Economic Growth and Productivity

The government’s economic plan is investing in the technologies, incentives, and supports critical for increasing productivity, boosting innovation, and attracting more private investment to Canada.

To ensure every Canadian succeeds in the 21st century, Canada's economy must grow to be more productive and innovative, in a way that is shared by all. To do this, the government's economic plan is investing in the technologies, incentives, and supports critical for increasing productivity, boosting innovation, and attracting more private investment to Canada. These efforts are underpinned by providing businesses with the certainty they need to invest in Canada. All of this is being done to help create more good-paying jobs for Canadians.

Key Measures in Budget 2024

Boosting Research, Innovation, and Productivity

• Strengthening Canada's AI Advantage with a monumental investment in targeted AI support of over $2.4 billion, including to launch a new AI Compute Access Fund and Canadian Sovereign Compute Strategy, and to support AI adoption across our entire economy. This will help Canadian researchers, start-ups, and scale-up businesses access the computational power and the digital tools they need to compete, and help catalyze the development of Canadian-owned and located AI infrastructure. 
• Enhancing Research Support and Federal Research Grants, with $3.5 billion in new strategic research infrastructure and federal research support, including investments in modern, high-quality research facilities and infrastructure, which are essential for breakthroughs in Canadian research and science. This also includes $2.4 billion for core research grants and to foster homegrown, top-tier research talent by streamlining and enhancing scholarships and fellowships through Canada's research granting councils. Boosting research support will ensure our industries and businesses can hire the talent they need to increase productivity and remain on the cutting edge.
• Modernizing the Scientific Research & Experimental Development tax incentives and further capitalizing the program with $600 million over four years, and $150 million per year ongoing, to boost research and innovation.

Strengthening Investment and Business Growth

• Delivering, by the end of this year, major economic investment tax credits to attract private investment, create more jobs, and drive Canada's economy towards net-zero by 2050. Budget 2024 also announces expanded eligibility for the Clean Technology Manufacturing investment tax credit, allowing more businesses to benefit.
• A new Electric Vehicle (EV) Supply Chain investment tax credit to support the EV supply chain and secure the future of Canada's automotive industry.
• Growing Canada's biofuels sector, to help decarbonize heavy industry and heavy transportation, such as marine, aviation, and rail.
• Extending for an additional year the Canada-U.S. Energy Transformation Task Force, to continue close collaboration with our largest trading partner, including bolstering critical mineral and nuclear energy supply chain integration.
• Getting projects built faster by announcing a suite of measures to improve the regulatory and permitting processes, focused on clarifying and reducing timelines, working towards "one project one review", and improving engagement and partnerships, including with Indigenous partners.

Helping Businesses Grow

• Solving the housing crisis with a bold plan to build nearly 4 million homes by 2031, which is critical to lower housing costs for Canadians, and ensuring that workers can afford to live near work. Shorter commutes increase productivity. More homes for workers give businesses the confidence they need to create more jobs. More affordable homes give entrepreneurs the cashflow they need to launch their next endeavour.
• Scaling-Up Modular Housing to build a housing economy that can build homes year-round, unlocking winter—nearly six months of the year in many regions—to ensure we can build at the pace and scale needed to solve Canada's housing crisis.
• Introducing an Accelerated Capital Cost Allowance for new purpose-built rental projects to enable homebuilders to increase their cashflow, and more quickly reinvest into more projects, create more jobs, and build more apartments. This will help move more apartment projects from unfeasible to feasible.
• Investing in Infrastructure to grow our communities and enable more homes to be built, including through the new Canada Housing Infrastructure Fund, the Canada Infrastructure Bank's Housing Initiative, and by delivering an estimated $57.3 billion in support of infrastructure projects across the country from 2023-24 until 2028-29.
• Introducing an Accelerated Capital Cost Allowance for innovation-enabling and productivity-enhancing assets, such as computers and data network infrastructure. By providing businesses with enhanced write-offs for their investments, they will be able to increase their cashflow, create more jobs, and make their businesses more productive and innovative.
• The new Canadian Entrepreneurs' Incentive to provide a tax break for entrepreneurs, ensuring they benefit from the fruits of their hard work while facing lower tax burdens.
• Encouraging Canadian Pension Funds to Invest in Canada, through a working group led by Stephen Poloz (former Governor of the Bank of Canada), and supported by the Deputy Prime Minister and Minister of Finance. The working group will focus on growing Canadians' pensions savings, spurring innovation, and driving economic growth in areas including digital infrastructure and AI, physical infrastructure, building homes on public lands, and removing the 30 per cent rule for domestic investments.
• Putting the capital of financial Crown corporations to work more efficiently and ensuring they better address market gaps by taking on more risk, including additional support for new and high-growth businesses, emerging sectors, and under-financed equity-deserving groups.

Cutting Red Tape to Boost Innovation and Business Growth

• National Regulatory Alignment to break down the barriers to internal trade that are preventing Canada from reaching its full economic potential, and holding back businesses from trading across provincial and territorial borders. Aligning regulations could increase Canada's GDP per capita by as much as 4 per cent, according to the IMF—and the federal government is taking action to get this done.
• Advancing work on regulatory "sandboxes" to help create temporary agile rules and approaches that allow businesses to reach their full potential, instead of holding them back.
• Foreign Credential Recognition for health care professionals, to unlock the full potential of everyone in Canada to practice in the career for which they are already qualified. There are an estimated 198,000 internationally educated health professionals employed in Canada, but only 58 per cent—114,000 workers—have employment in their chosen field. Red tape is holding back tens of thousands of doctors, nurses, and other health care professionals—and the federal government is investing to create 120 specific training positions, increase assessment capacity, and provide support to navigate credential recognition systems.
• Foreign Credential Recognition for construction workers, with an investment of $50 million to streamline the Foreign Credential Recognition Program, which has already helped over 9,000 skilled newcomers receive work placements, and another 20,000 workers receive low-cost loans to minimize the cost of practicing their trade in Canada. This will help ensure everyone in Canada who has the skills needed to build more homes can do so. The federal government is calling on provinces and territories to urgently streamline their trades certification standards for interprovincial consistency.

Inclusive Growth with Opportunities for Everyone

• Renewed support for the Aboriginal Entrepreneurship Program.
• Up to $5 billion in loan guarantees to unlock access to capital for Indigenous communities, creating economic opportunities and supporting their economic development priorities.
• Investing to create more opportunities for youth in their pursuit of entrepreneurial goals while renewing the support for innovation-driven growth across all regions in Canada.

Responsible Macroeconomic Management

• Attracting business investment by maintaining the lowest marginal effective tax rate (METR) in the G7, at an advantage of 5.2 percentage points compared to the United States, and at a level below the OECD average. Canada's manufacturing sector is particularly competitive at 7.5 per cent—an advantage of 14.3 percentage points over the United States.
• Adopting a fiscal strategy that complements rather than contradicts monetary policy as inflation continues its decline from its June 2022 peak of 8.1 per cent to 2.8 per cent in February 2024.
• Delivering on the commitment to refocus $15.8 billion over five years and $4.8 billion ongoing in government spending to the programs and services that matter most to Canadians.
• Maintaining declining debt- and deficit-to-GDP ratios to keep federal debt servicing charges as low as possible in a period of elevated interest rates.