The Canadian federal government is tabling the 2019 budget on March 19 and the Information Technology Association of Canada (ITAC) has addressed some serious concerns in its pre-budget submission that it believes would allow Canada’s digital economy to reach new levels.
ITBusiness.ca spoke with Andre Leduc, the vice-president of government relations and policy for ITAC, who will be in attendance at the budget lock-in on Parliament Hill, about what it hopes to see addressed in next week’s budget tabling.
Leduc said that progress has been made in recent years to prop up the digital economy, but also called for further investment in three key areas.
“Skills development continues to be an issue for most industries as the economy becomes the digital economy and all sectors are being impacted. We hope that there is some investment in skills development, especially on the STEM and technology side,” said Leduc. “We also hope that there’s some increased spending on digital government initiatives within the federal portfolio. And lastly, is the technology and innovation.”
Skills development in STEM
ITAC wants to see measures that directly address Canada’s ICT talent shortage. Leduc says that could come in the form of funding for foreign students to study at Canadian post-secondary institutions, as well as incentives to focus curriculum on STEM fields.
“Talent is the foundation of Canada’s ICT sector and of innovations in every sector of our economy. Beyond meeting projected demand for ICT talent, Canada needs to double down on its proven ICT strengths. People with the right ICT skills – combined with expertise in business, complementary technologies, innovation, and leadership – are a magnet for investment. Canada can gainfully employ a high share of its workforce in export-oriented technology-based products and services. This can help offset the disruptive impacts of automation,” ITAC stated in its pre-budget submission.
Leduc says this could be addressed by widening the talent pool through the creation of policies that will encourage more foreign talent to join the Canadian industry and improving the homegrown talent through investments in our post-secondary education system; as ITAC calls for Canada to “conduct national/regional consultation and strategy development project to identify, prioritize and develop ICT-related post-secondary education program capacity expansion priorities, strategies, and plans.”
Leduc points to strides being made in post-secondary education in the U.S. as an example.
“So one of the things that we see south of the border that I really appreciate is their tax incentives between industry and academia to make those research investments,” says Leduc. Not only should the curriculum be geared towards addressing the talent shortfall, but the research agendas of institutions should be geared towards the economy’s needs.
If the federal government were to create further incentives for Canadian industry to invest in innovation at the post-secondary level, Leduc says we would see a huge rise in collaboration between industry and post-secondary institutions, which would not only lead to commercialization of that research but also further the skills of students in the industry.
By improving how the post-secondary education system addresses the ICT field, Leduc says that the resulting increase in foreign talent entering the Canadian market will lead to the diversification and growth of the available talent pool that Canada needs.
Investment in curriculum and R&D, coupled with ITAC’s suggestion to fund an increase of foreign talent through the expansion of the Student Workplace Placement Program (SWPP) to include foreign students, will lead to a more talented and more diverse talent pool, says Leduc.
“ICT is the driver of economic growth. But if you want it to continue to be the driver of economic growth, we need the talented people to be able to fulfill the demand that the industry is having on talent.”
Advancements in a digital government
The government should build a hub to serve as the point of digital collaboration between government and the private sector, ITAC says.
For the ICT sector to continue to grow in the ways it needs to, ITAC believes that the government must adopt a digital-first agenda in its own practices, instead of the status quo, which its pre-budget submissions says has been “a barrier that limits small and medium-sized enterprise (SME) participation, slows deployments, dampens innovation and increases costs for government and industry alike.” It also states that “Driving a digital-first agenda, innovating procurement and ensuring a pragmatic approach towards a public-private partnership is mission-critical to building a modern digital government, fueling innovation and improving Canada’s competitiveness.”
The major suggestion that the submission brings is a government technology hub “to act as a centre of excellence for digital government collaboration with industry and academia.”
Not only does ITAC say this would drive innovation, it believes it could be extremely beneficial to the government as it would allow it to test out available technologies before making a purchasing decision, access talent they may otherwise have not had access to, and provide a virtual hub for SMEs to innovate on solutions for government infrastructure and platforms.
Along with the direct benefits for the Canadian government’s operations, ITAC says this hub will lead to great gains on the international market for Canadian innovation.
“The innovation hub is really designed to be able to facilitate bringing these innovative solutions that we’re developing in Canada to those global markets. So that’s kind of the whole concept is to provide an environment where SMEs can leverage the expertise of multinationals and potentially academic partners to develop the solutions.”
Furthering of innovation
While Leduc says that he already sees great innovation within Canada, he also points to a major impediment that ITAC brought forth in their submission that he believes is holding our country back from becoming a global superpower in the tech field: the Capital Cost Allowance (CCA).
He points out that this issue was addressed in the U.S. by lowering corporate tax rates and increasing the CCA in December 2017. By increasing the CCA to 100 per cent, it allowed business to write off or depreciate the entirety of their annual investments for the next five years.
Despite the move by the U.S. to do this, Canada’s CCA rates have remained unchanged; continuing to lie between 12 and 50 per cent.
“This slows investments by Canadian firms and multinationals operating in Canada and hinders Canada’s competitiveness and ability to attract foreign investments. Canadian firms are at risk. On a size-adjusted basis, Canadian firms invest half the level ICT that gets invested in the U.S. The result is a sizable lag in productivity,” ITAC says in its submission.
Two other fields that Leduc points out that Canada should be capitalizing on in regards to innovation are smart cities and our healthcare system.
Despite the recent controversy over the smart city project between Waterfront Toronto and Sidewalk Labs, Leduc says that an increase in transparency in the development process, which was a major issue with the Sidewalk Toronto project, will help Canadians embrace this new wave of technology.
“I don’t think people would be as concerned about the potential privacy ramifications if there was increased consultation and increased transparency about how we’re collecting, what we’re collecting, and how we’re going to leverage the data,” Leduc said.
By keeping the public informed and giving them the opportunity to understand the benefits as well as fully comprehend any data privacy concerns, Leduc says that Canadian citizens will be much more open to the concept and will get excited for the capacity “to provide better city-based services and digital services.”
Despite this call for advancements in smart cities, Canada has already made great strides in this field in recent history. Infrastructure Canada is currently running a Smart Cities Challenge, which has a $50 million CAD prize on the line, with the winner to be announced this spring. But the department believes the benefits of this program will go beyond the prize money; as they have already seen great strides by communities as they put in their own research and development into smart cities tech in preparation for this contest.
Along with increased city-based services, ITAC sees a great opportunity for Canada to improve its health care system through innovation in the technology sector.
While the ability to provide a free health care system to its citizens is nothing to sneeze at, it often lags behind in quality compared to some private health care systems, like the U.S.
This is precisely where investments in technologies could help bridge that gap, says Leduc.
“The health industry is going to go through a sea change,” Leduc said. “What is going to happen is there’s going to be a fairly significant shift to what we call precision health care where we’re using your data – whether it’s your family medical history, your medical history and pharmaceutical history, your genetic and DNA information – to provide you detailed and precise healthcare.”
To do so, Leduc says that Canada must increase its capacity to leverage data as well as share that data not only between regional health units, but across the country.
Despite the funds it will require to make these changes work, Leduc actually sees an opportunity for cost savings in the long run through the kind of preventative care ITAC believes could be created with this new system.
“It’s more preventative than it is curing sick and injured,” says Leduc. “It’s not that we’re going to stop doing the sick and injured side. But we could decrease the amount of sick and injured by doing kind of a preventative maintenance side. So I mean, there the cost savings opportunities are significant.”
ITBusiness.ca will be following up once the budget is released on March 19, including reaction from Leduc after the lock-in on Parliament Hill.