ICTC Insights on the 2021 Federal Budget

 

The Information and Communications Technology Council (ICTC) welcomes the federal government’s budget as it relates to the digital economy.

This budget strikes the right balance between inclusive economic growth and job creation while maintaining focus on climate action. Advancing investments in youth and adult training and skill development are key to empowering an adaptable workforce that can thrive in an era of mass digital disruption. This future workforce must be equipped with accessible and clear data needed to make informed decisions and robust digital infrastructure required to participate in the economy and leverage opportunities.

A successful economic rebound is inherently inclusive and equitable, acknowledging and remedying historical inequities and actively working to drive positive change and an entrepreneurial spirit among underrepresented groups. Supporting and empowering consumers and businesses on this journey is also crucial.

A community-level focus on green infrastructure is key to propelling a net zero future, and incentives that encourage innovation and investment are equally important. Much of our economic recovery is rooted in Canadian-led innovation, and small businesses pay a central role: investments in IP development, digital adoption and acceleration, and commercialization are all must-haves.

This last year has been challenging and unprecedented. Canadians have lived through the most significant economic downturn in recent history, yet despite these hurdles, the digital economy has remained strong.[1] Resilient and rapidly scaling, Canada’s digital economy is supported in the 2021 Federal Budget, and it will continue to be a driver of innovation, growth, and opportunity.

ICTC welcomes the federal budget announcement in the following key areas:

Investing in Youth via 21^st Century Skills  

The 2021 Federal Budget responds to the challenges faced by Canadian youth during the pandemic. Youth are the hardest-hit group, and this budget addresses this demographic by prioritizing the importance of transferable skills and practical work experience. ICTC finds the following commitments especially important:

• $239.8 million for the Student Work Placement Program in 2021-22, further supporting successful work-integrating learning opportunities for post-secondary students. This program offers irreplaceable skill development experiences for youth, while also benefiting Canadian employers via a wage subsidy. The budget commits to a 75% wage subsidy up to $7,500 for qualifying employers. ICTC has been delivering successful work-integrated learning programs for youth in the digital economy for years under its WIL Digital program. The full impact of this program is exponentially transformative, for example, in the City of Laval[2] where WIL Digital students worked with shop owners and startups to revitalize the commercial downtown core.
• $109.3 million for the Youth Employment and Skills Strategy (YESS) to meet the needs of vulnerable youth that face barriers to employment. In its 2020 report, The Digital Led New Normal, ICTC finds that although youth were the hardest-hit group by the pandemic, those with limited education or work experience were most severely impacted. Job losses were concentrated among the most financially vulnerable portion of the population.[3] ICTC welcomes this commitment to empowering all youth to participate in tomorrow’s economy.
• $80 million over three years to ISED Canada, assisting CanCode to reach an additional 3 million students and 120,000 teachers. In its 2021 report, 21^st Century Digital Skills, ICTC research highlighted that digital skills are increasingly at the heart of the education journey from a young age. Skills like digital citizenship, critical thinking, coding, and adaptability are core for K-12 youth today.[4] However, equipping youth with these skills necessitates an educator base that is sufficiently digitally literate. ICTC applauds this commitment that provides critical supports to K-12 youth and educators alike.

 

Adult Upskilling and Retraining

Although the COVID-19 pandemic highlighted the resiliency of the Canadian digital economy, it also shone a stark spotlight on sectoral transformation and its rapid labour market impacts. Increasingly, lifelong learning and continuous skilling are becoming common vernacular, and adults need support to effectively understand and plan their retraining journey. ICTC applauds the following commitments:

• $960 million to ESDC Canada for the Sectoral Workforce Solutions Program. This program works with industry and other relevant organizations to design and deliver training that is rooted in timely and accurate labour market information and commits to building a diverse and inclusive workforce. ICTC has been leading labour market research on the Canadian digital economy for many years, investigating first-hand the digital transition of the Canadian economy. ICTC supports and commends this commitment to accurate, validated, and evidence-based labour market information to support Canadian job seekers and industry.
• $55 million to ESDC Canada for a Community Workforce Development Program that supports communities to connect high-growth organizations with training providers that upskill or reskill job seekers. For the last three years, ICTC has been leading research on smart cities and community development in Canada. ICTC wholeheartedly agrees with the notion that recovery must meet the needs of local communities. ICTC’s 2021 research report Responsible Innovation in Canada and Beyond underlines that successful and sustainable innovation must be community driven.[5]
• $250 million to ISED Canada to scale-up proven approaches to upskilling and the redeployment workers to jobs in high-growth industries. Since 2018, ICTC has been at the forefront of research, skill mapping, and program development to support Canadians in their transition to in-demand roles. In partnership with Calgary Economic Development, ICTC has delivered successful programming that does just this. The EdgeUp[6] program helps displaced energy workers transition to in-demand jobs in Calgary’s growing tech sector.

