The government has been working hard to stabilize the economy following the effects of COVID-19, but many members of the tech community have been left out of their support measures. Organizations like MaRS and the Canadian Advanced Technology Alliance have been doing a great job working to advocate on behalf of tech start-ups. However, it’s clear now that outsourcing advocacy to third parties isn’t good enough, given how quickly things are changing.
We’ve been receiving many ideas from colleagues and friends in the tech community on how the government should act, and want to distill that and add to the voices out there to cause positive change. With that in mind, we hosted an event with Crestview Strategy, to share ideas, discuss the current landscape and what we can do to affect it.
Crestview Strategy is a public relations consultancy. By nature of their work, Crestview Strategy is in constant contact with all levels of government and can speak to the current federal landscape and engagement opportunities.
Below are the key take-away points from the conversation.
Crestview Strategy: Insights and Advice
- With Canada losing more than 1 million jobs in March, the focus of the Federal government has been working to ensure the largest number of Canadians, businesses and organizations receive support.
- Both the Prime Minister and Minister Bains have acknowledged that both the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy will not be enough on their own to support all businesses throughout the country
- The federal government remains focused on 2 things:
- supporting the supply chain to fight the virus
- trying to prevent mass layoffs and unemployment
- There are 4 business-focused Ministers with Offices working around the clock on your key issues: Minister Bains, Minister Ng, Minister Joly and Minister Morneau
- Offices have divided political staff to manage the immediate response effort while others have been tasked with considering mid-term economic relief and future stimulus efforts.
- The Cabinet has been meeting twice weekly, and the COVID-19 Cabinet Committee has been meeting virtually up to 4 times a week.
- The government is less than a couple weeks out from delivering on the long-anticipated sectoral supports for hard-hit industries. It’s important to note that they are framing decision-making through the lens of which players need support, how much and how quickly in a given sector.
- It’s not clear whether or not key parts of Canada’s tech and start-up communities will be considered – the IRAP IAP funding announcement is a start, but further changes aren’t clear
- What is clear is that the government is open to feedback and additional ideas.
Crestview Strategy: Current support measures and opportunity for putting forward other ideas
- There has been a massive spike in demand at BDC and EDC.
- There is additional support for small businesses through the Business Credit Availability Program that will be directed through local financial institutions. There are 3 variations of the BCAP:
- The Canada Emergency Business Account: interest-free $40K loans available for those with a payroll between $20,000-$1.5M in 2019 with 25% debt forgiveness if the loan is repaid before the end of 2022.
- Loan Guarantee for SMEs: this is 80% backed by EDC allowing loans of up to $6.25M
- BDC Co-lending program for SMEs: Similar to the loan guarantee but with segmented loans for SMEs of various sizes
- We have seen decision-making done on the fly, with the Prime Minister announcing measures at Rideau Cottage before the policy details have been finalized.
- The default for the government has been to move rapidly, build in flexibility and adjust later on for what doesn’t work.
- Our current experience has been that there is an opportunity to make a compelling case that underscores the impact that your companies are facing, the need that you wish addressed and the positive impact it will have on your survival and growth prospects.
- Sending letters to your MP is valuable on one level because they’re meeting regularly to discuss these measures.
- To be really impactful, you should be going directly to ministerial offices and directly to the PMs office – that’s the most targeted approach.
- While the Federal government has been clear about the desire to foster a homegrown tech sector that draws on global talent, we recommend incorporating COVID-19 specific impact and relevant opportunity metrics in relief suggestions. As political decision-makers begin to consider how to do a cold restart of the economy, this will require a transition of workers and continued capital investments.
- The timing of this discussion is particularly important as the time is now to mobilize to ensure that you are not left behind.
Mobile Capital Network: Government funding and advocacy experience
- We’ve been in business since 2008 and supported our clients through a major overhaul of the SR&ED program and the rewriting of the Ontario Interactive Digital Media Tax Credit, two critically important programs to our clients.
- In both cases, the government had proposed changes that were detrimental to our clients and, more broadly, the industry and economy.
- With great help from our clients and the community, we successfully proposed amendments to the legislation that benefited the ecosystem.
- For SR&ED, we actively advocated for leaving the 35% enhanced credit rate intact for CCPCs. We also successfully outlined the case against several proposed changes that would have made SR&ED compliance unbearably expensive.
- For OIDMTC, the original legislation draft would have limited the vast majority of game development companies from participating in both SR&ED and OIDMTC, simultaneously. This would have been a massive blow to the industry. We successfully advocated for a change that allowed companies to access both programs.
- There is a big difference, however, between these examples and what is happening today.
- In the past, we could wait for the proposed legislation to be released, analyze it, build a proposal and ensure that our cause was heard by the right people.
- In today’s fluid environment, this approach wouldn’t work. The government is making decisions on the fly and trying to affect change immediately.
- We have an opportunity to fuel the government with our ideas ahead of time and influence how they fill in current gaps.
- It’s not enough to say how and why the proposed legislation doesn’t cut it. We need to combine our ideas and present them for consideration before the next legislation is drafted.
- The good news is that, from our experience, the government is quite receptive to proposed ideas, as long as:
- They genuinely help the government address its public policy objectives.
- They’re well-articulated and supported by numbers, facts, examples and projections.
- They should be general enough to apply to a large group of companies or industries.
- We also shouldn’t forget about programs that already exist and are available (SR&ED, IRAP and others). Companies should be proactive in utilizing these programs and leverage them to secure reliable sources of funding past COVID-19.
We encourage you to take the insights from this forum and leverage your channels to get your thoughts across. To facilitate the process, we created a simple form where you can submit your thoughts. We will aggregate the ideas and deliver them to the government via available channels.