Monday’s federal budget promised billions for child care, emissions reduction, business-support programs and disruptive technology fields. Here’s what innovation-economy executives, industry associations and analysts think of the measures in Ottawa’s post-pandemic recovery plan. 

This story will be updated.

***

What: Large cash injections for existing programs that Innovation, Science and Economic Development Canada uses to support business R&D including $7.2 billion in new capital for the Strategic Innovation Fund (SIF) over seven years, with $511.4 million ongoing annually; $500 million over five years in new funding for the National Research Council’s Industrial Research Assistance Program plus $75 million over three years to offer client firms “expert intellectual property services”; $90 million for incubators and accelerators to similarly give enrolled startups access to advice; and $60 million over two years for the supercluster initiative.

The reaction: Benjamin Bergen, executive director of scale-up lobby group the Council of Canadian Innovators (CCI), said he was ”cautiously optimistic that this money will be more targeted” than earlier incarnations of the programs being renewed. With the new SIF funding, for example, the government is “now equating that to supporting high-growth businesses,” said Bergen. “Previously that funding was used a bit more writ large—companies like Mastercard could access it.” He also said Ottawa’s plan to review IP provisions in its innovation and science programming sounded “positive,” pending further details, citing the CCI’s past criticism that initiatives like the superclusters lacked clear intangibles strategies. 

***

What: “Green recovery” spending of $17.6 billion, including an additional $5 billion over seven years for the Net Zero Accelerator; up to $1 billion over five years to help attract private-sector investment to cleantech projects; $9.6 million over three years to establish a Critical Battery Minerals Centre of Excellence at Natural Resources Canada, which will get an additional $36.8 million over three years for R&D.

The reaction: “Up to this point, climate policy in Canada has focused more on market-based mechanisms to incent decarbonization,” wrote TD chief economist Beata Caranci and senior economist James Marple in a note for investors. “This budget, in concert with the updated climate strategy from December, [represents] a small but increasing shift towards direct supports for actions aimed at reducing greenhouse gas emissions.”  

***

What: Measures to help large emitters decarbonize, such as an investment tax credit for capital invested in projects for carbon capture, utilization and storage.

The reaction: The Canadian Association of Petroleum Producers is happy, saying it’s “encouraged to see the budget support the growth of carbon capture and storage.” Environmental groups are less thrilled, with Environmental Defence Canada’s climate and energy program manager Julia Levin saying, “These unproven and expensive technologies also obfuscate the reality that the energy transition is happening, and if we fail to prepare, it will be workers and communities to pay the price.” Murray McCaig, co-founder and managing partner of the cleantech venture capital firm ArcTern Ventures, said carbon capture “wouldn’t be where I would be putting capital, but I do understand the politics around it.”

***

What: New programs designed to train workers for a range of in-demand skills in industries facing talent shortages, including $960 million over three years for a new Sectoral Workforce Solutions program offered through Employment and Social Development Canada; $298 million over three years for a new Skills for Success program meant to “enhance foundational skills such as literacy and numeracy, as well as transferable and soft skills”; $708 million over five years for Mitacs, a non-profit that works with academia and industry on talent training and recruitment; and $470 million over three years to help train first-year apprentices in construction and manufacturing at small- and medium-sized businesses. 

The reaction: “The budget outlines important investments that build momentum on existing efforts toward recovery and innovation: industry-led skilling approaches in sectors facing significant disruption, a strong focus on ensuring equitable access to skills and entrepreneurship, and an emphasis on rapid response that front-ends the bulk of a $2.47-billion investment,” said Pedro Barata, executive director of the Ryerson University-based Future Skills Centre. The government-funded initiative isn’t mentioned in the budget, but the new initiatives target many of the same challenges the Future Skills Centre is trying to address. “We see a strong opportunity to boost, grow and accelerate momentum in strategies that are working,” said Barata.

