Budget 2026: A welcome shift toward investment, but business needs more than incentives

Canada's economic future will not be determined by what governments announce in a budget. It will be determined by whether businesses have the confidence, capacity and conditions to invest, grow, innovate and compete.

The federal government's 2026 budget, Masters of Our Destiny, recognizes something the Canadian business community has been saying for years: Canada needs to become a more attractive place to invest, build and do business.

That is an important shift in direction, and there are measures worth welcoming. But while the budget sends some encouraging signals, the real test will be whether those commitments translate into meaningful improvements in the day-to-day operating environment for businesses.

For businesses in London and across Southwestern Ontario, the stakes are considerable.

Making investment in Canada more attractive

The centrepiece of this budget is the Productivity Mega Deduction, a significant commitment designed to encourage businesses to invest in new capital assets by allowing them to immediately write off the full cost of eligible investments.

At an estimated cost of $36 billion over five years, the measure is intended to reduce the marginal effective tax rate on new capital investment from 13 per cent to 6.4 per cent, which the government identifies as the lowest in the G7.

This is welcome news for manufacturers, transportation companies and other businesses looking to modernize equipment, improve productivity and expand their operations. In an economy where technological change and global competition are accelerating, businesses need every opportunity to improve efficiency and increase output.

The introduction of the Canada Growth Incentive, including an exemption on up to $15 million in capital gains on eligible investments in Canadian companies, is another positive step. So too is the expansion of the Scientific Research and Experimental Development program to include commercialization costs.

These measures recognize that Canada's productivity challenge cannot be solved without private-sector investment. They also acknowledge that businesses need to be rewarded for taking risks, adopting new technologies and bringing innovations to market.

However, we must recognize that the benefits will not be felt equally across the business community. Companies with the financial capacity to make significant capital investments will be best positioned to take advantage of the Productivity Mega Deduction. Smaller businesses, professional services firms and companies with limited access to capital may see fewer immediate benefits.

If Canada is serious about improving productivity across the entire economy, it must ensure that small and medium-sized businesses are not left behind. These businesses are essential to our local economy, supply chains and employment base. Access to financing, practical support for technology adoption, workforce development and opportunities to participate in larger supply chains must remain part of the productivity conversation.

Trade diversification must translate into real opportunities

The budget also acknowledges the economic uncertainty facing Canadian businesses, particularly those exposed to U.S. trade tensions and tariffs.

The additional $16.6 billion in announced tariff-related support since the spring economic update, alongside investments in trade diversification and strategic infrastructure, recognizes the importance of helping Canadian companies navigate an increasingly unpredictable global trading environment.

For London businesses, this is particularly relevant. Our region's economy is deeply connected to manufacturing, automotive, food processing, transportation and international supply chains. Businesses need reliable access to markets, efficient transportation networks and a competitive trade environment.

Diversifying Canada's trade relationships is not simply a federal policy objective. It is an economic necessity.

But diversification requires more than trade agreements and funding announcements. It requires the infrastructure to move goods efficiently, modernized ports and airports, competitive transportation costs and fewer barriers to getting products to international markets.

The government's continued commitment to strategic trade corridors is encouraging. However, the budget offers relatively limited new dedicated funding for major trade corridor infrastructure beyond existing programs.

This is an area where Canada needs to move with greater urgency. Delays, congestion and inadequate infrastructure impose real costs on businesses and undermine our ability to compete internationally.

The proposed changes to airport operations, including long-term operating concessions for Canada's four largest airports, could also create opportunities for greater efficiency and investment. The success of these changes will depend on ensuring that improved operations translate into better service, competitive costs and stronger connectivity for businesses and communities across the country.

Competitiveness requires a more efficient operating environment

One of the most important challenges facing Canadian businesses is not necessarily a lack of ambition or ideas. It is the cost and complexity of doing business in Canada.

Businesses continue to navigate overlapping regulations, lengthy approval processes, inconsistent government requirements and uncertainty about the rules that will apply to future investments.

