Federal budget addresses tip of the iceberg

Expectations that last month’s federal budget would help Canada attract and retain knowledge-based workers fell a little short of the mark for many industry organizations.

Ottawa-based CATA Alliance recently polled about 2,700 high-tech executives across Canada on their opinions of the budget. According to John Reid, president of CATA Alliance, the federal government got a mixed review.

He said the budget made an investment in the country overall, which is crucial for keeping skilled workers in Canada, and was especially positive about the additional funds going to technology research, Smart Communities and the health-care system.

However, Reid feels the government is sending the IT community a mixed message.

“Where the shortfall and contradiction comes in is when you start looking hard at comparing the take-home pay between Canada and the U.S. It’s got to the point now where the gap is significant. And that is enough to motivate people to look for work elsewhere,” he said.

Legislation is needed to change taxes and option plans, because so far no dent has been made in the tax differentials between Canada and the United States.

“The objective is to bring us into closer parity with the U.S. It’s not like there is one formula here — it’s looking at the whole range of cost features of the economy and making some adjustments.”

Reid said the day after the budget was made public, Finance Minister Paul Martin announced 20 years of tax cuts, which makes him believe that the message had been heard. “Even (John) Manley agreed, when he was interviewed, that the differences are too great.”

Despite this, Keith Parsonage, acting director general of information and communications technologies at Industry Canada in Ottawa, said he thinks the budget will significantly improve competitive performance in the knowledge-based economy.

“All tax-payers will say they want to pay less tax. That’s a given. The challenge I think the government has is balancing a wide range of initiatives across the spectrum,” he said. “The industry is obviously saying it’s not enough. But it’s never enough.”

Peter Simeoni, a principal in the Office of the Auditor General of Canada in Ottawa and author of the Auditor General’s report to parliament, The Federal Science and Technology Strategy: Need for Government to Recommit Itself, said new technologies are not the responsibility of government alone.

“Innovation doesn’t just happen with some individual in a laboratory. The reality is it happens through interactions between institutions like government labs, universities and business,” he said.

“None of us should forget that innovation is a business idea, and the government can simply assist that — or get in the way, maybe — but it isn’t the one who is going to be doing it.”

Jim Carroll, president of Toronto-based J.A. Carroll Consulting and author of Surviving the Information Age, is optimistic that parliament is making a strong start with this budget.

“I give them credit for beginning to realize what the heck’s going on here,” he said. “In Canada, we have people who ‘get’ technology and we have people that don’t recognize how important it is. So let’s put all our efforts and our money into helping them understand why this is so damned important and what it can accomplish for us.”

Brian O’Higgins, executive vice-president and chief technology officer at Ottawa-based Entrust Technologies Ltd., was particularly impressed by the technology partnership programs that were announced in the budget.

“Entrust got started through a very similar initiative. We worked through grants programs to help fund it, and basically gave the money back in the form of product discounts on initial sales,” he said. “So I’m a real fan of all this stuff.”

But John de la Mothe, associate professor of science and government at the University of Ottawa and co-director of PRIME (The Program of Research on International Management and Economy), was disappointed that the budget did not address more social issues.

“The social sciences and humanities are so important to closing the innovation gap and making our IT sector competitive, and yet they are always the low man on the totem pole because politicians think that social science research isn’t really research, or that it is cheap,” he said.

“I don’t think that it’s a thing to be proud of that last year we restored the granting councils back to 1994 levels. That’s five years of lost time. Research people have left in that time and ideas couldn’t be pursued because we didn’t have the funding. So celebrating that we’ve only lost five years is kind of dumb.”