Canada's Future

Influential people gathered this year to ignite our national digital economy strategy.  They made plans and promises, but some onlookers pointed out this has all been discussed before.  What may be different this time, however, is a greater impetus for progress

By Hailey Eisen

Canada's productivity and competiveness have been so often studied, debated and then studied some more that, under normal circumstances, another round of examination and deliberation wouldn't raise much interest.

But gatherings held this summer engendered more energy and optimism than has been felt previously, and raised the hopes of attendees that, this time, action would result.

The current buzz started in June in a rec centre in Stratford, Ont. Fifteen hundred people packed the two-day Canada 3.0 conference that some attendees likened to Woodstock, in its spirit and enthusiasm at least. The focus was on digital media and national prosperity. From this seed sprang two organizations: the Canadian Digital Media Network, a federal Centre of Excellence for Commercialization and Research, and the Stratford Institute, a think-tank, integrator and training institute devoted to collaboration on digital media, international commerce and culture.

That same month, 150 C-level executives from businesses, universities and consumer organizations gathered down the street from Parliament Hill for a forum called Canada's Digital Economy. Industry Minister Tony Clement spoke and the entire event was broadcast live online. Topics covered included promoting business innovation using ICTs, building a digital infrastructure for the future, ensuring a safer, stronger online marketplace, and moving Canada's digital economy forward.

Laying the foundation for some of this was a private dinner hosted in May by Prime Minister Stephen Harper and Clement. The two invited a select group of industry players to discuss Canada's information and communication technology sector.

The need for speed
At the centre of these discussions is the very real need for Canada to move faster on the world's digital economy stage. As Terence Matthews, chairman of Wesley Clover, Mitel and March Networks, said in his keynote address in Ottawa: "…we seem to be standing still-parked on the side of the information highway, while other nations pass us by, at a time when the underlying technologies that make the digital economy possible are changing and growing faster than ever before."

This fundamental concern was underlined by Clement. "Since 2001, Canada has slipped from third to 13th on the Global Competitiveness Index, we have dropped from second to 10th in the OECD's broadband ranking, and from fourth to 13th in the Economist Intelligence Unit's e-readiness ranking. We are falling in the Networked Readiness Index from 10th in 2004 to 13th in 2007. At the same time, business R&D in this country-as a percentage of GDP-has declined 20 per cent and investment in ICT per worker in 2007 was only about 60 per cent of the U.S. level."

Yet there was also optimism and determination at these meetings, in no small part because Clement followed those bleak numbers with a commitment that his government will take action to propel national ICT adoption, and that it would do so soon-within the year.

He maintained this optimistic appraisal two months later, during a phone interview in August. "If we're going to compete and innovate then we need to be front and centre on the front-line of ICT," he said. "From my perspective you can't do manufacturing better, you can't do agriculture better, you can't do services better, unless you have a successful adaptation and adoption of ICT. And there is no reason why Canada can't be the number one digital economy in the world, if we put our minds to it."

So will it happen this time?
While there seems now to be an urgency in the public and private sector, those who have been around for a while remember similar e-economy events hosted by the government in 2007 and 2004, and prior to that discussions of this issue date back at least a decade.

But as the global economy has changed, innovation has become more critical and that alone may spur action from Canada. According to Bernard Courtois, the president and CEO of the Information Technology Association of Canada (ITAC), Canada cannot compete on a manufacturing or goods level with developing nations such as Brazil, India and China, and nor can we rely on a large market to differentiate ourselves, as does the United States. "As a result, we have to succeed based on innovation," he said. Despite our relatively diverse economy, including a strong natural resource sector, technological innovation must become a key focus if we are going to remain prosperous in the future. "The biggest challenges facing the oil sands, for example, are environmental challenges. These have to be solved using technology and creativity."

The economic crisis that swept the world's economies is also a driving factor. "Success will now be based on an ICT-driven global economy of competitiveness, and those that position themselves accordingly will come out of the recession much stronger," Courtois said. "This is a time of change and an opportunity to make use of a crisis."

