The new federal government’s first and much-anticipated budget introduces what it describes as “generational investments” to empower Canadians. However, when it comes to the social safety net that protects low-income families, persons with disabilities, workers, and marginalized groups from economic vulnerability, it is clear that the budget preserves the status quo rather than delivering a generational leap. It’s a timid retreat from the bold vision Canada so urgently needs.
Preserving the Safety Net: A Victory of Low Expectations
The budget’s avoidance of deep cuts offers some relief in an era of austerity, but this modest silver lining only highlights how low expectations have become. When simply preserving core social programs is treated as a victory, it exposes both the fragility of Canada’s safety net and the shrinking ambition to ensure equity in today’s policy landscape.
The budget includes the permanent installation of a National School Food Program, which will support roughly 400,000 children each year with meals – a move rightly welcomed by advocates. The budget also protects pharmacare and dental care as “vital” public goods, though it provides no new funding or acceleration to expand or strengthen these programs.
There is similarly no progress on increasing the amount of the Canada Disability Benefit (CDB), which remains far too low to meaningfully reduce poverty for low-income persons with disabilities. Redirecting even a fraction of the $81 billion allocated to defense spending could transform the CDB into a truly “generational” intervention, lifting one million disabled Canadians out of deep poverty, advancing real inclusion, and strengthening the economic resilience of families long marginalized by systemic barriers.
A new DTC incentive that risks creating more barriers
The much-criticized Disability Tax Credit (DTC) has drawn renewed scrutiny as the essential gateway to the CDB and other federal supports. In that regard, the budget proposes $115.7 million over four years to create a $150 post-approval incentive, a one-time supplemental payment linked to DTC approval and CDB entitlement, starting in 2026–27. The $150 supplement is meant to reduce financial barriers and encourage greater DTC uptake. The payment would be retroactive to the CDB’s launch in July 2025, and complements the $243 million announced in Federal Budget 2024 to cover medical form fees.
While the $150 post-approval incentive is well-intentioned, its post-approval, success-based design raises doubts about whether it will truly drive more applications. The proposal creates more administrative hoops for low income applicants to jump though and increases the administrative burden on doctors to seek post approval payment.
Unlike the administrative process for beneficiaries of Canada Pension Plan – Disability (the major federal disability income support program which reimburses health care professionals directly for completing required forms,) this administrative process only allows for payment for successful CDB outcomes, not just DTC certification. The $150 incentive is disbursed only after CDB approval and entitlement, leaving low-income individuals with disabilities to pay $200–$500 in medical fees upfront with no guarantee of reimbursement if denied. This creates a double barrier, potentially excluding those who incur costs but fall short on CDB criteria (e.g., income thresholds), setting a novel precedent that risks reducing overall uptake of the CDB and disproportionately affects vulnerable groups.
Furthermore, health-care providers, unpaid unless the CDB is approved months later, are likely to deprioritize complex or borderline cases to avoid working without compensation. If approval occurs, the government sends the $150 directly to the patient, not the provider. The provider must then follow up with the patient for reimbursement, generating additional billing, follow-up, and record-keeping tasks.
While last year’s $243 million commitment to cover DTC medical form fees was a win for people with disabilities who have avoided applying for the Credit for financial reasons, the government still has not yet explained how this new support will be delivered. With the CDB rollout underway and many people with disabilities facing urgent financial need, the new $150 post-approval incentive should be reworked and disbursed immediately, along with the swift, accessible, and efficient allocation for the DTC medical form disbursement.
On a more positive note, the budget’s commitment to legislate an exemption that would prevent the Canada Disability Benefit from being treated as income under the Income Tax Act is a very welcome move. ISAC has been advocating for this change, which would reduce the welfare wall and strengthen the CDB’s intended impact.
New automatic tax filing program for low-income Canadians
A key new measure is the launch of an automatic tax filing service for low-income individuals with simple tax situations. The Canada Revenue Agency (CRA) would pre-fill and file returns to ensure access to key federal benefits such as the GST/HST Credit, Canada Child Benefit, and Canada Workers Benefit. Backed by $174 million over five years, the program will launch for the 2026 tax year and is expected to scale to 5.5 million recipients by 2028, with targeted outreach to vulnerable groups.
However, some concerns remain. Limiting eligibility to those who haven’t filed in three years or more excludes many low-income workers with irregular filing patterns. Its modest funding and the fact that it covers only federal benefits, leaving provincial supports to separate, additional processes, constrain its impact. This risks leaving the poorest behind and turning a potentially transformative initiative into yet another bureaucratic process.
