After several days of debate, the Liberals’ fiscal plan for the year—Budget 2025: Canada Strong—narrowly passed on November 17 with 170 MPs in favour and 168 opposed. The highly anticipated budget comes during a time of economic uncertainty, driven by the trade wars with the United States. In the lead-up to its release, Prime Minister Carney boasted this budget as making “generational investments” and forewarned that cuts would be coming.
This federal budget comes against the backdrop of deep and persistent poverty, wages and income that have not kept up with costs of living, a worsening homelessness and housing crisis, pervasive systemic racism and anti-immigrant sentiment, unprecedented levels of food insecurity, and a climate emergency that can no longer be ignored. This moment calls for bold decisions and investments that meaningfully respond to these intersecting challenges. However, Budget 2025 falls short of what Canadians, particularly those with low and moderate incomes, need to meet today’s challenges.
Budget 2025 has been described as the most business-forward budget in recent memory. With this budget the federal government aims to build a strong Canadian economy that can withstand President Trump’s aggressive tariffs and other threats. Instead of investing in social programs and economic measures to help address the cost of living crisis, this year’s budget responds to external pressures through significant increases in military spending, stricter immigration measures, and efforts to attract private investment, to name a few. Two assumptions seem to shape the government’s approach: that increased defense spending will help stabilize Canada-U.S. relations, and tackling Canada’s broader economic challenges through investments in private sector industries will, over time, translate into tangible gains for individuals and families.
While many details are still to come, in this post we examine how this budget will directly affect low- and moderate-income residents today, and the implications for cities such as Toronto.
Income and Employment
Canada Disability Benefit: To reduce barriers to the Canada Disability Benefit (CDB), the federal budget offers a one-time $150 payment to offset the cost of obtaining the required Disability Tax Credit certificate. The first supplemental payments are expected to be issued to CDB recipients before the end of 2026-27, with eligibility applied retroactively to the program’s launch. The budget also commits to amending the Income Tax Act to exempt the Canada Disability Benefit from being treated as income. These are welcome changes, but many people with disabilities continue to struggle with the high cost of living. For example, a recent snapshot of food bank users in Toronto found that 31% had a disability. More needs to be done to expand eligibility of the Canada Disability Benefit and ensure payments are adequate.
Automatic Federal Benefits: The budget introduces a new initiative where the Canada Revenue Agency (CRA) will automatically file tax returns for eligible low-income people. This is a promising development, as it will make it easier for people to receive the benefits that they are entitled to, such as the Canada Child Benefit and the GST/HST Credit. Beginning with the 2025 tax year (filed in 2026), this measure will gradually expand to reach an estimated 5.5 million low-income Canadians by the 2028 tax year.
Personal Support Workers: A temporary (2026-2030) tax credit is being made available to Personal Support Workers, providing up to $1100 per year. This is being made available to PSWs in provinces (including Ontario) and territories that have yet to come to agreement on a wage increase under the 2023 Working Together to Improve Healthcare for Canadians Plan. While this tax credit is a welcome way to put money back into the pockets of care workers, PSWs deserve fair, stable wages that are commensurate with the essential and skilled work that they do.
Youth Employment: In recognition of growing youth unemployment, this year’s budget includes measures to help young people get into stable, well-paying jobs by:
- expanding the Youth Employment and Skills Strategy (YESS);
- continuing and enhancing funding for Canada Summer Jobs;
- connecting youth to growing industries under programs such as Futures Fund and Innovation Skills;
- providing additional funding for apprenticeship programs; and
- renewing investment in Indigenous-led education and employment initiatives.
Social Services and Health
Child Care: The federal government confirms its commitment to $10/day child care through the Canada-Wide Early Learning And Child Care (CWELCC) plan, including around $8 billion per year in transfers to provinces and territories and about $150 million per year over the next two years for capital funding. Further investment is still needed to meet the demand for more spaces, particularly in public and non-profit centres, to ensure fair wages for child care workers, and to bring fees down to $10/day (in Ontario, for example, fees sit at $19/day on average).
Immigration: The budget document includes the government’s new 2026-2028 Immigration Levels Plan, which sets permanent resident (PR) targets at 380,000 per year—down from the 2025 target of 395,000 PRs and well below the 2024 target of 485,000 PRs. Greater priority will be placed on economic immigrants and attracting international talent, resulting in reductions in the number of admissions under the Family Reunification, Refugee, and Humanitarian streams. Lower permanent residency levels means that many temporary and undocumented residents already living in Canada may continue to lack full rights, stability, and access to essential supports.
However, the budget does propose two important (though limited) regularization measures: a one-time initiative to grant permanent residency to 115,000 Protected Persons in Canada over the next two years, and a one-time initiative to fast-track permanent residency for 33,000 work permit holders over the same period. These measures point to the need for broader, ongoing status-regularization programs that provide permanent residency pathways for those already in Canada.
