CCI’s Pre-Budget Presentation to the FINA Committee
Today, CCI Vice President of Strategy and Advocacy Dana O’Born presented pre-budget recommendations to the House of Commons Standing Committee on Finance.
The following is the prepared statement Dana delivered on behalf of our 150 member companies, scale-up technology companies headquartered here in Canada:
Good afternoon Mr. Chair, and members of the Standing Committee on Finance. Thank you for the opportunity to present today on the importance of Budget 2022 for Canada’s innovation sector.
My name is Dana O’Born, and I am appearing on behalf of the Council of Canadian Innovators. We are a national business council representing 150 of Canada’s fastest-growing companies. All our member companies are headquartered here in Canada, employ north of 52,000 employees, and are market leaders in the sectors of health, clean, and financial technologies, cybersecurity and more.
Addressing Canada’s post-pandemic talent crisis, and improving Canada’s innovation outputs in research, development, and commercialization, are two priorities from our pre-budget submission that I will speak to today.
First, I’d like to brief you on the pressures facing domestic technology companies in Canada.
From governments to businesses, community organizations to individuals, so many of us have embraced new digital tools in the past two years.
Today, more than ever, Canadians shop, bank, study and connect online, and this increased demand for digital services actually helped fuel an economic rebound in the ICT sector after the dark early months of the pandemic.
A recent report from the ICTC estimated that by 2025, Canada’s digital economy will employ 2.26 million Canadians — 11% of all employment in the country — but this will require an additional 250,000 jobs to be created over the next 3 years.
I’m here today to say that CCI’s members and Canada’s scale-up companies are committed to creating many of the new jobs required, but they face a serious talent supply issue impacting the growth of this important sector.
Nearly every conversation I have with our member CEOs tends to deal with workforce issues in some way. Scale-up companies can’t JUST maintain their workforce: they need to grow — rapidly — and adding the best and brightest talent remains a constant priority.
A recent survey of CCI’s members found that most companies are planning to increase their workforces by 20% in just this year alone. That’s around 10,000 more workers added to our companies by the end of this year.
For years, the shortage of skilled talent has been a driving concern for CCI, but the recent shift to remote work has only exacerbated the problem.
Canada’s skilled workers are now part of a global labour market, where geography is no longer as important as it once was, and companies from around the world compete for the same pool of highly skilled talent as local companies. Technology companies are at the bleeding edge of this transformation.
Our domestic innovators are finding themselves in a fierce competition with global companies who can offer significantly higher salaries for the same crop of high-skilled workers.
This is driving up wage inflation across our companies, with some finding that wage expectations have increased by 25% over the past year.
To meet the talent needs of our country’s fastest growing companies, we need to increase the generation, attraction, and retention of skilled workers for Canadian firms.
CCI has many recommendations on how to address these challenges, including improvements to our immigration system and investments into upskilling and retraining programs. I look forward to engaging with you on these ideas today.
I’d also like to bring to your attention Canada’s SR&ED program and its need for reform to help spur innovation and generate a greater return-on-investment for Canada.
This tax credit is the cornerstone of Canada’s innovation funding, and it is used by the overwhelming majority of CCI members.
We have been calling for SR&ED reform for years. During last year’s federal election, we were encouraged to see that leading political parties heard our calls and included plans to reform SR&ED in their campaign platforms.
We continue to be concerned that as the government promotes an innovation agenda, the SR&ED program does not allow costs related to the development and protection of intellectual property to be eligible for the tax credit.
IP is arguably the most valuable commodity in the innovation economy, and SR&ED badly lacks an IP-focus.
In our budget submission, we also ask the government to stop giving SR&ED incentives to foreign companies who take their IP outside of Canada. The SR&ED tax incentive, and particularly its refundable portion, delivers material and long-term value to Canada ONLY IF the intellectual property flowing from the investment stays here.
Without an IP strategy for SR&ED, Canada is doing philanthropy, not innovation, with this program.
Aside from the need to channel the tax credit regime towards the domestic tech sector, we also need to see more tools to protect ideas as they commercialize — such as patent boxes — be deployed.
I appreciate the opportunity to be here today to present on behalf of Canada’s high-growth tech leaders.
I hope you’ll take the time to read CCI’s full budget submission, developed in deep consultation with our members.
I also urge you to get to know the innovative companies in your own ridings and understand the challenges facing them in their pursuit of scale.
Without a strong base of these homegrown, high-growth companies in Canada, we will not be able to generate the economic growth and public wealth necessary to pay for the public services that Canadians depend upon.
Thank you and I look forward to your questions.
To get in touch with Dana O’Born, email email@example.com.