Toronto

Ontario's funding cuts to tech could hit women and young people hardest, some warn

Ontario may be the winner when it comes to Canada's single biggest job increase in recorded history, but a funding cutback to its innovation companies could mean jobs once designated for the province will be forced to move elsewhere.

Several innovation companies reporting reduction in funding amid concerns women, youth will be hardest hit

Several tech companies say the province is tightening up the purse strings when it comes to how much it gives to startup companies and that the move will have a trickle-down effect on jobs. (Sean Gallup/Getty Images)

Ontario may be the winner when it comes to Canada's single biggest job increase since the mid-1970s, but a funding cutback to its innovation companies could mean jobs once designated for the province will be forced to move elsewhere.

Several tech companies say the province is tightening up the purse strings when it comes to how much it gives to startup companies and that the move will have a trickle-down effect on jobs. 

"A lot of provincial funding has stipulations that you are creating jobs in Ontario," said Ann Poochareon, CEO of Little Robot Friends, one of the companies that's learned it will no longer be receiving funding through the Ontario Centres of Excellence program.

"So with this avenue closed or cut in half, there is less guarantee that a job is coming from Ontario because if I have funding from elsewhere then I don't have to spend those funds creating jobs in Ontario."

News of the cuts comes the same day that Statistics Canada announced a surge of 106,500 jobs in April — the bulk of them full time.

It's the most in one month since 1976, when the government started keeping comparable data.  Nearly 80 per cent of the overall gain was concentrated in Ontario, according to Desjardins senior economist Helene Begin, with the province gaining 47,100 jobs.

Cuts 'deeper than expected'

But for Communitech, based in Kitchener-Waterloo, the cuts amount to a 10 per cent reduction of its annual budget. It's the same for Toronto innovation hub MaRs Discovery District, the organization said in a statement.

"MaRS anticipated cuts and built resilience into our plans and budget. however the cuts were deeper than expected," the company said in a statement, adding it will be restructuring departments in the coming weeks and could see a "small staff reduction."

I think one of the reasons Toronto is so strong and such a leader in the tech space is because there's been government funding.- Takara Small

Canada's digital economy is outpacing more traditional sectors like oil, mining and gas extraction, it said. "The province is seeing momentum as a growing global tech centre, so now is not the time to ease off the accelerator."

The government of Ontario Premier Doug Ford says it has a budget to balance and that it's supporting businesses by reducing red tape. 

"We're continuing to reduce funding in certain areas to protect what matters most," Treasury Board President Peter Bethlenfalvy said.

In a statement, a spokesperson for the Ministry of Economic Development, Job Creation and Trade said the province's "number one priority is supporting Ontario job creators, by making our province an attractive destination for investment, for companies to scale and grow, and for talent from around the world."

The statement adds that the government has had "frequent, constructive" conversations with the tech sector about the conditions to help companies grow, citing a new measure under the Ontario Immigrant Nominee Program, and introduced measures in its first budget to help support the development of automatic driving technologies.

'Premier cannot have it both ways'

In a news release Friday, the government also touted the surge in Ontario jobs in April — 10,100 full-time positions and 37,000 part-time jobs, with Minister Todd Smith saying it was "putting Ontario back on track."

Ontario Green Party leader Mike Schreiner said that characterization doesn't fly.

Officials with the MaRs Discovery District say the provincial funding cut was deeper than expected. (Patrick Morrell/CBC)

Premier Doug Ford in January decried the federal Liberals' carbon tax, claiming it would plunge the country into recession, killing jobs and hurting productivity. If Friday's job numbers are any indication, that claim may be overblown.

"The Premier cannot have it both ways. He cannot take credit for stronger job numbers while stoking rumours about a recession. The April job numbers show that, far from the Premier's economic doomsday talk, pollution pricing has not hurt our economy," Schreiner said in a statement. 

But the cuts to innovation will hurt, says Ontario's New Democratic Party — and will hurt young people specifically, says Catherine Fife, official opposition critic for Jobs, Employment Research and Innovation. 

Concerns women and young people could be hardest hit

"Right now, many applying for summer jobs and looking to gain a vital work experience are losing hope," Fife said.

"Doug Ford is making this job search even more difficult for young people by cancelling programs that help businesses train and hire them," she added, citing cuts to start-up companies and the cancellation of Youth Job Link and the Employment Youth Talent Incentive, which provide subsidies to businesses to hire young people. 

And while Canada's overall unemployment rate fell from 5.8 per cent in March to 5.7 per cent in April, Ontario's youth unemployment rate remains much higher, at 12 per cent, Fife points out. 

Takara Small, founder of Venture Kids Canada, a firm that teaches coding to kids, says she was shocked to hear of the cuts.

Her company doesn't receive provincial funding, but she worries the reduction will mean startups that do will have to offload the cost by making fewer jobs available in the province.

"I think one of the reasons Toronto is so strong and such a leader in the tech space is because there's been government funding," she said. "That helps startups, especially women, participate in the economy.

"What this does is hinder Toronto's tech scene."

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