Budget 2025 fails to tackle rising income inequality

The government says it’s investing in Canadians, so why is it slashing social spending and cutting 40,000 public service jobs?

Interview requests

The millions struggling to pay their rent and put food on the table were looking for relief in Budget 2025—and they were disappointed.

In prioritizing billions of dollars for defence, the federal government has chosen to follow the neoliberal playbook of shrinking government, cutting taxes and leaving more to the private sector. This is an approach that has shown time and again to lead to greater inequality, limited opportunity and reduced prosperity.

At a time when poverty is rising and the gap is growing between the rich and the rest of us, the government missed the opportunity to deliver a budget that lifts up all Canadians.

Moreover, it reinforces the narrative being promoted by business elites: that governments are an obstacle to prosperity, that social programs are a drain on the economy, that natural resources and manufacturing are the only industries that count.

We now have a sense of what the government means by “spending less so we can invest more” and who exactly is expected to “sacrifice”—which really means doing without—for Canada’s future prosperity.

Budget 2025 confirms plans to reduce federal spending by $60 billion over the next five years, eliminating an estimated 40,000 positions in the public service—about one in 10 federal jobs.

Even as automobile plants are laying off thousands of workers, the federal government is queuing up to deliver its own set of even larger job cuts that will fall disproportionately on women, people with disabilities and Indigenous workers.

It speaks volumes about how the government values public servants—and reveals a back-to-the-future growth vision focused on military expansion and resource extraction.

Many of the “equity” initiatives included in Budget 2025 were pre-announced, such as the reskilling package to train 50,000 workers, ongoing funding for the National School Food Program, and a new refundable tax credit for personal support workers. There are new investments as well, including funds for youth employment and gender-based violence.

While welcome, these initiatives fall short of addressing the cost-of-living crisis. The budget’s main affordability moves—eliminating the carbon levy and cutting taxes for middle- and upper-income earners—will only widen Canada’s income gap, as its own impact report admits.

Child care, pharmacare, health care, income security and a host of other vital programs—programs that are crucial to gender equality, social justice and our collective ability to prosper and thrive—were effectively ignored.

Budget 2025 states: “By spending less, we can make the generational investments that grow our economy and protect the essential programs that keep your costs down.” What does this even mean? George Orwell couldn’t have captured the blatant contradictions contained in this budget better.

In the election platform, the Liberals promised to review policies and programs using an equity lens (a tool to assess how government decisions impact different groups, especially those historically disadvantaged) to identify and understand the potential impact of government actions across diverse groups, “because our ability to recognize the value of all Canadians is what makes Canada strong.”

Notwithstanding selected investments, their commitment to equity and diversity now appears to be in doubt in the face of the large spending cuts and singular focus on private sector-led development.

Canadians recognize the seismic shifts underway in the global order and the demands they place on our security. This isn’t just about dollars and cuts: it’s about what kind of country we want to be. Canadians are prepared to step up to set Canada on a secure and independent footing. But meeting those needs cannot come at the cost of dismantling the very programs that make our society equitable and our economy resilient.

This course of action is setting Canada up for failure. Reducing income and wealth inequality ought to be at the centre of the government’s nation-building strategy, not an errant footnote.

Katherine Scott is a senior researcher at the Canadian Centre for Policy Alternatives and director of the CCPA’s gender equality and public policy work.