Recent developments on AI in federal government institutions

Canada’s proposed artificial intelligence (AI) legislation, the Artificial Intelligence and Data Act, died on the Order Paper earlier this year when Parliament was prorogued. While the future of AI legislation in Canada remains unclear, the federal government remains committed to strengthening Canada’s global position and approach to AI as a leader in the field. Recent developments show the federal government continuing to take steps to ensure the safe, responsible, and ethical development and adoption of AI systems. 

AI strategy for the federal public service

On March 4, 2025, the federal government launched Canada’s first AI strategy for the federal public sector following extensive consultation with key stakeholders. The AI strategy aims to “align and accelerate” the adoption of responsible AI systems across the federal government by establishing an AI Centre of Expertise to support and coordinate government-wide AI initiatives. In addition, the AI strategy will advance responsibility, training and transparency in utilizing AI systems based on four key principles:

1. Human-Centered. All approved uses of AI in the federal government must put people first. This means using AI to benefit Canadians, to streamline service delivery or benefit the work of public servants. In the latter case, using AI to handle basic administrative tasks would, for example, free up public servants to focus on more complex activities benefiting Canadians.
2. Collaborative. Collaboration with various stakeholders across the public and private sectors when implementing the AI strategy is critical to ensure ethical AI systems. The federal government’s approach to the AI strategy encourages collaboration with Indigenous and Canadian partners, as well as partners in other jurisdictions, which will allow public sector colleagues to improve the implementation and execution of the AI strategy. 
3. Ready. AI infrastructure should be built to be robust, scalable, and secure. Reliable and trusted data, and skilled staff to facilitate training and development, are vital to the functioning of a productive and successful AI system. 
4. Responsible. Transparency and accountability are key factors contributing to the establishment of any ethical AI system. The federal government aims to inform individuals and public servants alike on when and how AI systems are used so individuals trust AI use is justified, responsible, fair, safe and secure.

The AI strategy will apply to all types of AI systems with adaptive capabilities after initial training, irrespective of whether the AI systems are developed within the federal government or procured from third-party sources (e.g., open source, off-the-shelf products or custom vendor solutions).  

The scope and application of the AI strategy will not apply to: (i) software solutions not having adaptive capabilities after initial training, or (ii) adoption of AI by organizations outside of the federal government. While the AI strategy may not apply to provincial or private-sector organizations, it provides useful guidance on adopting best practices that facilitate the ethical, secure and successful implementation of AI systems. The federal government aims to update the AI strategy every two years to ensure it remains relevant and responsive to ongoing innovation.

Council of Europe Framework Convention on Artificial Intelligence and Human Rights, Democracy and the Rule of Law

On February 11, 2025, Canada signed the Council of Europe Framework Convention on Artificial Intelligence and Human Rights, Democracy and the Rule of Law (the Convention). The Convention is a comprehensive legal framework and the first-ever international treaty in the field of AI and human rights. It aims to establish a common international approach to ensure activities within the lifecycle of AI systems are consistent with human rights, democracy, and the rule of law, while remaining conducive to technological progress and innovation. 

In signing the Convention, the federal government confirmed its commitment to robust AI governance and global cooperation on AI. Indeed, the president of the Treasury Board of Canada noted the Convention aligns with the four principles of the AI strategy.

As of March 2025, Canada is one of 14 signatories to the Convention, including the European Union and the United States. The Convention will officially come into force once five countries, including at least three Council of Europe member states, express their consent to be legally bound by the Convention. 

Report on artificial intelligence and competition 

Last March, the Competition Bureau published a discussion paper on how AI may affect competition. After engaging and consulting with stakeholders and AI market participants, it published an updated report earlier this year that focused on four key takeaways from the feedback the Competition Bureau received in conjunction with the consultation on AI market dynamics:

1. AI is evolving rapidly, with large amounts of research and product implementation occurring daily. This can lead to new market dynamics that either promote or hinder competition. 
2. Investment is key for AI technology to grow. However, there is a balancing act required between large incumbent firms and emerging start-ups. Large firms continue to dominate the AI market, with various barriers to entry for start-ups in the absence of regulation.
3. AI can lead to anti-competitive conduct that may require new or revised enforcement mechanisms. Vertical integration and collaborations between large companies and start-ups, and algorithmic pricing may all lead to competition concerns. AI may also be leveraged by threat actors to amplify deceptive marketing practices by generating fake endorsements or tailored phishing campaigns. 
4. The Competition Bureau is viewed as an active collaborator in AI, which can benefit from pro-competitive principles and tech-neutral legislation on AI and competition.
   These takeaways will continue to inform how the Competition Bureau protects and promotes competition in the AI ecosystem. Given the emphasis on collaboration by stakeholders during the consultation process, the Competition Bureau welcomes continued engagement with market participants on AI matters.

Key takeaways

The AI strategy, Canada’s signing of the Convention, and the Competition Bureau’s engagement with AI market players all represent the federal government’s commitment to understanding and strengthening Canada’s AI resources and capabilities. These efforts are key to informing a practical regulation of AI and ensuring safe and responsible AI systems prior to new legislation being introduced.

The authors would like to thank Chloe Loblaw, articling student, for her contribution to preparing this legal update.