Data Center by Bob Mical CC BY-NC 2.0

Data Center by Bob Mical CC BY-NC 2.0


AI Spending is Not an AI Strategy: Why the Government’s Artificial Intelligence Plan Avoids the Hard Governance Questions

The government announced plans over the weekend to spend billions of dollars to support artificial intelligence. Billed as “securing Canada’s AI Advantage”, the plan includes promises to spend $2 billion on an AI Compute Access Fund and a Canadian AI Sovereign Compute Strategy that is focused on developing domestic computing infrastructure. In addition, there is $200 million for AI startups, $100 million for AI adoption, $50 million for skills training (particularly those in the creative sector), $50 million for an AI Safety Institute, and $5.1 million to support the Office of the AI and Data Commissioner, which would be created by Bill C-27.  While the plan received unsurprising applause from AI institutes that have been lobbying for the money, I have my doubts. There is unquestionably a need to address AI policy, but this approach appears to paper over hard questions about AI governance and regulation. The money may be useful – though given the massive private sector investment in the space right now a better case for public money is needed – but tossing millions at each issue is not the equivalent of grappling with AI safety, copyright or regulatory challenges.

The $2 billion on compute infrastructure is obviously the biggest ticket item. Reminiscent of past initiatives to support connectivity in Canada, there may well be a role for government here. However, the private sector is already spending massive sums globally with estimates of $200 billion on AI by next year, leaving doubts about whether there is a private sector spending gap that necessitates government money. If so, government needs to make the case. Meanwhile, the $300 million for AI startups and adoption has the feel of the government’s failed $4 billion Digital Adoption Program with vague policy objectives and similar doubts about need.

But it is the smallest spending programs that may actually be the most troubling as each appear to rely on spending instead of actual policy. The $50 million for creative workers – seemingly more money for Canadian Heritage to dole out – is premised on the notion that the answer to the disruption from AI is skills development. In the context of the creative sector, it is not. Rather, there are hard questions about the use and outputs of copyrighted works by generative AI systems. I’m not convinced that this requires immediate legislative reform given that these issues are currently before the courts, but the solution will not be found in more government spending. There is a similar story with the $50 million for the AI Safety Institute, which absent actual legislation will have no power or significant influence on global AI developments. It is the sort of thing you create when you want to be seen to be doing something, but are not entirely sure what to do.

Most troubling may the smallest allocation of $5.1 million for the Office of the AI and Data Commissioner. First, this office does not exist as it would only be formed if Bill C-27 becomes law. That bill is still stuck in committee after the government instead prioritized Bills C-11 and C-18, letting the privacy and AI bill languish for a year before it began to move in the House of Commons. It could become law in 2025, though there remains considerable opposition to the AI provisions in the bill, which received little advance consultation. Second, $5.1 million is not a serious number for creating a true enforcement agency for the legislation. In fact, the Office of the Privacy Commissioner of Canada estimates it alone needs an additional $25 million. Third, backing enforcement (however meagrely) places the spotlight on the juxtaposition of providing billions in new AI funding while pursuing AI regulation in Bill C-27. Major tech companies have warned that the bill is too vague and costly, mirroring the opposition in Europe, where both France and Germany sought to water down legislation when it became apparent the proposed rules would undermine their domestic AI industries. These are hard legislative choices that have enormous economic and social consequences with government forced to ask to how balance competing objectives and consider which will matter more to AI companies: Canadian government spending or the cost of regulation?

Canada wants to be seen as a global AI leader consistent with its early contributions to the field. But the emerging AI plan sends mixed signals with billions in government spending, legislation that may discourage private sector investment, and avoidance of the hard governance issues. That isn’t a strategy and it isn’t likely to secure an AI advantage.


  1. What do you expect from a government that wants to be seen doing something, but doesn’t have a clue on how to do it.

    • This criticism could be applied to literally dozens of Trudeau policies. “Do Something!” is the slogan of this government. They’ve bled the tax base dry, and talent and investment capital are fleeing Canada for greener pastures (ie, literally anywhere else).Yet they are unable to do anything meaningful about the actual challenges immiserating the country.

