ITAC calls for public sector incentives to spur IT adoption

Alarm bells are ringing following the unveiling of a new report by the Information Technology Association of Canada (ITAC), that says Canada’s information and communications technology (ICT) adoption and training efforts trail far behind those

of other countries.

The report demonstrates how other countries — both developed nations such as the United States, Great Britain and France and emerging countries such as Korea, India and China – use a broad array of incentives to spur the adoption of new technologies to drive productivity and overall economic performance.

According to ITAC President and CEO Bernard Courtois, there is a well-established link between ICT investment and productivity and he is calling for the government to take “serious measures” to stimulate the adoption of ICT. To start with, he would like to see Canada providing incentives both for the adoption of new technology and for the training to use it. He said he would like to see such incentives made available for both big businesses and SME’s.

ITAC senior vice-president Lynda Leonard hopes the report will lead to recognition of the significant gap between Canadian investment in ICT and that of competing nations is a clear problem of public policy.

“The gap is pretty alarming, especially in the SME areas,” she said. “Other developed nations — the UK, USA, and Japan — have added incentives, and emerging nations are aggressively doing this.

“We think we are in serious danger of losing our advantage,” she added. “We’ve been complacent about this problem. It’s not sufficient to buy software and technology. You need to invest in the human capital.”

Paul Swinwood, president of the Software Human Resources Council, agreed.

“We’ve been espousing this for a number of years,” he said, “Having the ability to invest in the HR aspect is one of the most effective ways of increasing our productivity and maintaining our workforce.”

Swinwood said the ICT sector is one of the most expensive places to play for an individual. “The rate of new technology introduction has not slowed. Moore’s Law is still in effect and a lot of people fall behind as the technology they are trained on is decommissioned and replaced.” 

Some of the report’s findings:

Japan introduced tax incentives in 2003 to stimulate investment by Japanese companies in ICT machinery and software. Firms investing in ICT have the option of either a 10 per cent tax credit or a special depreciation allowance equivalent to 50 per cent of the acquisition cost of technology.

In Spain, small companies receive a tax credit of 10 percent of the costs incurred for the acquisition of equipment to enable Internet access, design Web sites and deliver e-commerce.

Great Britain introduced a short-term measure that offered a 100 percent first-year allowance for capital expenditures on ICT acquisitions incurred by a small business from April 1, 2000 to March 31, 2004.

China has introduced a broad range of measures including depreciation schemes, investment allowances and allowances for technological innovation.

And finally, Korea offers tax credits for the acquisition of machinery and equipment by small companies. It also offers a tax credit aimed specifically at productivity enhancing facilities and is also one of a number of jurisdictions that offers tax credits for training in ICT use. Others that offer incentives for ICT training include France, Austria and the Netherlands.

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Jim Love, Chief Content Officer, IT World Canada

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