Liberal Platform Deep Dive
Happy Monday! Now we know that Mark Carney will be our Prime Minister, at least for a short while, given he has no majority, I thought I would go back and look at the Liberal platform and its various promises relating to innovation and technology policy. It isn’t a comprehensive examination, and I haven’t had time to assess the coherence of the platform as a whole (such as how far housing or immigration promises support innovation and technology, for example). Yet I thought it would be helpful to look in more detail.
My primary takeaway is that while there are some good proposals, they are thin overall on innovation and technology and insufficient to tackle our problems and challenges. I don’t feel that it offers anything close to the reorientation of our innovation policy away from focusing on inputs and towards the outcomes. Many proposals seem to duplicate work or funding already happening. Nor does it offer a more clearly value-driven approach to innovation and its benefits and harms. A mission framing is absent, and where there are promises made, for example around procurement, they are vague and uncosted, hinting that no real change is likely to be in the works. We should be clear that outcome is better than many alternatives, and what we are seeing in the US. But real change is needed, and it must come from somewhere.
But for now, let’s get into the weeds.
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Unite
Digital infrastructure is prominently featured under the platform’s pillar “Unite: Uniting Canadians to meet this moment.” $2.5 billion is slated over 2025-27 for building AI infrastructure, such as data storage facilities, computing capacity, high-speed, safe, and reliable communications networks, including rural broadband and cell service.
This appears to be a top-up for the Canadian Sovereign AI Compute Strategy, which provides $2 billion over 5 years to mobilize private sector investment in the AI ecosystem and build out public supercompute infrastructure. It also appears to be in addition to the $3.225 billion Universal Broadband Fund.
I’ve written before about how I feel the AI Compute Strategy and the funding allocated are insufficient to build out genuine sovereign compute, so extra funds are a good start. However, whether more money will address some of the key tensions of what sovereign compute means and whether this kind of money will end up subsidizing foreign cloud services to build in Canada is still unresolved.
This pillar also strongly emphasizes a “made-in-Canada” procurement strategy that will leverage “the government’s purchasing power to drive innovation, solving Canadian problems in new ways, and improving efficiency and service delivery, while supporting our small and medium-sized businesses.”
If you’ve been paying even a small amount of attention, you’ll know that the Canadian tech sector frequently asks for this. Effectively leveraging procurement is also prominently featured in more mission-oriented arguments. So this sounds great.
Unfortunately, details on how this will work are sparse. No new mechanisms were announced to achieve this, nor was any additional funding allocated. Given that Canadian firms are currently losing out to giant multinationals who can leverage their scale to undercut them on price, there will inevitably be a cost to buying more from Canada, at least in the short term. And given that the last government only recently cut funding to Innovative Solutions Canada, the existing program designed to leverage procurement to drive innovation, I’m not confident that this is anything other than platitudes.
Secure
Under the "Secure: Securing our Economy and Sovereignty" banner, the platform proposes establishing the Bureau of Research, Engineering and Advanced Leadership in Science (BOREALIS). This new entity is intended to provide the Canadian Armed Forces and Communications Security Establishment with made-in-Canada innovation solutions in areas like AI, quantum computing, and cybersecurity. While the intent is clear, the actual level of funding for BOREALIS isn’t known.
Again, there is an existing program, Innovation for Defence Excellence and Security (IDEaS), which aims to invest $1.6 billion over 20 years, with $330 million invested up to March 2023. Whether BOREALIS is just a rebranding of IDEaS or if it is meant to be a clearly different organization with a distinct mandate is unclear.
The platform also aims to safeguard the Canadian economy and values by strengthening the Investment Canada Act. Proposed changes include making more transactions reviewable, modernizing standards to capture manipulative models, and explicitly reviewing potential impacts on Canada's data sovereignty.
This could be a very impactful policy, but whether the practice matches the rhetoric will be the key question. It is clear enough that this change is happening due to the threats from Trump and the US. However, threats to our economic and data sovereignty from the US have existed long before Trump, and our prosperity has always depended on a relationship with the US that has always, in part, menaced our economic independence. How bullish will the Carney government be in enforcing these new changes? Are they going to take on big tech firms over manipulative models that distort our democracy and undermine the health and well-being of Canadians? Are they going to push back on US acquisitions of Canadian tech firms? We’ll have to see.
Closely related, the platform pledges to introduce legislation to protect children from online crimes, including sexual exploitation and extortion, and provide law enforcement with enhanced tools. It is not explicitly stated whether this will take the form of new online safety legislation or extend beyond child protection, nor whether it will tackle the underlying issues of manipulative models mentioned above. I recently signed an open letter along with a range of civil society organizations calling for a new law and a new regulator to protect the safety and rights of Canadians online. While it is welcome that the issue is at least on the Carney government’s radar, whether it goes anywhere near far enough remains to be seen.
