Federal Budget 2025

November 4, 2025

Today, Finance Minister François-Philippe Champagne presented the government’s first budget under Prime Minister Carney. Titled "Canada Strong”, which was the Liberal Party’s central campaign slogan, the budget marks a new approach that shifts the federal budget cycle from spring to fall. In the 568 days since the last budget, the economy, Parliament, and the broader world have all changed, each shaping the context in which this new fiscal and budgetary plan is presented. The budget documents are more than 493 pages — a more fulsome and comprehensive detail of policy programs, fiscal and economic indicators, and debt management objectives than has been seen in some time, giving weight to the political moment the country faces in a challenging geopolitical context. The budget’s annexes include detailed expenditure reviews broken down by departments and agencies, various tax measures, and impact reports, which assess how various fiscal and policy programs will affect Canada’s demographics, which is a different approach from previous budgets. 

Despite warnings of significant cuts to cultural funding in Canada, Budget 2025 makes modest investments in specific programs within the Department of Canadian Heritage and Canada Council for the Arts. The investments made were largely related to programs which had top-ups that were to sunset at the end of the current fiscal year.

While the Department of Canadian Heritage is expected to receive reductions as part of the Comprehensive Expenditure Review, the Canada Council is not. 

Key Items of Relevance to Arts and Culture

• $48 million over three years, starting in 2026-27, to Canadian Heritage for the Canada Music Fund to enhance the careers of Canadian artists while strengthening the competitiveness and stability of the Canadian music sector;
• $21 million over three years, starting in 2026-27, to Canadian Heritage for the Building Communities through Arts and Heritage Program to support local festivals, community anniversaries, and community-initiated capital projects;
• $46.5 million over three years, starting in 2026-27, to Canadian Heritage for the Canada Arts Presentation Fund to support professionally presented arts festivals or performing arts series;
• $150 million over three years, starting in 2026-27, to Telefilm Canada to support Canada’s vibrant film industry;
• $127.5 million over three years, starting in 2026-27, to Canadian Heritage for the Canada Media Fund to support Canada’s audio-visual content creators;
• $26.1 million over three years, starting in 2026-27, to the National Film Board to produce and share Canadian content with the world;
• $150 million in 2025-26 for CBC/Radio-Canada to strengthen its mandate to serve the public and to better reflect the needs of Canadians. The Government will explore modernizing CBC/Radio-Canada’s mandate to strengthen independence, and is working with CBC/Radio Canada to explore participation in Eurovision;
• $6 million over three years, starting in 2026-27 for the Canada Council for the Arts to support professional artists and arts organizations;
• $20 million over four years, starting in 2026-27, to Canadian Heritage for the Celebration and Commemoration Program to support Canada Day celebrations;
• $4 million over four years, starting in 2026-27, to Canadian Heritage for the Celebration and Commemoration Program to support National Acadian Day; and
• $6 million over three years, starting in 2026-27, to Canadian Heritage to support the purchase of Canadian content for the TV5MONDEplus platform.

Comprehensive Expenditure Review

The Government has given indication of its planned reductions in spending through the Comprehensive Expenditure Review. In total, the Review will achieve savings of $9 billion in 2026-27, $10 billion in 2027-28, and $13 billion in 2028-29.

While some departments will not face the full reduction, the Department of Canadian Heritage will work towards up to 15% of savings over the coming three fiscal years. The Budget lists the following steps that the Department will take to achieve this end: 

• The Canada Cultural Spaces Fund will be reduced and reoriented to focus solely on funding specialized equipment in the cultural sector.
• The Canada Periodical Fund will be refocused to incentivize the creation of original Canadian editorial content only, not long funding paid subscriptions and single-copy sales.
• The Department will reorganize its internal services and program administration to consolidate efforts, reduce overlap, and modernize workflows. It will transform its transfer payment delivery model, standardizing processes, consolidating functions, and replacing fragmented systems with a modern digital platform. Savings will also be achieved by refocusing on core priorities, including the closing of the Gift Bank for Ministers and senior officials and transitioning to a focus on digital interpretation products, which will support a wide variety of languages, including Indigenous languages.

