Digital Policy Salon: Speech from the Throne Special Issue
Welcome to the 27th issue of the Digital Policy Salon.
Yesterday’s Speech from the Throne outlined the Canadian Liberal Government’s priorities for the coming term in Parliament. Announcements included a plan to create one million jobs, with a focus on the sustainable economy, workforce upskilling and reskilling, digital infrastructure, and more: our expanded Policy Updates section this week covers key takeaways from the speech’s content.
Commentary following the speech focused on support for Canadians who have lost work due to COVID (including the CERB and its transition to EI and other benefits), and our first perspective piece takes on this topic. A smaller mention, but an essential conversation for the digital economy, is the move to consider digital taxation: this complex topic is addressed in a second piece on taxing digital goods and services. In addition, our interview piece and weekly “what we’re reading” section both examine the potential impact that better digital infrastructure could have on Canadian employment and wellbeing.
The theme of job creation and training in the digital economy is a core component of our recent Revised Labour Market Outlook for 2022, a publication featured in our research section. Finally, our twitter highlight underscores a new online program offering in software engineering and data science for youth across Canada.
Thank you, as always, for joining us in this week’s issue. If you haven’t yet had a chance to let us know what you think of our content, we appreciate your feedback.
Policy Updates 🇨🇦
On Wednesday, the government of Canada delivered its updated throne speech for the 43rd Parliament. Among the initiatives outlined by the government are many that ICTC’s research, policy, and programs have covered and reinforced, including Canada’s cleantech opportunity, retraining and upskilling, improving digital services and infrastructure, and support for women’s labour market and entrepreneurship opportunities.
Below is a summary of the initiatives and measures most relevant to the digital economy.
While the government has yet to provide the specific details, implementation measures, and funding arrangements that would bolster this plan, a document outlining this, in addition to Canada’s current economic and fiscal position is expected later this fall.
Emergency measures to support economic recovery
The government is launching a campaign “to create over one million jobs,” a figure which would restore employment to pre-COVID levels. This plan includes a number of emergency measures, such as:
- Extending the Canada Emergency Wage Subsidy (CEWS) to next summer
- Transitioning previous Canada Emergency Response Benefit (CERB) recipients to EI or the Canada Recovery Benefit (CRB), and expanding EI eligibility to include the self-employed and gig workers
- Expanding the Canada Emergency Business Account (CEBA) and improving the Business Credit Availability Program (BCAP), as well as providing emergency support for industries that have been hardest hit (travel and tourism, hospitality, cultural industries).
Long term plans for a resilient digital economy echo the priorities outlined in ICTC’s recent whitepaper
The government’s plan for the digital economy includes new and renewed investment in digital infrastructure and training/upskilling programs. Among other things, the government has proposed to:
- Fund training/upskilling programs in growing sectors.
- Accelerate the Women’s Entrepreneurship Strategy, which helps Canadian women grow their businesses.
- Scale the Youth Employment and Skills Strategy, which creates paid work experiences for young Canadians.
Investments in clean tech, clean energy, and green infrastructure are a cornerstone of the government’s plan to create jobs
Proposals on these topics include plans to:
- Support job growth by investing in retrofitting, climate resiliency, and new transport options.
- Accelerate timelines for the Universal Broadband Fund, with a continued focus on eliminating the infrastructure gap for Indigenous Communities.
- Legislate a goal of net-zero carbon emissions by 2050 and help industries like manufacturing, natural resources, and energy get to net-zero.
- Create a zero-emissions vehicle (ZEV) strategy, including support for charging stations and other ZEV infrastructure, and support for Canada’s nickel and copper companies (which contribute to the production of ZEV batteries). The government also plans to make Canada a top destination for ZEV companies.
- Support the transition to clean energy through a new Clean Power Fund and new investments in renewable energy, clean energy, and clean tech solutions.
Finally, in terms of internet policy, the government has proposed changing tax legislation to address corporate tax avoidance by digital giants, in addition to new measures to address online hate. - Mairead Matthews | email
Our Perspective
Millions of Canadians Accessed Government COVID Supports: Who were they, and were any missed?
On Wednesday, September 23rd, Canada’s 29th Governor General, Her Excellency the Right Honourable Julie Payette, outlined a plan to update Canada’s EI system to include the gig economy: “This pandemic has shown that Canada needs an EI system for the 21st century.”
The speech promised to create one million jobs in Canada, along with an extension of employment support for those in need. The following article, written just ahead of the Speech to the Throne, examines the effectiveness of the CERB, a benefit that supported Canadians throughout the COVID-19 pandemic.
In April of this year, we wrote about the CERB’s similarity to the idea of a UBI and the importance of gathering data on the CERB’s dissemination and impact. One of the central goals of UBI proponents is to ensure that no one who needs an income supplement is “left behind.” The universality of UBI is intended to remove issues of access, barriers to application, and stigma, among other challenges. We can now ask a similar question of the CERB: how effective was it as a blanket approach? As a somewhat targeted benefit (in that it was only intended for those who experienced a decrease in income due to COVID-19), does it illuminate whether or not a more universal program is necessary?
