Business Brief: A mega tax measure and an airport makeover

Good morning. Ottawa is opening Canada’s largest airports to private capital – and making it easier for companies to write off big investments. Today, we’ll look at how the airport plan would work, and why some big questions might take a while to answer.

Up first

In the news

Allies: European Commission president Ursula von der Leyen called for Canada to become the first associate member of the EU as part of a new “alliance for the future.”

Money: Canada’s new prediction market guidance leaves key questions unresolved, Wealthsimple CEO says.

Venture capital: Radical’s new Canadian-based fund secures $1-billion for AI megadeals.

Travel: Private-equity investor Birch Hill Equity Partners is forming a regional airline group in British Columbia.

In focus

Ain’t no mountain high enough?

Prime Minister Mark Carney launched the Canada Investment Summit with pitches that included elevating the country’s airports and upgrading a tax deduction from “super” to “mega.” With the summit in the books, Carney is in France, where he’ll address the European Parliament.

While in Europe, Carney’s pitch for Canada will likely include the two major announcements from yesterday’s summit.

1. Airports for lease

Canada is opening up its four largest airports to private investment.

Under Ottawa’s new plan, the government would retain ownership of the underlying land and assets in Toronto, Montreal, Vancouver and Calgary, but seek private investment through “long-term concessions” that will bring in new capital and expertise for airport operations and growth.

What ‘concession’ means

Ottawa currently delegates the management of major airports to not-for-profit airport authorities through long-term ground leases.

• Following the new flight path, a private company or group of investors would pay the federal government a huge chunk of money for the right to operate the airport for a long period, often decades. That’s the concession.
• Investors are attracted to airports because they generate relatively stable cash flows from airline charges, passenger fees, parking, retail rents and other sources of revenue.
• Carney said the money paid to Ottawa would be reinvested in infrastructure, including regional airports, and will lead to an improved passenger experience.
• That would be nice.

Australia’s mixed results

• The model was likened to Australia, where airports have been privately operated since the late nineties.
• The result down under has been a source of controversy ever since: In a March report, an Australian consumer watchdog said the country’s four largest airports are planning nearly $20-billion in capital spending over the next decade.
• But the report also cautioned that the “substantial capital expenditure will result in higher charges to airlines to recoup these costs in the coming years, which will ultimately get passed on to passengers in the form of higher airfares.”
• That would be less nice. But you can see the good and the bad.

What we don’t know

There are outstanding questions that could take months – if not years – to sort out.

• If Ottawa follows this model, one of the biggest unanswered questions is how (or whether) it will prevent private operators from boosting fees on airlines and travellers after paying billions for long-term concessions.
• It was not immediately clear what role organizations such as the Greater Toronto Airports Authority would play under the new model. The authority was created in 1996 after the federal government transferred operation of major airports to local not-for-profit agencies. 
• The GTAA did not immediately respond to questions from The Globe about whether it expects to continue operating Pearson under the concession model but issued a statement highlighting its focus on expanding the airport’s role as “one of Canada’s largest employment hubs, building on the 52,000 jobs supported by the airport today.”

2. From ‘super’ to ‘mega’

Perhaps taking a page from Donald Trump’s One Big Beautiful Bill Act, Ottawa introduced the “Productivity Mega Deduction,” which it said makes Canada more tax competitive than the United States “across all major sectors of the economy.”

If that sounds familiar, you might have seen the “productivity super deduction” in the November budget. As Erica Alini explains, this announcement makes that measure more generous:

• The existing suite of tax incentives lets businesses write off the costs of new capital investment in about 15 per cent of assets right away, focusing on manufacturing and processing, clean energy, productivity and research investments.
• The new “mega” deduction covers about 65 per cent of assets, including fibreoptic cable, mining property, oil and gas pipelines, software, computer equipment, aircraft and vehicles, patents, rail track, bridges and roads.
• That’s expected to cost Ottawa about $36-billion over five years. And it’s billed as a permanent measure to give businesses more certainty.

“The effect is straightforward. When you invest in Canada, you can deduct substantially more of that investment immediately,” Carney said in a summit speech.

You can read more about the mega deduction here.

More coverage from the summit:

Charted

U.S. government borrowing costs jumped above a key psychological threshold this week, Andrew Galbraith reports. Canadian bond yields also rose, as surging oil prices fed into growing worries over rising inflation and expectations that both the U.S. and Canadian central banks will lift interest rates.

Yesterday, U.S. Treasury Secretary Scott Bessent blamed rising bond yields on “global issues,” without mentioning how those issues came to be.

Quoted

They racked up debt from going abroad for medical school. Was it worth it?

Up next

More files we’re following

Holding our interest: The Bank of Canada’s summary of deliberations, released today, will give us a clearer window into how the bank is navigating the U.S. trade clash and war in the Mideast. Neither of those conflicts appear to be cooling down. Most economists don’t see the bank hiking this year, but the possibility of one or more bumps in early 2027 is growing.

Watching our wallets: Dollarama Inc. reports second-quarter earnings this morning. Budget-conscious Canadian shoppers pushed sales and profits higher for Canada’s largest discount retailer in the past quarter.

Morning update

Global markets edged higher as a respite in ​the global bond selloff and a drop in ‌oil prices steadied nerves ahead of a pivotal U.S. Federal Reserve decision later in the day.

Wall Street futures were in positive territory. while TSX futures followed sentiment higher.

Overseas, the pan-European STOXX 600 was up 0.31 per cent in morning trading. Britain’s FTSE 100 rose 0.53 per cent, Germany’s DAX advanced 0.07 per cent and France’s CAC 40 gained 0.27 per cent.

In Asia, Japan’s Nikkei closed 0.69 per cent higher, while Hong Kong’s Hang Seng climbed 0.19 per cent.

The Canadian dollar traded at 71.80 U.S. cents.