Yahoo Finance Canada plans AI funding boost, but critics warn 'red tape' could harm industry
Lion's share of $2.4 billion allocation in 2024 budget is for infrastructure, business development
The Canadian Chamber of Commerce says Canada's planned regulations for artificial intelligence could undermine the government's own efforts to support the AI sector with a $2.4-billion funding boost.
The new funding announced by Prime Minister Justin Trudeau on Sunday ahead of the release of the federal budget on April 16 was welcomed by some in an industry that has long sought more support. But it comes as the same government seeks to pass Bill C-27, the Artificial Intelligence and Data Act (AIDA), which critics say could cause an innovation chill in the same industry.
“We can’t continue to layer on additional red tape that will stifle and undermine private sector investment,” Ulrike Bahr-Gedalia, the Chamber of Commerce’s senior director, digital economy, technology & innovation, said in a statement Monday. “While this announcement makes way for new opportunities for AI in Canada, the truth of the matter is that the government needs to fix Bill C-27, which will drive productivity and adoption away from Canada if not addressed.”
A $2-billion chunk of the budget funding will go to “build and provide access to computing capabilities and technological infrastructure” and is intended to close a growing gap between Canada and global leaders in terms of processing technology and power.
“The details are obviously still very vague,” said Nicole Janssen, co-founder and CEO of AltaML, an AI studio and development startup.
“But I would say the buckets of adoption, safety and compute” — the term used in industry to describe the actual processors and infrastructure needed in vast quantities to support AI — “are strong buckets.”
The other funding includes $200 million for AI startups and “accelerating AI adoption in critical sectors, such as agriculture, clean technology, health care, and manufacturing;” $100 million to help small and medium businesses “scale up and increase productivity by building and deploying new AI solutions;” $50 million for skills training in sectors disrupted by AI; $50 million to create the Canadian AI Safety Institute; and $5.1 million for enforcement of AIDA.
Striking a balance on regulation
Bill C-27 is currently being studied by the government’s Standing Committee on Industry and Technology. The government has been nudging AIDA through the legislative process since it was introduced in 2022, and over that time it has accumulated vocal supporters as well as critics.
Aaron Wudrick, the domestic policy director at the Macdonald-Laurier Institute, argued last week that “AIDA’s current approach appears to conflate impact (how widely AI’s influence would be felt) with risk (how serious such consequences would be), and if implemented in its current form, it will not only deter innovation but risk isolating Canadian AI firms from the global economy.”
Jim Balsillie, the former co-CEO of BlackBerry pioneer Research In Motion, called the legislation “anti-democratic” in January, decrying the lack of public consultation. The Centre for Digital Rights, a non-profit Balsillie founded, has been actively campaigning for changes to the proposed law, saying it “treats citizen privacy as an obstacle to corporate profits.”
Nick Schiavo, director of federal affairs for the Council of Canadian Innovators, which represents Canadian technology CEOs, said AIDA, while “maybe imperfect,” would move Canada beyond “this wild west where there is no regulation.” In tandem with the increased infrastructure funding, Schiavo said, a clearer regulatory picture would yield “a smart way to support the economy and our artificial intelligence companies.”
Canada’s decline in rankings
Schiavo hailed Sunday’s budget announcement as a positive step. He said the focus now is “on what the details and the execution of those announcements will be … with a focus on Canadian companies, on helping our firms scale up and commercialize. And then also, protecting the intellectual property that comes as a result of these investments.”
Canada ranks fifth in the world on the most recent Tortoise Global AI index, a ranking based on “innovation, investment and implementation” of AI, down from fourth in 2021 and still light years behind the U.S. (which scores 100). But on infrastructure, Canada ranks 23rd, down from 15th in 2021.
Janssen said that Canada does need “compute within our country to address issues of data sovereignty and certain industries that need to hold their data within the country,” but argued that infrastructure isn’t the most essential problem for Canada because processing solutions are global.
“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.”
