TORONTO — The state and future of Canada’s economy amidst U.S. President Donald Trump’s trade war is central to this year’s election campaign, and business groups have no shortage of asks and ideas. 

The next government seems certain to be either a Conservative or Liberal one, and both parties are proposing to build infrastructure, speed up approvals for megaprojects and sell more of what Canada makes to the world. The tech sector is never a top topic in election campaigns, but both Liberal Leader Mark Carney and Conservative Leader Pierre Poilievre have promised measures that could help startups and scale-ups. 

Here’s what innovation economy groups are calling for, and what the parties are proposing. 

Innovation and investment

During its decade in power, the Trudeau government launched or updated plenty of funding programs, strategies and policies to encourage the growth of innovative firms and promising sectors. But tech founders have argued many of those initiatives are poorly targeted.

The longstanding scientific research and experimental development (SR&ED) tax incentive is Ottawa’s largest annual innovation outlay; the Department of Finance estimates it will cost $4.9 billion this year. Businesses want significant changes.

The Council of Canadian Innovators (CCI) has reiterated its call to expand the program from just R&D to commercialization activities like patenting, and to streamline the application process. The scale-up lobby group also wants Ottawa to pull funding from “ineffective” programs like the superclusters. The Canadian Venture and Private Equity Association (CVCA) wants the Finance Department to make the incentive more generous for growing firms, by raising the caps on expenses and assets that limit the value of credits companies can receive. 

In a memo for Build Canada, a group of founders posting policy ideas, A2X CEO Jamie McDonald called for Ottawa to cut SR&ED altogether, along with the National Research Council’s popular Industrial Research Assistance Program (IRAP). He suggested replacing those programs with one that would give startups matching debt financing when they raise venture capital.

Neither party has specifically addressed SR&ED during the campaign, but both have previously indicated they would update rather than abolish the program. In December’s fall economic statement, the Trudeau government announced plans to raise the expenses cap and make publicly traded firms eligible for bigger payouts. Carney has not said whether he’ll revive the proposals in the fall economic statement if elected. 

The Conservatives would stop foreign subsidiaries from receiving as much money via SR&ED, MP Rick Perkins told The Logic in January. A Poilievre government would move away from programs that offer direct subsidies, instead seeking to stimulate R&D through tax credits.

Tech executives were amongst the loudest critics of a Trudeau-era plan to raise the share of capital gains taxed from half to two-thirds for earnings above $250,000. Last month, in one of his first acts as prime minister, Carney canned the change. But the CVCA would like a further cut for “productive investments.” It’s recommending the inclusion rate drop to 25 per cent when investors put their capital into Canada-based startups and scale-ups. The financier lobby group is also calling for a federal tax credit for investments in such firms.

Polievre has pledged to defer the tax on any capital gains reinvested in Canada between July 2025 and December 2026, a measure he said will free up “billions” in funding for small businesses, homebuilding, data centres and other sectors. 

Buy Canadian

Canadian tech executives have long complained it’s far too hard for smaller firms to sell to the federal government, including via the Liberals’ now-gutted startup procurement program.

The CCI is calling for a “Buy Canadian” tech strategy, including getting cybersecurity and military tools from domestic companies. The group has lobbied for a specific procurement target for small and medium-sized businesses, and better support for firms going through the contracting process. 

Innovation economy leaders are pushing Ottawa to more aggressively adopt emerging technologies. The federal government should take an “AI-first” approach to delivering programs and services to citizens, as well as operational areas like call centres, Blue J CEO Benjamin Alarie said in a Build Canada memo. Ottawa should buy its AI tools from Canadian firms wherever possible, he added. Departments and agencies are already using some homegrown AI, like Blue J’s employment-law product. 

December’s fall economic statement also set the federal government a target of buying one per cent of goods and services from “innovative firms,” although Carney hasn’t reaffirmed that commitment. The Conservatives have not made a procurement pledge, but have promised to cut contracts with outside consultants; outsourced IT projects have generated scandal under the Liberals.

Despite the ongoing trade war, Canadian firms have recently notched several wins with the U.S. Defense Advanced Research Projects Agency (DARPA), which has helped spur several new technologies. The agency selected Canadian startups Nord Quantique, Photonic and Xanadu among 18 firms for a program designed to prove the usefulness of quantum computers; each could get up to US$300 million if they progress. Ottawa’s Ranovus, meanwhile, is working with Cerebras Systems to build a high-performance computing system for DARPA.

In an interview this week, Poilievre said a Conservative government would “invest in AI” for military use, including advanced robotics and drones, and also buy new cybersecurity tools. The Liberals have promised a new agency to help the armed forces and intelligence services buy Canadian-made AI, quantum computers and cybersecurity. 

Rules and deregulation

Tech leaders want the next government to launch a deregulatory push, but add new rules in other areas.

Industry group Fintechs Canada called for Ottawa to implement open banking by next year, letting people more easily pull their financial data from banks. The group also wants regulators like the Bank of Canada and Office of the Superintendent of Financial Institutions to be mandated to promote competition in the sector.

Borrowell CEO Andrew Graham similarly backed the 2026 open banking target in a memo for Build Canada. He called for the federal government to take the principle beyond financial services, establishing a consumer data right and setting up a system within two years that allows people to move information between providers in the health-care, telecommunications and energy sectors. In another Build Canada memo, League CEO Michael Serbinis said Ottawa should set national rules for how hospitals and other providers share health information, and create networks to move the data around.

Globalive Capital managing partner Brice Scheschuk said the Canadian Radio-television and Telecommunications Commission should require telecom firms with their own infrastructure to allow new players to buy access to their fibre networks and cell towers at favourable rates. In a Build Canada memo, he also called for the removal of foreign ownership restrictions in the telecom and broadcast sectors.

More broadly, Build Canada’s backers “believe in eliminating regulations and barriers that prevent Canadians from building, not adding more constraints,” the group’s website states.

The Finance Department has committed to launching open banking early next year, but the Liberals have failed to introduce the necessary legislation to do so. The election also killed bills that would have updated rules on cybersecurity, privacy, AI and medical information systems. Carney has not said whether he’d revive those proposed laws if elected, or what he’d do on financial-sector regulation.

The Conservative government would swiftly implement open banking and tweak proposed rules to ensure fintech firms can participate, the party’s then-competition critic Ryan Williams told The Logic in February. The party has also pledged to give military veterans control of their medical records, but hasn’t commented on health-care data in general.

Poilievre has pledged to cut “25 per cent of all red tape” within two years, then introduce a law requiring that departments eliminate two regulations for every new one they issue.