Telecom titan urges action to stave off collapse of Canadian high-tech sector

The ongoing collapse of the Ottawa telecom cluster may be the "canary in the coal mine" signaling imminent danger for all Canadian high-tech industries, says a new report authored by Dr Terry Matthews. The chairman of Mitel Corp and March Networks says that without urgent policy and program support by the federal government, further critical mass will be lost and Canada will revert to branch office status with critical decisions made in foreign jurisdictions.

Matthew's analysis and recommendations are contained in a reported issued by the Canadian Advanced Technology Alliance (CATA) and flesh out many of the concerns he expressed in a keynote address at the recent RE$EARCH MONEY Conference (June 5/08). The reasons Matthews cites for the precarious status of Canadian high-tech are many, and while some are beyond the control of the federal government, action is still required to ensure that the deterioration is reversed or stopped.

"Our advantage is quickly slipping away in today's globalized technology and business environment," writes Matthews. "Despite a few high profile Canadian companies, global brand companies like Nortel and RIM are the exception, not the rule."

Matthews outlines seven areas where Canada must take immediate action: lack of venture capital, tax treatment of foreign private investors, impact of a strong Canadian dollar, low levels of business-funded and managed R&D, government procurement, loss of critical mass to attract high-tech support companies, and a growing shortage of adequate expertise.

Matthews laments the demise of Technology Partnerships Canada and recommends either expanding the Strategic Aerospace and Defence Initiative to include ICT or create a new program.

On low R&D spending, he urges a "serious reform" of the SR&ED tax credit program, direct government grants or subsidies for new product development by young companies, and a dramatic expansion of the Industrial Research Assistance Program. A copy of the report can be obtained by contacting CATA (www.cata.ca).

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