Growing national defense is core to Canada: Bergen

Key Concepts

• Budget 2025: The Canadian government's new budget, focusing on infrastructure, community protection, and empowering Canadians.
• Innovation Economy: The sector of the economy driven by new ideas, technologies, and commercialization.
• Capital Gains: Profits made from selling an asset that was purchased at a lower price. Last year's budget caused "turmoil" in the innovation economy due to changes in capital gains.
• Inputs Budget: A budget that commits significant financial resources for specific areas, such as dual-purpose defense technology.
• Dual-Purpose Defense Technology: Technologies that have both military and civilian applications.
• "Buy Canadian" Provisions: Government policies aimed at prioritizing the purchase of goods and services from Canadian companies.
• Economic Sovereignty: The ability of a nation to control its own economy and make its own economic decisions, including supporting domestic industries.
• Procurement Dollars: Government funds allocated for purchasing goods and services.
• Domestic Capacity: The ability of a country to produce its own goods and services and develop its own technologies.
• Commercialization: The process of bringing a new product or service to market and making it profitable.
• Modular Housing: Housing constructed from prefabricated components or modules.
• Invention vs. Innovation: Invention refers to the creation of new ideas or devices, while innovation is the process of bringing those inventions to market and making them successful.
• Execution: The act of putting a plan or idea into effect.

Analysis of Budget 2025 and its Impact on Canadian Innovators

Government Investment and Strategic Focus

The Canadian government has announced a significant investment of approximately $280 billion over five years. This funding is earmarked for building new infrastructure, protecting communities, and empowering Canadians. Benjamin Bergen, President of the Council of Canadian Innovators, views this budget as a crucial step towards building trust with Canadian innovators.

Shift from Previous Budgets

Bergen contrasts Budget 2025 with the previous year's budget, which he states caused "turmoil within the innovation economy" due to issues like capital gains. Budget 2025, in his assessment, presents "a lot of opportunity."

"Inputs Budget" and the Need for Wealth Capture

Budget 2025 is characterized as an "inputs budget," with the government committing billions of dollars to areas like dual-purpose defense technology. However, Bergen emphasizes the critical need to establish mechanisms for "capturing wealth." This involves ensuring that government expenditures, such as those on defense technology, translate into benefits for Canadian companies. The core question is how to transform these government "dollars on expenditures" into "company creators" by prioritizing domestic players over foreign multinationals.

"Buy Canadian" Provisions and Definitional Challenges

A key focus for the Council of Canadian Innovators is the implementation of "Buy Canadian" provisions. While the term "Buy Canadian" was mentioned 20 times in Budget 2025, compared to zero in the previous year, Bergen highlights a significant challenge: defining what constitutes a "Canadian company." He poses critical questions: "Does Amazon Canada count as a Canadian company? Does IBM Canada count as a Canadian company?" The ambiguity in these definitions, such as whether incorporation in Canada is sufficient, needs to be resolved to effectively advance domestic capacity. The Council intends to work with the government to establish a clear "definitional framework."

Economic Sovereignty and Global Opportunity

The government's push for economic sovereignty, particularly in defense procurement, is acknowledged. Bergen argues that a clear definition of sovereignty and the firms eligible for procurement dollars is essential. The goal is to foster companies that are "headquartered in Canada," "commercializing in Canada," and subsequently able to "sell those solutions and products globally." This approach positions Canada as an "open small economy that believes in democracy and the rule of law," leveraging its values as a competitive advantage in fair trade.

The Invention-Innovation Gap

Bergen identifies a persistent challenge for Canada: excelling at invention but struggling with innovation and commercialization. He cites examples like the creation of AI in Canada by figures like Geoffrey Hinton and Yoshua Bengio, and the fact that "Ozanic was actually created at the University of Toronto and ultimately commercialized by a Danish company." This highlights Canada's strength in generating "really good smart ideas" but its deficiency in the subsequent step of commercialization, which is crucial for generating a "return on investment for the country."

Housing Sector and Modular Construction

The housing sector is presented as another area with significant opportunities, particularly in modular housing, where Canada is perceived to be lagging. The underlying principle remains the same: leveraging Canadian ingenuity for invention and then focusing on effective commercialization.

The Importance of Execution

Bergen concludes by reiterating that while the government is making "inputs in a lot of the right places," the critical factor will be "the follow through." He quotes William Blake, stating, "execution is the chariot of genius," emphasizing that the current phase for the government is about putting plans into action.

Conclusion

Budget 2025 represents a positive shift with substantial government investment and a stated commitment to Canadian innovation. However, the success of these initiatives hinges on the government's ability to clearly define "Canadian companies" for procurement purposes, establish effective mechanisms for wealth capture, and, most importantly, execute on its stated intentions. The focus must move beyond inputs to tangible outputs that foster domestic commercialization and strengthen Canada's economic sovereignty on a global scale.