Our priorities for Quebec’s Pre-Election Budget

By Pierre-Philippe Lortie, CCI Quebec director of government affairs

On March 22nd, the Quebec government will present their final budget ahead of the election scheduled for October. Over the course of their mandate, the CAQ government has been actively involved in promoting innovation and economic development, and we have seen some positive steps from Premier Legault and his team.

However, there is more that the Quebec government could be doing to ensure that the province’s economy is being driven by homegrown Quebec companies, especially in our technology sector. As we look ahead the budget, CCI has submitted recommendations for Finance Minister Eric Girard which would better support the growth of companies headquartered in Quebec.

With an election on the horizon, now is the time to show taxpayers that government funding is delivering results. For every dollar invested in tax support for the tech sector, the Government of Quebec must ensure that it maximizes the benefits. It’s not about spending less; it’s about spending better. On March 22, we hope to see real support for scale-up firms with deep roots in Quebec. Here are three things CCI will be looking for when Finance Minister Éric Girard tables his fourth budget:

1. Modernize the provincial tax credits to better support Quebec-headquartered companies

The Multimedia Title Production Tax Credit and the E-Business Tax Credit give refundable tax credits (effectively cash grants) targeting specific industries, namely gaming and ICT. These credits can be as high as 37.5% of labor. Currently, the programs provide the same amount of benefit to both foreign multinationals as they do to locally owned startups.

However, a multinational corporation headquartered overseas does not provide the same economic benefit to our province as a tech company headquartered in Montreal or Quebec City. When we subsidize the foreign tech giants, valuable intellectual property and profits leave the province. This creates an economic imbalance, in that the government is funding activities that ultimately lead to higher economic benefit outside of Quebec, rather than focusing their investments on local startups.

We are asking Minister Girard to consider two options: First, make the tax credits for foreign multinationals non-refundable, leaving the refundable program for locally owned startups. Alternatively, the government could increase the rate of the two tax credits (CDAE and CTMM) for locally owned start-ups and scale-ups, while maintaining the same rate for foreign multinational, so as to provide more active support to the local community.

2. Increasing the number of workers to expand the labour pool for high-growth companies in the ICT sector

Quebec’s skilled talent shortage is slowing the province’s economic growth. Scale-up technology companies need to hire more workers to fuel their growth, but they simply cannot find enough qualified people. When CCI surveyed our members in early 2022, we heard that wage inflation among highly skilled professionals is 20% in the past year.

The solution to this situation is simple: We need more workers. We are very pleased with the measures presented in the November 2021 Economic Update, including those allocating more than $1.1 billion over five years to upgrade and reskill skills and to train and reskill 50,000 workers over five years in the ICT sector. However, reskilling is not enough. The government needs to increase the number of skilled immigrants to Quebec to help ease the pressing labour shortage in the technology and innovation economy.

3. Promote local content in government procurement

The most valuable support the government can give to a business is a purchase order, as the sale of products and services to the government acts as a major validator that allows a high-growth company to secure other contracts with other large customers. If the Quebec government wants the local tech sector to succeed, the best thing we can do is to buy local.

We asked the government to modernize its government procurement strategy to increase opportunities for Quebec suppliers to sell to the government. We have seen encouraging signs on this front. Quebec’s procurement strategy released in February was a major step in the right direction. As the government implements this strategy, the ICT sector, including cloud computing and cybersecurity, should be a strategic priority area for the government.

Budget 2022 is a prime opportunity for the government to introduce a new policy vision that will position Quebec for the 21st century knowledge-based economy. On behalf of innovators from across this province, we’re eagerly awaiting to see what Premier Legault, and Minister Girard deliver!

If you’re interested in learning more about CCI’s work in Quebec, contact Pierre-Philippe Lortie at plortie@canadianinnovators.org.