Speech Article from  Federal Economic Development Agency for Southern Ontario

Archived - Keynote Address at the Business Innovation Summit 2015

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Speaking Points

The Honourable Gary Goodyear,
Minister of State for
the Federal Economic Development Agency
for Southern Ontario

Toronto, Ontario

April 29, 2015

Check Against Delivery

Good morning.

It's a pleasure to be here at this summit once again this year. I'd like to thank the Conference Board of Canada for the opportunity to speak to you all.

I am pleased to be here in my capacity as the Minister of State for the Federal Economic Development Agency for Southern Ontario.

FedDev Ontario, as we are better known, delivers programs and services to strengthen the economy and position the region to compete globally.

I am inspired every single day in this role as I hear about and visit the truly innovative companies in our region.

Companies such as Flixel Photos Inc., whose Cinemagraph software adds moving elements to hi-res photos and has also been used on the television show America's Next Top Model.

Companies such as Memex Automation, whose MERLIN technology is revolutionizing the way manufacturers can do businesses by improving productivity.

It's no secret that productivity growth in Canada trails behind those of key competitors. One key reason is that Canadian companies tend to invest less in R&D, advanced technology, and machinery and equipment than their international counterparts.

Our small, innovative companies are coming up with technologies and tools with benefits in multiple industries. However, they often struggle to find the funds to grow, invest in R&D and bring their ideas to market. This lack of access to risk capital in Canada has been cited as a major factor limiting the growth of our knowledge and R&D intensive firms.

We need multiple players to work together to tackle these issues head on to create a Canada that can thrive in the global, knowledge-based economy of the future.

I know that each of you here today recognizes the important role that innovation plays in ensuring long-term economic prosperity for our country.

Governments at all levels, academia, research and community organizations, investors and businesses must collaborate to innovate.

Our Government is committed to doing its part, as outlined in Economic Action Plan 2015, tabled last week by my friend and colleague Joe Oliver.

We are fulfilling our promise to balance the budget in 2015. Canada's Economic Action Plan has been underpinned by prudent fiscal management and the Government`s low-tax plan for jobs, growth and security.

Our strategy is working.

Since the depths of the Great Recession, more than 1.2 million net new jobs have been created—overwhelmingly full-time, well-paying and in the private sector.

At the same time, the Government has lowered taxes every year since coming into office, and has delivered the lowest overall federal tax burden in more than 50 years.

According to KPMG, total business tax costs in Canada are the lowest in the Group of Seven (G-7) and 46 percent lower than those in the United States.

Low taxes encourage capital investment, which in turn spurs job creation.

But we know we can do more to support small business and entrepreneurs.

Economic Action Plan 2015 cuts taxes even further for small business owners, as it proposes to reduce the small business tax rate to 9 per cent by 2019. This will be the largest tax rate cut for small businesses in more than 25 years.

It is estimated that this measure will reduce taxes for small businesses and their owners by $2.7 billion from 2015 to 2020.

For example, the amount of federal income tax paid by a small business with $500,000 of taxable income is already 34 percent lower in 2015 than in 2006. By 2019, our Government will have decreased taxes for this business by 46 percent since 2006.

Alongside lower taxes, businesses also need access to capital if they are expected to develop and transform.

That is why our Government is introducing changes to the Canada Small Business Financing Program. This program facilitates the extension of loans by participating private sector financial institutions to small businesses, for the acquisition of real property and equipment, and for leasehold improvements.

The program helps new businesses get started; helps established firms make improvements and expand; improves access to loans that would not otherwise be available to small businesses; and, stimulates economic growth and creates jobs for Canadians.

Economic Action Plan 2015 proposes to amend the Canada Small Business Financing Act to make two changes: first, increase the maximum loan amount for real property from $500,000 to $1 million and second, raise the small business eligibility criteria from firms with gross annual revenues of $5 million or less to firms with gross annual revenues of $10 million or less.

We will also propose to increase the maximum duration of government coverage for real property loans from 10 to 15 years under the Canada Small Business Financing Program.

