Drastic steps need to be taken to help Canadian start-ups

Drastic steps need to be taken to help Canadian start-ups

Published: November 16th, 2000

In my last column I expounded on an idea to improve the lot of Canadian “high-tech” entrepreneurs (“The Government…,” CWC, Nov. 3, 2000, page 50.)

My suggestion was to have a government-sponsored facility that could work at no cost to entrepreneurs. Such a facility would offer the essentials such as telephones and office logistics, together with a very strong advisory group of hardened marketers.

In addition, the government would persuade (with bared teeth) Canadian companies to use their marketing channels to promote the products from this entrepreneurial park.

The problem with this idea is that it takes money. To point out that billions of dollars have already been wasted in job creation (no doubt more will be wasted in the future) really is not even worth pursuing, as such funding is more for vote generation than for Canadian economic development.

So, one has to look at a new source, one that does not just pilfer the treasury. A most obvious approach is to look at parasitic industries. These are industries that contribute nothing to the development of the economy and just lean on those actually producing goods that compete in the world economy.

One industry that springs to mind is advertising.

I doubt anyone would disagree that there is too much advertising. It insults our intelligence on TV, it fills our blue boxes with paper, it changes newspapers into leaflet distribution mechanisms and it cheapens towns and the countryside with billboards. (If the trend continues it will not be long before we have advertising slogans on condoms).

If all advertising were cut in half it would have no effect as everyone would be on the same playing field. Consider Brewery A that increases its market share by one per cent with a $10 million advertising campaign. Brewery B is not amused and launches its $15 million onslaught to recapture its lost market share. The result is status quo except that $25 million has been wasted.

It would have been better had that $25 million been spent on financing the development of better garbage disposal technologies or more efficient water purification plants.

So, suppose the government did not allow companies to deduct advertising expenditures as a cost of doing business. This would mean they would have to pay tax on such expenses and the taxes collected would go to – yes, you guessed it – entrepreneurial investments.

Assuming that the government did not siphon off nearly all the funds to pay for a gazillion civil servants to administer the fund we would see many improvements. Not only would our entrepreneurs get help, but TV commercials would be reduced (hurrah!), and our blue boxes will be lighter, and our towns and cities would look prettier – and dozens of advertising “ideas” people might go to high-tech think tanks.

But one has to consider that such a method would not meet with the approval of the SUV-driving and Beanie-Baby-collecting of mentality, so here are some other suggestions.

How about a pre-emptive strike on the anti-Canadian growth system – NAFTA? We could impose a per cent tax on any goods purchased from offshore manufacturers that had a Canadian manufactured equivalent. The money would pour in.

Or, if we are afraid of NAFTA, perhaps a tax on anything made in China? Again the revenue would be enormous. Of course, on the other hand, we could just export more timber, potash, hydropower, earth and water.

To some, my suggestions in this and the previous column would appear somewhat ludicrous, as it would stir up all sorts of hornet’s nests, to say nothing of adverts proclaiming the benefits of saturation advertising.

But someone, somewhere, must have a bright idea. It will not come from politicians, as they are too intent on promises to ensure re-election.

The Canadian industry seems a poor bet, and we certainly will not get help from the numerous American subsidiaries (hello Bill) who sit comfortably in Canadian offices.

So, I suppose the only people who may get an idea would be the Canadian entrepreneurs. Excuse me, I have to go, I think this is where I came in – and remember – nothing comes out of nothing.