Infrastructure Gap Widens: Budget 2025 Falls Short of Municipal Needs

By Debra Allen

OTTAWA – While Budget 2025 signals federal recognition of the critical role local infrastructure plays in Canada’s economic future, a chorus of municipal leaders is warning that the plan falls significantly short of addressing the scale of the challenge. The Federation of Canadian Municipalities (FCM) acknowledges some positive steps but argues that a reliance on re-profiled funding and a lack of long-term commitment threatens national goals related to housing, economic growth, and climate resilience.

“The budget is a step in the right direction, but it’s more of a shuffle than a solution,” says a spokesperson for FCM. “We need a sustained, predictable funding model, not a series of short-term fixes.”

Budget 2025 earmarks $51 billion for the Build Communities Strong Fund, with $6 billion dedicated to a Direct Delivery Stream for municipal infrastructure and $12.2 billion contingent on provincial/territorial cost-matching. However, a deeper look reveals that approximately 60% of the $51 billion is comprised of previously announced commitments, leaving just $20.4 billion in new funding.

This pattern of re-profiling, where existing funds are reallocated rather than new investment being made, has been a long-standing concern for municipalities. As one municipal leader explains, “It feels like playing musical chairs. We're constantly scrambling to reapply for funds that were promised years ago, delaying critical projects and hindering long-term planning.”

The Cost-Matching Conundrum

The $12.2 billion allocation, tied to provincial/territorial cost-matching, presents another hurdle. While Ontario, Quebec, and British Columbia have committed to the program, others, like Alberta and Saskatchewan, have expressed reservations due to fiscal constraints. This disparity raises concerns about equitable access to funding and the potential for further delays.

“The cost-matching requirement creates a two-tiered system,” warns a source within a Western provincial government. “Municipalities in provinces with limited fiscal capacity will be at a disadvantage, exacerbating existing infrastructure gaps.”

Shovel-Ready Projects Left Waiting

Across the country, numerous shovel-ready projects are awaiting funding approval. In Winnipeg, a $250 million wastewater treatment plant upgrade is poised to proceed once federal funding is secured. In Brighton, Ontario, a $180 million wastewater infrastructure project is similarly stalled. And in Montcalm, Quebec, $120 million in infrastructure is already in place, awaiting federal contribution for residential development.

“We’ve done the planning, secured the land, and completed the design work,” says a municipal engineer in Montcalm. “We’re ready to build, but we need the federal government to deliver on its promise of infrastructure investment.”

FCM estimates that over $1.2 billion in municipal projects are currently shovel-ready, with the potential to create thousands of jobs and stimulate economic growth.

Beyond Housing: A Broader Impact

The implications of inadequate infrastructure investment extend beyond housing affordability. Aging and insufficient infrastructure threatens Canada’s ability to adapt to climate change, support a growing population, and maintain a competitive economy.

“Infrastructure is not just about roads and bridges; it’s about building resilient communities,” explains an urban planning expert. “Investing in infrastructure is investing in our future.”

Climate change adaptation is a key concern. Increasingly frequent and severe weather events are putting strain on existing infrastructure, necessitating upgrades and improvements. Investing in resilient infrastructure, such as flood defenses and stormwater management systems, is crucial for protecting communities and minimizing the economic impact of climate change.

The Advocacy Role of FCM

For years, the Federation of Canadian Municipalities has been a vocal advocate for predictable, long-term infrastructure funding. The organization has consistently warned the federal government about the growing infrastructure deficit and the need for a national infrastructure strategy.

“We’re not just asking for money; we’re asking for a partnership,” says a spokesperson for FCM. “We need a collaborative approach that recognizes the unique challenges and opportunities facing municipalities.”

FCM has presented numerous reports to Parliament, appeared before parliamentary committees multiple times, and actively engaged with federal policymakers to raise awareness about municipal infrastructure needs. While the organization acknowledges some progress, it argues that much more needs to be done.

A Call for Long-Term Vision

Budget 2025 represents a missed opportunity to address the long-term infrastructure challenges facing Canada. While the budget includes some positive steps, the reliance on re-profiled funding and the lack of a comprehensive national strategy leave municipalities feeling shortchanged.

The need for a long-term vision is clear. A national infrastructure strategy should include:

• Predictable Funding: Multi-year funding commitments that provide municipalities with the certainty they need to plan and execute infrastructure projects.
• Flexible Funding: Funding mechanisms that recognize the unique needs and priorities of different municipalities.
• Collaboration: A collaborative approach that involves all levels of government, as well as the private sector and community organizations.
• Climate Resilience: Investment in infrastructure that is designed to withstand the impacts of climate change.

The future of Canada’s communities depends on it. Without a sustained commitment to infrastructure investment, the country risks falling behind and losing its competitive edge. The message from municipalities is clear: it’s time for the federal government to move beyond short-term fixes and embrace a long-term vision for infrastructure investment.