While the industry feels heard, technology leaders want more details on plans for artificial intelligence and sovereignty.
Last year there was an unexpected change in the capital gains tax rate. fueled rage in parts of Canada's tech sector. This year budget marked a sharp contrast as several innovators and the organizations that represent them responded positively.
It doesn't hurt that the tech sector got a lot of what it asked for: more spending on defense technology, the promise of a stablecoin framework, steps toward open banking, updates to R&D tax credits, and a staggering amount money for defense.
“This is one of the most powerful symbols of Canada that we have seen in a very long time.”
“This is a major turning point in understanding and understanding how we can work together,” John Ruffolo told BetaKit. The Maverix Private Equity co-founder and CCI chairman added that he is overall pleased, although there is “still a lot of work to be done” and “the devil is in the details” regarding some issues such as the upcoming stablecoin law.
The new government's engagement with the private sector has been critical, tech leaders say. Prime Minister Mark Carney's experience in the private sector has helped develop parts of the ecosystem, as has the appointment of AI and Digital Innovation Minister Evan Solomon.
Some of this newfound business-friendliness is showing up in products that don't cost anything, Ruffalo says. He was excited by the promise of a stablecoin. open banking developmentand private sector collaboration through the Build Canada Exchange.
The latter is a rebranding Canada Interchangewhich will appoint 50 “external leaders” from the technology and other sectors into the civil service, the budget says.
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Daniel Eberhard, founder and CEO of Koho, said federal ideology has long been “anti-competitive and anti-construction.”
“I think this is one of the most compelling symbols of Canada that we've seen in a very long time,” Eberhard, who wrote notes for the tech-related nonprofit Build Canada, told BetaKit.
Claudio Rojas, CEO of the National Angel Capital Organization (NACO), said on stage at SAAS NORTH that “this government seems to have a much deeper understanding of the innovation economy and how all its parts fit together.” Rojas' reaction came after some of NACO's requests, such as increased funding for early-stage Canadian investment vehicles, were reflected in a $750 million budget allocation.
Shopify President Harley Finkelstein recently said that in the last few months he has seen more activity from the government than in 16 years. And some of this has translated into direct action: one of his ideas to speed up the SR&ED application process, published on Build Canadacame in on budget and was openly praise by the Minister of Finance.
Concern over the large budget deficit, estimated at $78.3 billion, was minimal compared with a broader sense of optimism. However, Ruffolo said the high debt “worried” him and that the government “hasn't gone as far as it could.” For example, he expected to see restrictions on loans offered to foreign companies under the R&D program.
Kaylee Thiessen, chief economist at the Canadian SHIELD Institute, told BetaKit that Canada's improving economic outlook, which the Bank of Canada says is now worst than before the US trade war will require government spending. Eberhard called the large deficit numbers a “red herring,” arguing that Canada's net debt-to-GDP ratio is relatively healthy.
This budget aims to “catalyze private sector money,” Thiessen said, which the government says will amount to up to $1 trillion invested in Canada over the next five years. This means direct engagement with the private sector.
However, Thiessen believes the budget lacks detail and clarity on how economic value will be reflected in Canada through jobs, intellectual property and profits. There is a lack of clarity on how the “buy Canadian” policy will be implemented and how the government plans to preserve Canadian intellectual property.
Artificial intelligence (AI) was another budget item that left some tech leaders feeling unsatisfied. The budget allocated $925.6 million to support large-scale government AI infrastructure, of which $800 million had already been announced and provided no further information on the AI strategy.
However, AI and Digital Innovation Minister Evan Solomon's AI Working Group recommendations should not have appeared in the Budget because the group 30 day mandate giving feedback ended just last week.
Daniel Vigdor, computer science professor at the University of Toronto and CEO venture studio AXLtold BetaKit that “Canada's real advantage is that we can jump… two to three years ahead of Silicon Valley,” rather than trying to emulate the American playbook. “We can compete where the real value is going to be, which is applications,” Vigdor said.
Vigdor said the government should consider supporting the creation of an applied computing center similar to artificial intelligence institutes such as Mila in Montreal.
Sarah Stockdale, founder and CEO of digital marketing company Growclass, told BetaKit that the budget has done little to address the problem artificial intelligence literacy gapdespite the commitment to artificial intelligence infrastructure.
“[AI] Infrastructure alone will not create overall economic benefit,” Stockdale wrote in an email to BetaKit. She added that only 12 per cent of Canadians have received formal training in artificial intelligence, and adoption rates among women are lower than among men.
“If AI adoption mainly benefits large players and specialist labs, the sector may grow, but the overall economy – and opportunities for workers – will not grow evenly,” she said.
With files from Alex Riehl.
Image courtesy of François-Philippe Champagne via LinkedIn.
