CPP’s home share holds at 12%
Canadian business leaders rank keeping capital in Canada as the second most pressing economic issue for Federal Budget 2026, shortly after pension funds and other institutional investors pledged close to $100 billion to Canadian assets.
In KPMG’s Federal Budget Survey, 44% cited attracting foreign investment and retaining capital in Canada, behind only the Canada–US trade conflict and tariff impacts at 62%.
KPMG polled 346 business leaders at firms with at least $10 million in revenue from September 22 to October 2.
Pledges on the table
The pledges came around the first Canada Investment Summit in Toronto on September 14 and 15. They included a $50-billion Maple Fund from CPP Investments and Brookfield Asset Management, and PSP Investments’ plan to lift its Canadian holdings to $100 billion.
CPP Investments reported a record $119.2 billion in Canadian investments at March 31, while Canada’s share of its $793.3-billion fund remained at 12%. Roughly half related to US-based investments.
A Royal Bank of Canada report cited by The New York Times put Canada’s net investment loss over the past decade at $1 trillion. CBC News reported foreign direct investment reached its highest level since 2007 while outward investment outward flows cooled in 2025.
Respondents also cited accelerating major projects such as energy and infrastructure (34%), cost pressures on businesses and households (34%) and tax competitiveness and reducing red tape (26%). Nearly nine in 10 (87%) support making Canada more self-reliant and diversifying its economy.
Levers already pulled
According to the Financial Times, Ottawa has scrapped the 30% cap on pension fund investments in Canadian entities. It also set up a Major Projects Office to fast-track national infrastructure projects and reduce approval risk.
Budget 2025 proposed $1 billion over three years, starting in 2026-27, for the Business Development Bank of Canada. The money would launch a venture and growth capital fund-of-funds to encourage participation by pension funds and other institutional investors.
On September 14, Finance and National Revenue Minister François-Philippe Champagne announced the Canada Revenue Agency will prioritize advance income tax ruling requests tied to investments of $1 billion or more.
For Budget 2026, 87% want a comprehensive review of the tax system, 85% want it simplified and 82% say it needs to be more competitive.
“While tax incentives can help drive specific outcomes, they are no substitute for comprehensive tax reform that improves competitiveness and reinvigorates the economy,” says Lachlan Wolfers, national leader of KPMG Law.
He does not expect such reform in this year’s budget, given the focus on US trade tensions.
Smaller firms under strain
Seventy-one per cent are confident the budget will be business-friendly and improve their growth prospects. Among firms with $10 million to under $100 million in revenue, 54% are confident it will support growth, compared with 82% of those earning $1 billion or more.
While 66% say they are adapting successfully to higher trade barriers and geopolitical risks, the figure is 51% for firms under $100 million and 77% for those at $1 billion or more.
On the economy, 59% are optimistic over 12 months and 67% are confident over three years. KPMG’s CEO Outlook put large-company leaders’ three-year confidence at 69%, down from past years.
For HR and benefits teams, these cost pressures coincide with steady pay budgets. Nearly seven in 10 leaders say mounting US tariffs are forcing them to pass on significantly higher costs to customers. Mercer Canada’s July survey found total salary increase budgets of 3.2% for 2027, almost unchanged from the 3.3% granted in 2025 and 2026.
Patience on Washington
Seventy-three per cent say competitiveness reforms matter more right now than a US trade deal, and 72% say Canada should hold out for a better deal even if it causes some economic pain. Seventy-seven per cent say Canada was right to suspend talks and impose counter-tariffs.
On returning to talks, 45% would resume only when a better deal is achievable, and 23% would return immediately without preconditions.
At the July 1 joint review, the US Trade Representative said the US did not agree to renew CUSMA in its current form. The agreement remains in force.
“A majority of business leaders are prepared to be patient and wait to secure a trade deal with the U.S. until more favourable terms are available,” says Robert Glasgow, partner in KPMG Law’s trade and customs practice.
Fifty-five per cent say counter-tariffs are creating significant challenges, rising to 67% in retail and wholesale trade and 64% in agriculture, automotive, construction and manufacturing.
Seventy-six per cent say diversifying trade away from the US is more important than it was six months ago, and 84% back a special partnership with the EU and other stable partners. Sixty-eight per cent are optimistic that new deals with non-US partners such as the UK, the EU and India will improve their prospects, rising to 80% among technology firms.
