What the new budget could mean for IT managers

Federal Finance Minister Jim Flaherty announced this week the new budget, a $40 billion stimulus package should also give the IT sector a jolt in the arm.

Over $1 billion will go toward tech-based projects and initiatives, including $750 million to help build research infrastructure for the Canada Foundation for innovation; $225 million to expanding broadband coverage; and $500 million to Canada Health Infoway to help drive the use of electronic health records.

The grouping of these projects under infrastructure shows that IT is continuing on its way to being seen as the bedrock for progress and innovation, however slowly, said Bernard Courtois, president of the Information Technology Association of Canada (ITAC).

The one sore spot about the new budget shared by the Information and Communication Technology Council (ICTC) and ITAC was the lack of a truly strong, explicit focus on IT’s power to help companies—and the country—out of financial crisis. “The recognition of the position IT holds in this country would be good, but you have to take what you can get,” said ICTC president Paul Swinwood.

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Small businesses will also get better tax breaks, such as a 100 per cent capital cost allowance rate for computers bought between January 27, 2009 and February 1, 2011, and the reduced rate of 11 per cent is now applicable to the first $500,000 (over the previous amount of $400,000). Maximum loan amounts from the Small Business Financing Program have been increased to $350,000.

The National Research Council Industrial Research Assistance Program will be getting $200 million to craft programs to aid small and medium-sized businesses. Those just starting out will also get a boost, courtesy of the $10 million being given to the Canadian Youth Business Foundation.

“We’re very happy with the budget in that it the government is spending on the future, not just upholding our troubled industry,” said Courtois. “They’re recognizing twenty-first century infrastructure. Instead of just building a bridge or something, they’re working on things like expanding broadband and e-health records.” Courtois also believes that provinces and the private sector will most likely match these contributions to the broadband and electronic health records industry.

IT is a sound investment, according to a Canadian Advanced Technology Alliance (CATA) release, and should receive even more funding, citing as reasons its fast growth, large sector size, resiliency during recession, productivity value, global spread, contribution to competitiveness on the world stage, and the ROI for government.

“With all these advantages, and the compelling need for the right level of spending, we will be creating human assets that will have the most to do with our global competitiveness five years down the line,” said CATA president John Reid.

“We can demonstrate that putting the infrastructure investment into knowledge-intensive services sector jobs will help Canada most, by driving job creation, exports and long term sustainable competitiveness. Only a big vision, with the right level of commitment, will work at this time.”

Swinwood said that, while he was “quite pleased” with the results, “the devil is in the details.” He said, “They’re providing $1.9 billion for upgrading of workers—what we have to figure out now is how to account for how that money is distributed. If a company is becoming more active or about to bring a product to market, would that allow them more access to these funds?”

Swinwood hopes to hear more specifics on the restrictions and how much of the allotment will go toward those wishing to either get more university-level training, or companies wanting to hire more university-trained professionals.

According to the CATA release, $60 billion is needed to stay on par with the United States when it comes to job investment and competitiveness.

In the release, CATA executive vice-president Barry Gander said, “”The Americans will be investing in jobs for the future and in those sectors which are largely knowledge-based, with leverage to enhance productivity. We cannot let the Americans fast-forward like this, without a response. Here, Canada is presented with a huge opportunity: we can also transform our economy by judicious but adequate spending on jobs for the future.”

The small business and economy stimulus aspects of the new budget could also bode well for IT services companies, according to Swinwood. He said, “This means a lot of good things for our service providers. With that new infrastructure comes development—let’s say you develop a new pipeline. You need schedules, services, and all that comes from IT.”

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Jim Love, Chief Content Officer, IT World Canada

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