2009 Provincial Budget – 'Staying True to the Brand'

With a balance between reduced government spending and modest deficits for the next two years, BC’s Budget 2009 has answered the call of the federal government to co-invest in the nation’s infrastructure, while staying true to the government’s brand of fiscal prudence.  As key elements of the federal stimulus investment require regional leverage, the Campbell government commitments should ensure that BC receives our fair share nationally.

By protecting current health care and education spending levels, while running a lower than expected deficit, the government had little room for spending in other areas. Therefore, Budget 2009 provides few direct benefits for the technology industry.

Some of the specific commitments mentioned in the budget include:

• $1.7 billion in investment in post-secondary education infrastructure, leveraging the federal commitments to renovate, retrofit and expand post-secondary research facilities.
• Additional $5 million over 3 years for the Connecting Citizen’s Grant Program to encourage delivery of ‘last mile’ broadband internet connectivity and wireless coverage for rural and remote communities.
• $15 million to support health research at the Michael Smith Foundation.
• Extension of the BC Mining Flow-Through Share Tax Credit.  This should encourage further mineral exploration across BC and provide additional opportunities for technology and engineering firms that service this sector.
• Improving access to highly-qualified personnel by investing $16 million over three years to remove barriers to employment for BC’s immigrant workforce.

Clean Technology Commitments

In keeping its commitment to the development of Clean Energy alternatives, while encouraging domestic energy conservation, Budget 2009 also includes several Clean Technology measures:

• Extension of the Innovative Clean Energy (ICE) Fund for 3 years (an additional $25 million annually) for demonstration of green BC technologies being deployed to assist BC communities.
• Expanding the list of prescribed patents under the International Financing Act to include wastewater treatment and fuel cell technology; and initiating a program review to examine the program objectives and opportunities for streamlining and improvement.
• $15 million in carbon tax rebates over the next 4 years for local governments that commit to becoming carbon neutral by 2012.
• $8 million over 3 years (matched by $10 million of industry investment) to complete the BC portion of the Hydrogen Highway. Similarly, the government will classify hydrogen as an alternative motor fuel and exempt it from the motor fuel tax.
• Providing PST exemptions for cleaner technologies including devices to reduce idling of commercial vehicles and equipment for producing energy from ocean currents, tides and waves.

Concern: Reduction in Professional Services Spending

For the technology companies who sell services to the BC Government and its agencies, and particularly ICT services companies, the planned $177 million (23%) reduction in professional services spending may impact on their business.  However, it is too early to assess this impact, which may be offset somewhat by a $75 million investment in the Public Service Transformation Fund which includes investment in "transformation opportunities where the approach to work can be re-tooled to deliver quality services to citizen’s with fewer staff".

Unaddressed Issue: Access-to-Capital

One area where additional investment is conspicuously absent is expanding access-to-capital programs. In the past, the Campbell government has shown its commitment to stimulating private investment through the Small Business Venture Capital Act (SBVCA) programs and more recently, the BC Renaissance Fund.  While the government did not cut these programs, they didn’t expand them either.

The BCTIA would have liked to have seen an expanded commitment to these programs to help leverage additional private capital within our industry. Similarly, enrichments to the Provincial SR&ED tax credits and making them permanent would have been beneficial to ensure our companies continue to maximize their R&D spending.  As the government has proven in the past, even relatively small investments in these programs do stimulate private investment.

In-line with our federal budget concerns, time is of the essence.  We encourage the Province to expedite its $14 billion in infrastructure commitments and maximize any federal co-investment.  It’s important that the stimulus keeps BC as one of the ‘Have’ provinces and continues to create jobs for all British Columbians.

Reminder: Stay Focused on the Knowledge Economy

The BCTIA recognizes that in the current economic and political circumstances that the budget needs to stimulate all sectors and regions of BC.  However, we are concerned that neither the budget nor the preceding throne speech made reference to continuing to diversify British Columbia into a true knowledge based economy. 

Over the next few months the BCTIA will intensify our efforts to ensure that any post-election plans for the provincial government will include initiatives for the advancement of the technology sector.

Pascal Spothelfer, President & CEO
BC Technology Industry Association