How's your Digital Adoption going?
A $4 billion program is off to a slow start. Maybe you can tell me why
Today I have news about the slow start of a major federal program to increase the online activity of Canadian businesses. I have theories about why it’s going so slowly. And I’m hoping readers can help me fill in more blanks.
The program is Boost Your Business Technology. It’s part of the $4 billion Canada Digital Adoption Program (CDAP) announced in Chrystia Freeland’s first budget as finance minister in 2021. It gives qualifying small and medium-size enterprises (SMEs) grants of up to $15,000, and interest-free loans of up to $100,000, to improve their online capability. (CDAP has another component, Grow Your Business Online, which offers smaller payments to smaller businesses and which we’ll essentially ignore today. This post will be quite enough of an acronym festival without it.)
Every government announcement about CDAP uses tremendously excited language. “Unprecedented and historic investments.” A “game-changing new effort.” A “Canadian technology corps” featuring “28,000 young Canadians” building “the Canadian-headquartered global champions of tomorrow.”
The program responds to a real need. Canadian companies chronically lag the international competition in using information and communication technology. In fact, the problem has been getting worse. That hurts the performance of an economy that’s already expected to underperform.
The feds backed their talk with serious money. Amazing money, actually: CDAP’s $4 billion is four times as much money as the Liberals put into their entire Innovation Supercluster program.
So how’s it going?
Slowly. So slowly that a couple of people with knowledge of the program gave me some numbers reflecting small businesses’ participation in Boost Your Business Technology. I checked those numbers with ISED, the federal department of industry.
The numbers suggest that in the early going, a government that’s trying to give away a lot of money is having a hard time finding takers.
When Boost Your Business Technology was announced, the department said “up to 70,000 SMEs will be supported by Boost Your Business Technology funding.” By Nov. 30, two-thirds of the way through the program’s first year, only 1,123 SMEs had received grant payments. Of those, 312 went on to the next step and had their applications for zero-interest loans approved. Those 312 loans have a combined value of $17.6 million.
The loan component is administered by the Business Development Bank of Canada (BDC). BDC’s corporate plan for the 2023 fiscal year tells us where they hoped to be by now. That corporate plan anticipates that by the end of the fiscal year on March 31, 3,840 firms will have loans approved, for a total of $208 million paid out.
You’ll note that 312 is less than 3,840, and $17.6 million is less than $208 million. Let’s put a finer point on that observation: Two-thirds of the way through the fiscal year, the loan component was only 8% of the way to its target for the year.
We’ve reached the point in the column where I normally make great fun of everybody involved. But in a huge plot twist, I’m not going to do that today. I’ve spoken to people involved with the program — people in the private sector chasing all that sweet grant money — and I’ve learned that the mere hope of getting those grants, and a piece of those loans, is driving a frenzy of activity among digital-services firms.
Why am I writing about this? And why am I making you do at least some of the work I had to do to even begin to understand the damned thing?
A few reasons. First, because as I’ve said, Canada’s productivity problems are often private-sector problems. Governments, plural, going back many years, have had limited success inciting business to use new technologies. That failure is costly for the whole economy.
Second, because this government is trying harder than many of its predecessors to fix the problem. Or at least, it’s spending more money: CDAP resembles a pilot program a decade ago under the Harper Conservatives, except the Trudeau/Freeland version is designed to spend 50 times as much money.
Third, because as you might predict — as, in fact, I sort of did — it’s all coming out a bit scrunched and sideways. Takeup is very low. The program seems unlikely to have the effect it was meant to have. But just when I’m tempted to play hanging judge — shut it down! Throw the bums out! — I notice the feeding frenzy it’s sparked in the IT sector and I think, maybe the thing isn’t useless. Maybe its unintended consequences are at least interesting. And maybe it can be tweaked to get better results.
And that brings me to the main reason I can’t stop thinking about CDAP: because today’s Ottawa is designed to ensure programs like this never get fixed. We have a government that thinks announcements are results. A thin-skinned government that can’t admit it sometimes gets things wrong, so it’s often the biggest obstacle to setting them right. Across the aisle, an opposition with about two answers to every question — durr, gatekeepers, triple-triple-triple. So the process of give-and-take that might improve the way we’re governed has gone away and left no forwarding address.
But maybe citizens can play a role? Maybe if you and I assume good faith, share what we know, and put some energy into ensuring that government doesn’t become a never-ending remake of Groundhog Day — maybe we can elevate the quality of the discussion? I figure it’s worth a try.