Who Accessed the CERB?
The CERB emerged in response to severe job losses across the country. Statistics Canada estimated that employment dropped by 15% from February to late April 2020. Using different sources and methods, other research teams found that in some provinces, more than one in five households experienced a job loss, and that workers aged 20–64 years experienced a 32% decline in aggregate weekly work hours. Many sources found that those most impacted by COVID-19 were employed in public-facing industries impacted by shutdowns, such as the service industry. Indeed, 43% of those employed in the accommodation and food services sector applied for the CERB.
While the CERB is designed to be unilaterally applied and easy to access, it nevertheless faces some challenges in equitable distribution. For example, one study found that differences in provincial income assistance (IA) schemes and their interactions with the CERB means that recipients are treated asymmetrically depending on the jurisdiction in which they live.
Gender
During the early months of the pandemic, the Government of Canada’s Gender-Based Analysis Plus (GBA+) of the CERB found that women’s employment losses were slightly higher than men’s (February to April 2020, 17% vs. 15%, respectively). However, men’s employment increased at over twice the speed of women’s during reopening in May. The GBA+ analysis suggests that this could be due to the increase in goods-producing industries, more commonly staffed by men, and/or women’s likelihood of shouldering caregiving responsibilities during school disruptions. The Canada Recovery Caregiving Benefit (CRCB) is intended to support workers who quit their jobs to care for a family member or child after the dissolution of CERB, and while women are expected to access this more frequently than men, it is possible that women’s careers will thus be disproportionately impacted in the long term.
Indigenous People
A report from July 2020 noted that 13.4% of off-reserve Indigenous people were receiving the CERB, vs. 18.7% of non-Indigenous people, despite comparable employment losses. Other types of financial aid, including funding for off-reserve Indigenous services organizations and funding for Indigenous students has been issued. This topic merits further investigation, both into the reasons for disproportionate access and mitigation for the future.
Nationality and Citizenship
Migrant workers, women, and newcomers were more likely to experience low job security during the pandemic. There were disproportionate rates of newcomers among CERB applicants, and temporary foreign workers and seasonal workers are able to apply for the CERB so long as they meet other eligibility criteria. In addition, unlike means-tested social assistance payments, accessing the CERB will not prevent a newcomer from sponsoring family members to come to Canada.
Taxing the Digital Landscape: Regions around the world move to tax digital trade
Yesterday’s speech from the throne included some of the government’s strongest language yet regarding the taxation of digital companies: “Web giants are taking Canadians’ money while imposing their own priorities. Things must change, and will change.”
In this article, published ahead of the speech in March 2020, ICTC’s Mairead Matthews compares different approaches to taxing online platforms. Included in the article are approaches already in place both internationally — in the UK, France, and Australia — and here at home, in BC, Québec, and Saskatchewan.
What are digital companies and digital services?
Generally, digital companies operate online, delivering a variety of products and services to consumers via the internet. Examples include ride-sharing, content-streaming, social media, and advertising. Digital services, in contrast, are any services delivered to clients and/or consumers via the internet. Digital services can be provided by companies, governments, and even non-for-profits.
What’s all the fuss?
For those in favour of international tax reform, concerns related to digital companies and digital services are two-fold:
The primary concern is that many digital companies aren’t sufficiently governed by corporate tax law.
Under international agreements, governments can only tax the profits of a non-resident company if that company has a permanent, physical presence in their country. A non-resident company is one that is incorporated or registered in a foreign country. A permanent, physical presence is usually a brick-and-mortar office, factory, or store. This rule dates back to the 1920s, when current international tax law was originally established.
For example, an American or British company would not be required to pay taxes on their business profits in Canada if they did not have a permanent, physical presence in Canada.
The general argument is that this type of agreement made sense in the past, when it was relatively difficult to create value or wealth in a country without having a physical presence in that country. But that no longer makes sense today. In today’s heavily globalized, digital economy, it is easier than ever (and in fact commonplace) for companies to create value or wealth in a country without being physically present.
The secondary concern is that the sale of digital services isn’t sufficiently governed by goods-and-services tax law.
In most countries, non-resident companies aren’t required to collect and remit sales taxes for digital services unless they have a permanent and physical domestic presence. This norm was originally established to prevent excessive regulatory burden for governments and multinational companies alike.
Interviews in the Field
Sheltering in Place and Offline: The impact of COVID-19 and broadband access on First Nations communities
Yesterday’s throne speech had the government commit to further investment in infrastructure, particularly for Indigenous and northern communities, with rural broadband specifically being named.
In June 2020, First Nations Technology Council (“Technology Council”) CEO Denise Williams sat down remotely with ICTC’s Faun Rice to talk about the impact COVID-19 has had on Indigenous peoples living in BC and their struggles with basic internet access.
Faun:
To begin, would you mind commenting on some of the primary impacts that you and the Technology Council are seeing on Indigenous communities in BC as a result of COVID-19?
