Liberals’ Innovation budget gets seal of approval from the tech industry

The 2017 Canadian federal budget was touted as an innovation-first agenda, and in the opinion of many tech industry leaders, the Liberal government has kept its word.

Finance minister Bill Morneau unveiled the budget in a rowdy House of Commons on Mar. 22, and innovation is a clear top priority.

Supercluster and startup investment

The government announced that $950 million over five years will go towards supporting business-led “superclusters.” or key economic sectors for investment “where Canada will lead the way.” Minister Morneau identified six areas of focus: digital, clean technology, agri-food, advanced manufacturing, bio-sciences, and clean resources.

Additionally, there will be $400 million over three years for a new Venture Capital Catalyst initiative, which will be made available through the Business Development Bank, that will focus on increasing late-stage funding for startups and entrepreneurs in Canada to them to market-ready levels.

“There are a lot of great things in this budget as it relates to technology and entrepreneurship, and I think the $400 million to entrepreneurs and young companies is a positive start,” says Anthony Lipschitz, the chief strategy officer at Thinking Capital, a Montreal-based small business loans company. “As an entrepreneur myself, you always hope for more, but it’s encouraging that these kinds of dollars are being made available.”

Echoing this thought is Mark Stevenson, vice president of finance at Kitchener, Ont.-based Igloo Software, who not only approves of the innovation-focused budget, but commends the government for its cooperation with industry CEOs in developing such a document.

“The late-stage funding will help companies get access to capital and talent, which is really what companies like Igloo need to grow and move to the next level,” he explains. “One thing that is really great about this budget is that it’s moving from being just policy talk to real outcomes, thanks to the dialogue the federal government has had with the tech industry. It’s encouraging to see how they have worked with tech CEOs to build something we’re happy with.”

Carl Rodrigues, the CEO of SOTI Inc., an enterprise mobility management company based in Toronto, points out that, overall, the new funding for superclusters and startups is great news, but it should come with strings attached.

“Hopefully these investments will be going to Canadian companies that hire Canadians and really are planning on staying 100 per cent Canadian,” he says. “Too often in Canada we invest in companies that are either already partly foreign owned or Canadian companies that sell out very quickly, which is really wasted funding in my opinion. The capital needs to come with some strings attached for keeping these companies Canadian owned, in Canada, and hiring Canadian employees.”

Innovation Canada and fast-tracking talent

The government has also committed to establishing a new agency, Innovation Canada, which comes with a mandate of researching and measuring skills development. Launching in 2018-2019, the platform will coordinate and simplify support available to Canadian entrepreneurs.

Finance Minister Bill Morneau.

“In time, Innovation Canada will serve as a one-stop-shop for Canada’s innovators,” Minister Morneau explains in his Parliament budget speech.

Robert Watson, president and CEO of Information technology Association of Canada (ITAC), says that he is “happy to see that the Government will create Innovation Canada to reduce confusion and make it easier for innovators to understand and access government-led innovation support programs. This platform will look at six innovation opportunities and we are very pleased to see digital industries is a part of it.”

Addressing the country’s need for talent in the IT sector, the federal Liberals are putting forth $7.8 million to fund the fast-track visa process within the Global Skills Strategy (GSS) to bring in talent from foreign countries. They also put an emphasis on training domestic talent and starting young: $50 million over two years has been dedicated to learning how to code programs for children.

Ben Bergen, executive director of the Council of Canadian Innovators (CCI), says this GSS investment “shows the government is listening to the concerns of Canadian CEOs facing talent shortages.

“CCI considers the $7.8 million in dedicated funding Ottawa has put behind the new Global Talent Stream a sign that they are aware this new process will be heavily subscribed to by tech companies and will require the staffing resources needed to succeed,” he explains in a press release on Mar. 22. “By granting greater access to highly-skilled talent, the federal government is providing high-growth companies with the jet fuel they need to reach new global heights.”

John Reid, president and CEO of the Canadian Advanced Technology Alliance (CATA Alliance), gives the budget a “thumbs up,” given the limited room and resources the government had to invest and make changes.

“We have pockets across Canada with huge skills shortages and the government has signaled that they’re going to be one of the biggest investors in changing that, which is very encouraging,” he says. “When you add up the kids coding program investments, and funding for super clusters and startups, they could make a real difference. We need to create an innovation economy, and you can only do that by having people who meet these new skills challenges for jobs of the future.”

SOTI’s Rodrigues calls the $50 million investment in children’s coding programs a “symbolic gesture.”

“It’s definitely a good start, but there are lots of kids across Canada,” he says. “It’s a nice symbolic gesture from the government recognizing the importance of kids understanding and learning about technology and coding, which will be key for the future and especially their future, but there’s probably more money needed long term.”

Capital gains stay the same and other key points

The federal government confirmed that no changes were made to the capital gains tax or stock options, which many tech market players view as a relief.

“There was a lot of concern that the government would touch the capital gains and stock options, which would affect how recruitment works and the cost of doing business in Canada, but it looks like they are waiting to see what our southern neighbours do first,” CATA Alliance’s Reid explains.

Other points made in the budget include $125 million for developing an artificial intelligence strategy, and $50 million towards government procurement from Canadian innovators and companies.

Cyber security

On cyber security, the budget includes $1.37 million for the fiscal year so Public Safety Canada can continue support for Regional Resilience Assessment Program and the Virtual Risk Analysis Cell.

The resilience assessment program conducts free cyber and physical threat assessments for systems and networks that are essential to the security, public health and safety and economy of the country such as electric and water utilities, financial institutions, railways, and airports.

Practitioners uses three instruments:

  • the Critical Infrastructure Resilience Tool (CIRT): an on-site, survey-based tool that measures the resilience and protective measures of a facility;
  • the Critical Infrastructure Multimedia Tool (CIMT): a multi-platform software tool that generates an interactive visual guide of a critical infrastructure facility, featuring spherical photography;
  • and the Canadian Cyber Resilience Review (CCRR): an on-site, survey-based tool that measures the cyber security posture of an organization.

According to a government website, the results from the assessments are intended to help owners and operators to identify dependencies and vulnerabilities within their organization. The site assessments also identify a series of optional cost-effective measures to help owners and operators mitigate risks and improve their ability to respond to and recover from disruptions.

The program has been available for several years. It runs in parallel with a similar program in the U.S. to enhance North American-wide critical infrastructure resilience.

The Virtual Risk Analysis Cell (VRAC) creates models and impact assessments for building resilience in critical infrastructure, and provides enhanced information sharing for critical infrastructure operators through an online gateway.

A Finance department spokesman said the funding will be used to maintain operations of both programs, including conducting assessments in various facilities across Canada and supporting ongoing sharing of information among stakeholders on critical infrastructure best practices.  Some of the $1.37 million will be used for hardware and software purchases, primarily for the acquisition of geographic information system (GIS) software as well as detailed economic and statistical information. This data is used in the VRAC modelling outputs and analytic deliverables.

More comments

There will be more comments and reaction from the tech industry to come. Check back here later today.

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Jim Love, Chief Content Officer, IT World Canada

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Mandy Kovacs
Mandy Kovacs
Mandy is a lineup editor at CTV News. A former staffer at IT World Canada, she's now contributing as a part-time podcast host on Hashtag Trending. She is a Carleton University journalism graduate with extensive experience in the B2B market. When not writing about tech, you can find her active on Twitter following political news and sports, and preparing for her future as a cat lady.

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