This week the Honourable Chrystia Freeland announced a $50-million handout called CanExport. In his coverage, Terry Dawes mischaracterized my positions that we need to stop subsidizing private sector risk and make investments in 21st Century infrastructure if we want to spur innovation and improve productivity in Canada.
CanExport is an example of the kind of spending that government uses in a generic poster called "innovation". That is like putting the word "smooth" on a pack of cigarettes. It is appealing on the surface, addictive and ultimately not good for anyone.
Each grant requires matching funds, which immediately disqualifies cash-strapped startups. The grant gatekeepers will be the Trade Commissioner Service (TCS). That means time to fill out forms and the further disorientation of Canadian businesses from focusing on selling to their customers.
Maybe the TCS needs $10-million a year globally to fund business development for established small businesses. But that is not innovation.
I am hopeful that the new Trudeau government will make good on their promise to listen to diverse voices and make evidence based policy decisions.
We can do better, with a combination of a true tax credit that enables angel investors to write off losses and make more small investments faster.
If so, they will overcome the social structural flaw of innovation and reconsider their campaign promises to dump $200-million per year more into government led hubs and clusters.
Dawes assesses that the Libs are eager to publicly declare a transition from over-reliance on the resource sector to Canada's innovation economy even though CanExport will do nothing to support the emergence of the kind of global juggernaut companies that thrive, as Om Malik pointed out in the most recent issue of the New Yorker, on a potent mix of network effects, algorithms, infrastructure, data and mastery of the smartphone interface and I agree.
Together let us urge Ms. Freeland and the Honourable Navdeep Bains to deliver a national angel investor tax credit program. British Columbia's grant program that is run through their provincial tax system returned $2 in government revenue for every dollar invested.
We can do better, with a combination of a true tax credit that enables angel investors to write off losses and make more small investments faster. This will keep investment decisions decentralized, in the hands of investors, instead of government gatekeepers. At the same time, the Canadian government should get standard terms for piggyback equity for these investments and an upside on any exits just like any seed investor would expect.
Above all, let us direct this appeal to the very influential Minister of Intergovernmental Affairs and Youth. Hopes for full, higher value, meaningful employment today rest on fostering a culture of ownership and innovation across Canada. If you want to forge mentorship relationships between our most experienced and successful business people and our young, use your budget to leverage this activity. Keep the process network driven, decentralized and market oriented. Don't let someone "smooth" convince you that it is wise for government to continue unproductive investments in institutionalized innovation.
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