2023 federal budget: a green response to maintain the country's leadership in a single key sector

Canadian innovation depends on the green economy

This budget includes significant tax credits aimed at increasing investment in clean energy, particularly wind and solar power, in clean technologies, including the manufacture of zero-emission vehicles and renewable or nuclear energy equipment, and in clean hydrogen. The Government of Canada also plans to invest in clean energy projects, particularly through the Canada Infrastructure Bank, and in the development and application of clean technologies through the Strategic Innovation Fund.

In short, the Canadian government is betting big on the clean technology sector in order to maintain its position as a leader in the battery, zero-emission vehicle, and clean energy sectors, which also gives Quebec a strategic advantage.

little investment in innovative start-ups

In addition to massive investments in the green economy totaling more than $40 billion over the next five years, most of which will continue until 2034–2035, Canada's budget does not include specific investments in innovation and support for entrepreneurs starting innovative young businesses. We also find several measures in this budget that are not quantified investments, but rather government wishes that will result in consultations and, perhaps, legislative changes favorable to innovation.

We note the expansion of the Innovation Program in Colleges and the Community, administered by the Natural Sciences and Engineering Research Council of Canada (NSERC), which is dedicated to colleges and CEGEPs in Quebec that already benefit from it, and especially the College Technology Transfer Centers (CCTT).

Among the funding that will contribute to this, we also note several upcoming initiatives whose results will benefit innovation: the launch of a new phase of the Smart Cities Challenge, from which the city of Montreal has benefited in the past; the introduction of legislation to create the Canada Innovation Corporation, which also involves changes to the role of the National Research Council of Canada; an amendment to the Patent Act; and consultations to establish a right to remedy.

The absence of new specific measures to support intellectual property has also been noted by several economic stakeholders, including the Canadian Council of Innovators. However, we would also like to mention that the budget lists several of the actions taken in recent years in this regard, including the establishment of innovation superclusters and the Intellectual Property Strategy.

innovation projects in certain specific sectors

In addition to more generic measures that will affect innovation, certain specific sectors will receive additional funding to adopt innovative practices and benefit from innovative ideas from young innovative companies.

We note significant funding forthe Canadian Space Agency for severalspace exploration initiatives, including the Lunaracceleration Program, which aims to develop new technologies.The dairy industry, through Agriculture and Agri-Food Canada, also wants to innovate in the research and development of new non-fat solids (NFS) products. We also note projects related to innovation in nitrogen management practices by farmers in eastern Canada (Agriculture and Agri-Food Canada), the establishment of a green maritime corridor program that will involve investments in shore power technologies (Transport Canada), and research and development in the forestry sector (Natural Resources Canada).

Let's hope for continuity in innovation that works well.

The Canadian government's budget shows promise for maintaining the country's leadership in the green economy, and we are hopeful that the diversity of our innovation economy will continue to be a consideration for the federal government.

The budget envelopes and current programs are still in place, even though no additional funding has been included in the 2023 budget, particularly for global innovation clusters such as Scale AI in Montreal and Innovation Expertise Canada, which oversees programs such as Innovative Solutions Canada. We would also like to point out that several funding programs for the Network of Centres of Excellence are coming to an end and that this network contributes to the creation of technological innovations that lead to the creation of startups.

We will closely monitor the progress of these initiatives, which have a considerable impact on innovation in Canada and Quebec, particularly the planned integration of the Industrial Research Assistance Program (IRAP-NRC) into the new Innovation Corporation of Canada.

to find out more about measures of interest to Quebec's innovation accelerators community, see our 2023 Federal Budget briefing note.