News
- What non-profits need to know about AI policy-making in Canada
- CanStudyUS Home and Away
- Mayor Olivia Chow and Marshall Ganz kick off the inaugural Dais Book Talks
- Canada is failing on the digital connectivity report card. What can we learn from leading nations?
- From Potential to Performance: Roundtable Report on Canada’s Investment in AI Compute Infrastructure
Reflections on Canada’s 2024 Federal Budget
Apr 17, 2024
The federal government released its budget yesterday, and in today’s dispatch, we dig in:
- A new, bold idea: changes to Canada’s capital gains taxes have grabbed headlines, and prompted a range of reactions from economists, the broader business sector, and community-based organizations.
- What we’re watching: what the budget has to say about innovation policy, education and skills, and democracy and trust, and what it says about broadly building up shared prosperity and inclusive citizenship for Canadians.
- Ideas in brief: our economists and policy leaders weigh in on where they see the boldest policy potential — in 280 characters or less.
- Related reading: highlights of our recent reports on AI computing capacity, Can Canada Compute? and AI adoption, Automation Nation. Plus, dive deeper on skills and technology policy in Canada, including our research on digital skills, online harms and government digital transformation.
A bold, new idea
Generational fairness, or investment damper?
The budget brings one bold, new idea that hadn’t been previously announced — an increase in capital gains taxes that will touch around 40,000 individual Canadians and 307,000 corporations. The increase will raise $19 billion over five years, and help pay for around 40 per cent of the new spending in the budget. The federal government is positioning this as a move to improve tax fairness and generational equity.
A big question with any tax increase is, how is that income being used now, and does this tax increase pay for programmes and services that can increase productivity, improve business confidence and dynamism, and lead to shared prosperity? Or will it dampen investment in those same things?
Canada’s productivity gap is long-standing and growing, and successive generations are going to suffer if we don’t take more dramatic action to help them build wealth. So we’ll be following the impact of this bold idea closely.
Three things we’re watching
AI, Innovation and Tech
There’s news for those drivers of prosperity — the innovators, researchers, and entrepreneurs who help generate economic growth.
The government had already released its renewed Artificial Intelligence strategy, which we applauded here. The budget reveals that $2.4 billion will be spent over five years, but that only $323 million (or one dollar in eight) of the new funds will be spent in the first two years.
We believe that there is urgency to get funds out the door, and we hope that the impressive federal commitment (even if it is focused on later years) rallies other investors to step in and support the scale-up ecosystem, especially on computing capacity and adoption of AI.
We were pleased to see that the government followed the Dais’ advice in our recent brief on the review of the Scientific Research and Exploration Development (SR&ED) tax credit — they will increase the total amount available, under the SR&ED credit, by $600 million over four years, and then make a $150 million increase permanent. SR&ED needs reform to support IP protection, commercialization efforts and scale-up companies. The budget also provides time-limited support for businesses to write off the cost of patents and IT.
Researchers were also attended to, with $1.8 billion in (largely back-ended) new money over five years, for councils that provide grants to support research projects. We agree with the federal government that “more needs to be done to maximize the effect” of the granting councils in the broader economy.
Education and Skills
On education and skills, it’s more money, but also more of a holding pattern.
The government has put aside $559 million in 2025-26, for one year only, to top up funding for its existing youth jobs programmes.
The federal government’s portfolio of programmes to support youth jobs and career development needs attention — the transformative effects of digital technology, the population growth Canada is experiencing, and the scarring effects on young people’s social capital and connectedness during the pandemic — mean that it’s more important than ever that government, the private sector and education institutions work together to help ladder young Canadians from all walks of life into meaningful careers. To that end, we’re excited about promised consultations on the development of a Youth Climate Corps program that would provide young people with jobs that work to address the climate crisis.
For students, the government is spending another $1.1 billion to extend Canada Student Grants and increased, interest-free Canada Student Loans and is making the Canada Learning Bond automatic (an excellent initiative with the potential for long-term impact). It’s also adding to support Master’s and Doctoral scholarships; dedicating money for kids’ coding bootcamps; increasing support for Indigenous students; and topping up the after-school support program.
Democracy and Trust
In: local news. Out: online harms.
Our democracy can be neither safe nor vibrant, if people who participate in it do not have trust in our institutions, including what they see, read or listen to in the media.
The government has re-committed to, and increased funding for, the CBC, journalism (through ongoing and increased tax credits to organizations employing journalists) and the Canadian Public Affairs Channel. What’s missing, however, is attention on the demand side — policies and a whole-of-society approach to encourage shared conversations around shared media spaces.