      At this point, every taxpayer dollar not spent on increasing the number of family doctors working in Canada, getting junkies off the streets of cities, or bringing down the costs of housing and food should be considered a theft from Canadian citizens.

      • Trudeau’s version of the Politician’s Syllogism:

        Something must be done
        This is something
        This must be done
        Everyone who disagrees is racist

      • To be fair, the “Do something” even if it will be useless or even impair actually fixing the problem is, in my experience, a position of all governments regardless of the party or level. Part of it is the partisanship that occurs in Parliament, since it is easy for an opposition to get press time about a need to fix a problem even if it isn’t warranted. Part of it is the bad press that appears if a journalist or opinion writer pens an article about needing a fix. And then to add on a tendency in Canada for people to look to the government to fix all of our problems rather than doing anything about it themselves; one big one is the housing issue.

        Lots of calls for others, such as the government, to do something about housing. However many of the people calling for that are unwilling to do things themselves to help. Things like working with organizations that are directly dealing with housing affordability issues like Habitat for Humanity which actually constructs affordable housing.

        Housing in particular is a complex one, because housing affordability is the product of a number of factors. These include the average “disposable” income, the initial price of the home, the minimum down payment, and the interest rate. People have become so used to low mortgage interest rates that they ignore that factor. For instance, when I bought my house in 1991, the mortgage interest rate had come down to 13% from its historic high in 1981 of 21%. People tend to focus on the price, rather than the payments.

        • Agree most governments want to be seem doing something, but this government is completely incompetent in developing effective policies. Instead it pushes lobbyist driven policies that benefit a few at the expense of the many and defends the policies by gaslighting the public and villifying critics.

          Having said all that, Trudeau has still exceeded my expectations. I thought he would be terrible, instead he’s been f***ing terrible.

  2. Bryan Ogden says:

    The gap is in the application of ai to provision of social services. If you are myopically focused on the commercial dev of ai then you haven’t got a clue that compute is in the hands of a small number of top companies which puts it out of reach of the public sector. There now you can have a clue, bravo Oh Canada!

  3. Agree to most, disagree to some. This government gets it wrong every time: they are told for years that the Prairie fire is creeping towards them, and that they need to develop a plan. Then, once the house is finally on fire, they then decide to act, sans plan but instead throw money at a wall. Or off a cliff. And this is no different.

    But, unfortunately, your analysis re. compute misses some things. Mainly that every other G7 nation has near double or more the amount of government-funded research compute capacity as Canada (and that is just what is known, and does not include military infrastructure, which competitor nations companies often have access to). These other countries are actively hunting our researchers and firm to poach them – and doing this by giving them access to their domestic compute capacity. So the government is trying, I think, at minimum, to play the same game as every other country putting down big money on compute. This is like building new university laboratories; you do not get invention, let alone innovation, without them.

    Compute also addresses another big concern of yours: data privacy and security. Do you really want your health data on a U.S.-based server where it is subject to who-knows-what state laws? Because that is the reality if we want better digital and AI-enabled healthcare but do not have domestic compute; the data would need to go elsewhere.

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  10. Frankly the whole thing to me comes across simply as another in the series of pre-election budget announcements that has been going on over the past couple of weeks, with the PM and selected Ministers maximizing their carbon footprint all the while evangelizing about Canadians reducing their footprint.

    Given the history of this government in particular, but also of governments in the past 30 years or so, if I were working in one of the areas that this announcement is related to I wouldn’t be holding my breathe. Government procurement, etc, has reached the point where there is so much oversight that the oversight itself is becoming a hindrance to actually getting anything done.

    As far as governance of AI is concerned, well, since this is a pre-budget announcement then governance would not be on the agenda since this would run counter to the “good news” nature of the announcements. However, the idea of a “made-in-Canada” approach to me is an issue, not the least of which is that Canada is, in reality, a relatively small market for this kind of service. Personally I would prefer to see a multinational agreement on the governance of AI, so that we see a consistent experience across the companies, the governments, and the people covered.

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