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Today, the Government of Canada publishes its 2024 budget.

Analysts do not expect #Budget2024 to be heavy on new spending commitments, with interest rates remaining steady and significant spending having already been announced in recent weeks for housing. Housing commitments and last week’s announcement of $2.4 billion to AI startups, compute, and safety, together already clock in at over $25 billion.

Instead, the Canadian tech community will be looking for meaningful updates on past commitments, such as open banking and the Artificial Intelligence and Data Act (AIDA), which is part of Bill C-27 (see our #Budget2024 expectations below for all the details).

And for a federal government facing a hard year, the question remains: will the Liberals be around long enough to execute their spending commitments (RIP CIC)?

#Budget2024 drops at 4 p.m. EDT. Keep this page open and regularly refresh as BetaKit provides you with all the details Canadian tech needs to know.

What #CDNtech expects from #Budget2024

The Liberal government has already revealed some big-ticket initiatives ahead of #Budget2024, but there are several key areas to watch for Canada’s tech and innovation sector, particularly open banking, investment tax credits, and federal procurement.

Earlier this month, the federal government announced the budget would include a $2.4-billion commitment to Canada’s AI sector. This includes enhancing compute power for AI researchers and startups through a new AI Compute Access Fund, and a new Canadian AI Sovereign Compute Strategy to increase domestically owned AI infrastructure.

The investment will also allocate $405 million to support AI startups in commercializing new technologies, foster AI adoption across critical sectors and small to medium-sized businesses (SMBs), create a Canadian AI Safety Institute, assist workers affected by AI developments, and strengthen the enforcement of the proposed Artificial Intelligence and Data Act (AIDA).

This year’s budget is expected to significantly advance Canada’s long-awaited move toward an open banking system. The government indicated in its Fall Economic Statement that it would table framework legislation for “consumer-driven banking” in the 2024 budget, with plans to implement the framework next year.

The Fall Economic Statement also revealed plans to amend the Canadian Payments Act to expand membership eligibility for Payments Canada, which is also leading the much-delayed implementation of Canada’s first real-time rail (RTR) payment system, to include payment service providers and credit unions. These changes are included as part of the Fall Economic Statement Implementation Act or Bill-C59, which passed second reading in the House of Commons and was referred to a House standing committee for consideration in March.

Today, Payments Canada announced a roadmap for delivering the RTR. The organization said IBM Canada and CGI will assist Interac in the delivery of the system, adding that industry testing is scheduled to start in 2026, indicating that the process already fraught with delays will take at least two more years.

The Liberals proposed amending the Income Tax Act in the Fall Economic Statement to ensure “concessional loans with reasonable repayment terms from public authorities” aren’t classified as government assistance. This followed a Supreme Court decision that upheld a ruling treating below-market federal loans as government assistance, excluding them from being used with Scientific Research and Experimental Development (SR&ED) incentives.

As for SR&ED itself, the 2024 budget likely won’t include major new developments on the government’s long-delayed review of the program. Initially promised in Budget 2022, the review has been slow to progress, to the frustration of many ecosystem players. However, the federal government did initiate consultations for this review in January, which officially wrapped up yesterday.

Also in the Fall Economic Statement, the government said it would give the country’s Competition Bureau new powers to crack down on abuses of dominance by large companies, with a plan to address cases of “killer acquisitions,” where large dominant firms engage in anti-competitive behaviour. Some of those competition measures, as well as others proposed in the Fall Economic Statement, are also included in Bill C-59.

Recent federal budgets have introduced several tax measures aimed at fuelling Canada’s cleantech sector, including the Clean Technology Investment Tax Credit, and a Carbon Capture, Utilization and Storage Investment Tax Credit. In their pre-budget consultation submissions, numerous stakeholders from the cleantech and energy sectors requested greater clarity concerning these tax incentives. 

Legislative proposals to implement certain clean economy tax credits were released late last year. Following consultations on these tax credits that concluded in February, the upcoming budget may offer updates and additional details on how these tax credits will be structured and applied.

While Budget 2023 included no new commitments to Canada’s semiconductor sector, the Semiconductor Industry Leadership and Innovation Canada Action Network released its inaugural policy report last year, outlining recommendations to enhance the nation’s chip industry. The 2024 budget may provide additional details on how the government intends to implement these recommendations.

Procurement has recently been a focal point among stakeholders in the Canadian tech ecosystem. The Council of Canadian Innovators (CCI), in particular, has urged both federal and provincial governments to refine their procurement strategies to better support the nation’s innovative companies. Proposed measures include establishing a national procurement agency, setting procurement targets for SMBs, and creating new standards for innovation procurement, among others.

In March, over 90 Canadian CEOs wrote an open letter calling for amendments to the regulations governing pension funds to promote domestic investments. While it’s not clear whether the federal government plans to implement these changes, Finance Minister Chrystia Freeland indicated last month that she would like to see more investment in Canada from the country’s pension funds.

Beyond pension funds, there are other mechanisms being considered to increase investment in Canadian companies. In its submission to the Minister of Finance for the federal budget, the Canadian Venture Capital & Private Equity Association (CVCA) recommended the government consider a new emerging manager stream for the Venture Capital Catalyst Initiative (VCCI). The CVCA also proposed implementing a capital gains exemption if proceeds from company exits are invested in a new Canadian venture.

Feature image courtesy Flickr.