Takeaways from Canada’s Budget 2025 for the Infrastructure and Construction Industry
November 2025On 4 November, 2025, the Federal Government of Canada unveiled its “Canada Strong Budget 2025” (the “Budget”), which underscored that “infrastructure investment is a key driver of economic growth”.[1]
Calling this “Canada’s moment [and] time to make generational investments”, the Budget highlights Canada’s prioritisation to build. The Government designates CAD $115bn on infrastructure and CAD $25bn on housing over the next five years, presenting potential opportunities for our industry not seen in decades.
Along with the funds, the Government promises to create policy measures to create low-cost financing for builders, incentives for purpose-built rental construction, streamlined regulations, pro-competitive reforms, and a reduction of taxes on investment.
If the Budget passes on 17 November, 2025 – and following the requisite implementation measures – our clients can, expect a number of fast-tracked nation-building projects to be tendered (see, the Major Projects Office). Our international clients can also anticipate Canada being a “fast, reliable, and indispensable global partner” (see, the Trade Diversification Strategy).
This article summarises the notable aspects of the Budget for the infrastructure and construction industry, as well as one critical concern for its execution – Canada’s labour shortage.
The noteworthy numbers
Budget 2025 commits to $115bn on infrastructure over the next five years, divided as $5bn on Trade and Transport Infrastructure; $19bn on Indigenous Communities and Municipal Infrastructure; $37bn on Other Infrastructure and Assets (e.g., health, innovation); and $54bn on Core Public Infrastructure (e.g., water/ wastewater transit).
It also sets out $25bn on housing over the next five years, split up as $16bn on Existing Programming; $7bn on Build Canada Homes; and $2bn on related Tax Measures.
One Canadian economy
Canada’s need to build the ambitious amount of infrastructure at “speeds and scale not seen in generations” requires the reduction of internal trade and labour barriers. Announced prior to the Budget, but mentioned throughout, is the One Canadian Economy Act which is a two-part legislation aiming to achieve this goal.
The first part focuses on internal trade (Free Trade and Labour Mobility in Canada Act), which provides the framework to reduce the burden of federal rules that pertain to internal trade (across provinces and territories), while the second part focuses on projects of national interest (Building Canada Act), which aims to provide regulatory certainty and help streamline the process for national interest projects – actioned by the Major Projects Office.
Trade Diversification Corridors Fund and Arctic Infrastructure Fund
To support the development of both internal and international trade and transportation infrastructure, a new Trade Diversification Corridors Fund (TDCF) of $5bn over seven years and the Arctic Infrastructure Fund (AIF) of $1bn over four years is proposed.
TDCF would invest in new ports, airports and railway infrastructure to improve access to overseas markets, while the AIF would invest in major transportation projects in the North for both civilian and military use, including airports, all-season roads, and highways.
Major Projects Office (MPO)
Pursuant to the Building Canada Act, the MPO (which was also announced ahead of the Budget), is a Federal agency that acts as the single point of contact to expedite construction of nation-building projects. Andrés Durán and Ben Spannuth have previously written about this move towards nation-building projects, which can be accessed here. Nation-building projects in this context are those that the MPO identifies to be in Canada’s national interest. To assess whether a project is of “national interest”, the MPO uses the following criteria:
- Whether the project will strengthen Canada’s autonomy, resilience and security.
- Whether a project will provide economic or other benefits to Canada.
- The likelihood of successful project execution.
- Whether a project will advance the interests of Indigenous Peoples.
- Whether a project will contribute to clean growth and address climate change.
As part of its work to fast-track development of the major/ nation-building projects, the MPO is expected to structure and coordinate financing from the private sector, and provincial and territorial partners, with the Federal Government through Canada Infrastructure Bank (CIB), Canada Growth Fund, and the Canada Indigenous Loan Guarantee Corporation. Of note, CIB’s capital envelope is proposed to be increased from $35bn to $45bn to enable it to invest in any nation-building project that has been referred to by the MPO, regardless of sector or asset class (subject to meeting CIB’s legal framework).
Provincial and Territorial Stream
In terms of other works, the Budget announced a Provincial and Territorial Stream that will provide $17.2bn over 10 years to support provincial and territorial housing, health, and education infrastructure projects. Importantly, to access the funds, the province or territory must agree to cost match the Federal Government’s funding, substantially reduce development charges, and not levy other taxes that hinder housing supply.
Of the above, $5bn over three years is specifically designated towards hospitals, emergency rooms, urgent care centres, and medical schools via the Health Infrastructure Fund.
Direct Delivery Stream
Administered by Housing, Infrastructure and Communities Canada, the Direct Delivery Stream will provide $6bn over 10 years to support regionally significant projects, large building retrofits, and community infrastructure. Owners of these works would be required to seek private sector investment, including leveraging CIB, before being eligible for this funding stream.
Build Communities Strong Fund
Also administered by Housing, Infrastructure and Communities Canada, a new Build Communities Strong Fund of $51bn over 10 years will support a wide range of infrastructure projects on the municipal level (through the provincial and territorial governments).
