2025 Federal Budget Impacts on First Nations: Key Funding Changes and Policy Measures

Contributed by: Emmaline English and Nicholas Daube

On November 4, 2025, the Government of Canada released the Federal Budget.

Many First Nations leaders have expressed disappointment with the Budget, since it does not commit to closing the infrastructure gap, includes no new investments for social services on reserve, and includes cuts to federal Indigenous programming. Assembly of First Nations National Chief Woodhouse Nepinak, for example, has said the Budget is a “missed opportunity.”

The Budget does include some positive spending for First Nations, either in new proposed spending or by highlighting investments that have already been announced. It proposes some new infrastructure spending (i.e., for water and wastewater on reserve), as well as access to capital and engagement for major projects. Our clients will also be keenly watching details relating to the Major Projects Office, which could be the vehicle to push fast-moving resource development proposals in their territories. While the Budget doesn’t include new funding announcements relating to its rapid resource development and major project strategy, it does give some detail on what the government’s next moves may be on these fronts, including the Ring of Fire.

This Budget also contains a lot of bad news in terms of reduced levels of funding for Indigenous peoples. It proposes substantially less financial support for programs and services than previous budgets. For example, there is no new investment for health and education on reserve after this fiscal year (ends March 31, 2026). Funding for other programs that is set to end, such as funding for Friendship Centres or implementing Jordan’s Principle, is not being renewed. Further, there is a marked decline over the next five years in funding to support communities asserting jurisdiction over child and family services and the implementation of An Act respecting First Nations, Inuit and Métis Children, Youth and Families.

The Budget also proposes cuts to Indigenous Services Canada (“ISC”) programming by 2% ($490 million/ year starting in 2026 – 2027). These cuts, along with the lack of new investment and inflationary pressures, means that this will likely have negative impacts on socio-economic gaps between First Nations and Canadians.
It is important to note that budgets are financial, policy and legislative plans of the government. They do not provide the government or the relevant department with the authorization to spend money. That means discussions with federal departments and their officials must continue before any funding is finally released, and it needs to pass through a vote in Parliament.

We describe some of the most significant details for Indigenous spending and programs below. If you have questions about accessing funding or exploring other opportunities announced in the 2025 federal Budget, a Woodward and Company lawyer can assist.

KEY TAKEAWAYS FOR FIRST NATIONS

Proposed Measures

I. Major projects

Proposed spending

• Funding to support the Major Project Office’s Indigenous Advisory Council. The Budget proposes $213.8 million over five years (starting in 2025 – 2026) for the Major Projects Office, noting that funding for the Council is included in this. The goal of the Major Projects Office is to advance major projects and streamline federal regulatory project approval. It was launched in August 2025.
• $10.1 million over three years (starting in 2025 – 2026) for Crown-Indigenous Relations and Northern Affairs Canada (“CIRNAC”) to continue leading the Federal Initiative on Consultation to support consultation of Indigenous rights holders in consultation processes.
• $40 million over two years (starting in 2025 – 2026) to ISC to support Indigenous capacity-building consultation on nation-building projects, prior to their project designation under the Building Canada Act. This was previously announced in July 2025.
• $5 billion to the Indigenous Loan Guarantee Program administered by Canada Development Investment Corporation, which facilitates access to capital for major projects across all sectors of the economy except for gaming, with a focus on energy and natural resources sectors. This investment was announced in March 2025. This is in addition to the $5 billion which was announced in December 2024 in loan guarantee authority focused on energy and natural resource sectors.
• $25.5 million over four years (starting in 2025 – 2026) to CIRNAC and $41.7 million over four years (starting in 2025 – 2026) to the Canadian Northern Economic Development Agency to accelerate regulatory processes and build partnerships in Canada’s Arctic.

Legislative amendments

• Intention to amend the First Nations Fiscal Management Act by allowing the First Nations Finance Authority to lend to Indigenous special purpose vehicles. Special purpose vehicles are separate legal entities that are created for a specific business purpose. This amendment is intended to expand options for affordable financing and support equity participation in major projects.

II. Infrastructure

Proposed spending

• $2 billion proposed increase to the Canada Infrastructure Bank’s target for investments towards Indigenous infrastructure projects that benefit First Nations, Métis, and Inuit communities. The Infrastructure Bank is a Crown corporation that enables partnerships between governments and the private sector. This proposed increase will go towards the Infrastructure Bank’s priorities (public transit, clean power, green infrastructure, broadband, trade and transportation, Indigenous community infrastructure, and project acceleration.)
• $2.3 billion proposed over three years (starting in 2026 – 2027) to renew the First Nations Water and Wastewater Enhanced Program to address drinking water advisories and upgrade at-risk systems.
• $1 billion proposed over four years (starting in 2025 – 2026) to Transport Canada for the creation of the Arctic Infrastructure Fund. The Arctic Infrastructure Fund will provide investments in major infrastructure projects in the Arctic, including airports, seaports, all-season roads, and highways intended for both military and civilian use. Confirmation of funding (not new funding)
• $2.8 billion for urban, rural, and Northern Indigenous housing (years not provided).

Policy commitments

• The Minister of ISC will coordinate a cross-government Indigenous Housing Strategy.
• The Government is going to explore:
  • The creation of a bonding and surety backstop pilot project for First Nations contractors on reserve to enable on-reserve construction companies to bid for infrastructure projects; and,
  • standalone pilot scheme to monetise federal transfers to support financing for First Nations infrastructure on reserve.

III. Other proposed spending, legislative measures and policy items to note

• 216.6 million in proposed funding (starting in 2029 – 2030) to government organizations, including ISC and CIRNAC, to make the National School Food Program permanent.
• Proposed amendments to the Canada Labour Code to restrict the use of non-compete agreements in employment contracts for federally regulated workplaces (consultations to start in 2026). This will impact First Nations as they are considered federally regulated workplaces.
• Finalize agreements which allow Indigenous governments to enact tax on vaping products, fuel, alcohol, cannabis, and tobacco and expresses a commitment to explore other tax jurisdiction arrangements with Indigenous governments. This is not a new commitment. It was announced as part of Budget 2024.