OTTAWA — The Trudeau Liberals are promising to create two new arm’s-length agencies to manage billions in federal funds to get businesses to invest in themselves.
Measures unveiled in the 2022 federal budget would see $15 billion over five years invested in a fund designed to mitigate risk for private companies to make spending on research and technology more palatable.
The money for what the Liberals call the “Canada Growth Fund” will come from existing funds built into the government’s fiscal framework.
The money would flow to businesses through loans and equity investments that the government expects to largely recoup, although some of that money may ultimately not return to federal coffers.
The fund would be set up over the next year, with the first investments expected over the following 12 months, in line with the projections set out in the budget.
Finance Minister Chrystia Freeland said the measures are aimed at addressing a long-standing problem with the productivity of the Canadian economy.
“Increasing Canada’s productivity, increasing Canada’s per capita GDP growth, that is what I think is one of the most basic aspirations of all Canadians, that our children have better and more prosperous lives. than ours,” Freeland told reporters.
The fund and a sister agency to help commercialize new findings add to the handful of independent agencies the Liberals have created over the years, which experts say have a mixed track record.
One such agency, the Canada Infrastructure Bank, received another change to its mandate in Thursday’s budget to allow it to invest in technologies such as small modular reactors and carbon capture and storage. carbon.
“The current government has tried many different approaches … with a mixed record of how they’ve succeeded in improving Canada’s productivity,” said Randall Bartlett, senior director of the Canadian economy at Desjardins.
“It’s another attempt to do that and I guess the proof of the pudding will be in the tasting, in terms of quality.”
Like the infrastructure bank, the Liberals say they expect to raise $3 in private investment for every $1 in public dollars from the growth fund to spur investment in research and development, which are long-term declines relative to GDP.
Robert Asselin, senior vice-president of policy at the Business Council of Canada, said the new agencies appear to be a step in the right direction to address this long-term problem, although there are still details to be ironed out.
He said the government should take a sectoral approach to funding, as opposed to one that gives grants to businesses, to ensure the money has an impact.
“I just hope they don’t get lost in these structures which, as we learned with the infrastructure bank, can get very bureaucratic,” said Asselin, a former Liberal budget director.
The measures in the budget are a departure from what the Liberals promised during the election campaign: to create an agency like the one housed in the Pentagon that funds so-called “blitz” ideas that don’t always materialize.
But a senior government official told a news conference the Liberals had made the political decision to move away from that model, saying it wouldn’t work for Canada, which has a worse record on commercialization of scientific discoveries.
Perrin Beatty, president of the Canadian Chamber of Commerce, said the investment fund and agency, once operational, must play a complementary role to existing programs.
“Our competitors are squarely focused on attracting investment and growth. That has to be our top priority as well,” he said.
This report from The Canadian Press was first published on April 7, 2022.
— With files by Sarah Ritchie