Quebec's 2024-2025 budget: our take on the measures affecting the economy and innovation

The 2024-2025 Quebec budget, entitled Health | Education Priorities, reflects the government's commitment to substantially increase investment in these two key sectors, which together account for 59% of program spending, while reviewing certain existing financial assistance programs.

In this budget, we note three key points to remember that indicate the government's priorities in terms of the economy and innovation:

1. minor and very specific additions to key initiatives, particularly regarding the mandate of innovation zones, the Accès Entreprise Québec measure, and business succession.
2. optimization of tax assistance measures, including three wage-based tax credits that will have an impact on IT talent
3. changes to the appropriations allocated to the Ministry of Economy, Innovation, and Energy (MEIE) indicating an expanded mandate for Investissement Québec

Funding for major entrepreneurship and innovation programs, namely the Quebec Entrepreneurship Plan (PQE) and the Quebec Strategy for Research and Innovation Investment (SQRI2), will continue. The additional measures included in the 2024-2025 budget reflect the priority given to certain sectors of activity that are important to the government. These sectors are emerging technologies, aerospace, tourism, and the bio-food sector, which is receiving funding for the creation of a new investment fund to facilitate access to land ownership for young entrepreneurs.

Although the 2024-2025 budget does not specify the next announcements of innovation zones, an additional $125 million over five years is earmarked to equip certain innovation zones with industrial laboratories in order to accelerate the commercialization and transfer of innovation. In addition, in terms of major investments, the Natural Resources and Energy Capital Fund, which aims to support the exploitation and processing of natural resources, energy transition, and green energy production, will be increased by $500 million.

Among other funding for entrepreneurship, the budget includes an additional $22.6 million for 2025-2026 to maintainAccès Entreprise Québec services, which support businesses in their growth within Quebec's RCMs, as well as $9 million over three years to be added to the PQE to support the takeover of Quebec businesses and ensure entrepreneurial succession.

Finally, the budget includes measures to support the vitality of regions, or certain key sectors in regions, including the aluminum sector and the forestry sector, as well as a $16.8 million increase over four years for theCapitale-Nationale Regional Action Support Program to support the implementation of tourism, economic, and cultural projects.

The other major trend in the 2024-2025 budget concerns the optimization of government action aimed at achieving savings of $2.9 billion over five years. This optimization will come from efforts to streamline the resources of major government-owned corporations, including Hydro-Québec, Loto-Québec, the Société des alcools du Québec, the Société québécoise du cannabis, and Investissement Québec, as well as from a review of tax incentives for IT companies.

In summary, three payroll-based tax credits—the Electronic Business Development Tax Credit (EBDTC), the tax credit for multimedia production (CTMM), and the tax credit for film production services (CSPC), will be revised to generate savings of $874.5 million by 2028-2029.

Without going into detail about the planned revision of these tax credits, the objective will be to restore the existing inequity between technology companies whose employees are part of the same IT main pool. In addition, the government hopes that removing the salary cap on the CDAE and CTMM will encourage companies to locate high value-added activities in Quebec.

It should be noted that some of the health funding allocations are related to innovation, such asacceleration of the health system's digital transformation with the arrival of the Digital Health Record, and increased investment in prevention and innovation to better respond to pandemics. Finally, to retain and attract talent, a $370 million envelope over five years is planned to strengthen support and services aimed at attracting, retaining, and ensuring the success of future graduates in higher education institutions.

If we look more specifically at the budget allocated to the Ministry of Economy, Innovation, and Energy (MEIE), we see a continuation of the spirit of government efficiency, as Quebec's budget shows a decrease of $228 million. The Ministry will go from a projected amount of $1,824 million for 2023-2024 to $1,596 million for 2024-2025.

Looking more specifically at the amounts allocated to the MEIE for 2024–2025, an increase of $117 million is planned for interventions related to Program 4—Economic Development Fund, a program that concerns the administration and disbursement of financial assistance granted by Investissement Québec. The decreases in the MEIE budget are mainly planned in the amounts allocated to:

1. To strategic industries and major economic projects (down from $95 million to $62 million)
2. Regional economic development and entrepreneurship (decreasing from $256 million to $211 million)
3. Support for organizations and projects (down from $210 million to $168 million)

Although it is possible that the amounts allocated to Program 4 – Economic Development Fund may target various existing programs currently managed by Investissement Québec, we can anticipate that certain business assistance programs will be supported by Investissement Québec, which has been a trend since the expansion of this economic development agency's mandate.

This budget is in line with the actions already announced for existing government strategies, and we did not expect an increase in existing budget allocations. We eagerly await the next steps surrounding^SQRI2, the future revision of the PQE, and the announcements of the next innovation zones.

We will continue to lobby the Quebec government to ensure that we address the three issues we currently see in the innovative entrepreneurship business ecosystem: lack of upstream financing, information problems, and the mental well-being of entrepreneurs.

It is on these three issues that we made representations during the 2024-2025 pre-budget consultations, and we will continue this work throughout the year.