In Thursday’s 2013 federal budget, Ottawa is continuing its push to kickstart Canada’s venture capital sector with a pledge to spend $60 million on venture incubators. At the same time, it’s killing the labour-sponsored venture capital corporations (LSVCC) tax credit.

In last year’s budget, the government earmarked $400 million to invest in venture funds and funds of funds over the next few years, in the hope that this will serve as a catalyst to revive Canada’s moribund venture industry. Today, the government said that it also now plans to devote another $60 million, over five years, toward the education of entrepreneurs through so-called incubators and accelerators.

These organizations help entrepreneurs develop their business plans and seek follow-on financing. According to the 2013 budget, this type of hands-on advice and mentoring can help startups gain a strategic advantage in the international marketplace. The budget doesn’t say just how it expects to deploy these funds, noting that details on these new initiatives will become available in the coming months.

Additionally, the government says it will provide another $100 million through the Business Development Bank of Canada to invest in firms that are graduating from business accelerators.

At the same time, it’s proposing to scrap a long-standing measure that was supposed to support venture investment, the LSVCC tax credit — a 15% federal tax credit for the acquisition of LSVCC shares. However, these credits have been criticized as ineffective at driving venture investment. Now, the government is planning to phase out the credit by 2017, a measure that’s expected to save about $335 million over the next four years.

The budget indicates that the credit will remain at 15 % when it is claimed for tax years that end before 2015. It will then be reduced to 10% for the 2015 tax year, and 5% for the 2016 tax year, before it’s ultimately eliminated for good in 2017. It also proposes to end new LSVCC registrations, as of budget day.

The government says that it will consult on changes to the tax rules for LSVCCs to ensure an orderly phase-out.