The federal government wants to jump on the Artificial Intelligence (AI) bandwagon and be a big player and contributor to the field. While it’s important to make long-term investments in Canada’s growth, we should have doubts as to the value of these particular expenses.
As part of the many giveaways Prime Minister Justin Trudeau is announcing in the lead-up to the April 16 Budget Day, the feds have announced an AI funding packet.
A total of $2.4 billion is intended to go towards various AI initiatives. Some of it will be in the form of grants to various start-ups, but the bulk of it—$2 billion—is earmarked for building up AI infrastructure.
“Ensuring access to cutting-edge computing infrastructure will attract more global AI investment to Canada, develop and recruit the best talent, and help Canadian businesses compete and success on the world stage,” reads the press release.
Canadian taxpayers and innovation advocates alike would be wise to scrutinize the details. The hottest thing in venture capital and private equity circles right now is AI. There’s money sloshing about all over the place. It feels like you only need to shout out the phrase “AI” while walking down Wall Street or Bay Street with your arms open and someone will throw money at you.
So it’s hard to believe that the Canadian federal government has anything to add at this point, especially when it comes to the funding of start-ups. It’s like we’re the poseur heading to the mall to pick up the cool new fashion only after everyone else has already bought it.
Grant-giving and project loans are ultimately about picking winners and losers, and there’s no way the feds can perform this capital allocation better than those already embedded in the AI landscape.
Perhaps valuable companies that need an added boost in addition to their private capital or have somehow been overlooked entirely will get access to the funds they need. Or will our tax dollars just go towards propping up the companies that the private sector has already identified as destined to fail?
When the press release justifies this spending based on the claim that “Canada has a world-leading AI ecosystem,” this also requires scrutiny. Yes, we have exciting things happening in the tech world. Yes, we should strive to be world-leading.
But we also shouldn’t be under any illusions about our importance to the sector as lofty rhetoric is floated around in justification of spending significant taxpayer dollars. We’re far from the only game in town and certainly not the industry leader. Think OpenAI, Grok, and Gemini.
The idea, though, of the government being a centralizing force in creating AI infrastructure is one worth discussing. While some clusters of companies in some jurisdictions became dominant players in their industry entirely through their own initiative, there are many examples of governments that have elevated industries in their countries for strategic reasons.
One interesting example is how Taiwan worked to become a world leader in semiconductors. This not only provides economic growth for the country, but is also a national security hedge by the small island country that is under continual threat of invasion from mainland China.
If other countries rely on Taiwan for key components in their own supply chains—which they now do—they’ll be more likely to advocate for and stand with Taiwan. It’s all by design.
It’s highly unlikely that Canada can position itself in a similar fashion with AI though. After all, we’re far from the only country hoping to benefit from the sudden growth in the sector.
Nicole Janssen, CEO of the AI company AltaML, told Yahoo News that infrastructure isn’t the leading problem for Canada’s AI sector right now.
“There’s a scarcity of compute right now, but there are billions and billions of dollars being invested globally to address this problem,” Janssen said. “AI isn’t company specific. It’s a global supply chain that creates AI.”
In other words, AI companies can use computing capacity from anywhere in the world. There’s little we can do to tie them to Canada.
A number of critics have already remarked that if Trudeau is serious about boosting the AI sector, then he needs to seriously revise Bill C-27, legislation that covers privacy, data, and AI systems. Canadian tech legend Jim Balsillie has denounced the legislation as “anti-democratic” and wants the conversation opened up to include broader public consultations.
It seems quintessentially Canadian that our first big national conversations around a hot topic revolve around government legislation and funding instead of letting our industry leaders dominate the headlines.
The United States’ AI conversation is playing out as a battle of wills among private sector titans like Elon Musk and Sam Altman. How government factors into things is an afterthought, if it’s even considered at all.
The Canadian economy needs to benefit from AI, no doubt. We need to ask more questions though about what these federal funds will truly accomplish.