The budget's stated commitment to streamlining parts of Canada's financial system and consolidating federal institutions may create opportunities for greater efficiency. The proposed merger of the Business Development Bank of Canada and Export Development Canada, for example, will need to demonstrate that it improves access to financing and export support rather than simply reorganizing existing structures.

Similarly, moving the Canada Infrastructure Bank under the authority of the Minister of Finance may help better align infrastructure investment with Canada's broader economic priorities.

These structural changes are worth watching, but organizational changes alone will not improve Canada's competitiveness.

Businesses need faster decisions, predictable regulations and a government that understands the importance of reducing unnecessary administrative burdens. Every month spent waiting for an approval or navigating duplicative requirements is time and money that could otherwise be invested in growth.

The federal government has an opportunity to make regulatory modernization a central part of its economic agenda. That means working directly with businesses to identify barriers and measuring success by tangible improvements in the time, cost and complexity of operating in Canada.

People remain at the centre of economic growth

There is another important consideration that no investment tax measure can solve on its own: access to people.

Businesses across London and Southwestern Ontario continue to identify workforce availability, skills development and labour market alignment as important factors in their ability to grow.

The budget maintains the government's immigration targets for the coming years and provides a pathway for some temporary residents already in Canada to transition to permanent residency.

Providing greater certainty for people who are already contributing to Canadian workplaces is a positive step. Businesses need stability when making workforce and expansion decisions.

However, immigration policy must be aligned with actual labour market needs. Employers need access to the skilled workers required to support manufacturing, construction, transportation, health care, technology and other essential sectors.

At the same time, Canada must continue investing in skills training, apprenticeships and partnerships between employers and educational institutions. Building a stronger workforce requires a coordinated approach that connects the needs of industry with the development of talent.

For London, with its strong post-secondary institutions and diverse industrial base, this represents a significant opportunity.

Fiscal discipline matters to business confidence

Finally, the budget's fiscal position deserves attention.

The government projects a deficit of $62.3 billion in 2026-27, declining to $52.9 billion by 2030-31. It also commits to balancing operating spending a year earlier than previously anticipated.

The commitment to distinguish between operating expenditures and investments that support long-term economic growth is a useful principle. However, the scale of the federal deficit and the approximately $60 billion in annual debt-servicing costs cannot be ignored.

Businesses make investment decisions based on confidence and predictability. They need to know that the tax incentives and programs designed to encourage investment today will remain sustainable tomorrow.

The government's fiscal projections rely in part on an improved revenue outlook. Maintaining spending discipline and demonstrating a credible path toward fiscal sustainability will be essential to preserving business confidence.

There is a cost to fiscal uncertainty, just as there is a cost to borrowing that limits the government's ability to respond to future economic challenges.

Turning ambition into action

The title of this budget, Masters of Our Destiny, is an ambitious statement. And there is merit in the idea that Canada must take greater control of its economic future, strengthen its domestic capacity and reduce its vulnerability to external economic pressures.

But economic sovereignty does not come from government policy alone. It comes from businesses that are confident enough to invest, entrepreneurs willing to take risks, workers equipped with the skills employers need, and communities with the infrastructure to support growth.

For London and Southwestern Ontario, the opportunities are significant. Our region has the industrial capacity, research institutions, skilled workforce and entrepreneurial talent to contribute meaningfully to Canada's economic ambitions.

What we need is an environment that allows those strengths to translate into investment, jobs and prosperity.

The London Chamber of Commerce welcomes the federal government's recognition that productivity, investment and competitiveness must be central to Canada's economic agenda. The Productivity Mega Deduction and other investment measures are meaningful steps in the right direction.

But we should be clear about what comes next. Businesses do not need more announcements for the sake of announcements. They need implementation, certainty and measurable results.

That means ensuring incentives are accessible to businesses of all sizes, accelerating infrastructure projects, expanding trade opportunities, addressing workforce challenges, reducing regulatory barriers and maintaining fiscal discipline.

Canada has the talent, resources and business capacity to compete on the world stage. The challenge is creating the conditions for businesses to do what they do best: innovate, invest, grow and create opportunities for Canadians.

Ultimately, being masters of our economic destiny means making Canada a place where businesses choose to build their future — and where they have every reason to stay.