Executive Summary
Navigating the 2025 Federal Budget
What Alberta businesses need to know
Prime Minister Mark Carney’s first federal budget comes at a time when Canada’s businesses are facing heightened economic and political uncertainty. Given Canada’s long-established trade relationships with the United States, particularly within energy and manufacturing, the ongoing trade dispute continues to be a source of economic anxiety and uncertainty. Billed as a “generational investment opportunity,” Prime Minister Carney is hoping to live up to his reputation as the “steady hand” during tumultuous times.
Given increasing and ongoing federal budget deficits, businesses are looking for assurances of a back-to-balance plan that keeps Canada’s strong standing credit rating to keep their own borrowing costs manageable. In parallel, businesses are concerned about the potential for increasing federal taxation, including personal, small business and corporate rates, as well as adjustments to other payroll taxes impacting their bottom line.
Finally, businesses are seeking targeted measures to support navigating these exceptional economic and trade developments brought on by a seismic shift in U.S. trade policy, including trade deals to access new markets with less tariff exposure.
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Context
The 67-page Liberal platform document, coupled with recent media coverage and statements from Prime Minister Carney, provides a foundational understanding of the government's intended policy direction.
While the Speech from the Throne on May 27th will offer further clarity on immediate priorities, it's crucial to acknowledge that stated intentions are subject to the complexities of execution, potentially leading to delays or modifications.
Key Takeaways
Major Sectoral Investments
U.S. Trade and Tariffs
Federal Fiscal Situation
Major Sectoral Investments
The headliner of Budget 2025 is what the Prime Minister has termed a “generational investment” in nation-building initiatives, through investments in strategic sectors like defence and infrastructure:
- $81.8 billion over 5 years to a new defence industrial strategy
- $51 billion over 10 years to a new Build Communities Strong Fund
- $40 billion in “ready-capital” investment in major, nation-building projects
Major Sectoral Investments
U.S. Trade and Tariffs
Federal Fiscal Situation
U.S. Trade and Tariffs
The budget delivers on the Prime Minister’s early fall promise for a package of measures to help workers, sectors, and regions disproportionately impacted by U.S. tariffs:
- $5 billion over six years, starting in 2025-26, for the Strategic Response Fund
- $1 billion over three years, starting in 2025-26, for the Regional Tariff Response Initiative
- $5 billion over seven years to create the Trade Diversification Corridors Fund
- $2 billion over 5 years to a new Critical Minerals Sovereign Fund
- $1.7 billion for a new International Talent Attraction Strategy
- $10 billion to support firms impacted by tariffs through a Large Enterprise Tariff Loan program
Major Sectoral Investments
U.S. Trade and Tariffs
Federal Fiscal Situation
Federal Fiscal Situation
Budget 2025 proposes $585.9 billion in total spending initiatives in 2025-26, increasing to $639.8 billion in 2029-30. This represents:
- $78.3 in deficit spending
- $55.6 billion in debt-servicing charges for 2025-26
- The deficit is projected to decline to $56.6 billion in 2029-30.
- Canada’s deficit-to-GDP ratio is projected to be 1.8 per cent in 2025-26 increasing to 2.1 per cent by 2029-30.
Additionally, Budget 2025 implements the new budgetary framework announced by the Finance Minister earlier this month, separating into operational and capital spending. The federal Finance Minister claims this will achieve operational savings of $9 billion in 2026-27, $10 billion in 2027-28 and $13 billion in 2028-29.
However, Budget 2025 does not include a projection back to balance, indeed high deficit levels continue through to 2029-30.
Economic Background
- While Alberta's economy is expected to perform relatively well, trade uncertainty has created headwinds for the province. Oil prices have declined, putting downward pressure on capital budgets.
- Despite rapid population growth and elevated unemployment, skills shortages persist in certain areas - particularly in the skilled trades.
- Pervasive policy uncertainty is hindering business investment and dampening economic growth, especially in the energy sector. This sector is seeking clearer federal guidance, specifically on how the government plans to fulfill "energy superpower" promises and streamline project approvals.
- Domestic trade barriers within Canada are a significant drag on economic growth, and their removal could boost GDP per capita by about 4% over the long term according to the International Monetary Fund.
Looking Ahead: Strategic Adaptation in a Shifting Policy Landscape
- Preparing your Alberta business for the evolving federal policy environment demands a proactive and adaptable approach.
- This includes diligently understanding the potential implications of new regulations, trade dynamics, and economic shifts across all sectors.
- Prioritizing robust financial management, such as maintaining strong cash flow and balance sheets, is crucial for building resilience.
- Businesses should also actively explore new opportunities, including diversification into emerging fields and the cultivation of alternative markets, while leveraging available resources and partnerships to mitigate potential risks.
- Implementing thorough financial analysis and planning, including sensitivity analysis, will be essential for navigating economic uncertainties and ensuring sustained success in this dynamic landscape.
Sector-Specific Insights: Impacts and Opportunities from the Liberal Platform
The May 27, 2025 Speech from the Throne, Liberal Platform, and recent statements from Prime Minister Carney in the media and House of Commons provide a foundational understanding of the government's intended policy direction.
Energy
Agriculture
Real Estate
Diversified Industries
Energy
- Alberta's energy sector is navigating a period of significant transformation driven by evolving federal environmental policies. Legislation, such as Bill C-48 (the West coast tanker ban), Bill C-59 (environmental performance reporting), and Bill C-69 (major project approvals) has created headwinds for oil and gas investment.
- Based on current government policy, the impact of the industrial carbon tax and the impending emissions cap will further intensify, directly affecting profitability through increased operational costs and potentially constraining future expansion.
- Concurrently, while the federal government has expressed support for energy corridors and faster pipeline approvals, the potential for pipes in the ground in the short to medium term remains uncertain.
