Budget 2009 Provides Nearly $1.5 Billion in Measures to Stimulate ICT

Posted January 27, 2009

Budget 2009 Provides Nearly $1.5 Billion in Measures to Stimulate ICT and Boost Canadian Productivity

Ottawa. January 27, 2009 - The 2009 budget contains several major initiatives requested by ITAC to ensure a sound 21st century economy for Canada and the health of the ICT sector. It proposes a 100 per cent capital cost allowance rate for computer hardware and systems software acquired between January 27, 2009 and February 1, 2011. This measure will allow business taxpayers to fully expense all of the value of their investment in computers and systems in one year. “Much has been said about the need for ‘shovel-ready’ stimulus programs that will have a swift impact on buying decisions,” said Bernard Courtois, President and CEO of ITAC, the Information Technology Association of Canada. “This measure will have a nearly $700 million impact on the ICT marketplace over the next two years. It is also a clear indication that the Government understands the strong linkage between productivity growth and ICT investment which ITAC has championed for many years. “This is good for our industry but it is also a great benefit for the broader economy. It’s very wise public policy.”

ITAC also advocated that infrastructure spending in this Budget should also include 21st century infrastructure, such as the funding of Canada’s electronic health record and the expansion of Canada’s broadband networks. The Budget has a $500 million provision to help fund Canada Health Infoway and its goal of enabling 50 per cent of Canadians to access their electronic health record by 2010. In addition this funding will be used to speed up the implementation of an electronic medical system for physicians, hospitals, community healthcare facilities, pharmacies and patients. “We called for an appropriate investment for this,” Mr. Courtois said. “Electronic health records are a vital part of 21st century infrastructure and will deliver profound benefits to all Canadians. They will improve patient outcomes and deliver efficiencies into the healthcare systems and they will save lives. This funding is a significant step toward getting this task completed.”

Another key component of 21st century infrastructure is broadband networks – the electronic highways that carry commerce, culture and social interaction to even the most remote locations. The Budget contains $225 million allocation over three years to develop and implement a strategy on extending broadband coverage to un-served communities. This initiative will engage additional funding from other levels of government and the private sector to continue to expand Canada’s broadband network.

ITAC also called upon Government to increase funding for the National Research Council’s Industrial Research Assistance Program, noting that IRAP funding for 2008 had been virtually depleted by mid year. This Budget provides $200 million over two years and will allow the program to double its contributions to emerging knowledge-based companies. The Budget also renews commitments to public investment in research by expanding the Canada Graduate Scholarships Program and funding for the national granting councils. Waterloo’s Institute for Quantum Computing received a $50 million allocation for the construction of its new facility.

The Government will also continue in efforts to reduce the general level of corporate income tax. It aims to drop the current rate of 22.12 percent to 15 percent by 2012. At that time, Canada will boast the lowest rate in the Group of Seven.

“This was not a simple Budget,” Mr. Courtois said. “The Government faced the urgent requirements of many distressed sectors. Our concern was that they keep their eyes on the future while addressing pressing present need. They have done this in a commendable way that helps to ensure that we have some key tools at our disposal – 21st century infrastructure, a well-educated workforce, a competitive tax structure and a more productive economy – to recover quickly from the economic downturn we face.”

“This is a very good Budget,” he said. “However, we continue to be deeply concerned about the virtual drought of venture capital in Canada for early stage technology ventures. This Budget contains measures to increase access to funding for EDC and BDC and there is the increase to the IRAP program that will help very early ventures. But we still need to address the needs of companies who rely on venture capital for growth. If we don’t figure out a way to get venture capital flowing again in Canada we could lose a whole generation of promising technology ventures. We plan to continue to work with our stakeholders and with Government to address this urgent matter.”

The Information Technology Association of Canada (ITAC) is the voice of the Canadian information and communications technologies (ICT) industry. ITAC represents a diverse ICT community spanning telecommunications and internet services, ICT consulting services, hardware, microelectronics, software and electronic content. ITAC’s community of companies accounts for more than 70 per cent of the 572,000 jobs, $140.5 billion in revenue, $6.0 billion in R&D investment, $31.4 billion in exports and $11.4 billion in capital expenditures that the ICT industry contributes annually to the Canadian economy. ITAC is a prominent advocate for the expansion of Canada’s innovative capacity and for stronger productivity across all sectors through the strategic use of technology.

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For further information, please contact:

Lynda Leonard
Senior Vice President, ITAC
(613) 238-2250 ext. 223