The budget tabled by the federal government on November 4 sets out a path that will worsen income inequality in Manitoba and squeezes the provincial government’s finances. The federal budget is focused on attracting $500 billion in private investment with only a handful of initiatives to help those most impacted by rising rents, food costs and the cost of other basic necessities. The private sector may not respond to Canada’s call for increased investment. If they do, experience shows that private sector wealth does not trickle down unless there are strong income and redistributive programs, which are completely missing from this budget.
The federal budget is an austerity budget with $60 billion in cuts to federal programs, and a massive increase in military and defence spending by $82 billion. The budget includes the “Build Communities Strong Fund”, which is $51 billion over ten years for the construction of roads, ports, hospitals, community centres, parks and transit, and a new program to build modular homes to address the housing crisis.
Cuts will impact Manitoba’s budget
Health care
Manitoba is particularly reliant on federal transfer payments to help cover the cost of major services like healthcare. Cut backs to federal transfers can therefore have a large impact in Manitoba, straining provincial health spending plans.
Budget 2025 maintains funding for the Canada Health Transfers to 2026-27, and then forecasts cuts of $300 million per year for 2028-29 and 2029-30. Future funding will be tied to national GDP growth with a floor of three per cent. This is problematic since health care costs are not tied to GDP, but rather to metrics such as inflation or population aging. This new method limits the funding available to provinces like Manitoba with an aging population and will put pressure on the province to increase funding to meet the needs of the population and reverse privatization brought in by the previous Conservative provincial government.
Thanks in part to current federal funding, Manitoba has made gains in staffing the health care sector over the past two years. Much more is needed, particularly with allied health workers, such as rural paramedics. Manitoba signed on to the 10 year-federal“Working Together to Improve Health Care for Canadians” plan in 2023, which provided $150 million per year for 2023-24 to 2025-26 to address health care staffing issues. This funding for staffing is not renewed in the new federal budget, and the budget was silent on addressing the health care staffing issue. Budget 2025 announced $5 billion over five years for health care capital infrastructure, but without cash on the table to staff these new facilities it is unclear how useful this funding will be for small provinces like Manitoba. By not including any funding for operating or staffing, this federal budget offloads these responsibilities to the provinces, making Premier Kinew’s commitment to balance the Manitoba budget less likely.
No additional money was earmarked for pharmacare programs in the 2025 federal budget. Manitoba was the first province to sign onto the Pharmacare program last February, which provides $219 million over four years for birth control, hormone replacement therapy, diabetes and HIV prevention and treatment. It is fortunate that Manitoba is one of the four provinces and one territory to have secured this federal funding; 60 per cent of the $1.5 billion is already committed.
Post Secondary Education (PSE)
This budget acknowledges the importance of research and innovation to Canada, but it lacks a plan for providing adequate funding to cash-strapped public universities and colleges. The budget included $1.7 billion for an “International Talent Attraction Strategy and Action Plan”; however, the universities tasked with attracting these professionals are struggling financially. There is a two per cent cut to the Social Sciences and Humanities Research Council (SSHRC) and other tri-agency administration, but no change to research grants.
The budget also cuts the number of international student permits by 49 per cent, from 305,900 to 155,000. Universities and colleges had come to rely on higher student fees paid by international students after provincial funding cuts. With the cuts in international study permits and no commensurate federal funding increases, university budgets will continue to be pinched and return to the provincial government for support, or continue to cut programs and increase tuition fees thereby eroding quality and accessibility of PSE.
Income inequality & poverty
The National Advisory Committee on Poverty reported that Canada is not on track to meet its 2030 target of halving 2015 poverty levels. Despite this devastating finding, there is no bold action to get ahead of poverty and support social and economic rights. There is no effort to redistribute income to those living at or below the poverty line. This is a concern in Manitoba as the province has higher than average poverty rates: 11.5 per cent of Manitobans live in poverty compared to the 9.9 per cent Canadian average. The federal Canada Child Benefit has assisted low-income families, but no changes are being made to help families raising children below the poverty line. In other provinces, provincial child benefit income programs provide additional assistance; however, Manitoba’s Child Benefit program has remained unchanged for years, and the threshold is so low that few qualify.
The only initiative for low-income people in the federal budget is automatic tax filing, which has been in the works for several years. The federal budget does include new money for youth employment strategy and employment initiatives to address the high and rising youth unemployment rates. The budget will increase the number of positions created under Canada Summer Jobs from 70,000 in 2025, to 100,000 in 2025. However, with the number of federal cuts in this budget, the increase in funding for youth seems like it is “robbing Peter to pay Paul.”
