2025 Federal Budget Highlights — Impact on Construction

Budget 2025 Highlights for Construction

Infrastructure Investment

Major Projects Office (MPO) – Budget 2025 proposes to allocate $264 million over five years to the MPO. Housed in the Privy Council Office (PCO), the MPO is responsible for streamlining reviews for projects designated under the Building Canada Act, as being in the national interest. One project, one review, with a maximum two-year decision timeline. The MPO is a coordinating office, not a funding program: it does not manage a capital or envelope. Financing for projects is structured through existing instruments (e.g., Canada Infrastructure Bank, Canada Growth Fund, Indigenous Loan Guarantee Program), which the MPO helps convene. For context, PCO’s total planned spending is $278 million in 2025-26. $19.8 million will be sourced from previously provisioned funds.

Catalysing investment in airports and ports – Starting in 2026-27, the federal government will invest around $13 million annually to upgrade Canadian airports through the Airports Capital Assistance Program. In addition, they will support attracting more investment from the private sector.

Build Communities Strong Fund (BCSF) – Ottawa will invest a total of $51 billion dollars over 10 years to support a wide range of local infrastructure, ranging from housing, transportation, and health care. The fund will be administered by Housing, Infrastructure and Communities Canada (HICC). Net new spending will start in 2026-27, at $4.75 billion, totalling $20.1 billion over the next five years, with almost half reallocated from existing programs like the Canada Public Transit Fund (CPTF).

Trade Diversification Corridor Fund (TDCF) – On March 28, 2025, Prime Minister Carney first announced the creation of a new TDCF to respond to tariffs imposed by the United States (U.S.) and diversify Canada’s trade away from its heavy reliance on the U.S. This fund introduces $5 billion over seven years, primarily targeting ports, freight railways, inland terminals, airports, and highways as the key locations to build and strengthen movement of goods and labour to consolidate one Canadian economy. The government will consider investing in projects in the Great Lakes-St. Lawrence Region and others.

Housing Supply

Build Canada Homes (BCH) – Officially launched on September 14, 2025, BCH is the cornerstone solution of the Carney administration to address the housing crisis. As a special operating agency under Housing, Infrastructure and Communities Canada (HICC), BCH intends to supercharge homebuilding through partnerships with affordable homebuilders, deploy capital and financing for innovative homebuilding solutions, and prioritize projects using Buy Canadian procurement. BCH is operating under an initial $13 billion investment while costing $7.3 billion.

First-Time Home Buyers’ GST Rebate (FTHB) – The new rebate removes the federal five per cent GST (the federal HST share) for first-time buyers, costing an estimated $3.9 billion over five years. The program will apply to newly built homes up to $1 million, with a maximum savings of $50,000. For new homes worth between $1 million and $1.5 million, the maximum savings is reduced linearly as the price rises, reaching $0 at $1.5 million. It applies to builder sales, owner-built homes, and co-ops for agreements signed on or after May 27, 2025. That price cut should nudge demand up across for entry-level multi-unit construction (through condo presales and stacked/row townhomes), while still supporting single-detached uptake in lower-cost markets where new builds clear the price cap.

Defence Investment

NATO pledge –Canada will meet at least two per cent of GDP for core defence under NATO’s pledge and aligns with the Hague Summit commitment to move toward five percent of GDP by 2035. The Budget is set to spend a total of $7.3 billion in 2025-26 and 11.7 billion in 2026-27, then reaching about $15 billion annually after 2028-29. What is new for industry is a larger pipeline from both sides of the pledge: on-base and operational facilities counted in the 3.5 per cent core spending (through Defence Construction Canada), and civil or dual-use infrastructure eligible under the 1.5 per cent category. At the same time, the increased spending on core defence is a major contributor to the deterioration of the fiscal deficit in this year’s budget.

