Canada’s 2025 Federal Budget: What Engineers Need to Know

The 2025 federal budget presents a bold vision for rebuilding Canada’s economy and accelerating clean growth. It also reflects many of the Ontario Society of Professional Engineers (OSPE)’s long-standing advocacy priorities: investing in infrastructure, advancing innovation, and supporting engineering-led solutions to climate and economic challenges. 

Yet, while the budget marks progress in several areas, it leaves critical gaps that may limit the pace and effectiveness of Canada’s transformation to a self-sufficient economy and industrial superpower. 

Let’s have a close look at the most pertinent sections for the engineering community. 

Powering a Clean Economy 

The Climate Competitiveness Strategy and expanded Clean Economy Investment Tax Credits align closely with OSPE’s calls for increased investment in low-carbon energy systems. New funding for nuclear, hydrogen, and renewable energy demonstrates clear recognition of engineering’s role in achieving net-zero goals. 

However, the budget stops short of addressing long-term energy planning and grid modernization, or of creating clear pathways to integrate district thermal systems and community-scale renewables—key recommendations in OSPE’s submissions. District energy or district heating and cooling systems (DHCS) are low-carbon heating options that offer a more efficient approach to heating and cooling buildings, and can be built to harness waste heat from other nation-building projects like Small Modular Reactors (SMRs) or data centres. Additional implementation details for new renewable energy funding will determine whether these investments translate into real, timely clean energy projects.  

New Jobs for Engineers 

François-Philippe Champagne, Minister of Finance and National Revenue, highlighted new opportunities for engineers in AI, cybersecurity, and aerospace—welcome news that supports OSPE’s efforts to strengthen Canada’s innovation ecosystem. 

This will be a challenge as, Canada’s engineering workforce shortages persist, and the pace of investment in research translation remains slow. Without stronger incentives for employer-led training, micro-credentials, and upskilling, job creation may outpace the availability of skilled professionals. 

Streamlining Major Projects 

The new Major Projects Office, with a budget of $213.8 million over five years, aims to streamline regulatory approvals for significant infrastructure and energy projects. OSPE supports this move, provided that efficiency does not come at the expense of engineering oversight and public safety. 

Cuts to the federal public service—a 10% reduction, or roughly 40,000 positions by 2028—risk undermining the very regulatory and project-review capacity needed to deliver major infrastructure responsibly. 

Infrastructure and Investment 

Budget 2025 directs $280 billion over five years toward capital investment, $115 billion of that budget is dedicated to building new infrastructure. The commitment to new infrastructure represents a significant opportunity for engineers to lead in design and delivery. The remainder of the $280 billion total plan is distributed across multiple priorities— like productivity, competitiveness—raising uncertainty about any additional opportunities for engineers. 

OSPE also urges the federal government to clarify how climate resilience, lifecycle costing, and engineering standards will guide infrastructure spending decisions. 

Industrial Strategy and “Buy Canadian” 

The Buy Canadian Policy for infrastructure, housing, and defence aligns with OSPE’s advocacy for strengthening domestic supply chains and manufacturing capacity. However, the policy’s implementation mechanisms remain vague. Without clear procurement directions and enforcement, Canadian engineering firms may still face competition from foreign-based suppliers that benefit from economies of scale and state subsidies. 

Listed below are relevant investment commitments 

• $105.9 million (starting 2026–27) to implement the new Buy Canadian Policy. 

• $79.9 million over five years to Innovation, Science, and Economic Development Canada (ISED) for a new Small Medium Business (SMB) Procurement Program. 

• $84.4 million over four years to ISED to extend the Elevate Intellectual Property (IP) program. 

• $22.5 million over three years to renew support for the Innovation Asset Collective’s Patent Collective. 

• $75 million over three years to the National Research Council (NRC) to extend the IP Assist Program. 

• Federal IP performance review to be conducted. 

These investments can strengthen Canadian ownership of innovation if procurement criteria prioritize engineering excellence, lifecycle value, and domestic IP retention. OSPE recommends tying Buy Canadian and SMB procurement to transparent standards and ensuring IP support programs are aligned with commercialization pathways in sectors like clean energy, infrastructure, and advanced manufacturing. 

