Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 316 INFORMATION TECHNOLOGY ASSOCIATION OF CANADA ASSOCIATION CANADIENNE DE LA TECHNOLOGIE DE L’INFORMATION ITAC on Digital Economy | Page 1 THE VOICE OF THE INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT) SECTOR IN CANADA | www.itac.ca Introduction: Modern Digital Economy Many researchers note a correlation between digital infrastructure, technology adoption, and a country’s productivity levels.1 Canada could be looked to as one example: digital technologies are indeed modernizing traditional industries such as mining, automotive and manufacturing, helping them increase productivity and global competitiveness. That said, Canada continues to lag behind other developed nations when it comes to business adoption of technology—due in part to a taxation and regulatory environment that fails to incent private sector investment in digital technologies and infrastructure. To realize the economic, social and democratic benefits of the digital economy, Canada must work harder to create world-leading digital infrastructure and facilitate the broader adoption of technology. This is why ITAC recommends the following policy changes as part of the Government’s Innovation Agenda consultations. Create a Digital Infrastructure Canada’s vast geography poses many challenges for connecting people across the country. This distinct challenge has led Canadians to create some of the most innovative telecommunications companies in the world. Network infrastructure is the backbone that supports and connects all sectors of the economy, while delivering social benefits such as e-learning and telehealth. Without this infrastructure, there would simply be no modern Canadian economy. Change the Capital Cost Allowance Rate (CCA) to encourage all companies to invest in digital technology The Government clearly understands the linkage between technology investment and productivity growth. For example, in 2007, this understanding drove the introduction of an accelerated capital cost allowance, to encourage investment in machinery and equipment used in manufacturing and processing. In 2016, that same logic should apply to all participants in the economy seeking to boost productivity and spur innovation through the broader adoption of technology. Capital cost allowances generally favour adoption of information and communications technology (ICT). However, ICT is spread across a broad swath of investment classes—and understanding the allowance for a full package of ICT tools (e.g., from cloud computing, to TO COMPETE TO WIN in the next phase of the global digital revolution, Canada must take bold steps now to lay the right foundation. The Innovation Agenda presents an incredible opportunity for the current government to make substantive policy changes—thereby benefiting all Canadians by growing our economy and ensuring continued prosperity for our country. The Information Technology Association of Canada (ITAC) has identified four fundamental priorities that must be addressed by government in order for the Innovation Agenda to succeed: Modern Digital Economy, Trade and Competitiveness, Modern Digital Government, and Talent and Skills Development. This is the first of ITAC’s Innovation Papers, a four- part series that: • provides insight into the state of Canada’s digital economy, and • offers recommendations to enable Canada’s Information and Communications Technology (ICT) sector to reach its world-class potential. Together with industry, ISED and all government stakeholders can build an Innovation Agenda that works for Canada. 1 Research includes the following: Innovation and Business Strategy: Why Canada Falls Short: The Expert Panel on Business Innovation (Ottawa: Council of Canadian Academies, 2009), http://www.scienceadvice.ca/en/assessments/completed/ innovation.aspx; The Global Information Technology Report 2016: Innovating in the Digital Economy (Geneva: World Economic Forum, 2016), http://www3.weforum. org/docs/GITR2016/WEF_GITR_Full_Report.pdf; and The Relationship between ICT Investment and Productivity in the Canadian Economy: A Review of the Evidence (Ottawa: Andrew Sharpe and the Centre for the Study of Living Standards for the Telecommunication Policy Review Panel, 2006), http://www.csls.ca/reports/csls2006- 05.pdf