Tech-tonic Shifts: Supporting the Growth of a BC Tech “Supercluster”

July 5, 2017
Kristine St-Laurent

Recently Deloitte, with the support of the BC Tech Association, the Research Universities’ Council of BC, Wavefront and the Chief Advisor of the Innovation Network, Dr. Santa Ono released an updated look at the potential to grow British Columbia’s technology sector into a “supercluster”. The report is a response to the 2017 Federal Budget’s announcement that Ottawa will invest up to $950 million to build a handful of Canadian business-led “superclusters” through the Innovation Superclusters Initiative.[1],[2]

BC is home to a rapidly growing tech sector supported by global anchor firms that, combined, are expanding new digitally-based and mixed reality technologies and firms. Of interest, Vancouver was named in the July edition of Forbes as the number one-start up region in the world, beating out the likes of San Francisco, Berlin, London and Singapore.

The Deloitte report highlights the potential to scale-up BC tech companies and grow the economy though the creation of a globally competitive digital technology “supercluster.” The foundation of BC’s tech sector is broken down horizontally in the report into three possible supercluster areas, which support the growth of other emerging tech clusters within the province.

BC’s tech sector is bolstered by the province’s well-respected post-secondary institutions, including the University of British Columbia, Simon Fraser University, BCIT, University of Victoria, UNBC, Kwantlen Polytechnic University, Vancouver Film School and Emily Carr University. Two of Canada’s five unicorn companies[3] were started by graduates of BC’s post-secondary institutions. In addition, more than one quarter of all US patents originating from Canadian academic research can be traced back to universities in British Columbia —a testament to the high quality of advanced education in the province.

Tech is an important driver of the provincial economy. Last year, 150,000 British Columbians were employed in tech-related jobs, including roughly 100,000 who work in industries that actually produce high tech goods and services (the remaining tech workers toil in other industries). These are jobs in digital animation and gaming, but also increasingly in forestry, mining, energy, manufacturing, agriculture, medical diagnostics and transportation companies that in some ways can also be seen as part of the “tech economy”.

Generating approximately $26 billion a year in revenue, over the last five years the high tech industry has grown faster than the overall BC economy. By no means should this accomplishment be understated. As it happens, last year British Columbia eclipsed all other provinces and American states in real GDP growth, with the sole exception of our southern neighbour, Washington State, which tied with BC -- and also forms part of the growing Cascadia Innovation Corridor.

Tech-related innovation is rapidly empowering new solutions to problems and increasing the development of new products in a changing and competitive marketplace. Embracing the cluster approach can enhance the competitiveness of our economy, including “traditional” industries such as natural resources, infrastructure, manufacturing and transportation, that rely on sophisticated technology “inputs”. Implementation of digital driven innovation at the firm level will also have the potential to enable more efficient capital utilization, increase public confidence in decisions made by regulators, and support the transition to a low carbon economy. Perhaps most exciting, in an era that will be defined largely by talent, technological innovation can build enough critical mass to allow BC to attract, develop and retain highly skilled people to fuel the future of research, innovation and government and business operations.

For example, virtual and augmented reality technology can help inform future mining operations, including autonomous trucking. Remotely-connected sensors and visualization technologies are already helping to improve planning, inventory management and operations in BC’s forest industry and in the manufacturing and transportation sectors. Layered environmental data coupled with First Nations’ traditional knowledge and improved analytics may make it possible to create greater certainty for project investors, while mitigating cumulative effects and strengthening public confidence in business operations. Advances in the life sciences are paving the way for better preventive and chronic care and tailored drug therapies based on a patient’s genetics and the application of personal treatment protocols. Looking ahead, specialty healthcare could be made more accessible and comprehensive for remote communities through two-way digital transmission of health information between patients and their team of caregivers.

As the Government of Canada decides where its $950 million in “supercluster” investments will go, it’s important to keep in mind that a host of policies can encourage growth within the technology sector and the broader provincial economy. First, continued investment in public and private R&D and in steps to accelerate the commercialization of new ideas and solutions are key pathways to a more prosperous BC. The same holds true for provincial and national government procurement programs, which today often limit the opportunities for innovative local companies to be successful within their home market. De- risking the incorporation of new technologies into the daily operations of business and government can add to the quality of life, increase productivity, expand consumer choice, and reshape traditional industries. Thirdly, smart immigration policy would enhance the ability of firms and academic institutions to attract talent from global labour pools. Lastly, policymakers must not overlook the role of tax policy, including the structure of the business tax system, in fostering the development of the advanced technology sector and encouraging firms to grow from a BC base. Steeply rising tax rates on mid-sized and larger firms and the levying of sales tax on machinery, equipment, software and other business inputs make it harder to build global-scale companies in British Columbia.

A technology supercluster has the potential to create a more dynamic investment environment, grow more significant BC companies, increase trade, and boost the number of high quality jobs in both urban and rural communities while also raising wages.

[1] This initiative “will incent large-scale industry partnerships, supported by other innovation ecosystem players, and ask them to work together on ambitious market-driven proposals to supercharge their regional innovation ecosystems, enhancing the growth and competitiveness of participating firms and maximizing economic benefits, including good, well-paying jobs and prosperity for Canada.”

[2] Innovation supercluster funding will be selected following a two-phase application process:

1) Phase 1: July 21, 2017. All proposals must be received.

2) Phase 2: Fall 2017. All proposals will be considered by a Federal panel, which will select the winning 3-5 proposals.

3) Announcement: March 31, 2018. Contribution agreements and disposition of funding for winning proposals.

[3] Unicorn companies are start-ups that have a valuation of $1 billion or more.

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