Denise:
The issue of basic access has existed for First Nations communities for a long time, but it’s currently exacerbating several challenges. A significant issue is access to information and benefits. Being able to find out if the Canadian Emergency Response Benefit is available to you and learning where to apply for support is very tricky for people who don’t have internet at home. A lot of First Nations people had community internet access points in the band office or school for example, but during COVID they couldn’t go there because they had to stay at home.
Accordingly, you have people who aren’t able to access information, fill out an application form, or even receive money promptly, because a lot of allocations are distributed through online banking accounts. A cheque being mailed might come slowly, particularly now, so that the people who are the most in need of these resources are having the hardest time accessing them and waiting the longest.
Another specific problem for First Nations communities is that all the K-12 students who were in public school have come home to their communities and are trying to study remotely. Fewer than 10% of First Nations homes in BC have internet access, and fewer than that have hardware, a laptop, or computer connected to the internet. The vast majority of First Nations K-12 students can’t continue their studies like other kids who do have internet access. You can imagine the impact of that. We have a lot of work to do very quickly to ensure that we actually address the fact that it’s a right for all kids to learn, and that now technology has become a foundational part of that right.
Read the full interview here 📖
What We’re Reading
Forget What You Thought About ‘Digital Nomads’
(The Tyee)
Far from extinct in the COVID-19 pandemic era, these remote workers could help rural Canada bounce back.
With the collapse of world tourism… many countries are actively looking for foreigners who might even settle down for a while, if not for good. And they in turn might get our government thinking about domestic digital nomads to revive our rural regions.
Our rural regions and small towns are being steadily depopulated, with a predictable loss of cultural, social and health benefits. Digital nomads could revive whole regions. Provide fast, cheap wifi for the B.C. coast, and communities like Sointula and Bella Coola could boom.
Talking points:
COVID-19 has accelerated the trend of people becoming ‘digital nomads.’ Once seemingly the domain of 20-something coders living in South-East Asian hostels, the pandemic has meant that far more people are working remotely. The next step, it seems, is the travelling component — countries around the world are taking note and creating ‘digital nomad visas.’ This article suggests that Canada should radically improve our rural broadband and encourage our own workers to remain, and foreign workers to join.
The federal government may have had similar ideas, as yesterday’s throne speech made mention of rural broadband and other investments, particularly for Indigenous Peoples and northern communities. Julie Payette’s speech noted that “the Government will accelerate the connectivity timelines and ambitions of the Universal Broadband Fund to ensure that all Canadians, no matter where they live, have access to high-speed internet.”
Remote work effects of the pandemic seem likely to linger, if not remain entirely: a government report from May suggested that 25% of businesses plan to continue to offer remote work after the pandemic. Enabling remote work across the country through improved broadband, including 5G infrastructure (and not only in urban centres) will be vital if the government is to support such businesses and their workers. — Khiran O’Neill | email
Research Visualized
The ‘second wave’ known to accompany epidemics and pandemics is a much-discussed phenomenon these days. A historical lens points to the second wave of the 1918 flu pandemic, which caused even more significant damages than the first, but some analyses find that expectations of such waves shouldn’t be assumed.
Still, as the graphic of Toronto above demonstrates, a second wave appears to be beginning before our eyes, and the throne speech made reference to this, acknowledging that the fall surge seen to date means that “we must do even more.” The speech included mentions of ramping up testing, ensuring Canadians can access a vaccine when it is available, and continuing efforts to make protective equipment more widely accessible.
Our Research
The Digital-Led New Normal: Revised Labour Market Outlook for 2022
In March 2020, Canada entered the beginnings of a recession. The main cause of this recession was a health crisis (COVID-19) unmatched in severity since the Spanish Flu of 1918. Officially declared a global pandemic in mid-March, its rapid spread led to large-scale economic shutdowns and supply chain breakages spanning nations, including Canada. In releasing The Digital New Normal: Revised Labour Market Outlook for 2022, ICTC contributes to the emerging analyses of these twin economic and health crises by updating previous forecasts conducted in the Outlook 2023 report.
COVID-19 has caused ripples across the economy and impacted all businesses and activities. While no business has been completely spared, the pandemic has heightened the importance of digital technology, clarifying its role as the essential fabric of our future economy. A post-COVID future will be one where technology and digital adoption is viewed as essential.
Despite the stark realities brought on by the COVID-19 pandemic, the Canadian digital economy remains remarkably resilient to the current crisis. Due to increased demand for digital services and the ability of many digital economy employees to work remotely, the COVID-19 crisis has actually led to an increase in the digital economy’s share of total employment.
A successful and competitive post-COVID Canada will, by its very nature, be digital-first.
Twitter Highlights
Talk to Us 💬
Send your comments, questions, and tech policy insights to:
- Tyler Farmer 🚀 t.farmer@ictc-ctic.ca
- Faun Rice 🦌 f.rice@ictc-ctic.ca
