The inaugural Canada Investment Summit in Toronto in September signalled to global investors, multinational companies and institutional leaders that Canada is open for business. While the summit laid out a vision for accelerating investment, removing barriers and building major projects more quickly, Ottawa’s policy announcements since the event are providing greater clarity on how the government plans to execute that vision.
To unpack the key takeaways from the summit and examine the steps Ottawa has taken since, Scott Brison, Vice Chair, BMO Wealth Management, hosted a digital event titled, “Canada Investment Summit: What It Means for Businesses and Investors,” featuring:
Michael Gregory, Deputy Chief Economist and Managing Director, BMO
Viviane Croux, Senior Vice President and Quebec Head, BMO Commercial Bank
Brison opened the conversation by underscoring the importance of recent policy changes as evidence that Prime Minister Mark Carney is moving quickly to improve productivity, accelerate investment and speed up major nation-building projects that can unlock Canada’s long-term potential.
“There was a commitment from the government to address some of the long-standing issues facing Canada, things like productivity, which were dampened by an inability to get things approved,” he said. “There have now been significant policy changes that show the world that Prime Minister Carney and his government, indeed Canada, is open for business."
Policy changes aimed at growth
One of the key initiatives Ottawa outlined at the summit was the Productivity Mega Deduction that will allow for the immediate expensing of more capital investments. Unlike the previous deduction that applied to about 15% of investment assets, the new program will capture about two-thirds of the capital outlays businesses make, explained Michael Gregory.
By pulling depreciation forward into a single year rather than spreading it out over several years, the government will lose some revenue. But that’s money that will be collected over time anyway, explained Gregory. “It’s meaningful support to growth,” he said.
Other moves included Ottawa’s commitment to provide advanced tax rules on projects over a billion dollars, giving investors clarity before committing capital, and opening four of Canada’s major airports to private investment.
Of course, those announcements are part of a wider strategy to accelerate productivity and spur development. The headline piece of legislation is the Build Canada Strong Act. In what Gregory described as a “powerful piece of legislation”, the bill codifies Ottawa’s plan to coordinate the review process and complete reviews within one year.
The legislation also seeks to modernize the operation of ports.
A boost to business confidence
The summit was an important signal that Canada intends to compete aggressively and focus on economic growth, said Viviane Croux, adding that there is great enthusiasm around the policy shift.
“The Productivity Mega Deduction, that's a game changer, as is the advance tax ruling,” she said. “Most business leaders are already looking forward beyond the announcements.”
Gregory echoed that sentiment. “We’ve had probably more significant steps from a policy perspective to actually improve the investment climate in Canada,” he said. “This is something that can actually provide a spark of confidence and to get you off the fence and maybe make that investment.”
While companies have been preserving financial flexibility because of economic uncertainty, these recent announcements are stimulating a renewed focus on growth across all sectors of the economy, added Croux.
As business leaders are reassessing growth plans to benefit from the announced investments, it makes sense to think about how to position their businesses to attract some of the capital that is expected to flow into Canada.
From policy to action
In his concluding remarks, Gregory noted that the policy shift in Canada is giving businesses and investors even more incentive to deploy capital rapidly. “By the time we get to Canada Investment Summit 2 in a year’s time, I think the buzz is going to be even greater around Canada.”
From Brison’s point of view, the timing couldn’t be better. “Some are saying this is one of the more profoundly important pieces of legislation, economic pieces of legislation we've had in a long time in Canada,” he said. “We are now leading with ambition again. It feels pretty good.”