Canada pitches federal support for domestic AI sector

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Minister Evan Solomon says his government is here to support Canada’s AI industry. Global News globalnews.ca

Those attending Wendesdays event listening intently to potential regulations for AI. Global News globalnews.ca

Mount Royal University information design associate professor Lauren Dwyer says regulating AI in Canada is critical for protecting Canadians. Global News globalnews.ca

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Canada’s federal government is pitching a new push to “support” domestic AI companies, with AI and digital innovation minister Evan Solomon outlining a three-part plan focused on capital, computing and government customers at an event in Calgary, according to Global News. Solomon said Ottawa wants to act as a facilitator — “team yes” — while also preparing new legislation on privacy and online harms, including criminalising non-consensual sexual deepfake imagery.

The combination matters because the state is positioning itself as financier, regulator and buyer in the same market. Solomon’s “three pillars” map neatly onto the bottlenecks that decide which AI firms survive: access to money, access to compute, and access to distribution. In Canada’s case, the distribution lever is unusually direct. As Shannon Vander Meulen, co-founder of WaitWell, told Global News, “most companies would rather have a contract than a grant,” and the federal government can provide that demand. But turning procurement into industrial policy also changes what companies optimise for: winning tenders, meeting compliance checklists and aligning with departmental risk appetites can become as important as model quality or product-market fit.

The compute pillar points to where much of the spending is likely to land. Large-scale AI development tends to concentrate costs in data centres, cloud capacity, and the specialised hardware and power infrastructure that supports them. Those are capital-heavy projects with long lead times and strong incentives to seek public backing, especially in a country with high energy and construction costs. A federal “support” package therefore risks becoming a subsidy channel for infrastructure owners — utilities, landlords, cloud intermediaries and consultants — rather than a direct accelerator for the small set of product companies that can plausibly scale globally.

Ottawa’s parallel move toward tighter AI-adjacent regulation adds another filter. Solomon said he plans to table privacy updates “to protect our consumers, to protect our children,” while other ministers work on online-harms measures. Voluntary codes of conduct would be replaced by statutory obligations, creating a compliance market that favours firms able to hire legal and policy staff early. The intended target may be harmful uses such as deepfakes, but the practical effect is to raise the fixed cost of entry for smaller developers.

Canada’s stated worry is that a “strong neighbour in the south” pulls talent and companies away — the familiar brain-drain problem. The proposed remedy, as described at the Calgary event, is to make staying attractive by offering public money and public contracts. That can keep firms domiciled at home, but it can also turn “being Canadian” into a business model: the easiest path to revenue becomes selling to Ottawa under Ottawa’s rules.

Solomon told the Calgary audience the government wants to “get out of the way when we need to, and to give a boost when we have to.” The boost, by design, would come from the same institution writing the rules and signing the cheques.