Canada turns to AI to solve productivity puzzle
Canada is making a bold bet on artificial intelligence to jumpstart its stalled productivity — pouring billions into a new national strategy it says could be as transformative as railroads or the printing press. With studies projecting multi-billion-dollar payoffs, the stakes for Canada’s economic future have never been higher.
‘There are legitimate questions about security and jobs and just keeping up. But we can't back away,’ says AI and Digital Innovation Minister Evan Solomon.
Canada is turning to artificial intelligence to revive its stagnant productivity, betting billions of dollars and a new national strategy on a technology that the government says could be as transformative as railroads or the printing press.
The potential rewards are high. Every dollar companies invest in generative AI returns $3.70, according to a 2024 International Data Corporation study commissioned by Microsoft. Widespread AI adoption could raise Canada’s real GDP by between 5 and 8% over the next decade, equivalent to annual productivity growth of 0.3 to 0.7%, Deloitte estimates.
Rhetoric is also high. Artificial Intelligence and Digital Innovation Minister Evan Solomon, who says Canadians are facing a “Gutenberg moment,” likens AI to critical infrastructure such as railroads, highways and ports.
“They are still critical to securing our sovereignty. They always were,” he said in a recent keynote at the Empire Club. “The same is true for our digital infrastructure. AI and quantum will be as important to securing our sovereign future as the railroad once was. But why? First, because they are going to give Canadians the power, but most importantly, the tools to build the economy of the future and keep that secure.”
Everyone agrees Canada needs to do something dramatic to overcome its lacklustre productivity. Even with abundant natural resources, a highly skilled workforce and strong institutions, the country lags its peers in productivity growth and innovation-based economic performance, Bill Syrros and Haya Elaraby at BDO Canada, a professional services firm, wrote in a blog on the Canadian Chamber of Commerce website.
They cite data that show in 2022, Canada’s business innovation rate stood at 36%, trailing behind the U.S. at 50%, and the OECD average of 45%.
Welcome to the ‘Agentic Age’
Syrros and Elaraby say AI is the “critical catalyst” to reverse the trend. “We’re entering what many call the agentic age―where AI doesn’t just assist humans but acts on their behalf, coordinating tasks, decisions, and workflows across systems. That’s a leap in how we define work, and it’s central to closing Canada’s productivity gap.”
BDO Canada did its own early experiment with AI, rolling out a pilot of Microsoft 365 Copilot. The results were astonishing, with the company recording a 485% ROI. Further, 98% of participants continued using the tool, and 90% reported faster task completion. The rollout saved more than 100,000 hours across the firm in 2024 alone.
“The real opportunity ahead lies in scaling beyond Copilot and into AI agents that not only respond to tasks — but proactively initiate, route, and complete them across teams and platforms,” Syrros and Elaraby wrote. “This is where the next productivity multiplier lives.”
To accelerate Canada’s AI ambitions and address the urgent productivity gap, Solomon announced the formation of a dedicated AI Task Force – 26 of the country’s “extraordinary minds” – to tackle the country’s most pressing AI challenges, ensuring coordinated action and practical solutions.
Solomon outlined the approach: A 30-day “sprint” on eight national priorities, and in November, the members of the task force will each send back their “bold, practical” ideas, and “by year-end, we will table a refreshed national AI strategy.”
He referenced Canada’s Olympic “Own the Podium” campaign and said it’s time for a digital one.
The task force is designed to ensure Canada not only keeps pace with global AI advancements but also translates technological potential into measurable economic and societal impact.
“The real opportunity ahead lies in scaling beyond Copilot and into AI agents that not only respond to tasks — but proactively initiate, route, and complete them across teams and platforms.”
— BILL SYRROS & HAYA ELARABY, BDO CANADA
Canadians remain distrustful of AI
But it’s an uphill battle. Canada ranked fourth in the Global AI Index in 2021 but fell to eighth in 2024. Only 26% of Canadian companies report using AI tools, compared with 34 per cent globally.
And current trust in AI remains fragile. A Leger poll in August found that 57% of Canadians had tried an AI tool, up 10 points since early 2025, and among younger adults, 83% reported use. Yet Deloitte reports that only 31% of Canadians trust AI, compared with 50% globally. Over 80% of Canadians say they fear AI will eliminate jobs, and nearly half worry it will make people “intellectually lazy.”
Bank of Canada Senior Deputy Governor Carolyn Rogers
In a landmark speech in March, 2024, Bank of Canada Senior Deputy Governor Carolyn Rogers warned the country’s productivity growth, which had flatlined for more than a decade, was jeopardizing our ability to compete in the future: “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass.”
“We’re not making the investments we need to be competitive in the economy of the future,” she said. “Productivity isn’t about working harder or longer hours — it’s about creating more value during the time we’re at work.”
Rogers highlighted three key areas where Canada needs to act to boost productivity. First, improving skills and training for existing workers through reskilling programs and technology-focused education. Second, increasing competition, as exposure to competitors drives innovation and efficiency, noting that many Canadian sectors currently face limited competitive pressure. Third, ramping up investment in machinery, equipment, and intellectual property, where Canada lags behind other countries.
How do we seize the moment?
Solomon says Canadians won’t embrace AI if they fear deep fakes, scams and job losses. “We have 2,500 AI companies in Canada today, and there are new ones born every single day,” he said at the Empire Club. “Our tech industry currently employs 800,000 people. It's the fastest growing sector in the country, highly skilled, good paying jobs and more to come. The question for all of us, how do we seize it? How do we seize the moment?”
