While Budget 2017 was generally a stay-the-course document, it emphasized innovation and clean technology and offered a few goodies for entrepreneurs.
Responding to business concerns, the budget focuses on innovation and skills development and allocates $8.2 billion to both over five years. The budget also ambitiously proposes to double the number of high-growth companies in Canada, particularly in the digital, clean technology, and health technology sectors, to 28,000 by 2025.
Trade continues to be a priority as a driver of economic growth and a creator of well-paying jobs. The budget reiterates the government’s commitment to growing Canada’s goods and services exports — from resources, advanced manufacturing, and others — by 30 per cent by 2025. It also hopes to boost exports by Canada’s women-led companies, which tend to be underrepresented.
Overall, the budget balances the continued need to jumpstart the economy with the necessity of reducing the budgetary deficit, though the deficits are expected to continue until 2021 or 2022.
Canada and the world
As expected, the budget underscored the importance of the U.S. relationship for clean energy, innovation, infrastructure, and a continued commitment to work towards a new agreement on softwood lumber.
As with the previous budgets, this document reiterated again the government’s focus on trade with countries such as China, India and Japan. To that end, Canada will be joining the Asian Infrastructure Investment Bank at a cost of $256 million over five years. The government hopes this move will support inclusive, sustainable economic growth by supporting high-quality infrastructure projects in transport and energy, giving Canadian firms new commercial opportunities. The Canada-EU Trade agreement will be a main focus over the next few years as it comes into effect, and funds were outlined for Trade Commissioners to support Canadian companies in Europe.
In addition, the budget announces the launch of the Development Finance Institution (DFI) it promised in 2015, capitalized at $300 million. The DFI, which will be a wholly owned subsidiary of Export Development Canada (EDC), is a specialized financial institution that will support successful private-sector expansion – in socially and environmentally sustainable ways – in developing countries where alternative financing is scarce.
The cleantech commitment
Cleantech firms will receive $1.4 billion worth of new and existing capital support through EDC and the Business Development Bank of Canada (BDC). Meanwhile, the SD Tech Fund at Sustainable Development Technology Canada was recapitalized with $400 million.
The budget also targets cleantech firms with an additional $380 million for EDC and BDC over three years, to support equity financing for cleantech firms looking to grow.
The fact that “cleantech” was mentioned 78 times in the 280-page budget document shows just how dedicated the Trudeau Government is to boosting this promising sector.
A focus on innovation
Innovation was a big theme, beginning with the creation of a new Strategic Innovation Fund, which will be funded at $1.26 billion over five years. This Fund that will consolidate existing programs and focus on business innovation through four initiatives: the Strategic Aerospace and Defence Initiative, Technology Demonstration Program, Automotive Innovation Fund, and Automotive Supplier Innovation Program.
There will also be a review of federal innovation and clean technology programs that will examine how to better align resources to improve their effectiveness. In concert with that, the government will create Innovation Canada, a hub run out of the department of Innovation, Science and Economic Development. Together, innovation and skills development will receive $8.2 billion over five years.
The Skills and Innovation Plan targets six areas — advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences, and clean resources — with a goal of expanding growth and creating jobs.
The budget reaffirmed a commitment to the Accelerated Growth Service, which supports businesses across several federal departments and agencies. So far, 142 firms have grown through AGS and the goal is to reach 1,000. The government wants to create efficiencies in the program, particularly in information sharing between federal organizations.
Entrepreneurs will benefit from the Venture Capital Catalyst Initiative, which includes $400 million over three years, to increase venture capital for growth-oriented established businesses.
Agriculture and Agri-Foods, meanwhile, get $200 million over four years to support cleantech research and buy-in. The government hopes these investments will help grow Canada’s agri-food exports to at least $75 billion annually by 2025.
The oil and gas industry, as well, is getting a shot in the arm with a one-time payment of $30 million to the government of Alberta to stimulate economic activity and employment in Alberta’s resource sector, which is expected to stabilize in 2017.