Protect
The "Protect: Protecting our values as Canadians" pillar doesn’t include much of relevance to innovation and technology but a couple of things are worth highlighting. One promise is the launch of a Task Force for Public Health Care Innovation. This task force is intended to invest in and scale made-in-Canada health care solutions, improve data quality, and ensure accountability in public health investments, including the $25 billion allocated through the Working Together Agreements with provinces and territories. However, the platform provides no specific funding for this task force, and I don't know what it will be able to achieve without resourcing when dealing with incredibly complex systems.
The platform also commits to protecting and strengthening the $10-a-day Early Learning and Child Care (ELCC) system. While this is not explicitly related to innovation, when it comes to this, I am 100% in agreement with Laurent Carbonneau’s assertion from his new book At the Trough: The Rise and Rise of Canada’s Corporate Welfare Bums that:
For all the nice things I've said about how we can do industrial policy better, funding the child care gap and providing genuinely universal access seems to me to be a smarter investment in the economy than just about any business subsidy you can think of.
Keep your eyes open for more on Laurent’s book soon!
Build
It is in the “Build: Building the strongest economy in the G7” section that we get most of the measures aimed at stimulating economic growth and fostering innovation. To encourage business investment, the platform proposes extending the Accelerated Investment Incentive and allowing for the immediate expensing of manufacturing and processing machinery, clean energy equipment, and zero-emission vehicles. At $12.59 billion over four years, this is a huge commitment. However, it was also previously announced in the Fall Economic Statement last year and isn’t a new spending commitment.
Incentivizing business investment is a significant challenge for Canada. In theory, this measure may be beneficial in promoting investments in technologies like robotics, where Canada lags. However, the fact that it is a continuation of an existing program means it isn’t likely to alter the poor investment patterns that plague us and will just sustain the status quo.
Another big announcement is increasing the claimable amount under the Scientific Research and Experimental Development Tax Incentive Program (SR&ED). While FES 2024 raised the expenditure limit for the enhanced 35% rate from $3 million to $4.5 million only a few months ago, this commitment raises it even further to $6 million. SR&ED is Canada’s single biggest tool for supporting business innovation. It has also been widely criticized from many directions for many years. Review after review has been promised, with very little in the way of substantive change. Increasing the claimable amount is only one part of a suite of changes called for, such as those called for by the Dais last year.
Interestingly, this commitment isn’t costed. The changes in FES 2024 were costed at $1.8 billion to 2030, so a further large increase in claimable amount is no small commitment.
Investment in homegrown startups is addressed through a proposed $1 billion recapitalization of the Venture Capital Catalyst Initiative (VCCI), including a defence-specific stream. This, combined with the previously announced reversal of the capital gains hike, is intended to encourage investment in promising Canadian companies.
More interestingly, the platform proposes introducing the flow-through shares for Canadian startups in sectors like AI, quantum computing, biotech, and advanced manufacturing as a mechanism to incentivize investment by allowing investors to deduct eligible R&D expenses from their taxable income. This builds on a model used successfully in the mining sector. At $2.1 billion, this is a huge commitment and something that cleantech firms have called for for many years.
The platform also includes the long-called for Canada Patent Box, which will cost $193 million and incentivize innovators and their IP to remain in Canada.
Combined, the changes to SR&ED, the extension of the Accelerated Investment Incentive, the introduction of flow-through shares and the Patent Box, this platform proposes a major suite of tax incentives to incentivize innovation and technology adoption. Yet Canada’s support for innovation is already heavily weighted towards tax incentives, with OECD data showing that tax support for business R&D accounts for 0.19% of Canada’s GDP. In comparison, direct supports account for only 0.07%. The OECD has also argued that “supposedly neutral instruments [such as tax incentives] are not free from bias, favouring incumbents and the status quo, e.g. driving incremental improvements in polluting technologies as opposed to radical advances in green technologies.” As a result, they have called for greater steering of innovation - the opposite direction the Carney government appears to be taking.
Other proposed measures include an uncosted and vague promise to secure a "Canadian advantage" in strategic industries like biomanufacturing, quantum computing, and ag-tech, as well as another commitment to build AI infrastructure and ensure Canada’s “technological sovereignty,” which is presumably a restatement of the promises in the Unite pillar.
Further commitments surround AI training, adoption, and commercialization. The platform proposes tracking AI's economic impacts in real time, though what this entails and its cost are unclear. Perhaps it means getting StatsCan to do more work in this space, which would certainly be welcome. $46 million in extra funding for Mila, Vector, and Amii to support AI commercialization is also nice to see, though I doubt anything of that scale will move the needle.
Another tax credit is proposed, this time a $400 million one for AI deployment for small and medium-sized businesses on qualifying adoption projects contingent on demonstrating job creation. Whether job creation is at all the relevant metric for AI deployment is far from clear to me. As we see with Duolingo, job losses seem to be the more common approach to AI deployment.
This measure is also presumably in addition to existing programs like the $300 million AI Adoption program and the $200 million Regional Artificial Intelligence Initiative. Yet, no additional support has been announced for other types of digital technology adoption. Technology adoption as an issue in Canada goes beyond AI, and we can’t afford to place all our eggs in one technological basket. As one StatsCan report argues
There is little evidence from Canada’s official productivity statistics that innovation and advanced technology adoption are translating into sustained improvements in business efficiency beyond their measured impacts on capital and labour. This aligns with a longstanding concern: the need for businesses to more fully exploit the benefits of innovation and advanced technology to expand output and increase labour productivity
I am not at all convinced that the package of measures proposed is equal to addressing this massive problem.