Defence Industrial Strategy: A New Opportunity for Engineers 

Among the largest new spending commitments in Budget 2025 is the $6.6 billion allocation to strengthen Canada’s defence industry, including $4.6 billion over five years in initial investments under the forthcoming Defence Industrial Strategy. 

This initiative aims to expand access to capital, spur research and innovation, strengthen domestic supply chains, and grow critical resource stockpiles. OSPE recognizes this as both an economic and national security opportunity—but one that must be implemented transparently, with strong engineering leadership in procurement and delivery. 

Key investments include: 

• $68.2 million to establish the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS) to advance cross-sector R&D. 

• $1.0 billion for a new Defence and Security Business Mobilization Program through the Business Development Bank of Canada to finance and mentor SMEs in defence and security innovation. 

• $656.9 million for dual-use civilian-military technologies in aerospace, automotive, cybersecurity, AI, and life sciences. 

• $334.3 million for quantum technology adoption in defence-related industries. 

• $443 million for critical minerals processing and stockpiling to secure domestic and allied supply chains. 

• $182.6 million to establish a sovereign space launch capability in Canada. 

In addition, the creation of a Defence Investment Agency (DIA) seeks to consolidate procurement processes, reduce red tape, and better align defence projects with industrial capacity. 

OSPE welcomes the intent to modernize procurement but emphasizes that engineering oversight and transparent standards are vital to ensure cost-effective, accountable, and technically sound delivery. Engineers must play a central role in the governance and assurance of these new structures. 

Artificial Intelligence and Quantum Technology 

Key investment commitments from the budget: 

• $925.6 million over five years to back a large-scale sovereign public AI infrastructure (including $800 million from the Sovereign AI Compute Strategy). 

• $25 million over six years ($4.5 million ongoing) for Statistics Canada’s Artificial Intelligence and Technology Measurement Program (TechStat). 

• $334.3 million for quantum technologies through the Defence Industrial Strategy: 

• $223.1 million for quantum research, and 

• $111.2 million for the Canadian Quantum Industry. 

• The NRC will explore options for expanding the Canadian Photonics Fabrication Centre to attract capital and scale operations. 

The government’s AI and quantum funding demonstrates important alignment with OSPE’s advocacy for sovereign digital infrastructure and emerging technologies. However, the funding remains modest relative to global peers, and lacks clear frameworks for safety, ethics, and engineering-led assurance. Canada must ensure that engineers are integral to developing and governing these systems—especially as AI and quantum applications expand into critical infrastructure, defence, and energy sectors.  

Fiscal and Structural Risks 

The budget projects a $78.3 billion deficit in 2025–26, with the debt-to-GDP ratio expected to rise to 43% by 2030. While OSPE supports strategic investment in infrastructure and clean technology, long-term fiscal constraints could jeopardize the continuity of these programs—especially those tied to multi-year engineering and R&D initiatives. 

The government’s emphasis on “discipline” and downsizing the public service raises concerns about maintaining regulatory expertise and oversight for critical safety systems, environmental assessments, and permitting. 

Foreign Credential Recognition 

OSPE welcomes new funding to accelerate recognition of foreign professional credentials, one of its core policy asks. However, the budget provides limited detail on implementation or collaboration with provincial regulators. OSPE continues to advocate for national coordination and robust bridging programs to fully integrate internationally educated engineers into the workforce. 

Conclusion 

The tabled budget for 2025 advances several of OSPE’s top policy priorities: clean energy investment, innovation, infrastructure renewal, and professional mobility. These are major wins for engineering leadership in shaping Canada’s economic future. 

At the same time, OSPE notes gaps in execution, workforce development, and fiscal stability that could undermine these ambitions. Engineers will be essential in ensuring these investments translate into durable, safe, and sustainable outcomes for Canadians. 

OSPE will continue to advocate for a coherent, evidence-based approach to national infrastructure, energy, and innovation—one that keeps engineers at the table from design to delivery. 

Note: The analysis above refers to measures proposed in the federal budget as tabled. All items remain subject to parliamentary debate, potential amendment, and a final budget vote on November 17, 2025. Many measures also require passage of a Budget Implementation Act (BIA) and related regulations before taking effect. Timelines, funding levels, and program details may change during this process.