The Morning After The Budget: What's Canada's Sovereign Company Strategy?

Here’s a truth about working in public policy that most people don’t talk about: Implementation matters a lot.

Sure, the big budget-day announcements are important. But the boring bureaucratic work of dispensing funding matters a lot, too.

Yesterday the Canadian Shield Institute was in the budget lockup in Ottawa reading as fast as we could, and then into the evening our policy team was huddled in the office, combing through the details. We’ll have more to say on announcements around Minister François-Philippe Champagne’s fiscal plan soon.

There’s interesting new details about how regular citizens can buy into the Canada Strong Fund, which feels a little bit like the idea we pitched for “sovereignty bonds” a while back.

We’ve also seen notable tax measures to drive investment. We now have a “Canada Growth Incentive” to go along with the “Productivity Mega Deduction” announced in September.

Across many of these measures, there’s a looming implementation question: how will the government define a Canadian company, for the purposes of economic policy?

Implementation is front-of-mind, because one of the biggest stories out of last year’s federal budget was the significant pace of defence spending. We were told in 2025 that rearming Canada would be good for the economy — driving a wave of innovation, wealth creation and domestic growth.

But earlier this week, Prime Minister Mark Carney’s point man on defence investment had some notable things to say on stage at The Logic Summit in downtown Toronto.

Doug Guzman is a former Bay Street banker and currently he is the head of the Defence Investment Agency.

But Guzman had a funny definition of what counts as a Canadian company, when it comes to defence procurement — a definition that apparently takes inspiration from U.S. President Donald Trump.

“It’s the exact same public policy objective as the tariffs. The US looks at Alcan and says if you process in the US we’ll consider you US, inside the umbrella,” Guzman said.

“I can understand the ‘really’ Canadian company’s perspective on that, but some of these Canadian subs of U.S. companies have been here 75 years, producing as a tax base, and making things.”

(Editor’s note: He did air quotes with his hands when he said “really” in that sentence.)

So there you have it: As far as the federal government is concerned, General Dynamics or Lockheed Martin is a Canadian company, as long as they’re operating in Canada and paying taxes.

Suffice it to say, at the Canadian Shield Institute, we don’t agree with this. In fact, our latest policy release proposes a more stringent definition of what counts as a “really” Canadian company.

“Canadian Dupes: A Better Definition for Real Canadian Companies”

This matters a lot in the context of defence spending, because we are forecast to spend more than $200 billion per year by 2035 if we hit our targets. That is a huge sum of money, and at least part of the rationale for that kind of spending is to build up Canadian defence industrial capacity.

If our military spending generates R&D, innovation and dual-use technologies that Canadian companies can sell to the world, that could be an enormous benefit. If we just fund local subsidiaries of foreign multinationals, then the innovation and intellectual property will accrue back to head office.

For much of 2026, we’ve been studying this issue.

We’ve looked at all the various definitions of a Canadian company across tax policy, telecom, product labelling, finance and economic development.

What we see is that the government’s definition of a Canadian company is usually about jobs, first and foremost. Take the “Strategic Partnership Framework” which the federal government published as part of the defence procurement push.

Under that policy, a Canadian company is a business that “maintains a registered address in Canada and employs personnel and/or conducts day-to-day business activities in Canada.”

It’s about jobs.

If you really go digging, though, there are some interesting ideas kicking around in government. The Venture Capital Catalyst Initiative, which aims to provide capital to invest in innovative Canadian companies, defines a Canadian company as:

• Headquartered in Canada, or a majority of executives based in Canada, AND
• A majority of operations, or a majority of full-time employees are based in Canada

By this definition, we see that the federal government is still really focused on jobs. But by highlighting the headquarters location and the key executives, at least we see that the government also cares about where control and key decision making lie.

We saw something like this too when the government invested $1.6 billion in Cohere last week. The government said that a condition of the investment is that Cohere will remain headquartered in Canada. But the government also said Cohere will create 1,000 new jobs.

To be clear: we understand that jobs are important and politically salient.

But in the 21st century, if you’re fixated on jobs, you miss the really important economic role of intangible assets like intellectual property, data, and control of algorithms.

Anthropic is about to IPO as a US$1.5 trillion company with only around 5,300 employees.

If we’re fixated on where the jobs are, we’re missing out on where the real wealth creation happens in the 21st century.

As the budget gets implemented and the government starts mobilizing money for sovereign economic growth, we will be paying close attention. As far as we’re concerned, it’s not a sovereign Canadian company if it’s a majority-owned subsidiary of a foreign multinational.

A real Canadian company is headquartered in Canada, and not majority owned by a foreign company or a foreign government. That’s what we should be investing in.