Income inequality is expected to worsen nationwide due to the federal government lowering the first personal income tax rate from 15 per cent to 14 per cent, a tax cut of approximately $420 per person, at a cost of $27 billion. This is the largest single new expense in the budget after defence and infrastructure spending, but they will not help those most in need. As CCPA National has found, most low-income earners (9.6 million people) see no benefit at all to these tax changes, as they have enough tax credits to not pay federal income tax, so changing the rate does not help them. Last spring, the federal government announced it would be eliminating the carbon levy, which not only stalls action on climate change, it is the loss of a policy tool that redistributed wealth to lower-income households. Lower-income households received more in income transfers than they paid in the carbon tax levy.
Accelerating fossil fuel expansion in Manitoba
The federal government has reaffirmed its commitment of $180 million over the next five years for the Hudson Bay Railway and the diversification of operations at the Port of Churchill, including upgrades to an all-season road and terminal. The Port of Churchill “Plus” is in budget 2025 as a nation-building initiative. First Nations and environmental activists have been raising the alarm about the digging required to make the terminal deepwater and its impacts on the Beluga whale sanctuary, as well as the traditional use of the lands and tourism to the area if the port expands.
The budget offers tax breaks for constructing new liquefied natural gas (LNG) facilities. These subsidies lock in new and expanded fossil fuel production, and in the case of LNG, they violate the government’s own policy to avoid new inefficient fossil fuel subsidies. The Port of Churchill has been touted as a potential hub for LNG exports.
The budget extends an existing investment tax credit for carbon capture and storage, a risky and expensive form of mega-projects with very limited proven potential to reduce carbon in the atmosphere. Manitoba also announced tax support for a carbon capture facility in southwestern Manitoba, despite critiques of the effectiveness of these efforts compared to switching to renewable energy.
Further policy areas of note:
Cuts to First Nations, Indigenous and Métis funding: First Nations leaders are very concerned, as the budget includes funding under “Indigenous reconciliation” for 2026 only, with nothing allocated for the four years following. This includes key areas such as Indigenous First Nations on-reserve education and Jordan’s Principle. AFN Grand Chief Cindy Woodhouse said this is “absolutely concerning” that these programs are going to be “sunsetted.” Another program set to expire in spring 2026, which received no renewed funding in the budget, is Urban Programming for Indigenous Peoples. This program funds organizations such as Urban Circle and EAGLE Urban Transition Centre, organizations who make a huge impact in Winnipeg. These are just a handful of programs the federal government is letting expire, for more information, please see Budget Cuts by Stealth by CCPA National.
Employment Insurance: The Canadian Labour Congress has called for Employment Insurance (EI) to be modernized, with more dignified earnings levels and removing barriers to eligibility to ensure workers impacted by trade are not left behind. The government responded with some temporary changes to EI until April 2026, such as longer weeks of income support but no increase in benefit rates.
Job cuts: The loss of federal civil service jobs will have a disproportionately large impact in a small province like Manitoba. The budget sets out to cut civil service positions, which is approximately 1,770 out of the 13,200 federal workers in Manitoba.
Cuts to CMHC and “Build Canada Homes”: The budget cuts funding to Canada Mortgage and Housing Corporation, and expands “Build Canada Homes”, designed to attract private sector investment to bring 4,000 modular homes to Winnipeg, and five other Canadian cities. The announcement does note a portion of units will be rent-geared-to-income homes, however, it remains to be seen how non-market housing will be created while a focus on attracting private sector capital is a part of this program. There is no funding available for the acquisition or operation of non-market housing, as recommended by the Social Housing and Human Rights Coalition.
Changes to Transit Funding: The federal budget may bring down funding already announced under the Canada Public Transit Fund. Winnipeg, Brandon and Selkirk had been promised $120 million per year from this fund to make needed improvements to public transit.
Extends funding to school nutrition programs: The federal budget extends the school nutrition program to 2029, making it permanent. The province has made the school nutrition program central to its education policy platform, and benefits from this federal funding.
What does this mean for the Province of Manitoba?
The recent federal budget cuts important funding for Indigenous reconciliation and health care in Manitoba. The federal budget’s focus on capital spending and spurring private sector investment means that those not directly involved in the construction or trades will miss out on the economic goals of this budget, and any gains will not “trickle down” to the rest of Manitobans. Without a focus on redistribution of income and a reversal of the cuts to spending on social programs, income inequality will widen and poverty will persist and deepen. In turn, this will put pressure on Premier Kinew’s hallmark commitments to end chronic homelessness and balance the Manitoba budget by 2027-28. The latest fiscal provincial update predicts the provincial deficit will rise to $890 million in 2025-26. This is due to massive tax cuts from the previous provincial government, the cost of wildfires in Manitoba this past summer and the economic impacts of U.S. volatility.
The federal budget impacts on Manitoba provide further impetus for the province to revisit its fascination with balancing the budget in the midst of the affordability and climate crises.
