2026 federal budget is a welcome first step in ending homelessness and addressing affordability challenges

Faced with growing rates of poverty, homelessness, food insecurity, and inequality, the 2026 federal budget offers some bold new investments in housing and income security that may begin to turn the tide.

Housing

Ending homelessness

In a welcome turn, the 2026 budget promises a new ten-year plan to “set Canada on a path to end homelessness,” noting that housing an estimated 65,000 unhoused people “must become a national initiative.” While we have heard bold language like this before only to be disappointed, this is the first time it has come from the Carney government, and it is backed by more substance than were past pronouncements. 

In a nutshell, the federal government is bringing capital dollars to the table: $11.2 billion over four years starting in 2027-28 and $17.8 billion over the following six years. This total ten-year investment of about $29 billion includes:

• $10 billion to build new supportive and transitional housing across Canada. As with the last investment in this area, the federal government will pay for capital costs, while provinces and territories are expected to pay for ongoing operations and wraparound services.
• $4 billion for an Integrated Supports Fund delivered through Build Canada Homes. According to the budget, the Fund would support projects that bring housing together with health, mental health, addictions, and social supports. The Fund would also help develop new transitional and supportive housing, adapt existing buildings, and mobilize public, private, and philanthropic capital behind an integrated housing and care model.
• $2 billion (over two years starting in 2027-28) for the Health Infrastructure Fund for facilities that “will provide care before people reach a crisis point.”
• $6.5 billion (beginning in 2028-29) to renew Reaching Home and the Veterans Homelessness Program. The budget promises more details early in the new year.
• $5.6 billion to renew the Canada Housing Benefit.

These investments are only part of what would be needed to end homelessness. Much of the heavy lifting in the form of operating dollars is left to provinces and territories, and the question now is whether they will come to the table. The government says it will work with the provinces and territories through new bilateral agreements “with the goal of putting Canada on a path to end homelessness in 10 years, protect existing non-market housing stock, take into consideration the expanded role of Build Canada Homes, and make responsibilities clearer for delivering affordable housing and targeted affordability supports.”

In this way, the budget begins to lay out what could be considered a “housing accord” – a clear statement of roles and responsibilities across each order of government. The federal government is offering capital dollars and financing support, and it is looking to provinces, territories, and local governments to step up in their areas of responsibility.

If past efforts are any indication, this approach risks being bogged down in intergovernmental infighting. Some jurisdictions will be eager to partner with the federal government, but will some provinces resist?  

Affordable housing

A second pillar of the government’s housing strategy is a broader expansion of non-market housing. The budget proposes an additional $13 billion over ten years (cash basis) starting in 2028-29 to recapitalize Build Canada Homes. It projects that Build Canada Homes will deliver 200,000 new homes across the country in the next decade but is silent on the specific levels and mix of affordability.

Further investment in Build Canada Homes is welcome, but it is not enough to meet the need for deeply affordable units. Maytree has argued that Build Canada Homes could deliver 200,000 non-market housing units annually if supported by $40 billion in annual cash investment. By retaining government ownership of these units and collecting rent to offset amortization, the cost to the government’s bottom line would be only a fraction of this number.

Verdict

The proposed investments in the 2026 budget show the federal government is serious about redoubling its efforts to end homelessness and build sufficient affordable housing. Sizable new capital investments are welcome, but on their own they will not be enough. It remains to be seen whether other levels of government will step up.

It is also worth noting two missing ingredients in the federal plan. First, the budget contains no mention of the right to adequate housing, despite this ostensibly forming the foundation of the government’s housing policy. The right to housing is not merely a messaging tool. It offers an important set of principles and policy frameworks through which to approach the housing challenge, and its absence is disappointing.

Second, the budget offers no progress on housing benefits. The extension of the Canada Housing Benefit is welcome, but it merely keeps existing recipients whole. Investments in new supply are important, but they will not bear fruit for years. In the meantime, housing benefits are a proven tool to help prevent and solve homelessness by getting people into available market rental units today. Maytree will be looking for more federal leadership on housing benefits in future years.

Income security

Many people in Canada are struggling. Analysis from the Bank of Canada suggests that while income gains for the average household kept up with costs between 2020 and 2025, younger and lower‑income households generally saw spending outpace income gains. This is consistent with Statistics Canada data showing low-income households are experiencing below-average income growth, contributing to growing income and wealth gaps between high- and low-income households.

Meanwhile, Canada is at risk of missing its 2030 target to reduce poverty by 50 per cent over 2015 levels and getting us back on track will require considerable investments to strengthen income supports.

The 2026 budget includes several important investments that, if they herald bigger things to come, could begin to shift us back in the right direction.

Canada Groceries and Essentials Benefit (CGEB)

The budget proposes to spend $4 billion on another one-time CGEB supplement, to be delivered in early 2027, equal to half of the maximum annual CGEB amounts for the 2026-27 benefit year. The one-time supplement would be worth up to $339 for a single person and $679 for a couple with two children (based on an additional $223 per adult, $117 per child and $117 for the single supplement). It is projected to lift about 120,000 people out of poverty.

