Nortel is in the news again!

A giant in the IT Industry and Canada’s one time largest employer have been force to sell off it’s assets due to bankruptcy. This time it is their wireless network infrastructure to Nokia Siemens Networks. IT is an industry ripe with innovation and Canada needs innovation in order to compete in the world marketplace. How can Canadian Industry compete with cheaper overseas labour and the economic down turn? Many companies turn to government programs like the SR&ED (Scientific Research and Experimental Development) tax credit program to help fund their innovation.

Many SME’s in Ontario capitalize on the 41.5% return on labour and material costs incurred from R&D. It is important to talk to an expert in SR&ED to gain the most from a your claim. An SR&ED consultant can assess if you actually have SR&ED eligible projects, what you can expect to get in return and prepare you for future SR&ED claims. Claiming SR&ED on a yearly basis can reap financial rewards for your company’s innovation and keep you manufacturing in Canada.

Without a consultant you could end up claiming less than you otherwise would have. The CRA, who administers the program, has said that a majority of the claims they see claim far less than what they should. You may not be able to identify all the projects that qualify, where a consultant can be that second pair of eyes that can catch any additional projects. A consultant should look at all the areas in your business and not the areas that are most prevalent with SR&ED activities. Areas that have SR&ED some of the time may incur the most labour and material expense because SR&ED does not happen there regularly. Most importantly a consultant works for you and it is in their best interest that you have a viable SR&ED claim – that way you will continue to claim for years to come.

I was pointed in the direction of an article in today’s edition of the Globe and Mail: Banks begin to decline federal aid in first sign of recovery. According to the article, at this point in time, banks aren’t struggling as much to raise funds for giving out loans, and have a more ready supply of cash on hand for these loans. Hopefully the situation will continue to improve.

A short while back, Heather Reisman (President and CEO of Indigo books) was interviewed on The Hour, and brought up a couple of points that piqued my interest. According to Reisman,

• 40% adult Canadians functionally illiterate
• That 40% of Canadian adults are the biggest drain on social services, hospitals, and are more likely to end up in jail
• By increasing literacy in adult Canadians by 1%, we would be adding $17 billion to our economy

In all honesty, I was a little surprised and greatly skeptical about the figures Reisman brought forth, especially about how increasing literacy could help our economy. So I’ve done some research, and have uncovered some facts. But first, the United Nations Educational, Scientific and Cultural Organization has defined literacy as

the ability to identify, understand, interpret, create, communicate, compute and use printed and written materials associated with varying contexts. Literacy involves a continuum of learning to enable an individual to achieve his or her goals, to develop his or her knowledge and potential, and to participate fully in the wider society.

United Nations Educational, Scientific and Cultural Organization (UNESCO)

In other words, if you aren’t literate you can’t communicate well enough to survive well in the Canadian job market.

In 2003 a survey was done by the Government of Canada, among other organizations, called the Adult Literacy and Life Skills Survey. This survey tested over 20,000 Canadians on their literacy, and it discovered that only 58% of adult Canadians had good literacy skills. So, that leaves 42% who don’t have good literacy skills. Wow!

But how would improving literacy skills help out economy?

• Studies have been done that show that low literacy skills can be related directly to poor health, social assistance, poverty and unemployment.
• If people are more literate, they will be more likely to get better paying jobs. This would decrease the amount of government spent on employment insurance and social assistance.
• More people with good literacy help with economic growth.

I don’t know exactly how money much that would save or make, whether Reisman’s figure of $17 billion is right, but it is some food for thought.