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Selling Innovation in a Forward-Thinking Manitoba

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12Feb

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  • Manitoba has a capital tax on banks and loan companies, pushing funding sources and investment out of the province.
  • There’s a reason why Manitoba is last in Canada when it comes to creating small businesses.

We’ll be discussing our potential as an innovator June 13 at “Manitoba Could Be…” a policy summit discussing how we can thrive again. Register now. 

Selling Innovation in a Forward-Thinking Manitoba

There’s a reason why Manitoba is last in Canada when it comes to creating small businesses

This week, Manitobans who are hoping to build their businesses gathered at the Winnipeg Convention Centre. They attended an event called Driving Innovation. It’s all about helping small businesses develop new products, new services and new business models – the key to a growth in a modern, job-creating economy. While Manitoba has produced no shortage of hardworking, brilliant entrepreneurs and innovators – there’s a reason they’re leaving this province in drovers for greener pastures.

Manitoba’s Minister of PR – Kevin Chief – will be stopping by for the customary greetings – but don’t expect his speech to be candid about the truth.

The truth is: Manitoba is a difficult place to start an innovative new business.

In fact, Manitoba is LAST in Canada when you measure how many small business employers we have per capita.* We’re talking about small businesses that have created jobs, not just self-employment businesses that Manitobans created out of desperation in Manitoba’s low-wage, low-opportunity economy.

Province Employer Small Business / Population Ratio (December, 2012)*
Alberta 1 small business for every 25.6 residents
Prince Edward Island 1 small business for every 26.2 residents
British Columbia 1 small business for every 26.9 residents
Saskatchewan 1 small business for every 28.4 residents
Newfoundland and Labrador 1 small business for every 30.8 residents
New Brunswick 1 small business for every 30.8 residents
Nova Scotia 1 small business for every 32.4 residents
Quebec 1 small business for every 34.8 residents
Ontario 1 small business for every 35.2 residents
Manitoba 1 small business for every 35.4 residents

It gets worse. It might seem like we’re in good company if Quebec and Ontario have fewer small businesses per person. But they also have more medium and large businesses per capita to make up the slack. In fact, we’re in last place overall. Manitoba has fewer employer-businesses of any size per capita than any other province either – a shocking sign of the NDP’s reckless indifference to the business climate in this province.

What’s gone wrong? We’ve got too much red tape. Our liquor laws make it difficult to start a microbrewery. Our labour laws make it difficult to run a small manufacturer. Our tax laws penalize R & D. Plus, there’s the long list of higher taxes and fees: low small business corporate tax rates don’t make up for higher payroll taxes, higher income taxes and higher sales taxes. Plus: Manitoba’s innovation policies don’t live up to their hype.

For example, Manitoba’s research and development tax credit is at 20%, making it more generous than in other provinces – on paper. That doesn’t matter, since the paperwork needed to take advantage of those credits is more complicated, rendering them less useful than advertised. Manitoba created a much-hyped Innovation Council in 2009 – but government policy doesn’t look much different than it did before it, aside from a slow-footed campaign to consolidate and reorganized various incubators, funding agencies and research councils.

Manitoba has a capital tax on banks and loan companies, pushing funding sources and investment out of the province. The result of this and other anti-growth policies: less capital available for investment. Last year, our businesses made fewer venture capital deals than Saskatchewan, Nova Scotia, and even fewer than tiny New Brunswick. In terms of overall private investment, we’re attracting less than half of what Saskatchewan is bringing in each year, despite their smaller population.

Now, it’s true that a number of politicians did manage to put up a sign a few weeks ago, renaming a street in the Exchange District as “Innovation Alley.” But that’s not much different from the signs you see in provincial political ads talking about “Steady Growth, Good Jobs.” The facts don’t support the hype. Most of the innovation happening on Innovation Alley or elsewhere is in spite of government policy, not because of it.

For too long, innovative businesses, new job creators and new business models have been treated like enemies in Manitoba. You may remember the Taxi Board stomping out any discussion of ridesharing. You may have heard about the province’s neglect of basic road infrastructure in front of productive rural factories, while it had plenty to spend on new headquarters for crown corporations. You may have read about how provincial food bureaucracies have stomped on local businesses for daring to offer local, organic, natural or innovative food products. If anyone’s putting up a sign at the border, it should read “innovators, beware.”

For the sake of those gathering to talk innovation at the Convention Centre today, and for the sake of our kids who’ll be looking for the jobs of the future, it’s time to start being more forward. It’s time to start making room for Manitoba innovation.

 

Manitoba Forward calculation using Statistics Canada’s December 2012 study of employer-businesses. (latest data available)

Dave Shorr
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