David George-Cosh

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Finance Minister Chrystia Freeland plans to significantly increase Ottawa’s spending on bolstering Canada’s high-tech sector to foster economic growth and further increase the country’s competitiveness on a global scale.

The Liberal government plans a broad list of new spending measures that aim to address Canada’s need to compete for capital and investment across a range of sectors including mining, transportation, and climate-related industries. It’s also bolstering protections to improve the country’s intellectual property policies.

All told, Ottawa plans to spend $5.5 billion over the next five years in its efforts to help spur economic growth through investment in the high-tech space.

That represents less than 10 per cent of Ottawa’s total spending in this budget, according to Pedro Antunes, chief economist at the Conference Board of Canada. And while the spending could help to improve lagging Canadian productivity, it may not be enough to spur more private-sector investment in the country’s economy.

“All of these programs often have good results but only on the small scale,” he said in an interview. “When we look at what draws future capacity in the economy, more productivity is nice but what draws the biggest attention is on the private sector investment front.”

The budget proposes to establish the Canada Growth Fund, an arms-length public investment vehicle that will be initially capitalized at $15 billion over the next five years and will be deployed toward restructuring supply chains, helping to achieve various climate-related goals, and investing in clean technologies. Ottawa said in the budget documents that its goal for the fund is to attract at least three dollars of private sector investment for every dollar it will invest.

In addition to the fund, the government said it will establish an intra-department innovation and investment agency with $1 billion in funding over the next five years to proactively work with Canadian businesses to spur research and development in various new technologies. Further details on the new agency, however, were lacking, and the government said more information will be revealed following further consultation this year.

Ottawa is also planning on making a swath of investments in areas like agriculture, critical minerals used across a range of electronics and batteries, and semiconductors. Up to $3.8 billion in spending over the next eight years will be earmarked for Canadian mining companies to support the projects that will yield exploration of minerals such as nickel, lithium, cobalt, and other rare earth elements, reduce regulatory red tape, and secure agreements to build manufacturing facilities for electric vehicles and batteries.

Antunes said the push for access to more critical minerals may wind up being worthwhile given the recent commodity price shocks and rising demand for electric vehicles.

”That kind of investment can be encouraged to grease the wheels to get more businesses interested in developing these projects here in Canada,” he said.

Another $750 million over the next six years will be spent on expanding Canada’s five innovation clusters that currently focus on innovation-linked sectors including plant-based protein, artificial intelligence, and digital technologies. Improving the country’s intellectual property regime will be supported by nearly $100 million in new spending over the next five years.

Other big ticket items pledged by the government include $603.2 million over the next five years to address supply chain shocks such as last year’s flooding in British Columbia, and $40.9 million over five years to help increase opportunities for Black Canadian researchers.