Canadian youth are uniquely vulnerable to digital harms. To protect Canadian children from online harms, Budget 2024 proposes $52 million over five years. This money will go to Canadian Heritage and the RCMP to hold large online platforms accountable in fostering safe and healthy digital spaces. Through this funding, the government hopes to operationalize the proposed Bill C-63, which seeks to create the Digital Safety Commission and the Digital Safety Ombudsperson.
Ideas in brief
A quick look at what caught our attention as the government moves to implement its economic agenda – and why it matters.
On the big policy implications
Karim Bardeesy | Executive Director
Young people & innovators face a disruptive, digitally-driven, winner-takes-most economy. A budget is only part of the answer, but there are good signs as we work to generate the capital, knowledge, innovations, & connectedness needed for more shared prosperity in Canada.”
On youth leadership
Camara Chambers | Director, Leadership Development
Young Canadians today face unique generational challenges. Prioritizing youth mental health, education, jobs and career growth will help build a resilient generation of leaders equipped to succeed on the world stage.”
On economic growth and productivity
Viet Vu | Manager, Economic Research
There are many things to like about the 2024 Federal Budget, from enhanced tax credits for businesses conducting R&D to reducing the regulatory burden on Canadian innovators. The government must continue to drive these conversations, and not let specific interests drive them.”
On cybersecurity
Andre Cote | Director of Policy and Research
Ottawa’s move to develop a whole-of-government approach to cyber security creates an important opportunity for Canada to lead in protecting government digital infrastructure, and help private businesses safeguard Canadian-made innovation.”
On skills and labour
Vivian Li | Senior Economist
Investing in upskilling is imperative to the resilience of Canada’s labour force during rapid technological change. The government’s $50-million investment to retool workers potentially disrupted by AI can help ensure that workers are not displaced as more workplaces adopt AI.”
On online harms
Sam Andrey | Managing Director
The victims of online hate and harassment need better and faster recourse, and an online environment that does a better job of preventing it in the first place. Resources to support the enforcement of the new Online Harms Act are a strong start.”
On digital service transformation
Tiffany Kwok | Policy Analyst
Canadians deserve modern government services. A single sign-in portal for services, $2.9B to improve benefits delivery for seniors, and an automatic tax-filing pilot for low-income Canadians are forward steps. Improving internal systems and processes is needed next.”
On AI
Graham Dobbs | Senior Economist
Only one-third of Canada’s $2.4 bn AI infrastructure strategy is spent in the first two years of the program, suggesting ongoing challenges with building domestic AI infrastructure. We hope to see cloud computing access and AI hardware procurement prioritized for scale-ups.”
Chriselle Tessono | Policy and Research Assistant
Budget 2024 proposes $6.7 million to create an AI-powered air cargo verification program. However, the proposed #AIDA in #Billc27 doesn’t account for gov’t use of AI systems. To ensure responsible adoption of AI, gov’t requires appropriate independent regulatory oversight.”
On tech workers
Angus Lockhart | Senior Policy Analyst
We are pleased to see the government is directing its investment in AI adoption where it is needed most – investing in both the most important sectors of Canada’s economy and in small- and medium-sized businesses.”
For media inquiries, please contact Nina Rafeek Dow at nina.rafeek@torontomu.ca.
Dais Digital Reading List
Can Canada Compute?
Canada needs to urgently tackle the AI Compute gap to retain and grow our business and talent investments, and improve productivity.
Skills Algorithm
As digital skills continue to evolve at a rapid pace, workforce planners, policymakers and employers must ensure the workforce is equipped to meet current and future labour market demands.
Byte-sized Progress
The Government of Canada has rapidly slipped in its ability to build government digital infrastructure over the past 20 years. Significant changes in government culture is needed, instead of incremental investments that patchwork capacity, if Canada is serious about becoming a leader in government digital infrastructure again.
Online Harms
More than 3-in-4 people in Canada were exposed to experiences of online harms in 2022, and this number is increasing. Over 80% of Canadians were also ready for governments to take action, particularly to compel social media platforms to address hate, and misinformation.
Dais Submission on AIDA
To build a robust and trust-worthy regulatory framework, the government needs to meaningfully engage the public and develop an independent oversight regime for AI uses by both business and governments.
Dais Submission on Impact of AI on work
The prosperity benefits of responsible AI adoption in Canadian workplaces should outweigh the risk to workers. However, targeted investment in the short term will be needed to support workers most at risk including those who lack formal educational credentials or live in areas that are overly reliant on a single industry.