#Budget2017 calls for $950 million towards ‘superclusters’, national AI strategy

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It was in March of last year that Minister of Science, Innovation and Economic Development Navdeep Bains publicly announced the government’s commitment to startups. The Innovation Agenda promised money in a few key areas:

  • $800 million towards incubators and clusters (though the clusters and incubators were not yet known)
  • $2 billion over three years for a Post-Secondary Institutions Strategic Investment Fund
  • $130 million over five years for cleantech research and development
  • $73 million supporting new co-op and integrated learning opportunities for companies in in-demand fields, called the Post-Secondary Industry Partnership and Co-operative Placement Initiative

Over the next year, Bains promised a “holistic approach” to shaping this agenda. With the new budget announced today, the federal government has become more specific about its strategy to build up tech companies in Canada.

Today, the federal government unveiled its second budget, which it dubbed the innovation budget. Here’s BetaKit’s roundup of the policies you need to know that affect the tech community.

Executive summary of the 2017 budget

  • $950 million towards a ‘supercluster’ growth strategy.
  • $50 million to the new Innovative Solutions Canada procurement program.
  • The creation of a $1.26 billion five-year Strategic Innovation Fund
  • The creation of an intellectual property strategy.
  • $125 million towards a national AI strategy
  • $400 million over three years towards a Venture Capital Catalyst Initiative
  • $50 million over two years to supporting organizations delivering digital skills training to girls and boys from kindergarten to grade 12.
  • $7.8 million over two years towards the Global Talent Stream of the Temporary Foreign Worker Program.
  • $221 million over five years to work towards the goal of creating 10,000 work-integrated learning placements through Mitacs.
  • $14.5 million over four years to develop Clean Technology Data Strategy
  • $400 million over five years towards the Sustainable Development Tech Fund, focusing on cleantech projects.
  • $380 million over three years for Business Development Bank and the Economic Development Corporation to provide equity financing.
  • $12 million over four years for government departments to establish a Clean Growth Hub.
  • $14 million over two years to non-profit Futurpreneur Canada
  • $8.1 million over five years towards the implementation of the Impact Canada Fund. This fund will dedicate $75 million over two years to solve cleantech challenges, $300 million over 11 years for smart cities challenges.

The Government is also looking to review “dozens” of innovation programs situated across many departments to see how they might be consolidated and simplified. To streamline their functions, the government proposes creating the Innovation in Canada platform, which will identify challenges and bottlenecks to innovation, and lay out specific strategies to help entrepreneurs achieve their goals.

The goal is to reduce the time it takes for entrepreneurs to figure out which departments meet their needs.

Here is some background on a few key pillars of the innovation budget:

On creating and attracting talent

The struggle to find senior talent in Canada is one that many local entrepreneurs are vocal about. To alleviate the issue, the federal government first unveiled its Global Skills Strategy in early November during its fall economic update, which included a standard processing time of 10 days to two weeks for work permit visas.

In early March, the federal government confirmed that this visa would be implemented on June 12, and officially called it the Global Talent Stream of the Temporary Foreign Worker Program.

Budget 2017 is dedicating $7.8 million over two years to this program, and the government will also make an amendment to the Immigration and Refugee Protection Act to create an express entry system responsive to labour market needs.

Finance Minister Bill Morneau said it is specifically studying policies on powering female entrepreneurs, especially as the government made the country’s first-ever gender-based analysis on this budget, and how policies specifically affect men and women. While the government expressed a commitment to supporting female entrepreneurs, there were no specific programs announced targeting this demographic.

“We will promote hands-on learning in science, technology, engineering, and math, especially for young women, girls, and Indigenous youth,” Morneau said.

The budget is dedicating $50 million over two years to support organizations delivering digital skills training to girls and boys from kindergarten to grade 12.

“Building on work being done by impressive organizations like Ladies Learning Code and Actua, we will encourage students to learn coding in the same way they learn to read and write, preparing our kids for the jobs of the future, Morneau said.

Building on its $73 million promise made last year towards co-op programs, this budget proposed provide setting aside $221 million over five years to work towards the goal of creating 10,000 work-integrated learning placements through Mitacs.

A focus on clusters — especially cleantech and AI

This year, the government announced that $950 million will actually go towards ‘superclusters’. This will provided on a competitive basis to support a small number of business-led clusters that have the greatest potential to accelerate economic growth. The competition will launch in 2017.

Of the $950 million, $800 million will be drawn from the Budget 2016 provision for innovation networks and clusters, and $150 million will be drawn from the public transit and green infrastructure funding provisioned in the 2016 Fall Economic Statement.

The government is particularly interested in six economic sectors: digital, cleantech, agrifood, advanced manufacturing, biosciences, and clean resources.

Last year, the government was vocal about its specific focus on cleantech.

In this budget, the government proposes $14.5 million over four years to develop Clean Technology Data Strategy and $400 million over five years towards the Sustainable Development Tech Fund, focusing on cleantech projects.

Cleantech firms are also getting a boost in venture capital. In budget 2017, $380 million over three years will be dedicated to BDC and the Economic Development Corporation. This funding will be dedicated equity financing for cleantech growth firms.

Overall, an additional $570 million over three years from BDC and EDC will go towards working capital supporting clean tech firms (including funding from the government and capital already under management).

The government will dedicate $12 million over four years for government departments to establish a Clean Growth Hub.

Overall, the government said it is providing $1.4 billion in new financing to cleantech companies.

In this budget, the government announced the creation of the Pan-Canadian Artificial Intelligence Strategy, which will promote collaboration between AI hubs Toronto, Kitchener-Waterloo, Montreal, and Edmonton. It will be dedicating $125 million towards the launch of this strategy.

On venture capital

The government is launching a new Venture Capital Catalyst Initiative, meant to increase the amount of late-stage venture capital available to Canadian scaling companies. It will be dedicating $400 million over three years through the Business Development Bank of Canada (BDC).

The government said that, with funds leveraged from the private sector, and depending on the proposals received, this $400 million investment could inject around $1.5 billion into Canada’s innovation capital market.

To access this fund, members of the private sector must submit proposals that address the expected benefits for Canadian companies and the proposed approach for risk sharing between the government and private sector. Minister Bains will reveal more details on this program following consultations with members of the private sector in the coming months.

The government is dedicating $8.1 million over five years towards the implementation of the Impact Canada Fund. This fund will focus its efforts on two initial problem streams: $75 million over two years to solve cleantech challenges, such as helping rural communities move away from diesel; and a smart cities stream, supported by $300 million over 11 years.

The government is also dedicating $14 million over two years to non-profit Futurpreneur Canada, which will match investments with funding from other government departments and the private sector.

The government’s $1.26 billion five-year Strategic Innovation Fund is targeted to aerospace and automotive companies, and to support this program expansion, Budget 2017 proposes to build on the existing funding by providing an additional $200 million over three years. $100 million will be new funding, and $100 million will be drawn from the $1 billion announced in Budget 2016 to support clean technology. The fund will be extended to digital industries, life sciences, and clean technology.

Accelerated growth service

In this budget, the government announced $50 million commitment towards its new Innovative Solutions Canada procurement program, modelled off the US Small Business Innovation Research Program (SBIR). It will be setting aside departmental money for early-stage research and development and late-stage prototypes under this program. The government noted that there will be a particular focus on procurement from companies led by women and other underrepresented groups.

Jessica Galang

Jessica Galang

Jessica Galang is BetaKit's News Editor.