Innovative Canadian firms looking to scale up their businesses are looking for next week’s federal budget to provide guidance on a national data strategy, commit to recruiting top talent from abroad, and open up new ways to grow by changing tax policies and updating procurement processes.
When the Liberals release the federal budget March 19, it will set the landscape for the policy issues they’ll be taking to the polls this October. In previous budgets, the majority government has both won praise and garnered criticism from those most invested in Canada’s technology sector.
Its Global Skills Strategy was given the thumbs up for cutting through red tape and getting high-skill workers into Canada more quickly and its boosted spending on cyber security was lauded as a wise investment. On the other hand, its changes to the Scientific Research and Experimental Development (SR&ED) tax incentives were slammed for taking billions out of innovation funding. And in other areas, such as updates to federal privacy law and a national data strategy, the government has been accused of dragging its feet.
Now, attention is on what line items the government will drop in the 2019 document.
“It’s important that we have frameworks for Canadian companies to succeed and grow,” says Ben Bergen, executive director of the Council of Canadian Innovators (CCI).
IT World Canada spoke with Bergen and Mike Wessinger, founder and CEO of Toronto-based electronic health records startup PointClickCare, also a member of CCI, about what they’re looking for in the budget.
National data strategy
CCI has been asking for a federal data strategy since 2017, Bergen says. While progress has been made on that front, the group of entrepreneurs is looking for a concrete policy.
In January, the clerk of the Privy Council released a roadmap report for the federal public service. It states the goal of having all departments and agencies organized with a data strategy by September 2019. The government conducted consultations on a national data strategy from June to October of last year.
“It’s gone into the dark in terms of what the government will be putting forward,” Bergen says.
For PointClickCare, a firm dealing with sensitive personal information in the form of 2.5 million international patient records every day, Wessinger says Canada needs to catch up to where the U.S. is on a data strategy.
“Having no data strategy leaves too much uncertainty for us,” he says. “More clarity on knowing what we could have trans-border and what would reside locally would be helpful.”
Also connected to the data strategy is privacy law, and whether the government will be updating the Personal Information Protection and Electronic Documents Act (PIPEDA) to standards recently rolled out in Europe. PointClickCare would like to aggregate non-identifiable data and combine it with other data sets as a way of conducting “virtual clinical trials,” Wessinger says. But it needs guidance from the government first.
A national data strategy may not get a line item in the budget, but the release of the document ahead of the election may be a good time for the government to make its vision clear.
Global Skills Strategy commitment
In 2017, the Liberals launched its Global Skills Strategy, a key component of which reduced the time it took to migrate high-skilled talent into the country to help fast-growing companies. Visas are issued to qualifying applicants within two weeks, fast-tracking a process that can take months.
“We’ve asked for it to be made permanent based on its overwhelming success,” Bergen says. “We have examples of firms that brought in an amazing executive and then built teams around them.”
In June 2018, the government said it received 10,000 work permit applications to the program between June 2017 and March 2018, with 96 per cent approved. As of May 2018, it had referred nearly 100 companies to the dedicated service channel designed to help with immigration. It pointed to Toronto-based FinTech firm Wave as an example for using the program, with CEO Kirk Simpsons saying in a statement he’d hired three people through it.
PointClickCare wants to use the program in the near future, Wessinger says. It’s looking to establish its business south of the border.
“We need experts on Medicaid and Medicare and it’s high likelihood they are not Canadian,” he says. “The global skills program has been tremendously helpful there, it just needs to be made permanent.”
The firm has already recruited two executives out of Boston – Paul Rybecky, its chief financial officer, and Bill McQuaide, its chief product officer.
“There was no pool in Canada I could draw on,” Wessinger says. “Having the ability to hire them to join our team was critical.”
The alternative would have been moving its headquarters to the U.S., or at least grow a major office south of the border.
So CCI will be looking for a line item committing more funding to the Global Skills Strategy in the budget.
Improving SR&ED and IRAP
Canadian government officials have stated interest in scaling up homegrown firms to be raking in revenue in the $100 million or even $1 billion range, but the tax tools they offer to help reclaim investment in R&D are missing the mark, Bergen says.
The two major federal tax incentive programs are the Industrial Research Assistance Program (IRAP), which requires firms have less than 500 employees. Similarly, SR&ED is divvying up incentives to smaller businesses.
In the Digital Industries Economic Strategy Table report released last fall, several executives from digital firms recommended to the government that SR&ED be overhauled to also include commercialization in addition to research. It asked the government to create a “hypergrowth passport program” for digital firms seeing 40 per cent year over year growth above $1 million.
“Federal programs like SR&ED and IRAP need to be reimagined,” Bergen agrees.
Procurement: Buy from local firms
The lack of opportunities for Canadian firms to sell their services to their own government has long been a gripe of the tech industry. Some work has been done in this area recently, Bergen acknowledges, but more improvements need to be made.
Government departments need to make the RFP process more open and inclusive, Bergen says. “As opposed to having it written in a way that’s siloed and processed in a way that doesn’t understand the eco-system.”
Winning a government contract is not only a nice shot of revenue for local firms, but serves as a good basis for attracting customers abroad. Being able to point to your own government on your client list helps build credibility.
IT World Canada will be following up on the federal budget as soon as it’s released March 19, including an interview with Bergen after he exits the budget lock-up room on Parliament Hill.
