The federal budget expected next month would be a good time for Mark Carney to start thinking small.
Not in terms of economic ambition. This is not a case to pivot hard into fiscal-restraint mode, when there’s still tons to be done to get this country to compete more aggressively for investment and growth and a reduced reliance on the United States.
More so, it’s a case for broadening those efforts.
What we’ve seen from Carney’s government so far is a somewhat overwhelming focus on building big things — pipelines, ports, power stations, mines — for which a combination of regulatory reforms, tax incentives and new financing mechanisms are meant to quickly get shovels in the ground.
That’s been admirable, at least up to a point that depends on your enthusiasm for new fossil-fuel infrastructure and lessened environmental focus.
But there are other components of our economy that need to be built up, too: the businesses Canadians own, the technologies they invent, the services they use.
The frustrations, on those fronts, are as familiar and long held as those around getting major projects approved. We’ve all heard laments about Canadian tech entrepreneurs being unable to find enough domestic financial backing because of a risk-averse Canadian investment culture, and either going bust or going south. And we all know business owners in our communities struggling just to survive high rents or rising input costs, let alone being able to afford capital or labour investments that might help them grow.
Those challenges have only gotten more acute during the Trump era. Coming off a tough 2025, venture and growth capital for early-stage Canadian companies hit decade-long lows earlier this year. And while we’ve mercifully not seen small and medium-sized businesses shuttering at rates as high as some of the post-pandemic peaks, monthly surveys (by the Canadian Federation of Independent Business) have shown their confidence falling amid all the global and cross-border turmoil.
It’s not that Ottawa has been doing nothing to help. There’s been relief funding for small and medium-sized businesses afflicted by U.S. tariffs, and recapitalization of a $1-billion federal venture-capital fund. The government has also taken some initial steps toward using procurement policy to provide a customer for new Canadian technologies, particularly as part of increased defence spending.
But there’s room for a lot more urgency and imagination of the sort Carney has brought to energy and infrastructure. And in the budget run-up, there’s no shortage of ideas being presented for what that could look like.
One of the more prominent examples came last week, in a letter from over 100 tech entrepreneurs and investors (coordinated by their industry associations) calling for expanded capital-gains tax exemptions on profits from investments in early-stage companies.
There’s promise in some of that pitch, including a component that would provide breaks for backers who reinvest their profits back into other Canadian companies. But tax measures, which can be inefficient in terms of subsidizing choices that would be made anyway and tend to get pushback from a Finance department worried about further complicating an already complex tax system, aren’t the be all and end all.
Another avenue would be to target Canadian pension giants that have mostly considered early-stage Canadian companies to be too small-potatoes to merit their dollars. At the more aggressive end, Ottawa could require a certain share of Maple 8 investments, perhaps 3 per cent as the Canadian Shield Institute recently proposed, be put toward those businesses. Less contentious would be for the government to help them overcome their lack of venture-capital expertise, by creating and seeding a pooled fund run by venture-capital specialists into which the pension funds could put some dollars without having to get into each investment’s nitty gritty.
Then there’s the possibility of the government (or at least its quasi-independent investment agencies, including the new and still fuzzily defined Canada Strong Fund) taking more equity stakes in promising early-stage companies, which could help validate them and draw in more private capital.
There are plenty of options to bolster more established small and medium-sized companies, too.
One of the more intriguing examples comes courtesy of Social Capital Partners, a Toronto-based non-profit that’s been loudly warning of the danger of main-street businesses not just closing, but in some cases being snapped up by U.S. private equity firms. Its pre-budget submission, aimed largely at addressing small-business complaints about difficulty securing loans from our dominant big banks, calls for Ottawa to help develop (through accreditation and modest funding) a more robust national network of alternative financial institutions like community banks and credit unions.
That idea, along with an array of possible small-business tax cuts and other measures, such as expanded federal loan guarantees, also made its way into a Senate committee report on small-business finances that was released on Wednesday.
The committee’s recommendations, like most of the other proposals floating around for this sort of stuff, might not bring quite the same big bangs as the major-projects push.
Those proposals wouldn’t lend themselves to quick announcements of new multi-billion-dollar investments, of the sort (largely in the energy sector) that are helping Carney show momentum and likely also appealing to his investment-banker sensibilities.
But there are lots of Canadians, with new and old businesses alike, dreaming big in different ways. And putting more of his government’s weight behind them, at not a whole lot of fiscal cost, could prove just as important to our economic sovereignty and our social fabric as extracting resources and shipping them overseas.