In another case of apparent duplication, improving AI procurement is addressed by proposing a dedicated Office of Digital Transformation at the centre of government. This office would aim to identify, implement, and scale technology solutions, reduce red tape, and take a whole-of-government approach to service delivery, potentially using AI to address backlogs. I have no idea how this new body differs from the existing Canadian Digital Service, which received funding in Budget 2021 for similar goals. Added to the fact that this new office is an unfunded promise, I can only conclude this is a rehash of existing efforts.
There are two very low-budget commitments on the science and research policy side of things. The first is the creation of a Canadian Sovereignty and Resilience Research Fund to support researchers whose projects could benefit Canada, particularly those potentially impacted by funding cuts elsewhere, such as in the US. The government has committed $100 million over four years to do this. This sounds great, but this is nowhere near enough to receive any real benefit in practice. To provide some perspective on the difference in scale between US support for science and research and these kinds of commitments, even after Trump’s proposed US$21 billion cuts to the NIH, at US$27 billion, the funding for that agency alone is only slightly smaller than all public and private sector spending on R&D in Canada, which amounted to something like US$33 billion in 2021.
On top of that, the average NIH grant size is US$609,000. With $25 million a year, you might be able to replace the funding for 30 researchers, but realistically, the top researchers and top projects are going to cost far more than the average grant, and this isn’t even taking into account the cost of setting up the lab, or the salaries of post-docs and lab techs that might be needed too. The Fund is a token effort at best. It is certainly not a real bet on securing talent that can transform Canada’s research and commercialization outcomes through recruiting top-tier talent.
Finally, the platform also mentions finalizing the modernization of science and research by creating a "capstone organization." As initially conceived, the capstone would be mandated to advance research involving multiple disciplines, mission-driven research, and international research. Yet, these mandates will be unachievable with only $10 million in annual funding committed in the platform. By way of another international comparison, UKRI, the UK’s version of a capstone research organization, out of its £8,811 million 2025-26 budget, over £2 billion is allocated for cross-UKRI funding rather than to specific funding councils. UKRI’s mandate isn’t a one-to-one (their cross-UKRI spending includes research infrastructure funded through the Canada Foundation for Innovation, for example), but the difference is still telling. By only providing such small sums, the capstone will be hard pressed to do anything other than maintain the status quo that the Bouchard Report criticized so heavily.
Conclusion
There is a lot in this platform. It hits some good notes around leveraging technology and innovation for economic growth and security. The emphasis on building digital infrastructure, fostering domestic innovation through procurement and R&D incentives, and strengthening key sectors is clear.
Yet, much is still missing here. Frequent absences of specific costings for significant proposals, the lack of detailed implementation plans for new bodies, and potential overlap with existing programs raise questions about these initiatives' feasibility and true impact. A heavy weighting towards tax incentives exacerbates an existing problem with how innovation is supported in Canada. I could go into more, such as the missing Canada Innovation Corporation, or around federal-provincial-territorial cooperation, but this is long enough already.
More broadly, there are both positives and red flags. On the positive side, the shift towards splitting capital investment from operational spending is a change that I think has a lot of merit. We need to invest more in building things, whether homes, data centres, clean energy, or trade infrastructure, and this change should help facilitate that and provide more transparency.
Regarding red flags, a proposed cap on the total number of temporary foreign workers and international students raises massive questions. I have seen the UK try to pursue arbitrary caps on immigration that have served to poison their politics, stoke racism, hamper their economy, and impose massive cruelty on immigrants, while also never getting close to meeting that cap. For Canada to go down a similar path would be madness. It would also potentially massively damage the Post-Secondary sector by further restricting international student numbers, while there is no new funding commitment to rebalance PSE away from its reliance on international revenues. For all of the talk of attracting international researchers, going down this path will cause us to struggle to retain the talent we already have if we start seeing bankruptcies.
Other areas strike me as hypocritical, not least the promise to use our G7 Presidency to “catalyze action in defence of our values, including working to protect the rules-based international order from those who want to destroy it.” Yet this is a platform that ducks any mention of what is happening in Palestine, one of the most glaring attacks on the rules-based international order that we see right now, even as it mentions Russia’s war on Ukraine. Similarly, for all of the talk in the platform about the impact of Trump’s policies, there seems to be no real underlying recognition of the US’s descent into authoritarianism and what that means for Canada or the rules-based international order. I don’t get a clear sense of the policies needed to account for a fundamentally different relationship with the US, with all that means for our sovereignty.
At least in the innovation and technology space and the areas that overlap it, this is, at best, a steady-as-she-goes platform. That isn’t necessarily bad - it is certainly better than the slash-and-burn approach we see down South. But I don’t see it as a platform that sets up a government that is ready and able to meet the moment.
