Parliament Prorogued – Implications for the Tech and Innovation Sector

As Canada navigates a period of political transition, Prime Minister Justin Trudeau has stepped down as Leader of the Liberal Party while continuing to serve as Prime Minister on an interim basis until a successor is chosen. Concurrently, Parliament has been prorogued until March 24, 2025, marking a pause in legislative activity and a reset of the government’s priorities.

What does this mean for the tech and innovation sector?

Key Parliamentary Developments and Political Implications

Parliament will reconvene on March 24, 2025, ahead of a required vote on March 31 to allocate funding for government operations. This vote could potentially trigger an election. When Parliament resumes, the government will need to deliver a Throne Speech, which could face opposition and potentially lead to a vote of non-confidence.

During the prorogation period, the Cabinet will continue to operate with a narrowed mandate. Ministers are expected to:

• Avoid high-profile domestic and international events.
• Defer non-essential decisions, announcements, and policy initiatives.
• Support Deputy Ministers in maintaining essential government operations while avoiding partisan activities.

A cabinet shuffle is anticipated as leadership contenders resign from their posts. Should an election be called, Canadians could head to the polls by May or June 2025.

At the provincial level, the Ontario PCs under Doug Ford may also consider calling an election in the coming months, adding to the evolving political landscape.

Legislative Implications: Bill C-27 and Broader Policy Considerations

1. The prorogation of Parliament has effectively terminated Bill C-27, which had been under review at the INDU Committee since September 2023. This development raises questions about the future direction of privacy and AI regulation in Canada, while also creating an opportunity to reassess priorities in these areas.
2. A new government will prioritize strengthening Canada’s relationship with the United States, with a focus on shared interests such as positioning Canada as a favoured destination for data centers and aligning on AI governance through non-legislative frameworks. These areas present opportunities for the tech sector to engage in shaping cross-border collaboration and advancing Canada’s economic interests.
3. Though the ways and means legislation for the new capital gains tax rules has not passed in parliament, CRA is proceeding with the administration of these new measures. We can expect a new parliament, likely to convene in June of this year, to provide the only certainty regarding when the CRA will be directed to shut this process down.

Other key updates:

• The New Canadian Entrepreneurs’ Incentive, providing a 33.3-per-cent inclusion rate for a one-time capital-gains exemption of up to $2-million “for individuals selling active businesses” will also proceed until a new parliament convenes.
• Other key digital policy legislation, such as C-26 (Cybersecurity), C-63 (Online Harms), has now died on the order paper, and we do not expect them to return in their current form with a Conservative government.
• Digital policy legislation that has passed, such as C-11 (Online Streaming) and C-18 (News Media), will likely be repealed by a Conservative government.
• The on-going regulatory dialogue regarding competition, abuse of dominance, codes of safety and conduct with digital platforms will continue; the review of CUSMA will ensure that any bilateral agreements will be in the foreground over the next two years.
• Given the Conservative Opposition to the 2022 Budget commitment for a digital sales tax (DST), we will not see this tax policy change move forward when parliament returns.
• The Conservatives have committed to reviewing the government’s current procurement policies and processes; it is likely that we will see some radical changes here too, not least to accelerate defense procurement processes.
• Lastly, the European Commission has recognized Canada as offering an adequate level of data protection, allowing the free flow of personal data from the EU to Canada without additional safeguards. However, with the termination of Bill C-27, Canada may need to demonstrate an ongoing commitment to robust data protection measures to maintain this status.

TECHNATION’s Advocacy

TECHNATION remains committed to supporting its members through these developments, providing timely updates, and advocating for policies that drive growth of the tech sector. We will continue working closely with members to navigate this transitional period and drive successful outcomes for the industry.

For any questions or to share your input, please feel free to contact us at psureka@technationcanada.ca.