Buy Canadian Policy
The Buy Canadian Policy is referenced throughout the Budget, but was announced prior to its publication. The Budget, decisively, notes the underlying concept of the Buy Canadian Policy is to stipulate that when the Government spends its money, it will select Canadian suppliers by default, particularly in industries such as steel, aluminum, critical minerals, and softwood lumber. Accordingly, it is expected that as much as $70bn of the Federal Government’s spending will support Canadian-made products and services.[2]
$186mil is budgeted to go towards the Buy Canadian Policy.
Build Canada Homes
Calling this Canada’s most ambitious housing plan in a generation for an “entirely new Canadian housing industry”, Build Canada Homes is another consistently referenced agency that has been previously announced by the Federal Government ahead of the Budget.
It is a federal agency, being allotted $7bn so that it can “double the pace” of construction to build “millions” of more homes. It will place a focus on more affordable housing and advancing methods of construction such as factory-built, modular, and mass timber.
With its implementation, Canada aims to be a global leader in housing innovation, including construction techniques, sustainable materials, and manufacturing.
Trade Diversification Strategy
The Budget is quick to point out that within the G7, Canada is the most tax competitive jurisdiction for new business investment. It points out that a prime trading partner which is no longer reliable has lit the fire under the Government’s belly to deepen trade relations and partnerships with like-minded countries – specifically calling out the EU, Korea, Japan and Mexico. As such, the Feds are working to build a new web of trade relationships around the globe.
With its new goal of doubling non-U.S. exports over the next decade, the Government proposes providing $8mil over four years starting in 2026-27, and $2mil ongoing, to Global Affairs Canada to deepen trade relations with European partners.
The Budget also states that investments in trade infrastructure will assist in strengthening existing relationships in Asia (using the Port of Churchill Plus project as an example).
With respect to the TDCF, the Government aims to improve access to overseas markets by investing in new ports, airports, and railway infrastructure.
Indigenous Partnerships
Budget 2025 promises that the Government will build its infrastructure in true partnership with Indigenous Peoples. To this end, the Government has committed $10bn through CIB’s Indigenous Equity Initiative and the Indigenous Loan Guarantee Program to enable more Indigenous communities to be owners of major projects. In fact, the Government’s intention for the Canada Indigenous Loan Guarantee Corporation was to work with investors on new build projects that will generate economic prosperity for Indigenous communities.
Budget 2025 proposes $10.1mil over three years to Crown-Indigenous Relations and Northern Affairs Canada, in part for Indigenous-lead resource centres, to support participation of Indigenous rightsholders in consultation processes throughout the review cycle of national interest projects listed under the Building Canada Act.
Cooperation agreements under the Impact Assessment Act with every interested province and territory will set out how the federal and provincial governments will work together on assessments of major projects, which provides greater transparency for Indigenous Peoples to protect Indigenous rights.
MPO will also benefit from the guidance of the Indigenous Advisory Council (IAC) – 11 representatives from First Nations, Inuit, Metis, and Modern Treaty and Self-Governing Communities.
Productivity Super-Deduction
The Budget introduces a set of tax incentives, called a Productivity Super-Deduction, which will cover all new capital investments, allowing businesses to immediately write-off a large share of the costs immediately.
This includes but is not limited to the Accelerated Investment Incentive, which allows for enhanced first-year write-offs for most capital assets, as well as a 100% first-year write-off for immediate expensing of manufacturing or processing machinery and equipment, clean energy generation and energy conservation equipment, and data network infrastructure. Further, eligible liquified natural gas (LNG) facilities would be allowed capital cost allowances of 50%for liquefaction equipment and 10% for non-residential buildings used in LNG facilities.
This is not tax advice. Please consult your tax advisor.
Critical Limitation – Labour Shortage
Despite some references to initiatives to expand the skilled construction workforce, the issue of Canada’s labour market having capacity to meet the Budget’s ambitious construction and infrastructure goals is slightly underdeveloped.
The Budget specifically names over 30 anticipated projects (including major), but these may be just the tip of the iceberg. While seemingly positive news for consultants and contractors, Trevor Stratton et al. of Deloitte estimates that, based on the Federal Government’s construction goals, there will be a shortage of 410,000 to 520,000 tradespeople by 2030.[3]
It will be interesting to see how the Federal Government plans to overcome this very key issue, particularly with its Budget’s goal of keeping immigration tight. Perhaps the broken-down internal trade barriers promised by the Free Trade and Labour Mobility Act or the new reskilling package for workers who have lost work due to tariffs and market shifts will assist. We will be watching for an action plan on this issue once the Budget is approved and commences implementation.
Contact Us
Our office in Canada supports international clients with their construction and infrastructure project needs. The team has experience in both Ontario and BC and can assist you in navigating how the Budget will impact the industry and what types of projects are being rolled out. Should you have any questions on this article or require tailored advice in respect of future opportunities or projects in Canada, please contact Andrés Durán and Sherry Hussain.
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[1] Budget 2025 – Canada Strong
[2] Prime Minister Carney outlines Budget 2025 measures to Buy Canadian | Prime Minister of Canada
[3] Builders, Baby, Builders? The Half a Million Worker Question | Deloitte Canada
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