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# Federal Budget Announces Billions to Boost AI and Build Data Centres as AI Industry Faces Growing Public Backlash
- URL: https://www.thewatchdog.ca/federal-budget-announces-billions-to-boost-ai-and-build-data-centres-as-ai-industry-faces-growing-public-backlash/
- Published: 2026-11-06T18:42:21.000Z
- Updated: 2026-11-06T18:42:21.000Z
- Description: Poll shows Canadians now identify AI as ‘one of the greatest threats to Canada’
- Author: Luke LeBrun
- Tags: Analysis

The Carney government’s 2026 federal budget is promising billions in spending and tax breaks to promote artificial intelligence, support tech companies and build data centres in Canada at the same time as a growing number of Canadians are hopping off the AI bandwagon.

The [2026 budget](https://budget.canada.ca/2026/home-accueil-en.html?ref=thewatchdog.ca) presents AI as a big focus of the Carney government’s economic growth strategy in coming years, with over 130 references to AI and data centres in the text of the budget document itself.

The budget identifies “frontier technologies such as artificial intelligence” as one of the forces “reshaping the global economy.” It predicts the government’s “ongoing investments in artificial intelligence infrastructure” will be a major driver of Canada’s economic growth for the remainder of the decade.

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In total, the budget’s fiscal tables identify $2.6 billion in spending tied explicitly to AI-related programs, including its [“AI for all”](https://ised-isde.canada.ca/site/ised/en/canadas-national-artificial-intelligence-strategy-ai-all?ref=thewatchdog.ca) strategy and plans to [transform the public service with AI](https://www.ctvnews.ca/ottawa/article/feds-to-spend-1-billion-on-digital-transformation-of-public-service/?ref=thewatchdog.ca). The budget also highlights other AI investments, including its recent [$1.6 billion equity stake](https://www.cbc.ca/news/business/canada-cohere-ai-investment-9.7401367?ref=thewatchdog.ca) in Cohere.

Meanwhile, the government is offering billions in corporate subsidies allowing tech companies to [deduct costs for equipment in data centres](https://www.policyalternatives.ca/news-research/canadas-federal-budget-is-about-to-give-billions-of-dollars-to-fossil-fuel-companies/?ref=thewatchdog.ca) as well as [lucrative tax breaks for tech entrepreneurs and investors](https://www.theglobeandmail.com/business/article-federal-budget-2026-canada-artificial-intelligence-technology/?ref=thewatchdog.ca).

Hadrian Mertins-Kirkwood, a researcher at the Canadian Centre for Policy Alternatives, says the 2026 budget underlines the Carney’s government “very ideological commitment to AI adoption.”

“The federal government has been a big booster of the industry,” Mertins-Kirkwood told *The Watchdog*. “It doesn’t mean they’re wrong necessarily, we just don’t have a lot of evidence that these investments will actually deliver productivity and prosperity and all this other utopia that AI promises.”

Despite the bets Carney’s government is making on AI, [recent polling](https://abacusdata.ca/budget-2026-affordability-tops-canadians-concerns-as-threats-from-trump-and-ai-rise-but-few-expect-the-budget-to-make-their-lives-better/?ref=thewatchdog.ca) from Abacus Data shows public opinion in Canada is beginning to turn sharply against the AI industry.

![](https://storage.ghost.io/c/78/69/78691ad9-bb05-4bb9-84d7-bd327e74858a/content/images/2026/11/wd-image-03-11-2026-ai-threat-abacus.jpg)

Source: Abacus Data

“AI is now the second most frequently selected threat in the survey, behind Trump and the United States,” Abacus CEO David Colletto wrote in advance of the budget. “AI is becoming a much more prominent part of how Canadians think about risks to their quality of life and the country’s future.”

The number of Canadians who identify AI as a threat has grown significantly in six months, from 10% in [April 2026](https://abacusdata.ca/what-canadians-see-as-the-biggest-threats-to-their-quality-of-life-and-what-that-means/?ref=thewatchdog.ca) to 26% in November 2026.

