transportation and logistics infrastructure across value chains. The budget also broadens the Critical Minerals Exploration Tax Credit to include additional eligible minerals and clarifies that technical studies will no longer qualify for flow-through share treatment.

At the same time, the government will cancel the Net-Zero Accelerator, reallocating its unspent funding toward more targeted clean-technology and industrial programs tied to measurable emissions reductions and economic impact. These actions are reinforced by continued federal support for the Clean Electricity and Clean Technology Investment Tax Credits, which underpin the broader transition toward low-carbon industrial infrastructure.

OCC Analysis:

Budget measures align with the OCC’s call for a focused, outcome-driven approach to resource and clean-energy investment. The creation of the Critical Minerals Sovereign Fund and First and Last Mile Fund directly addresses industry needs to de-risk large mining projects and improve infrastructure connectivity, key priorities for Ontario’s northern and Ring of Fire regions. Reprofiling the Net-Zero Accelerator marks a shift toward performance-based investment and better fiscal discipline. The OCC encourages transparent governance of the new funds and continued collaboration with provinces to ensure Ontario projects remain central to Canada’s critical minerals and clean energy strategies.

National Defence

Budget 2025 sets out the most substantial defence investment in decades, committing $81.8 billion over five years (starting in 2025-2026) to rebuild, rearm, and modernize the Canadian Armed Forces (CAF). This includes $20.4 billion for recruitment, retention, and health-care supports; $19 billion to maintain existing capabilities and infrastructure; $17.9 billion to expand the military’s operational capacity, including logistics, light and armoured vehicles, counter-drone and precision-strike capabilities, and domestic ammunition production; $10.9 billion for digital and cyber-defence infrastructure; and $6.6 billion to launch a new Defence Industrial Strategy that will expand Canada’s domestic defence-manufacturing base. Canada’s new Defence Investment Agency will receive $30.8 million over four years to accelerate procurement, while a new sovereign space-launch capability is allocated $182.6 million over three years.

OCC Analysis:

Unprecedented investments in defence are a unique opportunity to strengthen Ontario’s defence-industrial ecosystem, which includes major aerospace, cybersecurity, and advanced-manufacturing clusters. If execution follows, this aligns with the OCC’s recommendation to localize high-value procurement and support Canadian and Ontario supply chains. Procurement processes should maximize participation by Ontario-based firms, small and medium-sized enterprises, and research institutions contributing to Canada’s defence, cybersecurity, and dual-use technology capabilities.

Strategic Infrastructure and Transportation

Budget 2025 advances Canada’s trade and transportation priorities through a major investment in national logistics corridors, including $5 billion over seven years, starting in 2025-2026, to Transport Canada to establish the Trade Diversification Corridors Fund. The program is designed to strengthen supply-chain resiliency, expand export capacity, and improve the flow of goods across Canada’s ports, railways, and highways.

To improve the secure and efficient movement of goods and people, the Budget provides $14.8 million over four years starting in 2026-2027, plus $1.1 million in 2030-31 and $20.6 million in amortization, to Transport Canada to develop and implement a new pre-clearance access regime. Funding will enable Transport Canada to invest in modernized security-screening and onboarding systems for transportation workers across Canada. This initiative complements the government’s $30 million investment in 2023 to construct the pre-clearance facility at Billy Bishop Toronto City Airport, enhancing cross-border movement of goods and services

OCC Analysis:

These measures align with OCC recommendations to prioritize transportation infrastructure that underpins supply-chain reliability and export growth. Ontario’s airports, ports, and highway corridors are central to Canada’s economic competitiveness; ensuring that new federal investments accelerate project delivery and improve goods movement will be critical. The OCC urges the government to maintain close coordination with provinces, municipalities, and the private sector to ensure funding is deployed swiftly and equitably across key trade routes.

Canada’s Fiscal Outlook

Budget 2025 includes $141 billion in new spending commitments over the next five years on national defence, personal income-tax relief and infrastructure investments among other priority areas. These are partly offset by approximately $60 billion in planned expenditure restraint and a 10 per cent reduction in federal public service (about 40,000 positions) over three years. The package reflects the government’s attempt to balance growth-enabling investment with fiscal restraint.

The federal deficit in 2025-2026 is projected at $78.3 billion (~2.5 per cent of GDP) – nearly double last year’s forecast and larger than the $68.5 billion anticipated by the Parliamentary Budget Officer. The government is projecting the shortfall to narrow gradually to $56.6 billion (~1.5 per cent of the GDP) by 2029-2030.

Canada’s federal debt as a percentage of GDP is projected to hover around 42 per cent in 2025-2026, before edging up to 43 per cent starting 2026-2027. While broadly stable, this represents a historically elevated debt burden that leaves limited flexibility to respond to future shocks. Debt-servicing costs are forecast to nearly $56 billion in 2025-2026, nearly double pre-pandemic levels, highlighting the cumulative impact of a period of higher interest rates.

Macroeconomic assumptions underpinning the budget remain cautiously optimistic. Real GDP growth is projected at just over 1 per cent in 2025 and 2026, rising to 2 percent by 2027 as interest rates moderate. Inflation is expected to average 2.4 per cent, near the Bank of Canada’s target, while the unemployment rate is forecast to hold near 7 per cent. These indicators suggest modest expansion, but ongoing uncertainty in global trade and commodity markets could challenge revenue performance.

From a fiscal-management perspective, the introduction of a Capital Budgeting Framework and the Comprehensive Spending Review (targeting approximately $60 billion in savings over five years) mark important steps toward transparency and discipline. Nevertheless, the combination of slower growth and sustained program expansion underscores the need for a credible medium-term plan to stabilize debt dynamics.

Overall, Budget 2025 is more transitional than transformational, but it marks a turning point in focus — shifting attention from consumption to investment, and from broad spending to the needs of businesses seeking to grow and succeed. We welcome growth-oriented measures but urge continued fiscal prudence and stronger federal-provincial coordination to ensure that today’s borrowing translates into long-term competitiveness and sustainable public finances.

For more details, refer to the Ontario Chamber of Commerce’s 2025 Federal Budget Submission.