CCI’s 2025 Federal Pre-Budget Recommendations

By: Nick Schiavo, CCI Director of Federal Affairs, and Michelle Ehinlaiye, CCI Federal Affairs Coordinator

Canada's economy is in the midst of a period of stagnation, with alarmingly low growth rates and declining productivity. According to a recent OECD analysis, Canada’s economy stalled in the latter half of 2023, with projections for 2024 showing a dismal growth rate of just 1%. This decline in productivity and real GDP per capita has placed Canada at risk of becoming the worst-performing economy in the OECD from 2030 to 2060. This situation has been described as a productivity emergency by the Senior Deputy Governor of the Bank of Canada.

Canadians urgently need bold action to prevent further economic decline.

‍

The Role of Innovation in Economic Growth

The good news is that it’s never too late to embrace some good ideas. The federal government is already consulting the public for how to shape the 2025 federal budget, and we have some proposals!

CCI’s pre-budget submission is more than just a set of recommendations; it is a roadmap for securing Canada’s economic future. By adopting these recommendations, the federal government can foster an environment where Canadian innovators can thrive, scale, and compete globally. This is not just about economic growth; it’s about ensuring that Canada takes a role as a leader in the global innovation economy, creating opportunities for all Canadians.

Innovation is the engine that drives economic growth, creating jobs, and generating wealth. In particular, innovation is the only proven strategy for sustained productivity growth over time.

Despite significant investments in Canada’s innovation ecosystem, the country is struggling to scale home-grown companies to compete on the global stage. CCI’s 2025 budget submission emphasizes the need for the government to rethink its innovation strategies, focusing on optimizing existing programs and investments to support businesses with strong growth potential. By targeting companies that can thrive in competitive global markets, Canada can maximize the impact of public investment and drive sustained economic growth.

‍

Key Recommendations

CCI’s pre-budget submission outlines several key recommendations aimed at revitalizing Canada’s economy through innovation:

1. Prioritize Domestic AI Commercialization and Data Sovereignty: CCI advocates for the development of a comprehensive AI commercialization strategy that enhances R&D capacity, secures data sovereignty, and prevents the loss of talent and intellectual property from Canada. What would this look like? Check out our Roadmap for Responsible AI Leadership in Canada
   ‍
2. Implement a National Innovation Box Regime: Moving beyond a traditional patent box, CCI proposes an “innovation box” tax structure to encourage the commercialization of R&D and generate revenue, complementing the existing SR&ED tax credit.
   ‍
3. Reform FDI Policy with an Economic Spillover Lens: With the shift of value to intangible assets, CCI urges the government to evaluate the real benefits of foreign direct investment and set clear performance indicators for corporate subsidies.
   ‍
4. Finalize and Implement Consumer-Driven Banking Framework: CCI calls for the timely implementation of the Consumer-Driven Banking Framework to promote innovation and competition in Canada’s financial sector.
   ‍
5. Empower Domestic Innovators for Cybersecurity and NATO Targets: CCI stresses the importance of leveraging domestic innovation to meet cybersecurity needs and NATO defense spending targets, ensuring Canada’s national security is bolstered by home-grown technology.
   ‍
6. Reform Public Sector Innovation Procurement: CCI recommends a federal procurement strategy that encourages the adoption of innovative technologies, with a focus on SME participation to spur economic growth.
   ‍
7. Reverse Harmful Capital Gains Tax Changes: CCI argues that the recent increase in the capital gains inclusion rate is detrimental to Canada’s economy and urges its reversal to support investment and growth.
   ‍
8. Finalize SR&ED Tax Credit Reform: CCI calls for the completion of SR&ED reform to ensure it delivers maximum benefits to Canadian innovators, driving economic returns from R&D investments.
   ‍
9. Measure Economic Outputs of Canada's Research Granting Councils: CCI calls on the federal government to undertake a full review of the mandates of Canada's granting councils to ensure outputs are measured by economic gain. The government should develop clear KPIs for the benefit of these councils on innovation, productivity and economic growth for Canada.
   ‍

In a time of economic uncertainty, the need for a bold and strategic approach to innovation has never been more critical. CCI’s submission to the 2025 federal budget lays out a clear path forward, one that promises to secure Canada’s economic prosperity for years to come.

CCI’s 2025 Federal Pre-Budget Submission can be viewed here. To learn more about CCI’s work in Ottawa contact Nick Schiavo at nschiavo@canadianinnovators.org.

‍

About the Council of Canadian Innovators

The Council of Canadian Innovators is a national member-based organization reshaping how governments across Canada think about innovation policy, and supporting homegrown scale-ups to drive prosperity. Established in 2015, CCI represents and works with over 150 of Canada’s fastest-growing technology companies. Our members are the CEOs, founders, and top senior executives behind some of Canada’s most successful ‘scale-up’ companies. All our members are job and wealth creators, investors, philanthropists, and experts in their fields of health tech, cleantech, fintech, cybersecurity, AI and digital transformation. Companies in our portfolio are market leaders in their verticals, commercialize their technologies in over 190 countries, and generate between $10M-$750M in annual recurring revenue. We advocate on their behalf for government strategies that increase their access to skilled talent, strategic capital, and new customers, as well as expanded freedom to operate for their global pursuits of scale.

‍