In its 2025 budget, the federal government announced several initiatives to incentivize institutional investors to back domestic infrastructure and business ventures.
The budget proposed $1 billion on a cash basis over three years, starting in 2026-27, for the Business Development Bank of Canada to launch a venture and growth capital catalyst initiative, a fund-of-funds that would leverage more private venture capital by incentivizing pension funds and other institutional investor participation. The initiative will also support new and emerging fund managers and important sectors such as the life sciences sector.
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Institutional investors will also be able to access a tax credit for clean electricity investments, which will provide a refund equal to 15 per cent of the capital cost of eligible investments in equipment related to low-emitting electricity generation, electricity storage and the transmission of electricity between provinces and territories.
The budget also proposed exploring potential improvements under the National Airports System governance model, including amendments to ground leases and measures to crowd-in additional private investment, including from institutional investors.
The document proposed amending the Public Service Superannuation Act to extend the operational service early retirement program to eligible frontline employee groups in the Public Service Pension Plan, so that they receive pension benefits that reflect the weight of their responsibilities.
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Eligible employees will be able to retire with an immediate pension based on years of service with no penalty for early retirement. Implementation would proceed by Jan. 15, 2026, or when legislation receives royal assent, according to the budget, which noted the government intends to conclude the process within one year. This program is estimated to have a net fiscal impact of $1.5 billion over five years, while providing ongoing savings of $82 million annually.
The government intends to initiate consultations with key stakeholders to account for Canada Pension Plan and Quebec Pension Plan enhancements and ensure that federal employees continue to receive the same pension benefits without over-contributing. This adjustment is estimated to save federal employees up to $1,100 in annual pension contributions, while maintaining their pension benefit levels. The budget projected the move will achieve fiscal savings of $1.1 billion over four years and $384 million ongoing.
To support workers impacted by U.S. tariff policy and global economic volatility, the budget proposed $570 million over three years, through labour market development agreements with provinces and territories, for training and employment assistance.
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It would also provide $382.9 million over five years 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.
The budget also outlined funding for Employment and Social Development Canada to launch a pilot project to assess whether employment insurance eligibility and entitlement can be determined accurately and securely using real-time payroll information.
“While this measure is a pilot, it is expected to influence future decisions that would primarily benefit Canadian workers, EI benefit applicants and recipients and businesses of all sizes by reducing the reporting burden, improving program and service delivery, and streamlining employers’ and employees’ interactions with the federal government.”
To crack down on employers that misclassify employees, the budget earmarked $77 million over four years, with ongoing funding of $19.2 million annually, for the Canada Revenue Agency to implement a program that addresses non-compliance related to personal services businesses as well as lift the moratorium on reporting fees for services in the trucking industry.
It also reiterated a commitment to crack down on wage theft through regulatory changes announced in the government’s 2024 fall economic statement.
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