The minority federal Conservative government and finance minister Jim Flaherty introduced a budget Tuesday with large spending and tax measures designed to stimulate the economy as we face a recession, and included a number of measures of interest to the IT channel community.
Of strong interest to the reseller channel is a temporary measure that will allow businesses to deduct 100 per cent of the purchase price of eligible computer hardware and software purchases, and, instead of the usual half-year rule, write it all off in one year. Purchases between January 27, 2009 and February 2011 will be eligible. The previous rate was 55 per cent per year.
While of less direct impact to the channel, the budget also takes a number of measures to encourage the availability of credit and prevent or lessen any pending credit crunch, an important consideration for partners looking to float sales, fund expansion, and help customers pull the trigger on deals. For small businesses, the maximum eligible loan available under the Canadian Small Business Financing program will also rise from $250,000 to $350,000.
In all, the budget allocates more than $1 billion to IT-related spending initiatives, including $750 million to the Canada Foundation for Innovation, which funds infrastructure for university research. Another $50 million will go to the Institute for Quantum Computing at the University of Waterloo, $225 million will go to bringing broadband access to communities across Canada, and $500 million will be spent through Canada Health Infoway to spur the adoption of electronic health records.
The IT-related budget measures are getting a luke-warm response from the Canadian Advanced Technology Alliance (CATA). John Reid, president of the Ottawa-based industry association, said while the budget showed the government is engaged in advancing a number if science and technology programs and initiatives, from broadband spending to a clean energy fund, there was a decided lack of vision.
“Our observation is when you put together multiple initiatives you need a very compelling context,” said Reid. “You look at economic stimulus, yes, but the context should be economic transformation, that that’s really missing here. We’ve been arguing you need to rebrand, and think of Canada as an innovation nation, so we have the businesses, and the jobs and exports, of the future.”
The Information Technology Association of Canada (ITAC), another IT industry group, was more positive on the budget. In a statement, ITAC president and CEO Bernard Courtois hailed the spending on broadband access and electronic health records, as well as the infrastructure funding.
“Much has been said about the need for ‘shovel-ready’ stimulus programs that will have a swift impact on buying decisions,” said Courtois. “This measure will have a nearly $700 million impact on the ICT marketplace over the next two years. It is also a clear indication that the Government understands the strong linkage between productivity growth and ICT investment which ITAC has championed for many years. “This is good for our industry but it is also a great benefit for the broader economy. It’s very wise public policy.”
Your Turn
What do you think this budget will mean for the channel, and for your business? Did it go too far, or not far enough? What do you like? What measures would you have liked to have seen? CDN wants your feedback on Budget 2009.
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