What we saw in the 2021 federal budget
Today Finance Minister Chrystia Freeland tabled the 2021 federal budget, an enormous document, and the first budget in two years.
In response, Council of Canadian Innovators executive director Benjamin Bergen issued the following statement, on behalf of more than 140 of Canada’s fastest-growing technology-intensive companies:
Budget Reaction
“Canada is still very much in the thick of the fight against COVID-19, but there is never a bad time to create a prosperity strategy and a roadmap for generation of new wealth. As vaccinations ramp up and our economy begins to recover, it will be important for the federal government to work hand-in-glove with the private sector to adjust and target their recovery policies. Ahead of today’s budget, CCI had called on the federal government to develop a post-pandemic prosperity plan that addresses today’s economic challenges and positions our strategic sectors as engines of our economic recovery.
“Canadian industry competes globally in IP and data-intensive markets, and we had urged the government to develop strategies that position our fastest-growing domestic tech firms to have easier access to talent, capital and customers. On behalf of more than 140 of Canada’s fastest growing companies, our CEOs are always ready to lend their expertise and help the government drive growth and prosperity for all Canadians.”
Funding measures we were pleased to see:
· Increased funding of $7.2B over 7 years to the Strategic Innovation Fund to support high-growth businesses in accessing the capital they need to scale globally, including an additional $5B for the Net Zero Accelerator to support cleantech companies, and a $1B focus on growing Canada’s healthtech and biosciences companies;
· $2.6B over 4 years for BDC to help SMEs with technology adoption;
· $553.1M to establish a new Regional Development Agency for British Columbia to better support companies headquartered on Canada’s west coast;
· $500 million over five years, starting in 2021–22, and $100 million per year ongoing, to NRC’s Industrial Research Assistance Program (IRAP);
· $450M to the Venture Capital Catalyst Initiative over 5 years, including $50M focus on healthtech and biosciences companies.
Talent
“The government’s major investment in retraining Canada’s workforce through and transitioning workers for the knowledge economy will help address Canada’s skilled labour gaps and increase the talent pool for high-growth firms. The government’s funding for reskilling programs will help directly, but the investment in child care will also help by allowing more parents, and women in particular, to remain in the workforce.”
Digital Service Tax
“Our members were pleased to see the government move forward with a digital service tax, which will help level the playing field and force large foreign technology companies to finally pay their fair share and compete with Canadian businesses on an even playing field. Foreign digital giants often pay no tax on the revenues they generate from Canadians while having access to taxpayer funded programs and infrastructure. While no single tax is a panacea to Canada’s lagging innovation outputs, this new tax will begin to address Canada’s revenue challenges. We continue to call on Ottawa to take a strategic approach to managing the digital economy.”
Intellectual Property Investments
“This budget was a historic opportunity for the government to position Canada for success in the 21st century knowledge-based economy driven by intangible assets like intellectual property, algorithms and data. The government’s focus on IP literacy for high-growth companies and increasing their access to IP experts is a very smart move for positioning Canada for the digital economy. There is a global race to own valuable Intellectual property and control dataflows and countries around the world are strategically supporting their industries so they can benefit from innovative new ideas and technologies. We continue to think that reforms to SR&ED regarding IP expenses and measures like a Patent Box should be moved forward by the federal government to support Canadian companies to focus on generating and retaining intellectual property in Canada.”
Cleantech Investments
“We were pleased to see the government’s emphasis on supporting clean technology innovators as part of a green recovery. A strategic economic renewal must be built through high-growth, domestic technology firms who have already demonstrated the ability to commercialize their ideas and scale globally. These companies are engines for jobs and prosperity, and they have an enormous opportunity to scale up globally and generate wealth here at home while helping Canada achieve its climate goals.”
Open Banking?
“We are disappointed by the lack of commitment for financial innovation and a framework for open banking in Canada, especially after a round of industry consultations and promising signals from the government. Canada is home to some of the world’s most promising fintech companies, and Ottawa can support them by introducing regulations that allow for increased competition and delivery of innovative and affordable services to Canadians.”