***

What: Renewing the Pan-Canadian Artificial Intelligence Strategy, with $443.8 million in new capital over a decade, including $185 million over five years to commercialize research and inventions as well as money for universities to hire academics and buy equipment; $360 million over seven years for a new National Quantum Strategy; $400 million over six years for a genomics plan; and $2.2 billion over seven years for life-sciences programming.

The reaction: “This is a coordinated set of measures to keep Canada on our high-growth, high-potential path in [the] quantum sector,” said Charmaine Dean, vice-president of research at the University of Waterloo. It’s part of a consortium of research institutions and companies that lobbied Ottawa for a $460-million five-year strategy for the disruptive technology field. Monday’s budget “is going to be very instrumental” in advancing Canada’s quantum sector, said Dean. “Over time, as the country recovers, there will be opportunity to think about increasing the investments.” While the budget didn’t include details of how the funding will be allocated, the consortium’s proposal called for money for business-support programs as well as university programs. “The government understands that these research centers cannot lose their ability to undertake the kind of research that’s going to drive commercial development and train and attract talent,” said Dean, noting that a planned ISED quantum secretariat could help coordinate support for the sector through the department’s various programs.

CCI’s Bergen cited the commercialization funding within the AI strategy renewal as a positive development. “It seems like the government has [realized] that it needs to actually figure out how to get an ROI on these investments in order to grow the economy,” he said. Domestic tech executives have previously expressed concern that the IP from Canadian AI advances has flown to foreign tech giants that have set up domestic labs or research partnerships, or acquired local startups. 

***

What: Extending pandemic relief programs until September 25, including the Canada Emergency Wage Subsidy to businesses and the Canada Emergency Rent Subsidy and Lockdown Support; a new Canada Recovery Hiring Program that will cover up to 50 per cent of incremental remuneration, like salary and wages, up to $1,129 per week.

The reaction: Dan Kelly, president of the Canadian Federation of Independent Business, said in a statement that while he was pleased to wage and rent subsidies extended, “there are still critical gaps in the federal relief programs that exclude tens of thousands of hard-hit businesses.” Kelly noted that extending the existing programs doesn’t help businesses created after the pandemic began. “In addition, no new measures were put in place to help address the $170,000 in new COVID-related debt the average small firm has taken on,” he said, citing a CFIB report. The organization had recommended the government increase the Canada Emergency Business Account (CEBA) loans to $80,000 and make 50 per cent of it forgivable, as well as partially forgiving loans granted under the Highly Affected Sectors Credit Availability Program launched in January. The government held the maximum CEBA loan steady at $60,000, a third of which is forgivable.

***

What: A slate of new programs meant to help small- and medium-sized businesses grow beyond including $2.2 billion over five years on investment rebates for businesses meant to incentivize “assets that drive growth” like digitization and intellectual property; $2.6 billion over four years to the Business Development Bank of Canada to help small- and medium-sized businesses finance technology adoption.

The reaction: The government is hoping measures to support businesses including SME tech-adoption funding and the new hiring program “will boost chronically low business investment in Canada, but it bears noting that multiple efforts by previous governments to raise investment have been fruitless,” wrote Scotiabank chief economist Jean-François Perrault in an investor note. “Given the fiscal path implied by current proposals, we would have preferred to see larger sums devoted to measures designed to raise investment as part of the post-pandemic transformation.”

***

What: A national child-care initiative, which seeks to provide $10-a-day child-care services across the country by 2025–26, for which Ottawa has allocated up to $30 billion over the next five years, and $8.3 billion ongoing.

The reaction: “If successfully implemented, the program could go along way to raising the participation of women in the labour force,” according to Caranci and Marple, who cited Quebec, where “the labour force participation of women went from below the rest of the country to well above” after the program was introduced. A comparable outcome nation-wide would add 250,000 women to the workforce, “lifting the economy’s potential.”  

“Beyond the reattainment of previous employment rates, longer term growth could be enhanced by policies aimed at increasing labour force participation or output per worker,” wrote CIBC chief economist Avery Shenfeld and senior economist Andrew Grantham in an investor note. “Several new measures, including a major lift to federal support and early learning, fit with that objective.”

