(Bloomberg) -- Canada’s Liberal government is picking six industrial sectors, led by clean technology, to foster innovation and jobs in an economy that’s been relying on commodities to drive growth.
Support will be focused on clean tech, agri-food, digital, advanced manufacturing, bio-sciences and clean resources, according to Prime Minister Justin Trudeau’s second budget released in Ottawa on Wednesday. As part of the effort, the government will consolidate its corporate support programs into one fund and contribute C$400 million ($300 million) in additional venture-capital funding through the country’s development bank.
“We need to focus on our strengths -- areas where we can lead globally and create good jobs for Canadians,” Finance Minister Bill Morneau said in his budget speech to lawmakers, according to prepared remarks. Innovation, along with infrastructure, is at the center of Trudeau’s efforts to develop a growth agenda that could help bolster support for a deficit-spending plan that will see the country’s debt rise C$143 billion over six years.
About C$1 billion of the C$1.3 billion being spent over four years to promote industrial sectors will go toward clean technologies, with money for equity financing and research funding. The government will also spend C$125 million to launch an artificial intelligence strategy for research and talent and wants to grow Canada’s agri-food exports to at least C$75 billion annually by 2025.
Many of the world’s leading artificial intelligence experts got their start in Canada, which funded research into the esoteric technology for decades. As tech giants including Alphabet Inc., Apple Inc., Facebook Inc. and China’s Baidu Inc. invest heavily in the technology, those experts have largely been poached for corporate jobs south of the border. The strategy aims to keep Canada central to the future of smart computers and robots.
Trudeau’s Liberals are also providing C$950 million over five years for so-called superclusters -- through a competing bid process -- that could include the same sectors and would be modeled on ones like Silicon Valley or the Toronto-Waterloo corridor.
Canadian tech leaders are generally pleased with the budget, which followed through on funding for home-grown procurement and a special fast-track visa for tech workers, said Ben Bergen, executive director of the Council of Canadian Innovators, which represents fast-growing tech companies like Shopify Inc. and Hootsuite Media Inc.
Still, they’re waiting on exactly how the C$950 million “supercluster” funding will be spent.
“Ottawa will miss a great return on investment opportunity if they spread this funding too thin in the interest of playing it safe,” Bergen said in an email. “Supporting innovation is not about picking winners and losers, but it is about recognizing and doubling-down upon our strongest sectors.”
The government has sought to brand its economic policy around high-tech industries as an antidote to Canada’s recent reliance on the energy sector. The plan, which includes a skills and jobs training component, will set targets to gauge its success. That includes a target to boost exports 30 percent by 2025 and doubling the number of “high-growth” companies in Canada over that time.
In addition to the narrowing industrial focus, the government will also consolidate three corporate support programs -- for technology, aerospace and automakers -- into one C$1.3 billion five-year plan. The new venture capital funding will be allocated through the Business Development Bank of Canada and will be aimed at late-stage companies. The government will also create a C$50 million program for government procurement from Canadian innovators and put funding toward speeding up visa processing for high-tech workers, both of which the startup community had been asking for.
“By granting greater access to highly skilled talent, the federal government is providing high-growth companies with the jet fuel they need,” Bergen said.
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