Today we’re going to start looking at the 2025 budget. There’s a lot in here, it’s about 400 pages long, so we’re going to break this down into parts based on the chapters in the budget. There’s 5 chapters total in here. Note that I’ll mostly be focusing on the policy in the budget and not the numbers, the details there are well outside of my understanding and trying to break down all the spending is going to take way too long.
Chapter One – Building a stronger Canadian economy
Accelerating major nation-building projects
So right off the bat there’s a lot of talk about reducing red tape and streamlining processes. The budget calls out federal regulations as scaring away major projects and promises to address that.
To support this the government’s created the Major Projects Office to pick projects to fast-track. Five projects have already been selected to be fast-tracked and get extra funding. They are:
- LNG Canada Phase 2 – A natural gas plant owned by private companies like Shell and PetroChina, they’re looking to double the plant’s capacity.
- Darlington New Nuclear Project – Construction of a new Small Modular Reactor for Ontario.
- Contrecœur Terminal Container Project – A project to increase the capacity of the Port of Montreal by 60%.
- McIlvenna Bay Foran Copper Mine Project – A mine in Saskatchewan owned by Foran Mining.
- Red Chris Mine Expansion – An expansion of a mine in BC owned by Newmont Corporation.
The MPO is also going to be looking into:
- Our critical minerals strategy and speeding up the process to get projects like the Ring of Fire and the Golden Triangle moving faster.
- Expanding wind power generation in Nova Scotia and other Eastern provinces so we can sell more power to the Northeastern States.
- Carbon capture and pipelines in Alberta.
- Building up land and port-to-port infrastructure in the Arctic to help support mineral projects there.
- Major infrastructure upgrades for the Port of Churchill, including railways and an energy corridor.
- High-speed rail from Toronto to Quebec, with a focus on speeding up approval at all stages.
There’s some notes in here about increasing financing options for nation-building projects, including giving the Canada Infrastructure Bank an extra $10b to hand out. The CIB will also be expected to help finance any nation-building projects, even if they fall beyond the scope of projects the CIB normally handles.
Supercharging Growth
Next up the government is making changes to what capital expenses companies are allowed to write off and how fast they can do so. The list of changes includes:
- Bringing back the Accelerated Investment Incentive, an enhanced set of first-year write-offs that covers most capital assets.
- 100% first-year write-offs of manufacturing and processing equipment.
- Immediate expensing of clean energy generation, energy conservation equipment, and zero-emission vehicles.
- Immediate expensing of productivity-enhancing assets including patents, data network infrastructure, and computers.
- Immediate expensing of capital expenses for scientific research and experimental development.
Author’s note: Just wanted to say here a lot of this sounds pretty heavily geared towards pulling in construction of data centers for companies like OpenAI. These things are massively expensive and this list looks almost custom-built to give them huge tax write-offs.
There’s also some pretty hefty tax breaks for natural gas facilities. The government wants to increase the tax break on equipment from 8% to 30% and non-residential buildings from 6% to 10%. There will be some emissions performance requirements to be announced later, but any facilities in the top 10% of emissions performance will get a 50% tax write-off for equipment instead of the 30%.
The next part has a lot to do with corporate tax rates, specifically the marginal effective tax rate (METR) which is a touch beyond my understanding. The quick explanation is that the METR is an estimate of the tax rate companies pay after including taxes, rebates, and write-offs on the various costs of doing business. The government wants to drop the METR from 15.6% to 13.2%. Note that at 15.6% we’ve already got the lowest METR of the G7 countries, a full 2% lower than the current US METR. So yeah, less taxes and more handouts for big business. The biggest winner here is going to be manufacturing and processing industries, having their METR dropped from 8.6% to 0.4%. Services are going from 18.7% to 16.3%, and everyone else is getting a less than 2% decrease.
The budget then moves on to the Scientific Research and Experimental Development (SR&ED) tax incentive. This program’s supposed to convince companies to do R&D in Canada. The government’s already made some changes to this to give more money to companies, and the budget makes a few more changes on top of those. For one, they previously changed the limit that you can claim tax credits on for annual expenses from $3 million to $4.5 million. The budget is going to increase this again to $6 million. The budget is also going to make some changes around how applications for the SR&ED tax breaks to make it easier to get. They’re going to have the CRA:
- Create an elective pre-claim approval process so businesses can get an up-front approval of eligible SR&ED projects before starting any work. Anyone under this system will be able to have any spending reviews completed in 90 days instead of the normal 180.
- Use AI to process low risk claims to avoid audits.
- Simplify the review process by removing “unnecessary steps” and reduce information requirements.
Next is spending on AI-related projects. The government is going to:
- Spend almost $1b over 5 years to build sovereign public AI infrastructure. The goal here is to provide compute capacity controlled by the public for public and private research.
- Have the Minister of Artificial Intelligence and Digital Innovation meet with the AI industry and set up deals to attract them to build projects here.
- Allow the Infrastructure Bank to invest in AI projects.
- Have Stats Canada create the Artificial Intelligence and Technology Measurement Program (TechStat). The goal here is to use TechStat to measure how AI is being used and how it affects the country.
There’s some money here to help with managing Intellectual Property in Canada. The Elevate IP program is being renewed with a bit of a cut. (It was originally given $90 million over 4 years in 2022, the renewal is $84 million over 4 years.) The IP Assist Program is also being renewed. Both of these programs are based around helping businesses manage and use their IP. There’s also going to be a review of our IP systems to limit its abuse.
