A new report from the Parliamentary Budget Officer is taking a closer look at Ottawa’s capital spending plans and what they may actually deliver for housing on the ground.
The report examines the federal government’s claim that roughly $285 billion in spending over five years will “support” more than $1 trillion in total investment. According to the PBO’s analysis, housing accounts for $60.6 billion of that federal support between 2025-26 and 2029-30.
The watchdog cautions that this headline figure should not be confused with new economic activity created by federal policy. As the report puts it, “importantly, the estimated $1.080 trillion in total investment activity over 2025-26 to 2029-30 does not represent the incremental economic impact of federal spending in support of third parties.”
Only $11 billion of the $60.6 billion identified for housing reflects measures introduced in Budget 2025, while the remaining $49.6 billion was already planned before the budget. Using Finance Canada’s cost-sharing assumptions, the PBO estimates that this federal housing spending could support about $130 billion in total housing investment over five years, including roughly $23.6 billion tied to new budget measures.
Cost-sharing assumptions under scrutiny
Those estimates rest on an implied cost-sharing ratio of 2.1 for housing. In practical terms, that means each federal dollar is expected to attract about $1.10 from provinces, municipalities or the private sector.
That level of leverage is lower than in other program areas. For industrial development programs, federal dollars are assumed to attract roughly $7 in outside capital, while support for private research and development is expected to draw in about $5 per federal dollar.
The PBO also notes that it did not assess whether federally supported projects would have proceeded without Ottawa’s involvement, or whether federal funding might simply replace other sources of financing. As the report puts it, “our analysis does not assess whether these investments would proceed in the absence of federal support, nor does it examine whether federal spending in support of third parties could displace (‘crowd out’) other projects.”
More broadly, the watchdog emphasizes that the $1 trillion investment figure reflects an optimistic set of assumptions. As the PBO explains, “the estimate of total investment activity of $1.080 trillion over five years represents an upper bound estimate, as it assumes full take-up of federal support within the specified timeframe.”
When the PBO applies more conservative, historically grounded cost-sharing assumptions, that headline figure falls materially. In that scenario, the report estimates that “the $285 billion in federal spending would support $896.1 billion in total investment, which is $183.9 billion less than estimated in Budget 2025.”
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Last modified: January 21, 2026