They tried that a few times. I know because I was an advisor to one of the biggest incubators in Canada. The government even gives cash grants to startups.
But as soon as the company gets big, they either 1) open an engineering office in the Bay Area or 2) Sell, and the move to the Bay Area because they were just acquired by a Bay Area company who is making them move (or they just want to move now that they can afford it).
The startup scene in Canada has huge demand from Canadian engineers who want to start startups there, but they have a really hard time attracting local capital. Most of their capital comes from SV VCs who like the fact that it is cheaper to start a company there because of the low salaries, and a lot of the successful exits leave.