We’ve also got some investments in venture capital in the budget. The government is going to spend $1 billion over 3 years to launch the Venture and Growth Capital Catalyst Initiative. The goal here is to get more pension funds and other institutional investors to put more money into venture capital. There’s also going to be money invested in supporting firms that are having issues with early growth-stage funding, though details on this will be announced next year.
Next up we get to the topic of immigration. There will be a small decrease in the number of permanent residents accepted each year, from 395,000 in 2025 to 380,000 each year until 2028. The share of economic migrants in this (people moving to Canada for better work options and quality of life) is going to be increased from 59% to 64%. The target for temporary residents is also being almost halved from 673,650 in 2025 to 385,000 in 2026 and decreasing more in 2027 and 2028. Note that temporary residents covers temporary foreign workers as well as international students. The budget will also include a one-time initiative over the next two years to grant permanent residency to eligible Protected Persons. (Refugees) There will also be a one-time move to speed up 33,000 work permit holders becoming permanent residents.
There’s $97 million over 5 years to establish the Foreign Credential Recognition Action Fund to improve the country’s ability to recognize foreign credentials. This will work with provinces to help coordinate everything and make sure the recognition is consistent.
We then have money for the International Talent Attraction Strategy and Action Plan, a one-time initiative to bring over a thousand international researchers to Canada. This includes:
- $1 billion over 13 years to the Natural Sciences and Engineering Research Council, Social Sciences and Humanities Research Council, and Canadian Institutes of Health Research to recruit more international researches to Canadian universities.
- $400 million over 7 years to the Canada Foundation for Innovation to make sure these recruits have the infrastructure they need to conduct research in Canada
- $133.6 million over 3 years to these groups to get top international doctoral students and post-doctoral fellows to move to Canada.
- $120 million over 12 years to the granting councils to support universities’ recruitment of international assistant professors.
The details of this process will be announced later. The three councils will also have the targets for their budget cuts reduced by 2%. Finally the government is going to speed up the process for H1-B visa holders to get into the country. As far as I can tell this program ended in 2023, so I’m going to assume they’ll be reopening it.
Budget Progress
Amendment – Yves-François Blanchet (Bloc Québécois, Quebec, Beloeil—Chambly)
So bit of a funny one here, the right to propose an amendment to the budget motion is supposed to go to the opposition first but Pierre forgot to actually propose it when he finished his speech so the chance was passed to the next party with the most seats, the Bloc.
Now a quick important note on these that I want you to keep in mind as you read the next bit. These amendments and subamendments count as confidence motions. If they pass we could go into an election. The wording in them is extremely important, as a failed confidence vote sets the tone of the election. As you read the next bit remember that this is effectively what these parties want to set as the focus of an election.
Yves-François proposed that:
The House reject the government’s budget statement, which will hurt Quebec because it fails to:
- Raise the Canadian health transfer escalator to 6%
- End discrimination against people aged 65 to 74 who did not receive an equitable increase in Old Age Security
- Repay the $814 million to Quebeckers who were not compensated for the end of carbon pricing in April 2025
- Propose concrete and effective measures to combat climate change
Only part here that might need explanation is the $814 million. When the carbon tax was ended everyone still got their last rebate going into the election. Quebec, being one of the provinces that had their own carbon plan, didn’t get this rebate. These rebates are handed out in advance of the tax being collected, but no more tax was going to be collected so that rebate was paid for from other tax dollars. Quebec isn’t happy about that.
Subamendment – Jasraj Hallan (Conservative, Alberta, Calgary East)
Jasraj has an amendment to Yves-François’s Motion. There’s a lot of the usual buzzwords in this one, keep that in mind when you see it. He wants to change everything after “reject the government’s budget statement” to:
since, instead of presenting an affordable budget so Canadians can have an affordable life, it presented a budget that fails to:
- Consider that every dollar the Liberal government spends comes out of the pockets of Canadians in the form of higher taxes and inflation
- Bring down the deficit to the level Liberals promised in their last fiscal update, which promised $42 billion last year
- Scrap hidden taxes on food, including the industrial carbon tax on farmers, the food packaging tax that adds billions in costs, and the fuel standard tax that adds 17 cents per litre to diesel and gasoline for farmers
- End the inflation tax by bringing down the cost of government instead of printing money to pay Liberal bills
- Include a plan for any oil and gas pipelines that would strengthen our nation’s economy and get our resources to market
So yeah, once again they’re being overly generous with the word “tax”. Inflation is not a tax. Farmers have a number of exemptions and rebates to things like the carbon tax. There is no food packaging tax, he’s talking about the ban on single-use plastics. And I’m pretty sure setting up an entire department dedicated to fast-tracking projects like mines and pipelines says that last point on the list is irrelevant. As I said, it’s important to be aware of this because this is effectively these are the points the Conservatives want to make the focus of an election.
A vote was held on the subamendment and it failed with 139 voting in favour and 198 voting against.
| Party | For | Against | Paired |
|---|---|---|---|
| Liberal | 0 | 169 | 0 |
| Conservative | 139 | 0 | 0 |
| Bloc Quebecois | 0 | 22 | 0 |
| NDP | 0 | 6 | 0 |
| Green | 0 | 1 | 0 |
A vote was then held on the Bloc amendment and it also failed with 30 voting in favour and 306 opposed.
| Party | For | Against | Paired |
|---|---|---|---|
| Liberal | 0 | 168 | 0 |
| Conservative | 0 | 138 | 0 |
| Bloc Quebecois | 22 | 0 | 0 |
| NDP | 7 | 0 | 0 |
| Green | 1 | 0 | 0 |
The budget is now waiting for a vote on its final approval.
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