These changes will help enhance the ability of small businesses across Canada to secure capital, grow their business, and create jobs.

Other actions we are taking include:

  • Expanding services offered through the Business Development Bank of Canada and
  • Export Development Canada;
  • Cutting red tape and improving the tax services of the Canada Revenue Agency; and
  • Providing new tools, resources and mentoring support through the Action Plan for Women
  • Entrepreneurs and funding to Futurpreneur Canada.

The last area of the Budget that I will touch on briefly is international trade.

Access to foreign markets and the reduction of trade barriers are also necessary to help Canadian exporters grow.

Since 2006, the Government has concluded free trade agreements with 38 countries, bringing Canada's total to 43.

With new trade agreements complete and more soon to be in place, Economic Action Plan 2015 proposes $152 million in trade promotion investments over the next five years to help Canadian businesses fully capitalize on global opportunities.

Creating the best conditions for businesses to succeed is also a key focus of FedDev Ontario. Collaboration for innovation is especially important in southern Ontario given our tremendous assets.

Our region is home to more than a third of Canada's population. It contributes a significant amount to the national economy.

We have a highly-educated population and world-class research and educational institutions.

We have strategic access to the U.S. market and established clusters of strength in areas such as manufacturing and information and communications technology.

We also have plenty of entrepreneurial talent. In fact, Canada is ranked second in the 2015 edition of the Global Entrepreneurship Index, which measures the quality and scale of small-business start-up activity.

To help nurture this talent, FedDev Ontario delivers the Investing in Business Innovation initiative.

This initiative is aimed at strengthening the innovation ecosystem in southern Ontario. It supports not-for-profit organizations who are working with entrepreneurs looking for seed financing and skills training. It supports start-up companies with an existing product that they want to further develop and bring to market. It also supports angel networks and associations, so we can increase the amount of private capital and mentorship available to our entrepreneurs.

Through the first intake of the initiative launched in 2010, FedDev Ontario committed nearly $57 million to 86 businesses, leveraging close to $155 million in angel and venture capital investments.

We also invested more than $3 million in 13 angel investor associations and networks. In total, the networks have reported they were able to grow their registered members from 283 to more than a thousand, leading to support for more than 260 companies.

The promising results and positive stakeholder feedback on the initiative led us to launch it again.

Today, I'm pleased to announce more than $4.5 million for eight companies in the Toronto area through the Investing in Business Innovation initiative. I'd like to recognize the companies as they have joined us here today. They are: AutoServe1, Exact Imaging, Offset Market Exchange, OTI Lumionics, PUSH Design Solutions, Sightline Innovation, StackAdapt and WealthSimple Financial.

This brings the total amount of Investing in Business Innovation initiative announcements since April 1, 2014, to nearly $42 million in 47 projects. These recipients anticipate creating more than 2,700 jobs.

Working in different sectors, the eight companies announced today represent the breadth and diversity of the southern Ontario economy. What they have in common is their vision to use technology to bring about change.

For example, OTI Lumionics, which I might add is a spin-off from the University of Toronto, is making organic light emitting diode, or OLED, technology more accessible in various product applications, including display and lighting. OLED efficiently converts electricity into light using environmentally-friendly carbon-based organic dye molecules.

Sightline Innovation has developed its Verify technology to automate the quality inspection process. Most quality assurance tasks are still completed by manual inspection that doesn't always meet the needs of today's manufacturers. This technology presents widespread benefits for the manufacturing sector, and especially our automotive sector here in southern Ontario.

All of these companies have secured private investors and will contribute to keeping and creating job in the region. They will also expand into new markets, getting brand recognition beyond our borders.

This is exactly the type of activity our Government is proud to support and wants to see happen more and more.

It is my hope that the programming offered by the Government of Canada and the measures outlined in our recent Budget will help stimulate more R&D and the adoption of advanced technologies.

I'd like to end as I began in saying that various partners need to work together to boost innovation in Canada. This is the only way we can bring new products into the hands of customers both here and around the world.

I hope you enjoy the rest of the conference.

Thank you.

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