Alberta open to extending deadline for high tech panel report
Premier Jason Kenney's government is trying to figure out how to leverage Alberta's small but burgeoning tech sector
Alberta’s economic development minister says she is open to extending the deadline for a looming benchmark panel report on growing the high-tech sector, but says she wants to start taking action no later than the end of spring.
Tanya Fir calls the report the natural evolutionary next step to building the economy, but the opposition NDP says it’s more like a rescue operation for a vital sector ignored by the UCP during its first nine months in office, left to lose momentum and drift toward the ditch. Fir, in an interview, noted the Innovation Capital Working Group has a Feb. 28 deadline to report, but said she is open to giving it more time in order to make sure her ministry gets the answers they need.
“We’re asking them to come up with the best ways to attract investment, not only comparing best practices across North America, but new ways as well,” said Fir.
Leverage its small but burgeoning tech sector
Fir created the panel Dec. 17 as Premier Jason Kenney’s government figures out how to leverage its small but burgeoning tech sector while hewing to its guiding philosophy that an economy is best managed via system-wide changes rather than boutique programs and mirco-incentives, something often derided by Kenney as “picking winners and losers.”
To that end, the UCP government scrapped last fall multiple tax credits created by the former NDP government aimed at helping tech industries. The UCP said the reduction to the corporate income tax (from 12 per cent now down to 10 and headed to eight per cent) should be enough.
“The low-rate, broad-based approach will encourage sustainable diversification of Alberta’s economy that is not dependent on government handouts,” said the Oct. 24, 2019 budget.
Seven-member working group
But less than two months later, Fir created the seven-member working group, composed of academic, business and tech leaders, to find ways to incentivize. Fir dismissed suggestions the panel represents a reset or rollback of the UCP’s tech investment philosophy.
“It recognizes that early-stage tech companies need ways to attract capital,” said Fir.
The UCP scrapped five tax credits last fall, saying they targeted a small, select group of companies. The government also said the programs were tangled in red tape and that axing them will save $400 million by 2023. Jason Suriano, founder of Edmonton-based TIQ Software, said for him it was a quick one-step process under the now defunct Interactive Digital Media Tax Credit. That credit, he said, allowed him to hire two full-time staffers last year and perhaps three or four more this year as the government winds down the program.
Alberta companies showcasing their wares
Suriano also noted he was one of many Alberta companies showcasing their wares amongst thousands of vendors and representatives earlier this month at the mammoth Consumer Electronics Show, North America’s largest tech trade show, in Las Vegas. He recalled watching a presentation from a Quebec delegation.
“He was talking about how important the show was and their responsibility as a province to drive more traffic to their tech companies and industries because that was a way for them to generate jobs and revenue,” said Suriano. “And then I’m looking around realizing at this point we don’t even have a rep. There’s not a person from Alberta, (maybe) just one person, to kind of go ‘OK I represent Alberta and it’s important to us, too.”’
Fir said the province took a pass on Las Vegas, citing tight budgets, adding “There’s no definite return, or guaranteed return of business as a result of attending that Las Vegas conference.” NDP critic Deron Bilous, who handled the economic development portfolio in the past NDP government, said his ministry sent a senior official every year to the Las Vegas trade show and that 80 per cent of the Alberta businesses reported back new business deals or opportunities. Bilous said actions speak louder than words, especially from a UCP government that spends $30 million a year on a “war room” to promote the oil and gas industry.
Configure some of the tech incentives
“You can’t spend $82,000 a day on a war room and then say, ‘Yeah we can’t afford to send even one senior official to support Alberta companies,”’ he said. “Going sends a message. Well so does not sending anyone.”
Bilous said he has previously worked with many of the current Innovation Group members, and said they helped configure some of the tech incentives later scrapped by the UCP.
“I’ve got nothing but respect for them, and I know they will be saying to Tanya Fir, ‘Look you need to bring some iteration of these (incentives),”’ said Bilous.
Economics professor Alex Whalley, at the University of Calgary, said Alberta has a small but strong tech base to build on with projects like the Creative Destruction Lab at his school _ which links tech experts with business people and investors _ and the University of Alberta’s artificial intelligence and machine learning research programs. Whalley suggested tax credits could still be the way to go, but perhaps broader-based ones, such as a payroll tax break for tech companies, which are labour intensive and need time and space to turn a profit.
“We have those raw ingredients, but we need to find a way to transition it to build market leaders,” said Whalley.