The federal budget passed its first vote in the House this week and is now on its way to committee. That alone puts to rest a month of rumours about a Christmas election. The government cleared its first major hurdle, which means we can finally focus on what is actually in the budget instead of whether one would happen at all.
One of the biggest pieces now moving forward is the Buy Canada initiative. The government brought it in ahead of the budget as a response to the trade fight with the United States, and now Budget 2025 puts real money and direction behind it. The idea is straightforward. If the trading environment is getting tougher and less predictable, then Canada should use federal procurement to support firms headquartered here and build more of our own supply chain strength.
As this rolls out, one core issue sits at the centre of everything: how Ottawa defines a Canadian company. That definition is not set yet, and it will determine who actually benefits from this initiative.
Budget 2025 commits almost $186 million to implement the Buy Canada policy across government and Crown corporations. It also puts close to $80 million into a new Small and Medium Business Procurement Program designed to make it easier for Canadian companies to access federal opportunities. The policy will reach into major infrastructure spending, defence procurement through the new Defence Investment Agency, housing construction, and community infrastructure programs.
These are big programs with a lot of money attached to them. The shift is clear. Ottawa is moving from a system that treats foreign and domestic suppliers more or less the same to a model that prioritizes Canadian suppliers and, when needed, firms from countries that give Canada similar access. The government is also planning local content requirements so that even when foreign companies win contracts, a portion of the work benefits Canadian workers and suppliers.
But none of this works without a consistent definition of what a Canadian company is. Right now, we do not have one. Provinces use different rules, and some of those rules create more confusion than clarity.
Ontario’s new procurement restriction policy is a good example. It treats a business as Ontario based if it has at least 250 full time employees in Canada. Headquarters are not part of the test. A foreign controlled firm with enough payroll qualifies, while a Canadian headquartered firm with fewer employees does not. That may be simple, but it does not reflect how modern companies create value or where money actually goes.
Industry groups keep pointing out why this matters. Jobs are important, but they are not the only marker of domestic economic benefit. A firm that is headquartered abroad can close a facility, shift production, or consolidate operations with little notice. Canada has already seen this play out. Stellantis received major public funding tied to EV production and later downsized operations and moved technology development outside the country. Public dollars went toward work that no longer lives here.
That is the kind of scenario the Buy Canada policy is supposed to prevent. If the goal is industrial resilience and domestic capacity, then ownership, headquarters, and control of intellectual property need to be part of the criteria.
This question also extends into CUSMA renegotiations. Canada wants American recognition of Canadian firms in procurement and investment rules. To make that argument, the federal government needs a clear definition of what a Canadian firm actually is.
For now, the budget’s passage means the Buy Canada policy will move ahead as committees begin detailed study. The next phase is where the definition question becomes unavoidable. The success of the policy, and how much of it delivers real domestic economic value, depends on how the government answers it.
Daniel Perry is the Director of Federal Affairs at the Council of Canadian Innovators, leading national advocacy and engagement efforts. With experience in consulting and roles at the Senate of Canada, Queen’s Park, and the Canadian Criminal Justice Association, Daniel has helped political leaders and clients across various sectors achieve their public policy goals. A frequent media contributor and seasoned campaigner, Daniel holds a Master of Political Management from Carleton University.