Of note, phase-in and phase-out rates of the supplement would be adjusted to ensure that it fully phases in and out at the same income levels as under the current rules.

This is the second 50 per cent top-up that will be delivered this fiscal year. It builds on previous increases announced in January 2026 that raised the CGEB maximum by 25 per cent for five years at a total cost of $8.6 billion and provided a one-time 50 per cent top-up at a cost of $3.1 billion.

This is a welcome affordability boost, but it is yet another temporary benefit when people are craving long-term stability. Although unlikely to come about, the current fiscal plan would see both of the 50 per cent top-ups disappear in 2027-28. We are hopeful the government will provide more details about extending the CGEB as soon as possible.

The CGEB is a quick and progressive way to get funds to people in need. It is a good way to deliver assistance with affordability to a broad group of low- and modest-income Canadians. That said, with the same size of investment, the government could develop new refundable tax credit options that would have a much greater impact on the depth and prevalence of poverty, such as Maytree’s proposed Canada Renters Credit. In addition, the top-up approach does not address problems with the underlying benefit structure that prevent the lowest income singles from receiving the singles supplement.

Build Canada Workers Benefit

The budget proposes a rebranded Canada Workers Benefit, now known as Build Canada Workers Benefit (BCWB), with a new design that reallocates funds to better target those in need. The new benefit would lower the minimum earnings threshold from $3,000 to $500, and from $1,150 to $200 for the disability supplement. It would also increase the maximum benefit to $1,859 for single individuals without children and $3,143 for families, up from $1,709 and $2,943, respectively, under the existing benefit.

These changes are funded by eliminating the advanced payment aspect of the previous design. To provide more timely support, the old model saw payments issued based on older income information, leading to some funds going to higher income individuals.

The changes to the design are projected to increase benefits for about 1.9 million low-income workers, including 180,000 new recipients starting in the 2027 taxation year.  

Overall, the new BCWB is a positive development that directs more funds to those in greatest need. It is disappointing, however, that the government is not reinvesting all the savings from eliminating advanced payments. Between 2027-28 and 2030-21, the changes are expected to save the treasury a cumulative $1 billion.

Looking to the long term, there is little evidence that tweaks to the BCWB design will encourage people to join the labour market or to work more hours. If this remains among the policy goals of the new benefit, it will need to be much larger to offer a meaningful work incentive or to significantly reduce the number of working poor across Canada.

Canada Caregiver Credit

There is some unequivocally good news regarding the Canada Caregiver Credit (CCC). The budget proposes to change it from a non-refundable credit to a refundable credit at a cost of $845 million over four years, starting in 2027-28, and $245 million per year ongoing. It is anticipated to reach an additional 180,000 caregivers, for a total of 585,000, lifting an estimated 15,000 people above the poverty line. Caregivers would receive up to $1,260 annually for 2027, indexed thereafter. A refundable CCC would retain the same design parameters of the current non-refundable credit, including the annual indexation of the maximum amounts and income threshold.

Disability benefits

The budget is silent on further changes to the Disability Tax Credit. Recently, over 150 organizations, including Maytree, issued a joint statement calling for a new federal eligibility system outside the tax system that would enable the automatic enrolment of people already receiving provincial or territorial social assistance programs. We will be looking to the Spring Economic Update to offer more.

Automatic federal benefits

The budget proposes to spend $312 million over three years on “the next step in Automatic Federal Benefits” to reach 150,000 additional people. A small portion of these funds will go to CRA to strengthen outreach with people disconnected from the tax and benefit system.

This is different than the announcement in last year’s budget that the pre-filled tax return initiative would help 1 million people in 2026, growing to 5.5 million by 2028. Most of those people are already attached to the tax system, whereas the 150,000 announced this year (as well as those who will be helped through the separate deemed filing project) have more complex needs.

While it is always good to see progress on the various streams of work within the automatic federal benefits umbrella, the government’s level of ambition remains an order of magnitude too low. Canadians are losing out on billions in benefits that they should be receiving every year, and nothing announced so far is of a scale to fundamentally change that.

Verdict

The proposed investments in the 2026 budget could lift about two hundred thousand people out of poverty in 2027 and increase construction of non-market housing – an important achievement that may signal the federal government is serious about poverty reduction.

But it’s also worth remembering the bigger picture here. There were 4.5 million people living in poverty in 2024. Provisional 2025 poverty estimates from Statistics Canada suggest the poverty rate is likely to tick up from 11.0 per cent in 2024 to 11.2 per cent in 2025, driven by higher poverty among seniors. This will translate into about 100,000 more people living in poverty in 2025 compared to 2024. Given these trends, the investments in the 2026 budget may not do much more than hold the line, with the possibility of slipping behind when the CGEB top-up expires. On the other hand, they may be the first step in a larger project that would see Canada lift millions, not thousands, out of poverty and homelessness.