As Finance Minister Bill Morneau prepares to unveil the federal budget, Canada's plans for a digital, knowledge-based economy are coming into sharp focus.
We are witnessing the rise of a technological revolution, driven by artificial intelligence, automation, next-generation data analytics, 5G connectivity and the Internet of Things. This global revolution will re-engineer our country’s work force and redefine our core industries. It will determine nothing less than the future of our economy and our prosperity as Canadians.
The question now is, how do we position Canada to succeed in the global digital economy?
I believe the key is for government, industry, startups and academia to work together. The federal government has been working on an overhaul of the country’s innovation policy and one of its signature initiatives, a $950-million investment in innovation ecosystems through superclusters, is a move in the right direction.
Indeed, innovation ecosystems will be critical to our ability to expand and sustain the digital economy. More than simply “feel-good” Canadian-style collaboration, their purpose is to foster dynamic, interconnected communities where multinationals and homegrown tech companies, entrepreneurs and academics are incentivized to share knowledge, experiment and grow together. Only when we create the connective tissue for Canadian innovation to thrive will we be able to compete with the world’s best.
These ecosystems need to be supported by a policy framework that levels the playing field for Canadian companies. It must be one that protects and promotes our intellectual property without bogging down our innovators in red tape and stifling, outdated regulations.
As the likes of Netflix, Amazon and Uber continue to compete within our borders, our governments also need to pursue policies that ensure our homegrown players are not at a disadvantage compared to foreign-owned enterprises competing in Canada. Ottawa needs to continue modernizing regulations to make it easier for businesses to grow, while encouraging regulators to consider economic competitiveness when designing regulations.
For Canada’s innovation sectors to be competitive, we must also create an environment that encourages continued investment in our tech startups and research institutions by both venture capitalists and governments. The good news is that venture capital investments increased last year to an estimated $3.8-billion, but that still pales compared to south of the border. Granted, the U.S. market is about 10 times that of Canada, but last year VC activity topped $173-billion stateside – 45 times the investment we saw on our side of the border.
Existing incubator programs and tax credits are vital, but we must go further. We need to incentivize established Canadian companies to use the innovation and intellectual property coming out of our Canadian startups, in addition to leveraging large-tech company solutions.
Lastly, our success in building a digital economy will depend on our ability to develop a deep pool of future-ready, homegrown talent. After all, the future may rely on automation and AI, but it will still require exceptional people who can lead, adapt, and empathize with the needs of tomorrow's populations.
To nurture this talent, we will need to re-examine our education system and open new doors to tech careers. In this budget, we hope to see more funding for Canadian workers to upgrade their skills to meet digital shifts in the job market.
The best way to fight against the “brain drain” to the United States and beyond is by expanding a domestic tech sector that gives our tech professionals and emerging graduates a reason to stay. It also allows Canada to attract the best and brightest from around the world. As evidence of this growing need, the government has recently invited applications for more than 3,000 express entry visas to enable global talent to fill skills gaps here in Canada with a significant number of these visas coming from talent currently working in the United States.
We’ve already seen the potential for Canadian “unicorns” to flourish on home soil. Shopify, for example, has grown to a market cap of $20-billion since going public in 2015, potentially creating a path for other Canadian companies to reach “unicorn” status. More recently, the government’s $40-million funding of BlackBerry’s QNX and autonomous vehicle initiatives will also help to bolster homegrown innovation.
Going even further means stepping outside our comfort zone. It means playing off our strengths, supporting world-class research centres and innovation hubs, and using our own tech-sector trailblazers to our advantage.
Canada's vision for a digital economy is coming into view, but now the real work begins.
Armughan Ahmad is KPMG’s President & Managing Partner of digital solutions in Canada with decades of global experience at tech companies delivering client business transformations.