The vicious cycle of insufficient technology spending and lack of IT education can be improved with more government intervention, according to the Information Technology Association of Canada.

ITAC spelled out a seven-point program

Thursday with recommendations to improve Canada’s flagging economy. Its release was timed to coincide with the Federal Government’s Throne Speech on Monday, Sept. 30. Chief among those recommendations is improving small and medium-sized business commitment to technology investment through tax breaks and improvements to IT education programs.

“”We’ve got endless studies now that show without exception that investing in IT products and services results in productivity gains,”” insists ITAC president Gaylen Duncan. But making that argument to the SME community is proving difficult.

“”We’re having difficulty explaining, particularly to SMEs, what the return on investment is. That’s their first line of defence when we ask, ‘Why aren’t you using the technology?’ Yet, when we look at the contributions to productivity, there are both short term and long term returns on investment,”” says Duncan.

Tax cuts may encourage more IT spending, which should in turn improve productivity, he says, but the skills need to be in place to take advantage of technology in the workplace. “”We’ve got to find ways to getting skills out there, of understanding how to use technology to better the quality or the productivity,”” he says.

Canada’s financial sector has reaped the benefits of technology investment, notes Duncan, but he still sees a shortfall in heath care. According to ITAC numbers, 1.7 per cent of health-care budgets in Canada are devoted to IT, compared to almost seven per cent in the United States.

The Federal Government can encourage growth through tax breaks, but is directly responsible for the fizzling Government On-Line and National Broadband Network initiatives, says Duncan. ITAC is pushing for their resurrection as a way to encourage research and innovation.

David Paterson, executive director of the Canadian Advanced Technology Alliance (CATAAlliance), is discouraged by leaks that suggest that next week’s Throne Speech will follow a social spending agenda. “”This is not the sort of time when you want to be throwing more money at every problem you can imagine,”” he says. Like Duncan, he says that the Government’s focus should be on tax reduction and the encouragement of research and development.

However, he suggests the Canadian economy is in decent shape. “”I’m not convinced that the economy needs a lot of stimulation at the moment,”” he says. “”It’s certainly growing at a very impressive pace.””

But, Paterson points out, that isn’t much comfort to companies like Nortel, which continues to lay off staff, revise its revenue projections and suffer a precipitious drop in stock value. The only thing that may save Nortel, he says, is a healthier economy south of the border. “”Most of (CATA’s) membership is companies that export. What the Nortels and Corels and Entrusts of the world need is greater business activity in the United States and overseas.””


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