Government support for businesses in Canada has expanded dramatically since the final year before the pandemic, adding new fuel to a long-running debate over how governments should promote investment and economic growth. A new Fraser Institute study estimates that federal and provincial business subsidies reached $87.7 billion in 2024, measured in inflation-adjusted 2025 dollars—about 142% higher than in 2019.
The increase extends beyond emergency pandemic programs. According to the study, subsidy spending continued rising in 2022, 2023 and 2024, with Ottawa and the provinces increasingly using grants, capital transfers and production incentives to attract investment. Supporters argue these tools can secure factories, jobs and strategic industries. Critics question whether governments are spending too much picking individual winners when Canada continues to struggle with weak productivity and business investment.
The $87.7 Billion Figure Is Much Broader Than a Few High-Profile Deals
The Fraser Institute calculates the $87.7 billion total using Statistics Canada government-accounting data, combining federal and provincial subsidies with capital transfers to businesses. The figures are adjusted into 2025 dollars so spending across different years can be compared more fairly. The study defines these transfers as government support provided without the government directly purchasing an equivalent good or service, meaning ordinary government procurement is not included.
That distinction matters because the phrase “corporate subsidies” can evoke images of individual cheques being handed to large corporations. The underlying data capture a much broader range of business support. The study estimates spending rose from approximately $36.2 billion in 2019 to $87.7 billion in 2024, producing the headline 142% increase. Looking further back, governments spent an estimated $787.3 billion between 2007 and 2024—$312.9 billion federally and $474.4 billion provincially. Even after accounting for inflation and population growth, the study finds subsidy spending has increased substantially.
Ottawa Accounted for Roughly Half of the 2024 Total
The federal government was responsible for a particularly large share of the most recent increase. Fraser Institute calculations put federal subsidies and capital transfers at approximately $44.7 billion in 2024, compared with roughly $43 billion from all 10 provinces combined. Before the pandemic, federal spending was considerably lower: between 2007 and 2019 it generally ranged from roughly $5.8 billion to $9.5 billion annually in inflation-adjusted terms.
Provincial governments have nevertheless expanded their own programs. Combined provincial business subsidies increased from approximately $19.3 billion in 2015 to $43 billion in 2024. There is an important caveat when interpreting 2024 as a permanent new baseline. The Fraser Institute’s table shows federal support falling to roughly $12.1 billion in 2025, although comparable 2025 provincial figures were not yet available. Government support can fluctuate sharply when major capital projects, temporary programs or production incentives enter the accounts, making several years of data more informative than any single year.
The Pandemic Explains the Biggest Spike—but Not the Entire Trend
Nothing in the recent data compares with the extraordinary intervention during COVID-19. Federal business subsidies climbed to approximately $96.1 billion in 2020 and remained around $51 billion in 2021, according to the Fraser Institute’s inflation-adjusted calculations. Programs such as the Canada Emergency Wage Subsidy were specifically designed to prevent layoffs and business closures when public-health restrictions disrupted normal commercial activity. The Canada Revenue Agency has reported that roughly $100 billion in CEWS funding was ultimately disbursed.
Those emergency years therefore require caution when making historical comparisons. Statistics Canada research subsequently found that businesses using CEWS were associated with lower closure rates and stronger employment outcomes, particularly in sectors heavily affected by restrictions. The Fraser Institute largely treats 2020 and 2021 as exceptional years for the same reason. What concerns its researchers more is what happened afterward: total subsidy spending rose again through 2022, 2023 and 2024, rather than returning to the substantially lower levels common before the pandemic.
Ontario Has Recorded One of the Most Dramatic Long-Term Increases
The provincial numbers reveal significant differences across Canada. Ontario recorded approximately $19.9 billion in business subsidies in 2024, by far the largest dollar total among the provinces, while Quebec spent about $10.7 billion and British Columbia roughly $4.2 billion. Saskatchewan and Alberta spent approximately $2.3 billion and $3.7 billion respectively. Smaller provinces naturally register lower total-dollar figures, making population-adjusted comparisons useful as well.
Using three-year averages to smooth annual fluctuations, the Fraser Institute estimates Ontario’s provincial subsidy spending during 2022–2024 was 8.35 times its 2007–2009 level, the largest increase among the provinces. Quebec recorded the smallest proportional increase, at about 1.45 times. Per-capita figures tell another story: in 2024, provincial subsidies amounted to roughly $1,860 per Saskatchewan resident, $1,642 in Prince Edward Island, $1,232 in Ontario and $1,191 in Quebec. The differences demonstrate why the national total cannot simply be understood as an Ottawa spending story; provincial industrial and economic-development strategies are increasingly important.
