B.C. tech association calls for province to move towards tech and away from resource economy

The B.C. Tech Association (BCTA) is calling for the provincial government to provide more technology investments as natural resources become less important to the province’s economy.

The association has released a report calling on Premier John Horgan’s NDP government to invest in sectors with growth potential, prioritize education and skills training to drive expansion of the knowledge-based economy and capture better data to drive decision-making.

The authors argue that too many B.C. companies stay small and that the province should help to develop large tech firms that can compete globally. By doing so, the report says that the province will ensure that it has a reliable tax base in the future.

The report says that B.C.’s aging population poses financial risk, that an overheated housing market is an unhealthy source of revenue and that resource revenues are declining. Income and consumption taxes on individuals, meanwhile, provide B.C.’s most significant and least volatile source of revenues, the authors argue.

In an emailed response to Research Money, BCTA president and CEO Jill Tipping said that tech companies in B.C. stay smaller than in Ontario, Germany and Israel. Only two percent of B.C. tech companies have 100 or more employees, according to Tipping.

"They stay small rather than scale up. And the key reason is that that BC’s tech companies can’t access sufficient senior talent experienced in scaling a company and succeeding on a global stage," she said.

She added that Ontario has had far greater success than B.C. in scaling up tech companies and pointed to federal investments in 2019 in the FedDev Ontario Scale-Up Platform delivered by Communitech, Invest Ottawa and MaRS Discovery District. The platform provides advisory services, specialized programs and network connections to companies trying to scale-up.

She says the BCTA is asking for the federal and B.C. provincial governments to invest in ScaleUp BC, a similar platform, to allow tech companies to "access the same services their counter-parts access in Ontario."

"The spending asks of the tech sector are very modest. For instance, the ScaleUp BC program would cost the province $10M over 4 years and support 800 companies to scaleup," she said.

"That’s a fantastic return on a small investment! And [it's] an investment to power the growth that can pay for the needs of other sectors and important social programs."

Government investment plans must be specific: economist

UBC economist Werner Antweiler said the BCTA’s goals are “not necessarily a departure from what the government wants to do.”

However, Antweiler said the BCTA must be specific about what it wants and where investment is needed in the tech sector.

“Obviously, you can spend more money, but you have to make choices,” Antweiler told Research Money, adding that the province must ensure its investments help society.

He said that businesses sometimes want governments to do things that are beyond their capabilities, and that money for new technologies must come mainly from companies that have the entrepreneurial ability to develop them.

He added that it’s not up to the government to “make companies bigger or smaller.”

B.C. might not have enough venture-capital firms to fund startups, said Antweiler. But he said it's "very hard" for governments to create VC companies, noting that "most governments around the world have tried."

Unlike the Alberta government, which relies heavily on natural-resource-related revenues, B.C.’s provincial revenues are not “seesawing with the market,” because natural resources have a much smaller impact on Canada’s westernmost province. B.C. also has a sales tax while Alberta does not, so B.C. taxation is steady and not particularly onerous, Antweiler said.

Antweiler noted that the province could do more to attract global talent and innovation by demonstrating the region’s diversity and favourable political climate, which hold appeal over other places. Provincial investment in tech sectors in which B.C. dominates, such as biotech and software, as well as the green economy, could also help.

But the investment plans need to be specific, he said.

“You can’t just say we want to be Silicon Valley and the next day we’re going to be Silicon Valley,” he said. “[The tech sector] has to grow organically.”

In response to Antweiler's comments, BCTA president and CEO Jill Tipping said that "there is a role for government in economic development but it isn’t to second-guess the market on which technologies merit investment."

"Government has a key role in measuring the economy and its trends accurately and completely, focusing its ministries, resources and policies on the needs and priorities of today’s economy rather than yesterday’s economy and investing in the programs that help small companies grow."

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