Federal budget takes a step back from promised Canada Public Transit Fund | Daily Hive

Federal budget takes a step back from promised Canada Public Transit Fund: CUTA

Testing of a new generation Mark V train at Alstom's manufacturing plant at Kingston, Ontario in August 2023, ahead of its delivery to Metro Vancouver for the SkyTrain system. (TransLink)

Prime Minister Mark Carney’s 2025 budget for the Government of Canada is drawing criticism from the public transit sector after previously dedicated public transit funding was folded into a larger infrastructure pool, raising concerns over predictability and the ability to move forward with public transit expansion projects across the country.

The newly announced federal budget introduces the new Building Communities Strong Fund (BCSF) — a $51-billion, 10-year-long infrastructure program covering a wide range of municipal government needs.

But stakeholders warn the fund comes at the expense of the federal government’s new Canada Public Transit Fund (CPTF) — created by Justin Trudeau’s previous administration — which had promised stable, public transit-specific capital funding of $3 billion per year starting in 2026 for a total of $30 billion between 2026 and 2036.

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BCSF’s broader infrastructure types include hospitals, post-secondary institutions, water supplies, and sewage treatment facilities.

According to the Canadian Urban Transit Association (CUTA) — the national association representing public and private transit industries, and advocates for improved urban mobility — the budget’s revamped structure has redirected an unspecified portion of CPTF funding into the broader BCSF framework. This leaves some uncertainty over how much federal funding directly for public transit remains intact.

“The federal government has taken funding that was meant to strengthen and stabilize transit systems and folded it into a wider program without clear assurances that those dollars will still reach transit,” said Marco D’Angelo, president and CEO of CUTA, in a statement.

“This change undermines the very predictability and reliability that the CPTF was designed to deliver. Further clarity is needed from the government on what commitments they will be providing the transit industry under this new fund.”

CUTA described the move as a setback for municipalities, public transit authorities, and bus and train manufacturers that have relied on long-term federal commitments to renew fleets, expand systems, and maintain aging infrastructure.

According to industry estimates cited by CUTA, every dollar invested in public transit generates $2.40 in economic activity, plus an additional $1 in GDP from wages, taxes and business spending. Each $1 million invested supports roughly 15 jobs in construction, manufacturing, and technology.

The organization cautioned that unstable funding could disrupt Canada’s domestic public transit supply chain, particularly vehicle manufacturing — where production planning depends on reliable long-term procurement pipelines.

“The alternative — funding that arrives in fits and starts — creates a boom-and-bust cycle,” CUTA noted, warning that this leads to higher costs, capacity issues, and delayed delivery of new buses, trains, and maintenance facilities.

The budget did include a commitment to streamline approvals and reduce administrative barriers within the CPTF — a move CUTA welcomed, noting that it aligns with recommendations the group has raised previously.

“Faster approvals will help get transit funding deployed more quickly and accelerate shovel-ready projects,” says the association. But CUTA warned that efficiency improvements cannot replace funding certainty.

“Progress on efficiency must not come at the expense of the overall funding envelope for stable and predictable transit investment,” D’Angelo said.

While the federal government signalled that some portion of the CPTF will remain, details on how much funding will stay dedicated to public transit have not been released — a gap that has fuelled unease across the sector.

“As Canada faces economic headwinds, the answer should be reinforcing the foundation of stable transit funding,” continued D’Angelo. “Communities, workers, and manufacturers need the confidence that comes with a predictable, long-term federal commitment to public transit.”

CUTA added that public transit projects that help reduce emissions, support economic growth, and connect communities are already ready to proceed, but will stall without guaranteed funding streams.

“Canada’s transit systems are ready to build,” said D’Angelo. “What’s needed now is predictable, long-term federal investment to unlock delivery.”

CPTF was previously announced to help address the growing challenges of funding new and improved public transit infrastructure. Beginning in the 2026/2027 fiscal year, the fund is intended to deliver about $3 billion per year in capital support.

In 2024, the federal government formally confirmed the CPTF and opened the application process based on a framework divided into three main funding streams.

The Metro-Region Agreements stream focuses on large regional public transit expansions and integrated transportation planning, with around $2 billion annually dedicated to major metropolitan areas. The Baseline Funding stream provides about $500 million per year to support ongoing capital needs and system improvements in established transit systems. Finally, the Targeted Funding stream allocates another $500 million annually to priority areas such as rural transit, Indigenous communities, and zero-emission or active-transportation projects.

CPTF faced concerns over adequacy from the start

Even before the federal government introduced the BCSF, the CPTF was already widely criticized as too complex and underfunded.

While the CPTF promised long-term stability, the application process has proven to be both cumbersome and time-consuming for many municipal governments and public transit authorities.

Applicants must go through multi-stage approvals, submit detailed project justifications, provide environmental and planning documentation, and secure matching funds from other government sources before federal contributions are confirmed.

Eligibility rules and federal review requirements have been described as onerous, and lengthy approval timelines can delay project delivery and restrict agencies from initiating work until funding is officially secured. As well, applicants must commit to implementing transit-oriented development densification policies.

Stakeholders have expressed concern that this administrative burden undermines the program’s core intent to provide predictable, timely investment in public transit infrastructure. The federal government’s time-intensive application and review process also increases the risk that project and procurement costs will escalate due to inflation while public transit authorities wait for approvals.

The Liberals first included the promise of a “permanent transit fund” in their campaign platform leading up to the 2019 federal election. Canada’s largest public transit authorities were unsuccessful with their pleas to the federal government to have the CPTF begin in 2024, as opposed to the current timeline of starting in April 2026.

Moreover, critics argue that the original $30 billion allocated to the CPTF over 10 years through 2036 is inadequate. While the figure similarly mirrors the approximate $30 billion the federal government has committed to public transit capital projects since 2015, the impact of significant post-pandemic inflation means that funding now stretches much less far. The costs of purchasing new buses and trains, as well as constructing and maintaining rapid transit infrastructure, have risen sharply.

In September 2025, CUTA called on the federal government to expand the budget set aside for the CPTF, including doubling the Baseline Funding stream from $500 million to $1 billion annually to accelerate shovel-ready projects, and adding a five per cent annual funding increase due to market inflation. They pointed out that bus prices have gone up by more than 22 per cent since 2020.

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