Maximum Load? Major Infrastructure Aspects Of Budget 2025

On November 4, 2025, Finance Minister François-Philippe Champagne tabled the 2025 federal budget (Budget 2025). Budget 2025 contains significant infrastructure announcements across five major categories: trade and transport infrastructure, community and core public infrastructure, housing delivery and financing, defence and security infrastructure, and critical minerals and clean economy enablers. The planned spending and incentives are intended to enable over $1 trillion in total investments, including approximately $315 billion in infrastructure. For builders, financiers and other participants in the Canadian infrastructure industry, Budget 2025 represents the potential to substantially expand the project pipeline with new delivery mechanisms and financing tools.

The infrastructure spending pipeline

Budget 2025 confirms a five-year infrastructure plan totalling $115 billion on an accrual basis, comprising $54 billion for core public infrastructure (e.g. water, wastewater, and transit), $19 billion for Indigenous and municipal infrastructure, $37 billion for other assets (health, innovation), and $5 billion for trade and transport infrastructure.

Significantly, Budget 2025 introduces a Capital Budgeting Framework that separates day-to-day operational spending from long-term investments designed to strengthen the economy. This change is said to align with financial management approaches in other countries, such as the United Kingdom and Singapore, and builds upon some provinces' practice of presenting capital or infrastructure plans separately from the main budget. This move is said to be driven by an overarching target to catalyse $500 billion in new private sector investments over the next five years by focusing federal spending on capital formation and projects that attract private investment.

Budget 2025 projects that, while the 2025 deficit will be $78 billion, it will be reduced to $58 billion by 2028-2029, by which time all deficit spending will also be entirely related to investments in the long-term economic growth of the country. More than $32.5 billion of the net new spending over five years presented in Budget 2025 is classified as capital investment.

In another notable move for industry participants, the government announced that budgets will be moved to the autumn to align with the construction season and planning cycles for provinces, municipalities, builders, and investors. This may be a welcome change to the extent it allows for greater coordination across all levels of government.

Trade And Transport Infrastructure

Budget 2025 makes substantial commitments to trade-enabling infrastructure.

Trade Diversification Corridors Fund

The government will establish a Trade Diversification Corridors Fund (to be delivered by Transport Canada) with $5 billion over seven years starting in 2025-26 to invest in port, rail, airport, and digital infrastructure to strengthen supply chains and open new export gateways. Examples cited in Budget 2025 include projects in the Great Lakes–St. Lawrence region, ports in northeastern Quebec, rail lines in Alberta, and port infrastructure on the West Coast.

As part of this initiative, the government has indicated it will expand CBSA port designations in the Great Lakes–St. Lawrence region, including Quebec City and Hamilton to catalyse private port investment.

Arctic Infrastructure Fund

Budget 2025 commits $1 billion over four years for an Arctic Infrastructure Fund to support major northern transportation assets including airports, seaports, and all-season roads and highways. These projects will have dual civilian–military use and support sovereignty and northern trade. This is complemented by $25.5 million over four years for Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) and $41.7 million for the Canadian Northern Economic Development Agency to accelerate northern regulatory processes and consultation.

Airport Policy Reform

Budget 2025 suggests that the government will consider lease extensions, economic development on airport lands, rent formula changes, and potential privatisation to unlock private capital for airport infrastructure, with details to follow. Budget 2025 also provides $55.2 million for local and regional airport safety infrastructure to be delivered through the Airports Capital Assistance Program.

Build Communities Strong Fund

Budget 2025 establishes the Build Communities Strong Fund to be administered by Housing, Infrastructure and Communities Canada with $51 billion over 10 years, followed by $3 billion per year in ongoing funding. Funding will be provided to provinces, territories, and municipalities across three streams and project selection will consider factors such as the use of unionised labour and community employment benefits agreements.

The fund will be structured as follows:

• Provincial/Territorial Stream: $17.2 billion to support housing-enabling infrastructure such as roads and water/wastewater, hospitals, and infrastructure at colleges and universities. Access to funds will require provinces to cost-match federal funding.
• Health Infrastructure Fund: Within the Provincial/Territorial Stream, $5 billion over three years will be dedicated to bolster provincial health infrastructure like hospitals, emergency rooms, urgent care facilities, and medical schools.
• Direct Delivery Stream: delivered by Housing, Infrastructure and Communities Canada, the stream will provide $6 billion over ten years for regionally significant projects, large building retrofits, climate adaptation, and community infrastructure. Project proponents will be required to seek private capital or Canada Infrastructure Bank (CIB) financing before being eligible for funding.
• Community Stream: this is a rebrand of the Canada Community-Building Fund and will, as planned, provide $27.8 billion over 10 years and $3 billion per year in ongoing funding to support local infrastructure projects.

