Canada’s $1-trillion investment push promises growth — but raises questions about who benefits

The federal government is betting on tax incentives and private capital to drive growth, but questions remain over costs, oversight and who benefits.

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The Canada Investment Summit, which concluded on Sept. 15, outlined the federal government’s plan to catalyze $1 trillion in investment in Canada over the next five years.

The event brought together global investors managing more than $100 trillion in assets who have already committed nearly $500 billion in new investment to Canada.

In his keynote address, Prime Minister Mark Carney announced several major policy measures: a new productivity mega deduction for business investment, a streamlined permission process for new projects, a formal asset-recycling policy and plans to seek private investment for Canada’s four largest airports.

Investors attending the summit were also presented with a pitch book featuring 167 potential projects across sectors including energy, mining, infrastructure, manufacturing and technology.

These announcements signal a change in Canada’s economic strategy: using public policy to attract private capital at a much larger scale and across more sectors.

Incentivizing private investment

The first group of announcements focuses on reducing barriers to investment, including the cost of capital investment, regulatory uncertainty and the challenge of identifying viable projects.

The most significant is the new Productivity Mega Deduction, which allows businesses to write off most new capital investments immediately, effectively lowering the marginal tax rate on new investment from 13 per cent to 6.4 per cent.

The government estimates the measure could increase economic output by $22 billion annually and raise long-term employment by up to 80,000 jobs. However, it is also expected to cost the government $36 billion in lost revenue over the next five years.

If the projected benefits do not materialize in new projects that would not have otherwise occurred, budget deficits could increase, leaving taxpayers to ultimately foot the bill.

The mega deduction also expands the types of investments eligible for immediate tax write-offs compared with the previous Productivity Super-Deduction. While the earlier policy focused more on areas like clean energy, data network infrastructure and scientific research, the new approach expands eligibility to include controversial areas such as oil and gas pipelines and commercial aircraft.

Faster approvals for major projects

The second investment incentive involves speeding up project approvals. The federal government has promised a new standard of “one project, one review, one year,” arguing that faster permitting would lower the barrier to new investment.

Lengthy and uncertain approval processes have been identified by businesses as a barrier to investment, particularly for major infrastructure, energy and natural resource projects that can require years of regulatory review before construction begins.

However, accelerating approvals involves balancing competing objectives. It remains unclear how this policy will co-exist alongside provincial permitting processes, and whether accelerated timelines could undermine regulation aimed at protecting Indigenous rights and ecosystems.

Building an investment pipeline

The third incentive relates to the pitch book of 167 projects, which is intended to lower search costs and reduce information barriers for investors considering opportunities in Canada.

The document includes projects from clean energy (31 projects totalling approximately $94 billion) and conventional energy (11 projects totalling $108 billion), as well as marine infrastructure, mining, utilities, transportation, digital infrastructure and advanced manufacturing.

It remains unclear how many of these projects — which Energy Minister Tim Hodgson called “conversation starters” — will ultimately proceed, nor how they relate to other government commitments, such as the Paris Agreement.

Among eight projects in New Brunswick listed in the pitch book, for instance, only one has received conditional environmental approval.

Private investment in airports

One of the most prominent announcements from the summit was the government’s plan to seek private investment through long-term concessions for the operation of Canada’s four largest airports: Toronto Pearson, Montréal-Trudeau, Vancouver International and Calgary International.

The federal government says it will retain ownership of the land and underlying assets while selling the rights to private investors to operate the airports in order to provide capital for future infrastructure projects. Airports are currently operated by private, not-for-profit airport authorities.

The initiative builds on the government’s broader “asset optimization” or “asset recycling” approach, under which existing public assets can be used to attract private capital that is then redirected toward new infrastructure.

Existing research on airport privatization has highlighted increased cost with poorer service, with significantly different outcomes depending on the type of privatized ownership.

A recent study covering 437 airport privatizations over 25 years found that, while privatization does not improve airport performance on average, private equity ownership leads to strong and persistent improvements in higher traffic volume, better efficiency, increased access to low-cost carriers and reduced cancellation rates.

A broader economic bet

Compared to past government initiatives, the Canada Investment Summit signals a broader approach focused on attracting investment across a range of sectors rather than targeting only areas of strategic interest.

Previous federal investment strategies have often focused on specific priorities, including clean technology, electric vehicles and critical minerals through targeted tax credits, funds and industrial programs.

This new approach may serve to draw in more investment than the existing, targeted incentives, perhaps increasing economic growth and creating new jobs. At the same time, broad-based incentives raise questions about the type of economy being built and the distribution of benefits and costs.

As protesters at the summit highlighted, many of the proposed investments involve the oil and gas sector or projects that may affect Indigenous territories.

There are serious questions remaining about who will profit from this broad-based strategy, and who will be negatively impacted, especially given concerns about the economic impacts of government incentives on the federal government’s finances and the potential environmental consequences of some projects.
Paul Calluzzo receives funding from the Social Sciences and Humanities Research Council of Canada.Dan Cohen receives funding from the Social Sciences and Humanities Research Council of Canada.Evan Jo receives funding from the Social Sciences and Humanities Research Council of Canada.

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