- This disconnect creates a challenging environment for investment in traditional energy infrastructure.
- Despite these considerable pressures, the federal focus on a green transition presents concrete opportunities for Alberta businesses.
- Investment tax credits targeting clean energy technologies - coupled with the First and Last Mile Fund for critical mineral projects - offer tangible pathways for diversification and growth into emerging sectors.
- Furthermore, the federal government's active support for CCUS technology, highlighted by Prime Minister Carney's acknowledgment of the Pathways project, provides a crucial avenue for sustainability within the existing energy framework.
- However, the successful advancement of such initiatives hinges on establishing clear and economically viable capital cost recovery models in collaboration with both federal and provincial governments.
- Navigating this complex landscape, shaped by both regulatory challenges and emerging opportunities, demands a strategic and proactive approach.
- Recognizing the tangible impacts of current legislation while exploring and capitalizing on new avenues for growth will be essential for building a resilient energy future for Alberta.
Energy
Agriculture
Real Estate
Diversified Industries
Agriculture
- The federal platform for agriculture balances support for supply management with investments in modernization.
- A core commitment remains the protection of supply management, particularly for dairy, poultry, and eggs.
- However, while the platform pledges to exclude dairy from trade negotiations, past experiences with CUSMA and the political dynamics of key dairy-producing states in the US suggest this sector may still face future trade-related pressures.
- Key proposals include permanently expanding the AgriStability Program's revenue protection to $6 million per farm to enhance producers' safety net against external shocks.
- Strategic investments aim to bolster long-term resilience through a $200 million Domestic Food Processing Fund to increase processing capacity, a $30 million boost to the Agriculture Clean Technology Program for sustainable practices, and expanded financial support via the Canadian Agricultural Loans Act.
- Additionally, a $30 million top-up to the AgriMarketing Program underscores the government's commitment to export diversification and internal trade.
Energy
Agriculture
Real Estate
Diversified Industries
Real Estate
- The Liberal Housing Plan aims to address supply-demand imbalances across Canada’s real estate sector, with initiatives like Build Canada Homes (BCH) and Canada Mortgage and Housing Corporation (CMHC) programs, potentially offering opportunities for increased homebuilding.
- The Liberal plan to accelerate housing construction through pre-fabrication presents a significant opportunity for Alberta; As a long-standing manufacturing hub for pre-fab housing, particularly for the natural resources sector, areas like Nisku, Acheson and Southern Alberta are well-positioned to benefit from this initiative given that the necessary manufacturing infrastructure is largely in place.
- However, the ambitious goal to double construction rates raises concerns about potential skilled trades shortages, which could increase project costs, especially since Alberta is already grappling with labor supply challenges that an aggressive building program could exacerbate. The government's Apprenticeship Grant program aims to accelerate the training of skilled tradespeople, potentially mitigating this issue.
- The government’s commitment to reducing red tape in development and construction is welcome news for real estate clients, as expediting approvals and permits will allow projects to become shovel-ready sooner, thus responding to demand pressures.
Energy
Agriculture
Real Estate
Diversified Industries
Diversified Industries
- The Liberal platform outlines several initiatives designed to invigorate innovation, investment, and entrepreneurship across Canada, presenting distinct opportunities for Alberta businesses.
- Notably, the proposed extension of flow-through shares to sectors like artificial intelligence, quantum computing, biotechnology, and manufacturing could significantly benefit Alberta's burgeoning tech industry, facilitating crucial capital raising for growth and development.
- Furthermore, the introduction of a "patent box regime," which aims to reduce corporate income tax on profits from domestically developed and patented R&D, could help address Canada's historical weak innovation performance, particularly in the area of business R&D and commercialization.
- In a move welcomed by the business community, the proposed capital gains tax increase and changes to stock options have been reversed.
- This reversal, coupled with the continued support of initiatives like the Lifetime Capital Gains Exemption (LCGE) and the Canadian Entrepreneurs’ Incentive (CEI), aims to foster a more favorable environment for entrepreneurship and investment.
- The platform seeks to introduce apprenticeship grants to address the critical need for skilled tradespeople in Alberta's construction, energy, and manufacturing sectors.
Energy
Agriculture
Real Estate
Diversified Industries
Energy
- Alberta's energy sector is navigating a period of significant transformation driven by evolving federal environmental policies. Legislation, such as Bill C-48 (the West coast tanker ban), Bill C-59 (environmental performance reporting), and Bill C-69 (major project approvals) has created headwinds for oil and gas investment.
- Based on current government policy, the impact of the industrial carbon tax and the impending emissions cap will further intensify, directly affecting profitability through increased operational costs and potentially constraining future expansion.
- Concurrently, while the federal government has expressed support for energy corridors and faster pipeline approvals, the potential for pipes in the ground in the short to medium term remains uncertain.
- This disconnect creates a challenging environment for investment in traditional energy infrastructure.
- Despite these considerable pressures, the federal focus on a green transition presents concrete opportunities for Alberta businesses.
- Investment tax credits targeting clean energy technologies - coupled with the First and Last Mile Fund for critical mineral projects - offer tangible pathways for diversification and growth into emerging sectors.
- Furthermore, the federal government's active support for CCUS technology, highlighted by Prime Minister Carney's acknowledgment of the Pathways project, provides a crucial avenue for sustainability within the existing energy framework.
- However, the successful advancement of such initiatives hinges on establishing clear and economically viable capital cost recovery models in collaboration with both federal and provincial governments.
- Navigating this complex landscape, shaped by both regulatory challenges and emerging opportunities, demands a strategic and proactive approach.
- Recognizing the tangible impacts of current legislation while exploring and capitalizing on new avenues for growth will be essential for building a resilient energy future for Alberta.
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