Defence and Security Infrastructure

Budget 2025 contains a significant defence infrastructure commitment as part of an $81.8 billion investment to rebuild, rearm, and reinvest in the Canadian Armed Forces (CAF), as further outlined below.

Canadian Armed Forces Rebuild

Budget 2025 commits $19.0 billion towards repairing and sustaining CAF capabilities and investing in defence infrastructure, including expanding ammunition and training infrastructure. A further $10.9 billion will be allocated to upgrading the Department of National Defence, CAF, and Communications Security Establishment's digital infrastructure.

Defence Industrial Strategy

A further $6.6 billion will be directed to strengthening domestic defence production, supply chains, and procurement. A new Defence Investment Agency will also be established to streamline procurements over $100 million, including submarines and other critical CAF capabilities.

The creation of the Defence Investment Agency and the substantial capital allocation for defence infrastructure will create significant opportunities for construction firms and suppliers in the defence sector.

Critical Minerals and Clean Economy Infrastructure

Critical Minerals Sovereign Fund

Budget 2025 establishes a Critical Minerals Sovereign Fund to be administered by Natural Resources Canada. The fund will receive $2 billion over five years beginning in 2026-27 to provide equity, loan guarantees, and offtake agreements for critical minerals projects and companies. Natural Resources Canada will receive $50 million to support the delivery of this fund.

First and Last Mile Fund

The government will also provide $371.8 million over four years to Natural Resources Canada to establish the First and Last Mile Fund. The fund will support the development of critical minerals projects and supply chains at the upstream and midstream segments with a focus on getting near-term projects into production. This fund will absorb the Critical Minerals Infrastructure fund envelope to provide up to $1.5 billion in support through 2029-30. The fund will also continue to support clean energy and transportation infrastructure projects relating to critical minerals development.

These funds are designed to de-risk critical minerals projects by addressing the infrastructure gaps that often prevent projects from proceeding to development.

Climate Competitiveness Strategy

Budget 2025 also outlines the government's Climate Competitiveness Strategy. Among other initiatives introduced as part of the strategy, Budget 2025 focuses on prioritizing effective carbon markets, enhanced methane regulations, and technologies such as carbon capture and storage as the primary means to reduce oil and gas emissions, with a view to providing clarity and stability for businesses. The climate strategy aims to ensure Canada has access to markets by driving investment and focusing on results, providing at least some short-term relief for the energy sector to avoid production constraints and maintain flexibility. These policy shifts will be of interest to industry participants involved in energy infrastructure and may support the viability of projects like the Pathways Plus carbon capture, storage network, and pipeline project in Alberta.

Changes to the Competition Act's Greenwashing Provisions

In June 2024 the Canadian government amended the Competition Act to, among other changes, prohibits making false or misleading environmental claims. Budget 2025 notes that these changes have created investment uncertainty and have not had the desired effect, causing some parties to slow or reverse efforts to protect the environment. In light of these adverse impacts, and to provide more certainty to the marketplace, the government announced its intention to propose legislative amendments to remove some aspects of these provisions by removing the requirement for businesses to substantiate their environmental benefit claims based on internationally recognized methodology standards and also by removing the ability for third parties to bring cases directly to the Competition Tribunal for greenwashing complaints. The government's recognition of the resulting investment uncertainty is a welcome response and should provide for more certainty to the marketplace, including in relation to sustainability-based financing.

Major Projects Acceleration and Financing

Budget 2025 affirms and elaborates on significant reforms made earlier this year, including through Bill C-5, to project approval processes for large infrastructure projects of national importance.

Major Projects Office

As previously announced, the government has established a Major Projects Office (MPO) as a single window to fast-track nation-building projects. The MPO will facilitate "one project, one review" cooperation agreements under the Impact Assessment Act to streamline assessments and enable substitution where appropriate. The first five MPO-referred projects represent more than $60 billion in total capital, with a pipeline of nation-building projects expected to trigger at least $150 billion in total capital investment. For background information on the MPO, please see our prior bulletin here.