The polling data also suggests Carney’s government is out-of-step with their own supporters on the issue.

“Among those who strongly approve of the Carney government, 78% identify Trump and the United States as a leading threat, and 36% select artificial intelligence,” Colletto noted. In fact, the survey finds AI is now the number two most cited threat by nearly one-third of Liberal, NDP and Bloc Québécois voters.

![](https://storage.ghost.io/c/78/69/78691ad9-bb05-4bb9-84d7-bd327e74858a/content/images/2026/11/wd-image-02-11-2026-ai-threat-abacus.jpg)

Source: Abacus Data

And it appears the problems for the AI industry are not getting any better any time soon.

This week’s US midterm elections are being viewed as a [reckoning for tech companies](https://www.bnnbloomberg.ca/business/artificial-intelligence/2026/11/06/ai-data-centres-took-a-beating-in-the-midterm-elections-a-reckoning-may-be-ahead-for-tech-giants/?ref=thewatchdog.ca) as much as a rebuke of Donald Trump’s MAGA politics. Voters across the United States [passed moratoriums on data centres](https://www.theguardian.com/us-news/2026/nov/04/datacenters-midterm-elections?ref=thewatchdog.ca) in response to growing grassroots opposition to data centres, including in rural and conservative communities.

In Texas, incoming Democratic governor-elect Gino Hinojosa has [pledged to ban construction of data centres](https://www.texastribune.org/2026/11/04/data-center-texas-pause-gina-hinojosa-governor-policies/?ref=thewatchdog.ca) across the state until new laws are passed ensuring data centre operators hire unionized workers, protect communities’ water supplies and don’t drive up electrical bills. Texas’ incoming governor has also pledged to cancel the state’s [tax breaks for data centres](https://www.texastribune.org/2026/04/08/texas-data-centers-sales-tax-break-billion-dollars/?ref=thewatchdog.ca).

AI company [stocks have plummeted](https://www.nbcnews.com/business/markets/tech-stocks-plunge-ai-midterms-rcna607650?ref=thewatchdog.ca) following the US midterm vote, as the [political backlash and threat of public interest regulations](https://www.cnbc.com/2026/11/06/ai-data-center-midterms-selloff.html?ref=thewatchdog.ca), along with the AI industry’s [ongoing struggle to generate profits](https://www.theguardian.com/technology/2026/oct/09/openai-forecast-revenue-gap?ref=thewatchdog.ca), are making AI a [less attractive bet for investors](https://www.wsj.com/tech/ai/openai-raises-less-than-half-of-30-billion-target-in-latest-round-91aecdc5?ref=thewatchdog.ca).

Despite the Carney government’s investments, Mertins-Kirkwood notes Canada is “ironically in a pretty good position to weather this AI stock crash” given the investments the federal government announced are “pretty small in the grand scheme of things” and that most planned data centres planned are still early in the proposal stage. “We’re not nearly as vulnerable to this downturn as the US and some other countries.”

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Like the United States, Canada is also beginning to see [rising grassroots opposition to data centres](https://energynow.ca/2026/07/opposition-brewing-as-data-centre-capacity-is-set-to-explode-across-canada/?ref=thewatchdog.ca) across the country, including in [small rural Albertan communities](https://thewalrus.ca/alberta-data-centres/?ref=thewatchdog.ca) where Premier Danielle Smith is devising plans to [power a network of hyperscale data centres with oil and gas](https://thenarwhal.ca/alberta-ai-data-centre-takeover-cabinet-doc/?ref=thewatchdog.ca).

“The government is definitely out of line with Canadian public opinion,” Mertins-Kirkwood said. “I’m curious what it will take for the federal government to change its tune, because it’s been pretty consistent on AI for the last year and a half.”

“You wonder as more evidence is coming in and the economic case is getting clearer and opposition is manifesting, what will they adjust?”

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