Non-risky business

Is there any business activity in Canada that doesn’t get a handout from government? Doesn’t seem like it. No project or activity is too big or too small that it cannot be rolled onto the backs of taxpayers. Okay, there is one exception: Pipelines. We don’t even allow new pipelines. So aside from pipelines, name one other Canadian industry that has never been or is not now seeking some form of assistance from government.

This being federal budget day 2018, Canada’s entrepreneurs and innovators, instead of entrepreneuring and innovating, will be gathering around their computer screens to see whether Finance Minister Bill Morneau will again add some new essential fiscal tools to the existing kits that will free them from the burden of dealing with market forces and provide them with the essential catalytic assistance without which they will not be able to entrepreneur and innovate.

The traditional definition of entrepreneur (from the Concise Encyclopedia of Economics) captures the spirit of the concept: “Someone who organizes, manages, and assumes the risks of a business or enterprise.” That’s the ideal. In Canada, entrepreneurs apparently need government to help them organize and relieve the risk that they are, by definition, supposed to be carrying.

Government budgets, federal and provincial, have become strategic incentive machines Canada’s entrepreneurial classes need to get them into the mood for entrepreneurship and innovation: more subsidies, bigger grants, investment injections, training incentives, partnerships, R& D support, financing services, regional development aid, cheap loans, repayable grants, technology backing, innovation deals, cluster funding, gender-innovation frameworks, small-business loan programs, medium- sized loan programs, big- business loan programs.

It was Morneau’s last budget that introduced the $950-million plan to “accelerate innovation through super-clusters.” Last week, just in time for this year’s budget, Innovation and Economic Intervention Minister Navdeep Bains unveiled the details of the supercluster strategy by rolling out a fresh load of jargon to explain it all. He said the government had “challenged” Canadian business and research institutions “to collaborate with other innovation actors … to propose bold and ambitious strategies that would transform regional innovation ecosystems and develop job- creating superclusters of innovation.” Guess what? Canada’s entrepreneurial innovators met the challenge by coming up with ways to accept the government aid!

Five Canadian superclusters have been identified as recipients of the $ 950- million subsidies: digital in British Columbia ( corporate players include Telus, Shoppers Drug Mart and Microsoft); agriculture on the Prairies (Maple Leaf Foods and DowDuPont); manufacturing in Ontario ( Linamar, Myant and Woodbridge Group); AI- supply chains in Quebec (Air Canada, Agropur, NEXT Canada, CN and Aldo); and oceans (Emera, Scotia Seafood and CFFI Ventures).

The corporate names make it clear that businesses willing to accept handouts from taxpayers span the economy. There is no level of innovative entrepreneurialism or entrepreneurial innovation that does not receive federal support. Big, rich, established giants right down to the youngest of Canada’s incubators and startups are the targets of government giveaways in the name of fostering entrepreneurialism and innovation. Even declining sectors (newspapers come to mind) want help.

For smaller businesses, there are scores of programs, including the Small Business Research, Financing and Services program to enhance the growth and competitiveness of small business and encourage entrepreneurial activity ($ 100- million over three years). Ottawa has a handy website to help innovative entrepreneurs do their jobs. “Find money for your business,” it says. A number of private consultants also specialize in hooking entrepreneurs up with government bureaucrats. Last year, Morneau announced a $ 400- million cash infusion into the Business Development Bank of Canada to fund a new Venture Capital Catalyst Initiative to increase late- stage venture capital available to Canadian entrepreneurs with young, established businesses.

When Ottawa and the provinces aren’t supporting startups they are at the barricades with declining industries, mature operating businesses and uneconomic ventures. It goes without saying that governments are plowing billions into clean energy, solar and wind power, electric cars and other ventures that the entrepreneurial classes are apparently unable — or, perhaps wisely, unwilling — to fund on their own.

No entrepreneurial sector seems to need more government incentives than the digital space, where the objective is to make Canada an advanced, digital environment filled with artificially intelligent, blockchain- empowered green fintechs. Funding here includes $ 125 million to launch a “Pan- Canadian Artificial Intelligence Strategy.”

Last month, Ottawa listed some of the companies set to benefit from a new $ 1.3- billion Strategic Innovation Fund (SIF) announced by Morneau in his last budget. The objective of SIF is to attract and support high-quality business investments in Canada’s most dynamic and innovative sectors: Automotive, aerospace, clean- tech, information/communications technology, and agri- food. The funds will support innovative business activities such as R&D projects, firm expansion, attraction of large-scale investments to Canada and collaborative technology-demonstration projects.

And there may be more to come. The Globe and Mail reports that Ottawa is set to propose a new automobile regime under NAFTA that includes incentives for auto companies to build new factories or expand existing ones in North America, use more North American steel and aluminum, and spend more on research and development.

Meanwhile, Ontario Premier Kathleen Wynne insists her province needs at least $2.5 billion to support the auto and agri- food sectors in that are becoming non- competitive on world markets.

They say Morneau’s 2018 budget on Tuesday will disappoint Canada’s entrepreneurs since there are expected to be few new initiatives promoting innovation and risk-taking. What on earth will our innovating, risk-taking entrepreneurs do if the government doesn’t help?