Short-term worker supports without long-term security
With regard to supports for workers, the extension of work-sharing flexibilities, the waiver of the one-week waiting period, and temporary regional unemployment-rate adjustments will provide short-term relief to some workers in tariff-impacted sectors. Yet they are explicitly temporary, set to expire in 2026, leaving workers vulnerable to the next shock. Workers have rightly argued that emergency measures must be made permanent features of a modernized EI system, not one-off patches. The new federal government’s first budget disappoints in this regard.
There are some positives: Budget 2025 includes a $77 million investment over four years to the CRA for enhanced enforcement against worker misclassification. This directly addresses employers’ deliberate avoidance of EI premiums, CPP contributions, overtime, vacation pay, and other protections; practices that push low-income workers deeper into poverty.
The budget also announced a five-year refundable tax credit for personal support workers (PSWs), delivering up to $1,100 annually from 2026 to 2030. Though it is time-limited (from 2026 to 2030), it is a positive step that will help to improve retention and economic security for frontline care workers, and strengthen long-term care access for seniors and vulnerable Canadians.
At the same time, the budget unfortunately favours some workers over others, scapegoating migrant and temporary workers “to alleviate pressures on housing demand”. The housing crisis is rooted in decades of underinvestment in non-market housing and speculative real estate policies. Slashing refugee admissions by over 10,000 spots, imposing healthcare co-pays, and halving international student permits while keeping three million temporary residents in precarious, tied work conditions does nothing to build homes. It does, however, weaken Canada’s humanitarian obligations and allow for further exploitation of precarious essential workers.
Resource extraction tied to meagre investments in Indigenous Communities, who otherwise face cuts to crucial programs and services
While the $2.3 billion water infrastructure investment is a welcome initiative, the budget’s Indigenous-focused supports are mostly reaffirmations or modest additions. Little is offered in the way of distinctions-based, long-term investments in housing, health, education, or child welfare. The budget freezes base funding for Indigenous health, social services, and treaty work at Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada, resulting in a 2% real cut, nearly $2.3 billion by 2030.
Meanwhile, the new investments ($2.3 billion over three years for water infrastructure and $10.1 million for consultations with Indigenous leaders and communities) are modest and frequently linked to resource extraction or Arctic sovereignty priorities. Furthermore, urban Indigenous programming received only a one-year $34M top-up before it will drop to zero, risking a 75% cut to friendship centres serving many Indigenous people who live off-reserve or far from their home communities.
Indigenous leaders rightly described this budget as a historic missed opportunity that will widen socio-economic gaps, particularly in education, where no new funding was announced despite more than half of the Truth and Reconciliation Commission’s calls to action relating to this area. The lack of a clear multi-year funding commitment undermines much-needed trust-building efforts and income stability, especially given the troubling levels of income insecurity among First Nations, Inuit, Métis, and Urban Indigenous communities.
A punitive approach to low-income Canadians
Budget 2025’s decision to allocate $123 million to continue collections for overpayments related to COVID-19 emergency benefits is an alarming one, clearly made without any reflection or consideration of an equitable and accessible approach to pandemic benefit recovery. Instead of implementing a debt relief program or streamlined remission process for low-income recipients, the government has chosen to double down on collection efforts. This approach entrenches hardship among people already living in poverty, especially as the CRA continues to offset refunds and credits meant to alleviate financial strain. By prioritizing enforcement over fairness, Budget 2025 risks deepening post-pandemic inequality and undermining public trust in Canada’s income security system.
This targeting of low-income Canadians stands in stark contrast to the budget’s repeal of the luxury tax on yachts and private jets. This is a direct handout to the ultra-wealthy that fuels perceptions of a two-tiered system that enforces hardship for those with the least, and perks for those with the most.
The budget’s affordability measures include a middle-class tax cut, lowering the federal rate on the first $57,375 of taxable income from 15% to 14%, and the elimination of the consumer carbon tax, framed as a direct cost-of-living win. However, low-income households, which previously received net financial gains through carbon rebates (up to $1,120 annually for a family of four in Ontario), will now lose this direct income support, potentially offsetting any broader relief.
A Strong Canada Requires a Strong Safety Net
The budget touts Canada’s “strong social safety net” as a national advantage, yet it deprioritizes that very system when it comes to meaningful, let alone “generational”, investment. This comes at a time when income inequality is at record highs and poverty is rising, putting Canada off track to meet its commitment to cut poverty in half by 2030. The country’s social safety net is ill-equipped to handle the magnitude of current challenges, and the burdens on low-income individuals. Investing in the social safety net is investing in a stronger Canada. This budget falls short of recognizing that.