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A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.



Something Ventured:
January 27th, 2006

By Brent Holliday
Greenstone Venture Partners


Is There Anything To Harp About?


“Nobody wants him,
He just stares at the world,
Planning his vengeance,
That he will soon unfurl” – Black Sabbath, Iron Man


Stephen Harper is the Prime Minister of Canada.


He is 46 years old.


He is not rich.


He is not from Quebec.


Ask anyone in urban Montreal, Toronto or Vancouver if they actually voted for the man.


Ask him if he cares what urban Montreal, Toronto and Vancouver people think at this point.


We are not making this up.


We can’t make this up.


We’re $30M in debt, have no leader and we’re stuck with Belinda Stronach.


--- New commercial from the Liberal Party of Canada


Well that was fun wasn’t it?  Now that the campaign is over, the votes are tallied and the Conservatives are the new government, we can all get back to work and see just how scary a weak minority government led by Harper can be.  Answer: not scary at all, unless you fear elections. 


In looking through the Conservative agenda for Canada, there was nary a mention of the technology or knowledge industry.  Education initiatives were mainly about pre-school.  Does this mean we will be ignored?  Not at all.  The economy was not an issue to politicos aiming to get elected because it is humming.  What is important about the Conservative agenda is that they want smaller government and strong monetary policy, not Keynesian “we-know-better-how-to-spend-your-money-than-you-do” Liberal and NDP philosophy.


If Stephen Harper could enforce his entire dream for Canada, it wouldn’t be that different from Gordon Campbell’s dream for BC when it comes to the government’s role in business.  The subsidization of business, handouts in the form of grants and weak loans, would disappear over time.  Tax credit support for specific industries or special industries is a no-no under his views, but tax credit support to encourage re-investment in capital, training and R&D will be likely, as long as it is broad in scope (i.e. not just for one particular industry).


After being largely ignored as an industry in the 90’s by the provincial NDP and growing to 50,000 employees despite the government, this industry is not that reliant on handouts anyway.  We have fought for certain amendments to the employee standards act that reflect how our industry works differently than, say, the forestry industry.  We have been a voice in the changes to capital gains tax recognition for stock options and other tax reductions.  So advocacy and liaison with government is and will always be important.  But now we have a federal government for at least two years that will try and get out of our way as a technology industry more so than ask what they can do for us.


One thing about not electing any Conservatives in urban Vancouver is that we have lost the ability to have a senior Cabinet member from our fair city.  David Emerson was (is) a right leaning Liberal on business issues and was a great boon for BC’s technology industry as Industry Canada’s head because he was right here in our backyard and very accessible.  Now, we might have to drive to Chilliwack or Kelowna to find a senior Cabinet member of the new government and my guess is that the Industry Canada post will come from Alberta.  So much for the “West Wants In”…. except for Vancouver, where we want to be politically neutered in Ottawa and have our elected officials rot on back benches in the opposition.


If the Conservatives stick to their game plan, bearing in mind the fact that they need support from any or all of the other parties to do anything, the real result for us in technology in BC is that we will be largely ignored, which is OK when times are good. 


Will the NRC/IRAP programs be gutted, especially the TPC?  There will definitely be a review.  TPC will likely be torn apart because it is symbolic of Liberal hand-outs and politically it is a hand grenade.  Commercialization programs are OK under Conservative philosophy largely because of market failure.  The government does play a direct role where the market doesn’t work.  Commercialization of un-proven technology always fits under this description.


Nothing from Ottawa that has direct bearing on our businesses will get a short fix.  Harper thinks very long term, even if his political situation is not stable beyond 18 months.  So, our important need to be able to find experienced talent from other areas and incent them to move to BC will not get a short fix.  The need to attract more early stage capital from other jurisdictions will get no immediate help from the Harper government.  We have to deal with the reality of a $0.90 dollar, a global market for supply, production and sales and the shortage of good talent when the industry is doing well.  And we can’t look to Ottawa to do anything specific for us in the next few years, that we will feel immediately.


So let the debates rage on in the halls of Ottawa power about health care, federalism and foreign policy.  Enjoy the theatre of it all.  But make hay with what tools you currently have handy and don’t look to our new smaller, less likely to handout cash, government for any gifts.  We’re on our own out here.  And that might be just fine.


What Do You Think? Talk Back To Brent Holliday


Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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