Some of the speakers at a recent Canada 2020 event had some ideas, and more questions. Former Innovation, Science and Economic Development deputy Minister Simon Kennedy pointed to the fact that while Canada is seen as a research leader, commercializing and scaling up has been tougher. “Turning world-class science into commercial success has long been a tricky challenge for Canada, and the worry might be that we will sort of repeat the mistakes of the past of developing the technology and then seeing others reap the benefits,” he said, asking panelists, “So how do we translate Canadian research excellence into commercial leadership and AI?”
Marc Etienne Ouimette, an affiliated researcher at Cambridge University’s Bennett Institute who was on the same panel as Kennedy, echoed that concern. “It’s a different playbook when you concentrate on adoption and deployment en masse,” he said. “The challenge now is commercialization of what’s already been built.”
“The commercialization challenge is always the perennial challenge for Canada.”
Kevin Chan, vice-president of AI at Meta, said Canada should celebrate its achievements in AI over the last 10 years, however, “the commercialization challenge is always the perennial challenge for Canada. A lot of the indices that have come out in recent years, Canada is not performing where you would expect it to be in terms of commercialization.”
He noted that to really “get at that productivity increase, you're really looking at mass adoption at the small business level and you want to make sure that you find many different ways to do it and be pragmatic.”
Dawn Nakagawa, President of the Berggruen Institute, agreed, saying that while Canada has a strong research foundation in artificial intelligence, it is not the ideal environment for building frontier AI models, which require massive data, energy and computing scale. “At some point, you have to go to a place that just has scale. That’s why so many of our entrepreneurs … have had to go to larger markets.”
Nakagawa emphasized that Canada lags in adoption of AI across industries, leaving the country behind other OECD nations. “Canada’s behind the curve on adoption. I think there are about 10 points behind most countries in the OECD,” she said, adding that broad enterprise adoption is critical for sparking innovation and entrepreneurship. “Once you get that adoption into the enterprise and all these different industries, people start to think about what can be done with AI. … As long as you’ve got the right regulatory environment and the right finance environment, then you can take advantage of it.”
Unsexy but important work
Former ISED Deputy Minister Simon Kennedy; Mark Schaan, Deputy Minister, Department of Artificial Intelligence & Digital Services; Rana Sarkar, Consul General of Canada, San Francisco; Dawn Nakagawa, President, Berggruen Institute; Kevin Chan, Global Policy Campaigns Strategy Director, Meta; and Marc Etienne Ouimette, Affiliated Researcher, Cambridge Bennett Institute, participated in a panel discussion on the opportunities for AI. / CANADA 2020 PHOTO
Canada’s AI strategy must account for the nuances of different industries and investment stages, a process that requires detailed, often overlooked work, said Mark Schaan, Deputy Minister to Solomon. “It’s highly, highly unsexy work, but it’s actually super important across all of the verticals of an AI adoption or AI strategy for a country,” Schaan said during the Canada 2020 panel.
He explained that adoption varies widely depending on the context. “Adoption is very, very different on a B to G, on a B to B, and on a B to C basis,” he said, referring to Business-to-Government, Business-to-Business and Business-to-Consumer. “Model development, model fine-tuning and calibration is very different on a B to C, B to G, and B to B basis, and talent and commercialization are very much the same,” he said, emphasizing that while top-level strategies are important, the real work comes in breaking down sector-specific needs.
“What does it actually look like for forestry to adopt AI? What does it actually look like for big forestry versus little forestry to adopt AI? And that’s going to be very distinct from what it looks like for a retailer to adopt AI,” he said. “What does it look like to get your next flagship superstar versus…your next grouping of data scientists and AI prompt engineers who actually have the capacity to do this in real-time?”
As Canada seeks to reclaim its competitive edge, experts warn that productivity gains will depend not just on AI adoption, but on controlling the infrastructure and data that power the digital economy. Without a strong foundation, even the most innovative technologies risk being constrained by foreign dependencies or regulatory uncertainty.
Solomon said building digital sovereignty is the government’s mission, emphasizing the need for Canada to control the infrastructure and data underpinning its digital economy. “What does that mean? It means we need a meaningful Canadian sovereign backbone — that means the people, the power and the compute to build the economy of the future, a digital economy that is free from coercion. Acts under Canadian law that someone else cannot turn off.”
Capturing the full benefits of AI
He highlighted that technology adoption depends on trust, a critical factor for driving productivity and competitiveness. Solomon stressed that building trust and sovereignty is essential not only for safety but for economic performance. By establishing a secure, Canadian-controlled AI ecosystem, businesses can confidently adopt AI technologies, scale solutions and improve productivity.
Canadian companies that leverage AI in this trusted environment are better positioned to compete globally, retain talent, and innovate. In Solomon’s view, digital sovereignty is directly linked to Canada’s ability to capture the full economic and societal benefits of AI, ensuring that gains in productivity translate into higher wages, stronger growth and a resilient, future-ready economy.
“We get it. There are legitimate questions about security and jobs and just keeping up. But we can't back away,” he said. “We've got to demonstrate what AI delivers. It is not the technology we should talk about. It's the tool. What it delivers? Better health care, better agriculture, better government. It is a tool to serve people first, and we need to recognize that and keep it all here.”
This is the first in a series of stories, op-eds and Q&As on the impacts of AI on the Canadian economy.
Do you have a unique vantage point on AI and how it will affect Canadians, the economy and the future of work?
We want to hear from you! What should the government be doing to spur business innovation? Can Canada adopt AI quickly enough to compete meaningfully globally? How can we get digital sovereignty right? What are the ‘bold, practical ideas’ that will increase productivity?
Reach out with your solutions: news@meansandways.ca.
