High-tech sector looks to federal budget to spark innovation boom, deliver skilled workforce

Can a budget that government officials say will be short on new spending foster the Liberals' innovation agenda and help create the highly skilled workforce the country needs? And will it be enough to make sure the next great Canadian tech company stays in Canada?

'We have a situation where we have people without jobs, and we have jobs without people'

Minister of Finance Bill Morneau's second budget will have to help boost the government's innovation agenda without a massive amount of new spending. (Sean Kilpatrick/Canadian Press)

Kirk Simpson's high-tech firm Wave is an example of the type of company the Liberal government is trying to help as it prepares to table its second budget.

Simpson has big plans for Wave, a Toronto based tech firm that builds financial services apps for small businesses. He plans to double his workforce of 150 over the next two years — if he can find the people he needs.

"That's our No. 1 challenge," Simpson said. "It's very, very hard to find highly skilled workers within this environment."

Wave isn't the only tech company on a never-ending hunt for rare talent. Industry players and the government agree that by 2020 the sector will face a shortage of 220,000 workers.

Finance Minister Bill Morneau will table his second budget at 4 p.m. ET Wednesday, March 22. CBC News and CBCNews.ca will have live coverage beginning at 2 p.m.

If that skills gap can't be closed, companies like Wave won't be able to grow at the pace they could. Simpson warns it could force many companies to start looking for opportunities outside the country.

"That has a detrimental impact on the economy," Simpson said. "These are very high-paying jobs. If we can find the talent somewhere else, we might open a second location in the U.S. market or in a European market. And those jobs will not go to Canadians."

And that's the dilemma facing Finance Minister Bill Morneau: Can a budget that government officials say will be short on new spending foster the Liberal's innovation agenda and help create the workforce the country needs? And will it be enough to make sure the next great Canadian tech company stays in Canada?

"Tech is at the centre of wealth generation. And it's important that we get this correct if we want to be a prosperous country," said Benjamin Bergen of the Canadian Council of Innovators.

Getting it correct in this budget means, among other things, more federal investment in co-op programs for tech students and graduates. Bergen said that would get Canadian students into the workforce faster and forge ties with local companies — a key consideration when mid-size Canadians firms are competing for the same workers as the giants of Silicon Valley.

The government has already announced measures to fast-track the entry of foreign high-tech workers into the country. But a focus on global talent alone won't close that 220,000-job gap the sector expects by 2020.

Justin Trudeau and Jennifer Flanagan, centre, President and CEO of Actua, pose with children at the new Google Canada Development headquarters in Kitchener, Ont. Keeping these young tech hopefuls in Canada after university is a challenge for the Liberal government. (Nathan Denette/Canadian Press)

The tech industry is also hoping for a suite of training and retraining measures. The challenge for the government is that technology is destroying old jobs almost as fast as it's creating new ones. Automation is eliminating jobs at every level of the economy, with the government's own advisory council projecting that 40 per cent of existing jobs will disappear over the next decade.

"Technology has always been disruptive. What's changed this time around is the speed at which it's happening," said Craig Alexander of the Conference Board of Canada. "So we have a situation where we have people without jobs, and we have jobs without people."

Growing inequality

Matching people with those jobs is crucial for a government trying to break a cycle of low economic growth. But this isn't just an economic problem — it's a social one.

As technology wipes out the old jobs, many of those workers don't have the skills to get the new jobs. Alexander said that if the government doesn't take steps to help displaced workers adapt to the changing workplace more people will fall behind and income inequality will grow.

"Workers get displaced very quickly and then they have a hard time getting back into the labour market, as things have changed rapidly," Alexander said.

Funding social programs

The finance minister has promised a budget that will help Canadians deal with those challenges, telling reporters he was confident his second budget will "help Canadians get the skills they need in a challenging economic environment."

But for weeks now, the government has been trying to downplay expectations for this so-called innovation budget. The Liberals already spent big on infrastructure and child benefits in their first budget. As a result, one senior government official told CBC News, this budget will be a "down payment on the innovation agenda" rather than a fully formed plan.

Mark DiFranco, a software engineer, uses a Myo gesture control armband to fly a drone at the Thalmic Labs headquarters in Kitchener Ont. Thalmic Labs was cited by Forbes as one of the standouts in the tech sector. (Hannah Yoon/Canadian Press)

Bergen, with the innovation council, hopes the government can find the financial wiggle room to give the sector a meaningful boost. He warns that the jobs of today won't pay for the social programs of tomorrow, because many of those jobs won't exist.

Building a robust tech sector with a workforce of highly skilled Canadians would solve a host of economic and social programs.

"That's where generation of tax revenue comes from and that's ultimately how we'll fund the social programs that we enjoy in this country," Bergen said.


David Cochrane is a senior reporter in CBC's Parliamentary bureau. He previously wrote for CBC Newfoundland and Labrador.