Canadian Manufacturing

Small businesses not leveraging Canada’s digital strengths

A study measuring Internet usage in business says Canada's SME's are missing the boat in the digital age and calls for a Digital Tax Credit to help them improve

October 8, 2014  by Jennifer Ditchburn, The Canadian Press

OTTAWA—Some of North America’s most influential online companies warn that Canada is losing its international edge on the Internet because businesses are slow to take up digital technology.

The Internet Association, a group that calls itself the voice of “America’s leading Internet companies” including Google and Facebook, released a paper October 7 on Canada’s competitiveness in the digital economy.

The paper points to statistics showing Canadians are among the most enthusiastic users of the Internet in the world, taking into account the time they spend online and their social networking habits.

But small and medium-sized businesses are another matter. Only three per cent of the Canadian retail economy is online compared with 23 per cent in the United Kingdom. The economic contribution from Canadian Internet companies is far below that of other G20 countries.


Such issues have been raised for years. The Council of Canadian Academies Expert Panel on Business Innovation outlined the same concerns in 2009.

The federal government finally produced a digital strategy this year, after years of discussion.

The Internet Association, while supporting the strategy, calls for faster, more aggressive action.

Its main proposal is a Digital Renovation Tax Credit to help businesses adopt digital technologies.

Colin McKay, head of public policy and government relations for Google Canada, used a recent trip to Prince Edward Island to underline the need to go digital.

“You have the ability as a small business to target someone who is looking for your business at that very moment and give them some specific information about what services you have available,” McKay told an Economic Club luncheon October 7.

The paper also takes a swipe at Canadian privacy laws, including the Personal Information Protection and Electronic Documents Act, legislation that was initially brought in to make consumers feel comfortable online.

The report notes that British Columbia and Nova Scotia require public-sector data to be stored locally and not in an computing cloud managed elsewhere.

“By forcing companies to store their data locally, it hinders their competitiveness and causes governments to waste money because online storage reduces costs and complexities,” the paper said.