Taking steps
As to why Canada began slipping in the first place, opinions differ. As noted by Clement, we were the first nation to connect all its schools and libraries to the Internet and we lead the OECD in deployment and updates of broadband. But, sometime within the past 20 years, our perceived need to remain competitive dwindled. According to Tom Jenkins, executive chairman and chief strategy officer for Open Text, "Canada has had a tremendous economic run but has become fat, dumb and happy."

The most effective way, it seems, to get things back on track is to engage the private sector in discussions among themselves and with government in order to promote education and investment in technology. "Canada is blessed to have a really good, functioning government and tremendous intellectual capacity in our ability to collaborate," Jenkins said.

For his part, Clement committed to move forward with the current broadband initiative, a $225-million commitment to develop and implement a strategy for improving coverage to underserved and unserved geographic areas of the country. The government is also committed to continuing work on anti-spam legislation, introduced to the House of Commons but not yet passed. He will also examine the current tax structure and said that within two years Canada will have the lowest corporate tax rates of the advanced economies. And the government will continue to modernize its existing copyright laws in order to support creativity and innovation and foster economic growth within a changing digital landscape.

Matthews takes a similarly big-picture view. He argues Canada should work on developing and supporting a national culture of innovation. "If Canadians want well-paying, challenging, knowledge-based jobs for their children, we must become an Innovation Nation," he said. "IT and telecom industries, along with new media and digital content creation, can become the foundation of Canada's future prosperity." Along these lines, he also proposed that more emphasis be placed on translating university research (which is currently thriving in Canada) into viable commercial enterprises.

Matthews also highlighted two specific areas of focus. The first is the need to revise the Scientific Research and Experimental Development (SR&ED) Tax Credit system to ensure all companies that need funding support qualify for it. The second focus should be encouraging the Gen Y generation to get serious about careers in technology. "StatsCan data shows university enrollments between 2001 and 2006 increased in every major program area with the exception of mathematics and computer and information sciences, which were down 20 per cent in that period."

Addressing this requires a wide-reaching approach to tech education, said Perrin Beatty, president and CEO of The Canadian Chamber of Commerce. "ICT fundamentals should be integrated into all areas of education from elementary through high school, community colleges and universities, and to new-immigrant learning programs… We need to instill the excitement of discovery and innovation in today's youth, by celebrating entrepreneurship in all its forms."

The conversations of the spring will hopefully lead to continued real-world action, concluded Bernard Lord, president and CEO of the Canadian Wireless Telecommunications Association. "We have to look at the expectations of the next generation and unleash that potential. We'll do that by making investments in infrastructure, ensuring people are well-educated and fostering competitive business and fiscal environments that allow companies to invest, compete and create prosperity."

What Canada's digital economy needs

According to The Canadian Chamber of Commerce the Federal government should...

1 In collaboration with business and academia, develop and execute a national ICT strategy that commits to accelerate Canada's economic leadership by investing in the requisite infrastructure, skills and enabling policy environment.

2 Accelerate investments in next-generation networks by: amending tax policies to stimulate investments (including an accelerated capital cost allowance (CCA) in the class of assets most closely associated with broadband networks); removing regulatory disincentives to capital investments; leveraging the government's role in delivering services electronically.

3 Promote a culture of excellence in Canada and encourage youth to get engaged in ICT and entrepreneurship in innovative technologies.

4 Increase work with the private sector to accelerate e-business adoption among SMEs and create a more favourable investment climate that encourages foreign and domestic investment in Canadian e-business. 

The Stratford Declaration

Key points developed by the participants of the Canada 3.0 conference:

> Success in digital media will be central to national prosperity in the 21st century

> Significant upgrades are required to [Canada's] digital infrastructure, including both technological infrastructure and made-in-Canada digital content

> Canada must use the digital revolution to reinvent the manner in which this country trains, educates, creates new business, cooperates, serves the population and views its collective future

> The creative talents of this country must be connected to the technological potential of this age

> Canada needs to produce a regulatory and legal environment attuned to the 21st century and needs to use these arrangements to propel the nation into a position of global leadership in digital rights management.

> Canada must set an ambitious target-to become the first truly digital nation in the world-and must move with urgency and determination toward this goal.