The total reduction for the Department of Canadian Heritage will be the following:

The Canada Council for the Arts is not part of the planned reductions in Budget 2025 and no cuts to programs related to official languages were mentioned as part of the Comprehensive Expenditure Review.

There is no mention of significant movement on or reform related to the social safety net.

There is no mention of a live performance tax credit scheme, or similar.

Other relevant investments

Cultural Infrastructure

• Budget 2025 announces the government’s intention to launch a new Build Communities Strong Fund, to be administered by Housing, Infrastructure and Communities Canada, and proposes to provide $51.0 billion over 10 years, starting in 2026-27, and $3.0 billion per year ongoing in new and existing funding for this initiative, including through funding to provincial and territorial governments—and through them to municipalities—to support a wide range of infrastructure projects and help our local communities build Canada strong. (p.102)
• A Direct Delivery Stream, delivered by Housing, Infrastructure and Communities Canada, that will provide $6 billion over 10 years, starting in 2026-27, to support regionally significant projects, large building retrofits, climate adaptation, and community infrastructure. Proponents of regionally significant projects would be required to seek private sector investment, including private investment leveraged through Canada Infrastructure Bank financing, before being eligible for funding under this stream. (p.102-103)

 Employment Insurance and Social Safety Net

• $570 million over three years, starting in 2025-26, through Labour Market Development Agreements with provinces and territories to support training and employment assistance for workers impacted by tariffs and global market shifts. (p.133)
• $382.9 million over five years, starting in 2026-27, and $56.1 million ongoing, to launch new Workforce Alliances to bring together employers, unions, and industry groups to work on ways to help businesses and workers succeed in the changing labour market and coordinate public and private investments in skills development. A new Workforce Innovation Fund will invest in projects tailored to local job markets to help businesses in key sectors and regions recruit and retain the workforce they need. (p.133)
• Temporary flexibilities to the Employment Insurance Work-Sharing program, as announced on March 7, 2025, to provide EI benefits to eligible employees who agree to work reduced hours due to a decrease in business activity beyond their employer’s control. This helps employers and employees avoid layoffs while supplementing reduced income with EI benefits. This measure is expected to cost $370.5 million over five years, starting in 2025-26, and $18.5 million ongoing. (p.133)
• Temporary Employment Insurance measures that enhance income supports for Canadian workers whose jobs have been impacted by the economic uncertainty caused by foreign tariffs. These supports are expected to cost $3.7 billion over three years, starting in 2025-26. (p.133)

Student and youth programs

• Employment and Social Development Canada will streamline program delivery by consolidating the Canada Service Corps program and the Supports for Student Learning Program to bring down administration costs. (p. 300)
• Budget 2025 proposes to provide $594.7 million over two years, starting in 2026-27, to Employment and Social Development Canada for Canada Summer Jobs to support around 100,000 summer jobs in summer 2026. (p. 166)
• Budget 2025 proposes to provide $307.9 million over two years, starting in 2026-27, for the horizontal Youth Employment and Skills Strategy to provide employment, training, and wraparound supports (e.g., mentorship, transportation, mental health counselling) to around 20,000 youth facing employment barriers annually. $20.1 million of this is offset by funding already provisioned in the fiscal framework. (p.166-167)
• Budget 2025 proposes to provide $635.2 million over three years, starting in 2026-27, to Employment and Social Development Canada for the Student Work Placement Program to support around 55,000 work-integrated learning opportunities for post-secondary students in 2026-27. (p.167)

Trade and export

• Global Affairs Canada will implement reforms across its trade and investment portfolio, including modernising the Trade Commissioner Service, and refocusing certain trade support programs. (p.305)
• Budget 2025 proposes to provide $8 million over four years, starting in 2026-27, and $2 million ongoing, to Global Affairs Canada to deepen trade relations with European partners by undertaking new trade missions with Canadian businesses and supporting Canadian Chambers of Commerce in Europe. (p.143) 

Tourism 

• The Regional Development Agencies will also wind down the Tourism Growth Program after 2025-26, with the industry continuing to be supported by regular programming. (p.331)

Tax reform 

• The Government intends to proceed with the proposal of August 15, 2025, related to reporting by Non-profit Organizations, subject to a deferred application date for taxation years beginning January 1, 2027 or later (the government is reviewing the feedback it received from consultations with stakeholders and will release final proposals in due course that minimise any additional administrative burden and clarify which organizations are, or are not, subject to the new requirement); (p. 362)
• The Government intends to proceed with legislative proposals released on January 23, 2025, to extend the 2024 charitable donations deadline; (p. 362)
• The Government intends to proceed with legislative and regulatory proposals released on August 12, 2024 related to charities and qualified donees; (p. 363)
• Planned repeal of the Digital Services Tax.

