Environmental Spending Faces Steep Cuts in Carney’s Fall Budget

Prime Minister Mark Carney’s planned “austerity and investment” budget could deliver significant cuts to Canada’s environmental programs, with green transport funding set to fall by two-thirds and Environment and Climate Change Canada bracing for reductions of up to 50%.

Carney has sought to reshape the country’s finances with deep cuts to government spending and federal jobs. He has described his plans as “an austerity and investment budget at the same time,” achievable “if we’re disciplined.” He has said there will be no cuts to health care spending, education transfers, or individual benefits like pensions, the Guardian reports.

As the PM plans to cut operational spending in stages—7.5% for 2026-27, 10% in 2027-28, and 15% in 2028-29—he is also pushing to raise Canada’s NATO military spending by almost $9 billion, increase support for major infrastructure projects, and cut taxes for middle-income Canadians, writes CBC News.

The impact of these changes will be felt across the entire government, but some environmental programs face notable losses.

Transport Canada expects a 41% reduction in spending over three years, suggesting the department will lose 1,000 employees and raising uncertainty about some emissions reduction programs. The Hill Times reports that across Transport Canada’s three transportation system priorities—efficient, safe and secure, and green and innovative—green and innovative systems will see the biggest reduction, from $672 million to $211 million in three years.

The department says much of the spending drop is due to sunsetting programs, which occurs when lawmakers choose not to renew a program after its funding runs out. Transport Canada’s departmental plan states [pdf] that it “will seek to renew sunset funding to continue work on these critical activities through future federal budget exercises.”

Similarly, Environment and Climate Change Canada’s departmental plan signals that its budget could drop by 50%, with significant impacts on its programs. Leaked memos suggest freshwater conservation could be undermined by cuts to the Canada Water Agency, which protects rivers and lakes, The Pointer reports. A group chat message accidentally shared with a reporter indicated that less spending could result in less work on algal-bloom restoration nation-wide.

While several departments—the Department of National Defence, the Royal Canadian Mounted Police, Canada Border Services Agency, the Supreme Court, and the Parliamentary Budget Office—are protected and can expect relatively modest 2% cuts, all other departments expect to cut spending by 15%. Job losses across the federal government could reach a total of over 57,000 full-time equivalent jobs between 2024 and 2028, reports Policy Options.

An analysis by Policy Options suggests that achieving Carney’s budget targets will also require cutting federal transfers to other levels of government, non-profits, and businesses, which could result in less support to First Nations, veterans, newcomers to Canada, international aid, and research and science.

Whether these funding cuts will occur, and to what extent, remains uncertain until the fall budget is released, The Hill Times writes.