Budget 2025 provides $213.8 million over five years for the MPO, including $19.8 million from existing resources, although details of how this funding will be utilized was not outlined. A further $10.1 million will be provided to Crown-Indigenous Relations and Northern Affairs Canada to continue leading the Federal Initiative on Consultation in relation to the projects listed under the Building Canada Act.

Budget 2025 confirms the government's intention for the MPO to help structure and co-ordinate financing from the private sector, provincial and territorial partners, and the federal government. This includes funding through the CIB, Canada Growth Fund, and the Canada Indigenous Loans Guarantee Corporation.

Further Insight into MPO Support for Other Nation-Building Projects

Budget 2025 alludes to future nation building projects that will be announced by the MPO this month. Industry participants will surely be eagerly awaiting this announcement for more insight into the types of projects the MPO sees as qualified for their significant support.

Additionally, Budget 2025 provides some early details of projects the government views as being potentially transformative and outlines steps the MPO will take to further aid their development. A notable project addressed in this section is the Alto High-Speed Rail project from Toronto to Quebec City. The government committed the MPO to help accelerate engineering, regulatory, and permitting work to enable construction to start in four years. Other projects highlighted here include: the Pathways Plus carbon capture, storage network, and pipeline project in Alberta; the Artic Economic and Security Corridor projects at the Port of Churchill; and Wind West Atlantic Energy projects leveraging wind power potential in Nova Scotia and delivering it to eastern and Atlantic Canada.

Enhanced Infrastructure Financing

Budget 2025 saw the government announce an increase to the CIB's capital envelope from $35 billion to $45 billion, and provides that the CIB will be further empowered to make investments in nation-building projects referred to the MPO, regardless of sector or asset class, provided they fall within the CIB's legal mandate.

Budget 2025 further announced the Government's intention for the Canada Indigenous Loan Guarantee Corporation to work with Indigenous investors on greenfield projects that will generate economic prosperity for Indigenous communities.

The CIB capital increase and MPO referral authority, along with the expansion of the Canada Indigenous Loan Guarantee to greenfield projects could represent a significant expansion of the bankable project pipeline for private sector financiers and equity investors.

Buy Canadian Policy

Budget 2025 introduces a Buy Canadian Policy, which moves from "best efforts" to a clear obligation to buy Canadian. With this, the government will implement regulatory amendments to ensure that the Buy Canadian aspects of federal procurement processes are not subject to review by the Canadian International Trade Tribunal. The approach will extend to all federal agencies and crown corporations. It is expected that this policy will have implications for procurement strategies and supply chain composition for major infrastructure projects. The extent of those implications will depend on the policy's specifics, including whether it is limited to procurement done solely by the federal government or whether Buy Canadian requirements will extend to aspects of federal government-supported projects, including proposed nation building projects.

Tax Changes Related to the Infrastructure Industry

Budget 2025 contains additional tax changes and new incentives with the stated purposes of supporting investments and productivity, which will be addressed in a forthcoming Bulletin.

Implications for Industry Participants

Budget 2025 represents a substantial expansion and evolution of federal infrastructure policy. The $115-billion five-year infrastructure plan, combined with new delivery vehicles such as Build Canada Homes, enhanced financing capacity through the expanded CIB mandate and increased CMHC limits, and streamlined approval processes through the Major Projects Office, create a significantly expanded pipeline for industry participants.

The emphasis on private capital leverage, particularly in the Build Communities Strong Fund's Direct Delivery Stream, the industrialisation of housing delivery, and the strategic focus on trade-enabling and critical minerals infrastructure reflect a clear policy direction towards public-private collaboration in infrastructure delivery.

The shift to autumn budgets should also provide greater alignment with construction planning cycles and improve the ability of builders, financiers, and other participants to respond to federal infrastructure initiatives.

When it comes to getting "shovels in the ground" on large projects, particularly those in remote areas, many key details remain to be worked out, chief among them being the multi-jurisdictional cooperation required to ensure that the workers needed to build major projects are available and can be brought to site in a timely manner. While the federal government has signalled a desire to help address ongoing labour shortages in the building industry, most of the levers for doing so are outside of its jurisdiction. Cooperation among all levels of government will be crucial.

The Budget is deemed a matter of "confidence" and must be approved by Parliament. As such, the Budget must be passed to implement the newly added proposals. Industry participants will be watching closely for further details on the implementation of the promises made by Budget 2025.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025