Competition

• Amending the Competition Act to strengthen its ability to address longstanding competition issues and to reflect the new realities of the technology-driven economy.  (p.115)

Overall Budget at a Glance

The budget is based on core themes from Carney’s pre-budget address: economic resilience, fiscal discipline, empowering Canadians, building national capacity, and creating a leaner, more efficient government. It positions Canada as moving into a new industrial phase driven by global competition and U.S. protectionism, focusing on “Buy Canada” procurement, domestic supply chains, and export diversification. The government combines these ambitions with a promise to protect key social programs and eliminate the operating deficit within three years. 

The budget also detailed significant savings from the federal government’s recent Comprehensive Expenditure Review, which aims to control spending by identifying internal efficiencies through three core pillars: modernizing operations, streamlining delivery, and recalibrating programs. It confirmed planned operational cuts across the federal public service through workforce adjustments and attrition, and, for the first time, included immigration levels within the fiscal framework as part of a broader effort to align population growth with the government’s economic and labour goals. Included in the budget is the government’s Climate Competitiveness Strategy, which outlines the Carney government’s approach to harmonizing economic development with climate and environment issues.

Broadly, the strategy looks to focus on how Canada and Canadian businesses can play a larger role in the global transition to a low-carbon economy. While short on details, the strategy marks a departure from the previous Trudeau government’s climate policy, which focused on legislative and regulatory interventions. The Carney government is instead emphasizing the role of industry and private-sector investment, by utilizing various investment tax credits to drive this agenda. The new Carney government approach indicates that the two-remaining market-based emissions reduction mechanisms introduced by the previous Liberal government – the industrial carbon price and the clean fuel regulations – will remain intact for the foreseeable future. 

Attention now turns to the House of Commons, where the government will need a supportive partner or at least a cooperative critic to keep its agenda advancing.

Budget Themes

The budget document sets the stage by providing a detailed economic and fiscal overview, with remaining chapters focused on building one Canadian economy, shifting reliance to resilience, protecting Canada’s sovereignty, and creating a more efficient government, all elements that Prime Minister Carney reinforced both during the election campaign, and in his pre-budget address.  

Legislative Items

The budget contains well over 75 items proposing various legislative changes in areas including competition and environmental laws, the Broadcasting Act, high-speed rail, anti-money laundering, and various other statutes and laws. This will likely serve as an initial preview of what to expect in the forthcoming Budget Implementation Act.  

Fiscal Position

The budget’s fiscal outlook is gloomy. The document projects sharply lower GDP growth for the coming years, at 1.1% for 2025 and 1.2% for 2026. This is a drop of almost 50% from 2024 projections. Unemployment is expected to peak at 7.2% in Q4 of this year. This leads to a budget awash in red ink. Though the 2024-25 deficit comes in significantly lower, at $36 billion, compared to the $48 billion projected in 2024, the coming years see no return to budgetary balance on the horizon. The 2025-26 deficit is projected at a staggering $78 billion, and though deficits are projected to fall, this budget forecasts a $56 billion deficit in 2029-30. Canada’s debt-to-GDP radio will reach almost 42% this year before declining to 39% by 2030.  

PAA and PACT are reviewing the budget in detail to assess its impact on our members and identify opportunities for continued advocacy. PACT will be issuing its response to the 2025 Federal Budget in the days ahead. 

Click here to view full the full budget.

Our friends at PAA will go over the budget and answer questions at PACT’s Town Hall on Thursday, November 13, 2025, at 1:00pm ET. Click here to register.

Click here to view PACT's response to the Federal Budget. 

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