Workforce Development

Reskilling and support package – The government announced a reskilling support package for up to 50,000 workers to assist sectors impacted by tariffs, the following items under the ‘reskilling’ package are pertinent to construction:

• Union Training and Innovation Program (UTIP) – As part of the government’s intention to boost union-based apprenticeship training for Red Seal Trades, they have announced a boost to UTIP to strengthen the pipeline of apprentices and workers in Red Seal trades for major infrastructure and housing projects. $75 million over three years will give continued stability to recruit more apprentices; however, it is essential to note that approximately 70 per cent of construction workers are non-unionized, which may not proportionally translate to a marked increase in apprenticeship recruitment.
• Foreign Credential Recognition Action Fund – On October 27, 2025, Minister of Jobs and Families Patty Hajdu announced the creation of a Foreign Credential Recognition Action Fund, channelling $97 million, funds pulled from existing employment department resources, over five years starting from 2026-2027. This initiative aims to partner with provinces and territories to streamline foreign-trained professionals so that they are absorbed into the workforce faster, explicitly referring to construction as an industry that could benefit.
• Labour Market Development Agreements (LMDAs) – To allow workers to upgrade their skills under Employment Insurance (EI) funded training, the government is investing an additional $570 million over three years to be distributed via LMDAs through provinces and territories. Workers will gain access to skills training and career counselling to fill gaps in in-demand jobs.
• Workforce Alliances and Sectoral Workforce Innovation Fund – By bringing together employers, unions, and industry groups under a planned three to five ‘Workforce Alliances,’ these alliances will work on ways that businesses and workers can adapt and thrive in a rapidly changing economic landscape, especially in sectors like auto parts, steel and aluminum, energy, critical minerals, and advanced manufacturing. This initiative is funnelled through a new $382.9 million ‘Workforce Innovation Fund’ over the next five years. This initiative complements the Strategic Response Fund “to ensure a comprehensive and strategic response for tariff-impacted firms.”
• Temporary EI measures due to foreign tariffs – The government is earmarking $3.7 billion in total over three years for temporary EI support in response to jobs lost due to export losses to the U.S. It will improve stability in the labour markets.

Protecting workers against improper classification – In response to industry concerns that individuals in the trucking industry were misclassified as individual contractors, thereby allowing companies to circumvent reporting fees and tax obligations, the Government is proposing $77 million over four years starting in 2026-27, with $19.2 million annually in ongoing funding for the Canada Revenue Agency (CRA) to implement a program to investigate non-compliance.

2026-2028 Immigration Levels Plan – Of note to construction in the new levels plan, the Government announced the reduction of the target for new temporary residents from 673,650 in 2025 to 385,000 in 2026. However, the government did caveat this statement by recognizing temporary foreign workers’ role, especially those in tariff-impacted industries and sectors; potentially signalling flexibility. Nonetheless, the drastic cut in targets may cause chaos for construction industry recruitment, given the lack of prioritization in existing immigration pathways.

Procurement Modernization

Buy Canadian Policy – The government launched the new Policy on Prioritizing Canadian Materials in Federal Procurement to mandate that domestic and foreign suppliers source key Canadian materials, such as steel, aluminum, and lumber, if contracting with the federal government.

• Buy Canadian obligations will now apply to all federal agencies and Crown corporations.
• The implementation of this policy alone will cost $98.2 million over five years.
• It will also cost an additional $79.9 million over five years to support the Small and Medium Business Procurement Program. To ease navigation of federal procurement systems, the government is setting up an SME business procurement program to ensure fair competition, reduced red tape, and streamlined access to federal procurement.
• The government also noted the intent to formalize and extend Buy Canadian obligations for “infrastructure spending, grants, contributions, loans, and other federal funding streams.” This initiative is predicted to cover an additional $70 billion by scoping in procurements.
• To address the lack of material capacity in Canada for specific inputs, the government will implement by spring 2026 a complementary Policy on Reciprocal Procurement so that “non-defence procurements are limited to Canadian goods and services as well as those originating from Canada’s trading partners. This will include supplier eligibility being based on the origin of goods and services being offered.”