School Food Program: Budget 2025 makes the National School Food Program permanent, saving families roughly $800 per year in grocery costs. This program currently reaches 400,000 students which represents a small fraction of the school-aged children in Canada. While this is very welcome news, to achieve its vision where all children and youth in Canada have access to nutritious food at school, further investment and expansion of this program are needed.
Housing and Homelessness
Affordable Housing: Announced in September, a core initiative of this budget is the Build Canada Homes agency with an initial investment of $13 billion over 5 years. This is the federal government’s plan to build more affordable housing, particularly non-market housing. As part of this initiative, the government is allocating $1 billion to build transitional and supportive housing for people who are homeless or at risk of homelessness. As well, $2.8 billion is earmarked for urban, rural, and northern Indigenous housing.
Recent analysis from Maytree found that it would cost the federal government $40 billion annually through a direct build-model to achieve the 200,000 non-market homes per year needed to meaningfully address Canada’s housing crisis. While details on how the new Build Canada Homes will fulfill its mandate remain limited, the initial investment is clearly a drop in the bucket compared to this.
Indigenous Community Engagement
Language in Budget 2025 states the federal government’s commitment to reconciliation. Many projects seem to include consultation with Indigenous peoples and consideration of the impacts on the land. For example, the new Major Projects Office will have an Indigenous Advisory Council and will consider whether a project will advance the interests of Indigenous Peoples. While there are several references to consultation with Indigenous communities, we have consistently heard from our partners that engagement must go beyond consultation to include partnership and co-creation.
Other Affordability Measures
Banking and Telecommunications: The budget promises to make life more affordable through reforms to Canada’s banking and telecommunications systems. By reviewing bank and ATM fees, increasing immediate availability of cheques deposited from $100 to $150, and a new voluntary Code of Conduct for the Prevention of Economic Abuse, the government seeks to make financial services more consumer-friendly. Similarly, in telecommunications (internet, mobile, and home phone), the government is taking measures to expand market competition, simplify plan switching, and streamline infrastructure deployment. This is expected to drive down prices and improve access. While initiatives like these are generally helpful and can benefit lower-income households, timelines and ultimate impact remain uncertain.
Consumer Carbon Price: Earlier this year the government cancelled the consumer fuel charge and removed the requirement for provinces and territories to have a consumer-facing carbon price. This has lowered gas prices at the pump, a welcome relief for drivers, but it also means that eligible residents, including low-income households, are no longer receiving the tax-free Canada Carbon Rebate. This rebate amounted to $560 annually for an individual or $1120 annually for a couple with two children.
What Does This All Mean for Cities and Municipalities?
This budget provides minimal direct support to the average Canadian resident, much less those experiencing deep poverty, placing added pressure on municipal governments. Urban centres face some of the most severe and unique impacts of the economic, climate, and affordability crises, which puts them on the front lines of responses. When the social safety nets of the federal and provincial governments are inadequate, local governments take on a greater role in meeting community needs. Residents then come to rely heavily on free or low-cost municipal programs such as shelters, social housing, public transit, libraries, and community programs.
At the same time, the municipal government has the fewest fiscal tools to address poverty, leaving cities cash-strapped and often with their hands tied. For example, Toronto Mayor Olivia Chow sounded the alarm when the federal government only delivered a fraction of the funds needed to provide emergency shelter to asylum seekers. The winding down of these federal funds, coupled with the shrinking Canada Ontario Housing Benefit allocation, is expected to put significant stress on Toronto’s shelter system.
On an optimistic note, the federal budget is making key investments in infrastructure through programs such as Build Canada Homes and a new Build Communities Strong fund. Build Communities Strong provides funding for a variety of local infrastructure projects, from roads to hospitals to colleges and universities. However, access to these funds depends on provincial cost-sharing and complex bilateral agreements. The real impact of these initiatives will depend on how efficiently and collaboratively they are implemented. When major infrastructure projects support local economic growth, for example by hiring locally or including community benefits, they can create quality jobs, build community capacity, and help to reduce poverty.
A Future That Lifts Everyone
The federal government has a big picture in mind—building the economy and increasing productivity—the effects of which will take time to see. But to truly build Canada Strong and deliver on the generational promise made, we must ensure every single one of us is strong. When the people who are struggling the most to make ends meet are lifted up, all of us benefit: our communities grow stronger, our economy becomes more resilient, and our society fairer.
Although Budget 2025 offers limited direct support for individuals and families, Canada has the tools and fiscal capacity to do more. With meaningful investments in health care, social programs, income supports, stronger employment and inclusive economic development programs—all grounded in reconciliation—we can build not only a strong economy for all, but a more resilient and equitable country. At a time where we are faced with multiple challenges and crises, this is the kind of leadership Canadians deserve and the kind of future we have the power to create.
Now that the budget has been approved in the House of Commons, the next step is for Parliament to pass Budget Implementation Acts in the House and Senate. Once these receive Royal Assent, we will begin to see how the budget’s proposals are translated into actual programs and funding.