Budget aims to build momentum for Canadian innovations

The government’s plan to support Canada’s innovation sector is less about opening its own wallet and more about sparking investments from elsewhere.

What happened: Tech and innovation didn’t get a huge chunk of change in the 2024 federal budget, but what was announced is meant to help Canadian businesses and researchers create their own growth down the line.

  • An extra $600 million will go to Scientific Research and Experimental Development over four years, with a $150 million boost every year afterwards and new consultations on how to reform the R&D program.
  • Starting in 2026, $200 million will be invested in startups based in underserved communities and outside of big cities.
  • The Digital Services Tax will finally be implemented and bring in $5.9 billion from big tech companies over five years.

Yes, but: Budgets are about more than dollar signs, and this year’s gave marching orders to the Business Development Bank of Canada and Export Development Canada to consider investing more in high-growth and higher-risk businesses.

  • Ottawa is also starting a working group to explore how pension funds could deploy more investments in Canada, with focus areas including digital infrastructure and AI.
  • Businesses will be able to write off all costs invested in patents, network infrastructure, computers, and data processing equipment.

And don’t forget AI: The government’s biggest innovation item — $2.4 billion on AI — was among the pre-budget announcements. Spending $2 billion of that on local computing infrastructure is meant to help businesses and researchers keep up in the AI race.

  • There’s also $200 million to help AI startups go to market and accelerate adoption, with $100 million going to a program that helps small businesses build and deploy AI, plus $50 million on skills training for workers in disrupted sectors.

Bottom line: Canada has long been criticized for not doing enough to support home-grown innovation. Anyone not building computing infrastructure might not see as many zeroes as they’d like, but the government thinks it can build momentum that will get more money from other sources invested locally.