On a mid-May evening, Prime Minister Stephen Harper joined Industry Minister Tony Clement and 15 chief executives from Canada's largest technology companies for dinner in a private room of the 6th-floor restaurant in Parliament Hill's Centre Block.
The guests included Nortel Networks Ltd.'s boss, Mike Zafirovski, and Research In Motion Ltd.'s co-chief executive Mike Lazaridis – though there was no talk at the supper table of Nortel's court-supervised bankruptcy.
Nor was there any mention of RIM's desire to purchase key Nortel wireless assets, an objective that sparked a nationalist backlash this week after U.S. and Ontario courts approved the sale to Sweden's Telefon AB LM Ericsson of Nortel's wireless division for $1.1-billion.
Instead, the CEOs discussed with Mr. Harper and his Industry Minister how Canada's information and communication technology (ICT) sector can help propel the country's emergence from the recession, and sustain its prosperity in an increasingly competitive global economy. And Mr. Clement had a bold commitment for his dinner guests: He would produce an overarching plan by the end of the year to reverse a long slide in Canada's technology industry and make it the world's leading digital economy.
Few stories have underscored those declining fortunes more starkly than the dismantling of Nortel. But Canada has not only lost its leading high-tech multinational; it has also failed in recent years to keep up with major competitors in embracing technology as a force for economic growth. With the exception of RIM, no new major Canadian tech champions have developed. Canada is lagging the leading countries in promoting business innovation through adoption of technology. And we are falling behind in deploying digital infrastructure, such as state-of-the-art high-speed Internet and e-commerce systems that buttress an innovative society.
Those failures undermine the productive strength of the economy – making companies less competitive in the long run. They keep Canada trapped as a producer of commodities and branch-plant manufactured goods. As a result, there are fewer high-paying jobs in value-added sectors of traditional industries, and in the service sectors that support them.
Canada's best and brightest migrate elsewhere for opportunity, while workers see their incomes undermined by more competitive producers in other countries. In the end, the country is poorer.
“Our competitiveness depends on, in part, early adoption of ICT, and in today's day and age, it depends on having a competitive and thriving digital economy,” Mr. Clement said in an interview this week.
Homegrown champions
Mr. Clement said the government recognizes that Canada needs successful, homegrown companies that can bring innovative technologies to the global marketplace and add some high-tech heft to the broader Canadian economy.
“When you look at successful economies that have moved up the value chain, ICT is part of what they have.”
Past governments have made similar promises and, while there has been progress in specific areas, none managed to instill the required dynamism and innovative spirit into the country's corporate culture.
Ottawa has signalled some components of the plan. It is examining how to use its powerful procurement budget to stimulate business innovation – an “all government” approach. It has increased financing for a little-known but highly regarded program to boost technology adoption among small businesses. And it is studying federal R&D tax credits to determine how best to deliver tax benefits to research-oriented firms.
The government's critics say its public embrace of the high-tech sector is mere posturing from Conservative politicians who have slammed past government financing for the high-tech sector, cut funding for some high-profile research projects and failed to muster a rescue plan for Nortel.
For many critics, the auction of Nortel's assets suggests the Harper government simply doesn't believe it should intervene to promote high-tech champions. Those multinational not only create knowledge-based jobs directly, but they also act as anchors for technology clusters, providing a market for smaller Canadian suppliers and spinoffs as former employees launch their own startups.
RIM's Mr. Lazaridis and his co-CEO Jim Balsillie argued that Ottawa should back national players when they called on the government to block the sale of key Nortel assets to foreign companies. In the aftermath of RIM's public denunciation, former Nortel president Robert Ferchat said the high-tech sector “seems to confuse” the government.
Liberal industry critic Marc Garneau said he expects the government will make noises about support for the sector, but do very little.