***

What: Support for underrepresented entrepreneurs including $146.9 million over four years for the Women Entrepreneurship Strategy; up to $51.7 million for the Black Entrepreneurship Program; and $42 million over three years for the Aboriginal Entrepreneurship Program. First Nations, Inuit and Métis Nation communities will also get $117 million this fiscal year in renewed funding for the Indigenous Community Business Fund to support jobs affected by the COVID-19 pandemic.

The reaction: “We are pleased with some of the things we’ve seen for Black entrepreneurs and minority groups in the budget,” said Christelle Francois, president of the Canadian Black Chamber of Commerce, which lobbied the government for many of the supports for Black entrepreneurs proposed in the budget. “We need clarity on whether and how much of the funding is in the form of loans or grants, because that makes a huge difference,” she said. “Canadians in general are extremely indebted, and some racialized communities have increased debt. Although access to capital makes it a lot easier for businesses to grow, we want to make sure there’s funding accessible that’s in the capacity of grants to alleviate the financial burden that may have incurred, especially during this time.” 

***

What: A new round of the Venture Capital Catalyst Initiative, which seeds funds-of-funds and VC funds that raise further private-sector money, consisting of a $450-million top-up over five years, with $50 million allocated to life science-focused fund managers and $50 million to “increase access to venture capital for underrepresented groups, such as women and racialized communities.”

The reaction: “CVCA is pleased to announce that its key priorities were reflected in Budget 2021; namely, the continued partnership with the federal government on venture capital and Canada’s innovation economy,” said Matt Ivis, director of government affairs and policy, in an email to members of the Canadian Venture Capital & Private Equity Association. He also favourably cited the lack of “major tax reform measures were announced in Budget 2021 such as on capital gains or carried interest.”

***

What: British Columbia will get a new regional economic development agency (RDA), at a cost of $553.1 million over five years and $110.6 million ongoing.

The reaction: BC Tech CEO Jill Tipping said her organization “advocated strongly for the creation of a BC RDA centered on technology and in [Economic Development] Minister [Mélanie] Joly we had a strong champion.” Along with 10 other local organizations, it has lobbied the federal and provincial governments for $41 million in total funding for a scale-up support program. “The RDA in Ontario was the mechanism to fund the ScaleUP Ontario platform and now we have a BC RDA we have a clear mechanism for the federal funding for ScaleUP BC,” said Tipping.

***

What: More oversight over retail payments that would require payment service providers to comply with requirements to protect the funds against losses.

The reaction: Paytechs of Canada, a lobbying group that advocates on behalf of payments startups, welcomed the additional oversight, but said it was disappointed the federal government didn’t also establish a way for tech companies to clear and settle transactions on their own, without going through a legacy financial institution. “With more regulation should come the opportunity to access essential payments infrastructure,” said Alex Vronces, the group’s executive director. “Imagine having to do business with your competitor in order to compete with them.”

***

What: No mention of open banking, despite ongoing consideration by the federal government about how to implement the practice in Canada.

The reaction: Andrew Graham, CEO of credit-report provider Borrowell, said he would have liked to have seen a commitment from the federal government around the importance of the country’s fintech sector. “There’s no mention of fintech that I can see, and there’s no mention of open banking, either, despite the thoroughness and length of the budget document,” Graham said. “We are going to get there as a country on open banking, but as with vaccinations, time matters, and getting there sooner rather than later will make Canadian companies more competitive on the global stage.”

***

What: Plans to streamline the Express Entry permanent residence program for highly skilled immigrants and $428.9 million in new funding over five years to improve application processing. 

The reaction: “I’m glad they’re doing something,” said AlayaCare CEO Schauer. “It is mayhem out there right now. Everybody’s poaching [from] everybody else, and because everything is virtual now, all the American companies with no physical presence in Canada are offering 30 per cent premiums to developers in Montreal. And that’s still 30 per cent cheaper than Silicon Valley.”