Ontario budget fails IT: experts

At least one industry group says there’s little in Ontario’s budget to help bolster the province’s high-tech sector. Outside of health care and education, the budget, the first handed down by the Liberals since coming to power, is notable for its overall freeze on spending.

And in a province that’s home to North America’s third-largest concentration of IT companies in Toronto alone, not counting the “Silicon Valley North” of Ottawa and the tech-heavy region near the University of Waterloo, the industry is playing close attention.

David Paterson, spokesperson for CATA Alliance in Ottawa, which represents Canada’s technology businesses, said even those dollars that have been earmarked for technology, mostly for education, are being misspent.

But the most worrisome element, says CATA, is Ontario’s decision to re-introduce health care premiums, and its refusal to axe the three per cent capital tax for businesses, which Paterson calls “the most destructive tax you can possibly have,” given that it applies to all companies regardless of their financial health. At present, it’s not set to be phased out until 2012. That’s nowhere near soon enough, Paterson said. “The high tech industry works in Web years of three to four months…so you’re looking at taking (the equivalent of) 24 to 32 years. It’s irrelevant.”

CATA points to B.C. and Alberta, where no such tax exists, as chief competitors to Ontario’s high-tech sector. Though companies rarely discuss their location choice, “I’ve been told privately by large companies in the IT business that they pay close attention to (tax) rates,” Paterson said.

Although roughly $140 million was set aside for post-secondary schools under the banner of the Ontario Research Commercialization Program, which helps universities and hospitals take advantage of research with mainstream product potential, “our reaction to the budget was one of general disappointment,” said Michael Doucet, president of the Ontario Confederation of University Faculties Association, which represents 12,000 of the province’s faculty members.

However, Doucet noted that university research funding comes largely from the federal government, and that the province is a relatively small player. “But anything helps,” he said.

Also, the announced appointment of Bob Rae, former NDP premier of Ontario, to review Ontario’s university funding system comes as good news, said Arnice Cadieux, executive director of public affairs at the Council of Ontario Universities in Toronto. “Higher education is key to the economic and competitive well being of the economy.”

The Council would like to see per-student funding brought to the national average.

Although the funds are welcome, Paterson said the $27 million earmarked to commercialize research is being misdirected to research and development. Instead, the money should go to bolster the marketing and business development of resulting products.

“This is the area that is universally recognized as the greatest weakness of the Canadian high-tech industry,” Paterson said.

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Jim Love, Chief Content Officer, IT World Canada

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