Canada has set a clear and ambitious goal to become a global leader in artificial intelligence.
With budget 2025 now tabled, the government has made important moves towards this goal, but the question remains whether these measures go far enough to ensure Canada not only participates in the AI revolution but leads it responsibly.
AI isn’t a distant prospect; it’s here, reshaping economies, industries and jobs. The decisions made in this year’s budget will determine whether we harness AI’s full potential responsibly and sustainably or risk falling behind as other nations move ahead.
EY’s Responsible AI Pulse Survey shows businesses aren’t waiting: most have implemented seven of ten key practices for ethical AI, from setting up governance committees to real-time monitoring. Eighty percent report efficiency gains, and advanced adopters see revenue growth and cost savings. Budget 2025 reinforces the critical role of data in guiding this transformation by funding TechStat, complementing private-sector findings and ensuring policymakers have the evidence needed to shape responsible AI adoption.
With AI dominating the thoughts of business’ brightest minds, Canada must prove it is prepared to lead this transformation.
Investing in AI infrastructure
Budget 2025 proposes an investment of $925 million over five years to build a large-scale sovereign compute capacity — a critical move to ensure Canadian businesses, researchers and public institutions have the horsepower to innovate securely. The government has asserted this will ensure Canada can compete in a secure and self-reliant manner.
Budget 2025 also announces that Shared Services Canada, working in partnership with National Defence and the Communications Security Establishment, will develop a made-in-Canada AI tool for federal use in collaboration with leading Canadian AI firms. This initiative will strengthen digital sovereignty, ensure government data remains in Canada, and create significant opportunities for the domestic technology sector.
By doing so, Canada is indicating that it recognizes sovereignty and control over AI resources are essential to economic security and technological leadership. But infrastructure alone won’t make Canada a leader. Leadership requires bold action on governance, innovation, and workforce readiness.
Developing robust responsible AI governance and compliance policies
EY’s survey showed AI-related financial risks are real and costly. Nearly every company in our survey suffered financial losses from AI-related incidents, with average damages of about CAD $6.2 million. However, those with governance measures such as real-time monitoring and oversight committees are seeing far fewer risks and stronger returns.
Budget 2025 stops short of dedicated funding for governance frameworks, independent oversight or AI compliance mechanisms. Without these, innovation could outpace safety, eroding public trust. The government should prioritize responsible AI oversight; by working with industry leaders to ensure we’re protecting Canadians, while at the same time not creating new barriers which deter investment.
Support innovation while managing emerging AI challenges
Our data shows that organizations have already implemented governance policies to manage AI risks, with more than 75% of those surveyed adopting eight out of 10 key agentic AI governance measures, including continuous monitoring (85%) and incident escalation for unexpected behaviors (80%).
This progress is promising, but challenges remain in creating effective controls for systems that operate continuously, adapt quickly, and require minimal human oversight. The new challenges such as agentic AI and “citizen developers” creating AI tools without adequate policies pose escalating risks.
The budget bill provides the means for innovation, but Canada’s government should also focus on research and development of control mechanisms for advanced AI and guidelines and training for internal AI creators, ensuring innovation does not outpace safety.
Prepare the workforce for a hybrid AI-human future
Our EY survey also showed that preparation for a hybrid AI-human workforce is lacking with only 32% saying their HR team is developing strategies for managing such environments.
This comes at a time when more and more Canadians fear losing their jobs to AI. A recent Express Employment survey showed some 63% of Canadian workers worry AI will significantly reduce employment opportunities and 46% fear their jobs could be eliminated. An Angus Reid survey shows similar concern with about 26% of Canadians worried that AI could replace their role within the next five years.
Government investment is still needed in workforce development programs, reskilling initiatives, and strategies to integrate AI effectively while safeguarding jobs and wellbeing.
Budget 2025 is a strong step forward, but ambition must translate into action. Canada’s leadership in AI will hinge on pairing investment with clear governance, innovation safeguards, and workforce strategies to ensure adoption is both responsible and transformative.
Biren Agnihotri is the Chief Technology Officer at EY Canada.
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