 

Empowering Businesses on their Digital Transition

A resilient recovery will undoubtedly be rooted in small and medium sized businesses that can thrive and compete. Despite the large-scale economic downturn of the COVID-19 pandemic, government support has proven critical to ward off notable insolvencies[7] and help businesses sustain operations. To remain competitive, Canadian businesses need financial support alongside assistance to digitize their businesses and compete. ICTC supports the following measures taken in Budget 2021 to assist businesses on this journey:

• The development of a new $595 million Canada Recovery Hiring Program for employers that continue to experience revenue loss. This program offers a subsidy to offset a portion of costs taken to reopen, increase wages or hours worked, and hire staff.
• Launching the $1.4 billion ISED-led Canada Digital Adoption Program, helping up to 160,000 small and medium sized businesses adopt new digital technology while creating thousands of jobs for young Canadians. ICTC supports this initiative and, in 2017, piloted a program called the Small Business Digitization Initiative that achieved a similar mandate.[8] This program paired small businesses with digitally skilled youth for a 60-day placement. During the placement, students helped companies digitize their operations and adopt technology to improve efficiency, growth, and capitalize on market trends.
• $2.6 billion to the Business Development Bank of Canada to extended support for small businesses that are struggling to adopt new technology, including “off-main street” businesses (e.g., small manufacturing, food processing, etc.). Supports provided to such businesses include the provision of financing options and advisory expertise for technology planning and procurement. ICTC applauds this decision. In its 2020 white paper, Economic Resiliency in the Face of Adversity: From Surviving to Prospering, ICTC recommended the provision of grants for digital consulting services to aid small businesses on their digital transformation journey.[9]

Driving Inclusive, and Equitable Innovation

Small and medium sized businesses form the bedrock of the Canadian economy and will be cornerstone to a robust, resilient, and green recovery and rebound. In the Canadian technology sector, more than 99% of businesses are small or medium sized. Yet, the most recent data available from ISED suggests that slightly more than 15% of all SMEs are owned by woman.[10] The figure for Indigenous-owned SMEs is significantly lower,[11] and for Black-owned businesses, it is unknown. Support for Canadian entrepreneurs must be inclusive, equitable, and strive to achieve long-term positive change. For that reason, ICTC commends the following commitments in Budget 2021:

• Up to $146.9 million to strengthen the Women Entrepreneurship Strategy, providing access to financing, mentorship, and training. ICTC has been supporting research and programming that encourage the representation of women in the digital economy. Recent ICTC research found that women were more severely impacted by the pandemic than men.[12] Mentorship and access to financing are key contributors, driving improved outcomes for women in the digital economy.
• $51.7 million to ISED and regional development agencies to support the Black Entrepreneurship Program.
• The federal government is committed to promoting the vitality of Canada’s official language minority communities and fostering bilingualism in Canada—now and for generations to come.
• Strengthening Canada’s Immigration System Diversity is our strength, including as a source of our economic strength. Net immigration contributed to half of Canada’s average GDP growth from 2016 to 2019, and nearly three-quarters of its growth in 2019. As our workforce ages, immigration ensures the Canadian economy continues to grow, that we attract more top talent and investment capital, and that we continue to create good jobs. Welcoming immigrants is an important part of Canada’s recovery.

Focusing on R&D, IP Development, and Commercialization

Research and development are prerequisites for future innovation, business growth, and robust employment opportunities for Canada. In world that is increasingly interconnected and digital, support for R&D is needed to ensure that innovative products, services, and initiatives are developed to advance Canada’s digital advantage in a global economy. Resultantly, ICTC supports the following commitments:

• $2.2 billion and $511.4 million to support innovative projects across the economy, including in areas like life sciences, the automotive and aerospace sectors, and agriculture. ICTC’s 2020 report A Digital-Led New Normal identifies both the life sciences and agriculture sectors as experiencing significant disruption by technology. As a result, ICTC anticipates that by end of 2022, the agri-foods and the food tech sub-sector will be responsible for 650,000 jobs; health and biotech is expected to employ another 119,000.[13]
• $443.8 million in support of the Pan-Canadian Artificial Intelligence Strategy, focusing largely on talent attraction and commercialization. $162.2 million is to be targeted at retaining and attracting top talent across Canada; $185 million will be leveraged to support the commercialization of Canadian AI innovation. ICTC especially applauds the shift in focus toward commercialization. In its 2020 report, Betting on Red and White: International Investment in Canadian AI, Canada is identified by investors as an attractive destination for investment, in large part due to its availability of skilled talent. Although interviewed investors lauded the country’s talent base and strength in academic research, commercialization was highlighted as a challenge.[14] Ensuring that Canada’s emerging AI hubs are places of thriving research and commercialization is key.
• $90 million to create ElevateIP, a program for accelerators and incubators to offer IP services to startups; $75 million to the National Research Council’s Industrial Research Assistance Program, providing high-growth firms with access to IP expertise. ICTC supports this investment and focus on homegrown IP to ensure Canadian business competitiveness. In its 2020 whitepaper, Bolstering Growth: The Next Frontier for Canadian Startups, ICTC identifies the creation, protection, and incentivization of Canadian IP as critical to Canada’s competitive advantage.[15]

Accelerating Digital Infrastructure & Solidifying Data Governance  

Ensuring diverse and inclusive innovation is inherently tied to equitable access to digital infrastructure, connectivity, and data. The COVID-19 pandemic has altered much about the nature of work itself. In 2020, many organizations—including technology companies like Shopify and government institutions like Transport Canada—committed to going “digital by default” (remote work by default). As a result, robust and affordable connectivity infrastructure is crucial to ensure equitable access, opportunity, and participation in the future economy. At the same time, Canadians must trust that their data is used appropriately and governance frameworks are put in place to effectively protect them without stifling innovation. For this reason, ICTC applauds the following commitments:

• $1 billion over six years to the Universal Broadband Fund to support the rapid rollout of broadband projects in collaboration with the provinces and territories. ICTC supports this commitment, as more Canadians than ever rely on high quality internet connectivity to access work and education. ICTC’s 2020 white paper, The Rebuild: Going Digital and the Role of Canadian Telecom in a Post-COVID Future, highlights notable connectivity gaps across Canada, including stark differences between urban and rural communities.[16] Moreover, robust connectivity infrastructure and next-generation networks like 5G are needed to support innovation in areas like digital health, connected and autonomous vehicles, smart cities, and advanced manufacturing.[17]
• $175 million over five years and $3.4 million per year ongoing to create a Data Commissioner. The Data Commissioner will inform government on business approaches, and help protect Canadians’ personal data, without limiting innovation. ICTC supports this decision and agrees that data privacy is cornerstone to effective governance. However, this must be combined with instruments that simultaneously support both informed consent and innovation. ICTC’s 2020 submission to the Ontario Consultation on Privacy, titled Renewing Privacy in a Modern Digital Economy, highlights that increased transparency on behalf of organizations is needed to provide Canadians with detailed, clear, and consistent information about how their data is being used.[18]

Committing to a Net Zero Future

Worldwide, governments are committing to a future where economic growth is not decoupled from environmental sustainability. Canada’s two largest trading partners—the United States and the European Union—are both pursing an economic recovery that is green-by-default. Supporting Canadian innovation and prosperity via a green recovery is a decision that is simultaneously economically sound, internationally respected, and environmentally just. ICTC applauds the following commitments to Canadian green recovery:

• $5 billion to the Net Zero Accelerator, supporting projects that help reduce domestic greenhouse gas emissions across the Canadian economy. In its 2021 submission to the 2021 Davos Conference, Shaping the Next Normal, ICTC suggests a large-scale realignment of economic recovery with environmentally and socially responsible goals in mind.[19]
• A proposed reduction of 50% to corporate and small business income taxes for companies that manufacture zero-emission technologies. ICTC supports this proposition and asserts that providing attractive business incentives—such as tax rebates—are essential to garnering industry buy-in for a green recovery. In ICTC’s 2021 Davos submission, private sector incentives like tax deductions and feed-in-tariffs are highlighted as policy levers to support a green transition.[20]
• $36.8 million to Natural Resources Canada for research and development to advance battery mineral processing and expertise; $56.1 million to Measurement Canada to develop and implement a set of codes and standards for retail ZEV charging and fuelling stations. ICTC supports both initiatives, understanding that electrification and EV adoption cannot take place on a large scale without the battery technology and charging infrastructure in place to support it. ICTC has recently partnered with Quebec EV cluster Propulsion Quebec to lead research on the technological investments and labour market shifts associated with an EV-led green recovery in the province.
• A framework and targeted issuance of $5 billion for Canada’s first Green Bond. The framework will provide details on how investors can finance Canada’s work to fight climate change and protect the environment. Possible projects include green infrastructure, clean tech innovations, and nature conservation. The first issuance is expected to be one of many. ICTC wholeheartedly supports this commitment and applauds this innovative financial mechanism to propel Canada’s green recovery forward. In its 2020 white paper, Economic Resiliency in the Face of Adversity: From Surviving to Thriving, ICTC proposes the development of a Green Recovery Bond—fixed rate or asset-backed—as a mechanism to drive sustainable GDP growth in a post-COVID Canadian economy.[21]

Conclusion

The Canadian digital economy has been insulated from the shocks of the pandemic and has proven capable of thriving despite them. Investing in a sustainable and robust economic rebound necessitates a focus on skilling, digital transformation, equity, and living within ecological boundaries. ICTC concurs with the 2021 Federal Budget as it relates to the digital economy, that invests in a resilient future for Canadians. Later this week, ICTC will release a special edition of its Digital Policy Salon briefing, focusing on the 2021 Federal Budget. This briefing will contain analysis of key commitments and investments, highlighting how Canada’s digital economy will be impacted. Stay tuned for more information!

 

For more information about our statement, please contact Paul Stastny at [email protected] or 403.351.0138 Ext. 823.

 

[1] Maryna Ivus, Akshay Kotak, Ryan McLaughlin, “The Digital-Led New Normal,” ICTC, August 2020.

[3] Ibid.

[4] Maryna Ivus, Trevor Quan, Nathan Snider, “21^st Century Digital Skills: Competencies, Innovations and Curriculum in Canada,” ICTC, March 2021.

[5] Mairead Matthews, Faun Rice, Trevor Quan, “Responsible Innovation in Canada and Beyond: Understanding and Improving the Social Impacts of Technology,” ICTC, January 2021.

[6] https://edgeupyyc.com/

[7] “Government financial support pushes Canadian insolvencies to lowest level in 20 years,” CTV News, February 5, 2021.

[8] “ICTC and Savoir-fair Linux Partnership: Empowering Ontario Youth to Digitize Small Business,” March 29, 2017, ICTC

[9] Namir Anani, Alexandra Cutean, Ryan McLaughlin, Faun Rice, “Economic Resiliency in the Face of Adversity: From Surviving to Thriving,” ICTC, June 2020

[10] “Majority Female-Owned Small and Medium-Sized Enterprises: Key Small Business Statistics,” Industry Canada, 2015.

[11] Audrey Ann Belanger Baur, “Indigenous-Owned Exporting Small and Medium Enterprises in Canada,” Canadian Council for Aboriginal Business, 2019

[12] Ryan McLaughlin, “January 2021 Economic Update,” ICTC, January 8, 2021

[13] Maryna Ivus, Akshay Kotak, Ryan McLaughlin, “The Digital-Led New Normal,” ICTC, August 2020.

[14] Alexandra Cutean, Rosina Hamoni, Chris Herron, Kiera Schuller, “Betting on Red and White: International Investment in Canadian AI,” ICTC, July 2020

[15] Alexandra Cutean, Tyler Farmer, Mairead Matthews, “Bolstering Growth: The Next Frontier for Canadian Startups,” ICTC, October 2020.

[16] Alexandra Cutean, Ryan McLaughlin, “The Rebuild: Going Digital and the Role of Canadian telecom in a Post-COVID Future,” ICTC, November 2020

[17] Ibid

[18] Rob Davidson, Mairead Matthews, “Renewing Privacy for the Modern Digital Economy,” ICTC, October 2020

[19] Namir Anani, Alexandra Cutean, Ryan McLaughlin, Faun Rice, “Shaping the Next Normal,” ICTC, January 2021

[20] Ibid

[21] Namir Anani, Alexandra Cutean, Ryan McLaughlin, Faun Rice, “Economic Resiliency in the Face of Adversity: From Surviving to Thriving,” ICTC, June 2020