Canada’s EV Strategy Shows Why Governments Are Spending So Much
Few policies illustrate the new approach better than Canada’s effort to establish a domestic electric-vehicle supply chain. Ottawa and provincial governments have offered substantial incentives to attract battery plants and related manufacturing, arguing that Canada risks losing investment to the United States, Europe and Asia if it does not compete with their industrial policies. The Parliamentary Budget Officer estimated in 2024 that 13 announced EV-related investment groupings worth $46.1 billion could be associated with government support of up to $52.5 billion, including capital support, production incentives and investment tax credits.
Those figures should not be directly added to the Fraser Institute’s $87.7 billion annual total because the measures use different definitions and can be spread over many years. They nevertheless show the scale of modern subsidy competition. Volkswagen and Stellantis-LG alone were offered performance incentives potentially worth billions. Honda’s proposed $15-billion Ontario EV supply chain was expected to qualify for up to $2.5 billion in federal tax support, although Honda later postponed the project for roughly two years as EV-market conditions weakened.
Whether Subsidies “Work” Depends Heavily on What Is Being Measured
The Fraser Institute argues that targeted subsidies generally provide poor value because governments may subsidize investment that companies would have made anyway, shift economic activity from one region to another or give supported firms an artificial advantage over competitors. International research provides reasons for similar caution. Recent OECD analysis found industrial subsidies can increase recipient firms’ market share and influence global production patterns, meaning the benefits enjoyed by supported companies can come partly at the expense of unsubsidized competitors.
That does not mean every subsidy produces the same result. Some government support is designed around objectives other than maximizing near-term GDP, including national security, emissions reduction, supply-chain resilience or preserving capacity during emergencies. OECD research has found that some industrial support can encourage additional production capacity. Canada’s pandemic wage subsidy offers another example: Statistics Canada found meaningful associations between CEWS participation, business survival and employment. The harder policy question is therefore not whether every subsidy is automatically beneficial or wasteful, but whether the measurable public benefits of a particular program exceed its cost and economic distortions.
The Spending Surge Comes During Canada’s Productivity Problem
The debate is particularly significant because Canada has simultaneously been confronting weak productivity and investment. The OECD reported that Canadian workers generated about US$74.70 of output per hour worked on a purchasing-power-adjusted basis in 2023, compared with approximately US$97 in the United States. Business research and development spending is also relatively low, at roughly 1% of GDP compared with an OECD average near 2%. The OECD has identified sluggish business investment as one of the main factors behind Canada’s productivity weakness.
Governments increasingly view strategic subsidies and investment tax credits as one way to change that trajectory by encouraging companies to build new factories, commercialize technology and deepen domestic supply chains. Critics see the same productivity problem and reach the opposite conclusion: they argue capital would be allocated more efficiently if taxes, regulatory obstacles and internal trade barriers were reduced for all businesses instead. For an entrepreneur financing expansion from retained earnings while a major corporation receives government incentives, that difference in approach is more than an abstract economic argument—it affects the competitive landscape directly.
Fraser Institute Wants Subsidies Replaced With Broad Corporate Tax Relief
Rather than simply reducing government spending, the Fraser Institute proposes redirecting subsidy savings toward broader business tax reductions. Its calculations compare subsidies with corporate income-tax collections to illustrate the potential scale. Federal and provincial governments collected approximately $139.7 billion in corporate income tax in 2024, up from roughly $55.2 billion in 2007. At the federal level alone, 2024 subsidies were equivalent to approximately 50.6% of federal corporate income-tax revenue.
The Institute calculates that during 2020–2024, subsidies averaged the equivalent of roughly 81.2% of corporate income-tax collections across the federal government and 10 provinces, although the percentages vary sharply by jurisdiction. Its analysis is explicitly static: it does not attempt to predict how eliminating subsidies or cutting taxes would change investment, corporate behaviour or future tax revenues. Canada currently applies a 15% general federal corporate tax rate, with a 9% federal small-business rate for eligible Canadian-controlled private corporations. The broader debate is therefore becoming one of allocation—whether increasingly scarce public dollars produce more growth through targeted incentives or through a less selective business environment.
