Abstract:
Budget 2025 marks a turning point for Canada’s science, technology, and innovation ecosystem as a platform to support broader government priorities. Announced amid global uncertainty and fiscal constraint, it introduces new national missions that will shape research and innovation priorities for years to come. This panel will examine the Budget measures supporting science and innovation policy, and their implications for governments, post-secondary institutions, industry and communities across Canada. Speakers and panelists will present their own perspectives on the extent to which Budget measures position Canada for success, or are likely to fall short.

Summary of Conversations

The discussion centered on the 2025 federal budget, analyzing whether it adequately addresses national priorities and challenges in the innovation, technology, and science sectors. Some commentators highlighted a significant disconnect between the upstream focus on production (e.g., defense, infrastructure, housing) and the downstream benefits for citizens, such as affordability and social cohesion. Concerns were also raised regarding a decline in direct research and development funding and the continued gap in R&D investment compared to international peers. These deficits notwithstanding, and in light of geopolitical challenges that Canada faces, some commentators expressed a level of relief that cuts to R&D were modest relative to other areas of government expenditure. Some panelists argued that civil society and communities must be placed at the center of the innovation ecosystem, shifting the measure of success to consumption-side outcomes. Major themes included the need for better integration of housing with community infrastructure, the necessity of sequencing policy implementation, and the critical importance of creating measurable metrics to ensure the participation of diverse groups in procurement and funding. Ultimately, while the new fiscal plan was seen by some as meeting the moment in direction, a key challenge was highlighted to be effective execution.

Take Away Messages

• Persistent R&D Investment Deficit: The country faces a long-standing competitiveness challenge due to a significant deficit in Gross Domestic Expenditure on Research and Development (GERD) gap, with spending at 1.81% of GDP compared to the OECD average of 2.70%.
• Declining Direct Innovation Spending: The budget exhibited a decrease in direct R&D and innovation allocations, raising concerns about support for science and technology ecosystems.
• Risk of Foreign Outflow from Defense: The substantial defense spending, which now defines the fiscal architecture, risks crowding out essential investments in productivity and talent development, especially if a large portion flows to foreign suppliers rather than domestic firms.
• Omission of Key Research Partners: Investments in higher education structurally overlook colleges despite their crucial role in applied research, regional economic growth, and essential workforce development.
• Structural Trade Vulnerability: The economy retains a critical structural vulnerability due to an extreme reliance on a single major trading partner, which creates significant exposure in times of trade tensions and tariff risks.
• Lack of Policy Integration and Sequencing: A fundamental disconnect exists between the upstream focus on building and production and the concrete downstream impacts on communities (e.g., affordability), necessitating a more integrated, sequenced, and coordinated implementation process.
• Barriers to Inclusive Participation: There is an inherent challenge in ensuring that funding and procurement opportunities, such as in the Defense Industrial Strategy, equitably involve entrepreneurs and businesses led by equity-deserving groups.
• Execution as the Primary Hurdle: While the overall direction and strategic intent of the financial plan were acknowledged as positive, the historical and ongoing struggle lies in effective execution and translating major commitments into tangible, measurable outcomes.

Recommendations/Next Steps

• Place Civil Society at the Center: Redefine the measure of success by positioning civil society as the centerpiece of the innovation ecosystem, prioritizing performance on consumption-side benefits like affordability, security, and social cohesion.
• Establish Measurable Metrics for Inclusion: Implement Key Performance Indicators (KPIs) and accountability metrics, particularly for large procurement and contracts, to track and ensure domestic participation.
• Develop a Policy Sequencing Plan: Outline a clear, sequenced implementation process that defines roles and responsibilities across government, business, civil society, and academia to systematically advance the budget’s objectives.
• Maximize Domestic Defense Return: Strategically manage the significant defense investment to ensure that spending is channeled to promote and support Canadian firms and suppliers, thereby bolstering domestic economic growth and innovation.
• Integrate Community-Level Expertise: Increase the engagement and strategic use of the country’s 35,000 community-based non-profits, leveraging their deep local knowledge for the effective, ground-level delivery of federal and provincial programs.
• Adopt an Inclusive Trade/Procurement Strategy: Implement policies to strengthen domestic demand and resilience within programs like the “Buy Canadian” policy.
• Strengthen Applied Research Capacity: Develop an inclusive research and innovation strategy that explicitly balances discovery with application and fully incorporates the vital role of colleges and institutes as equal partners alongside universities.