Good afternoon and thank you for this opportunity to address this committee again.
My name is Scott Smith. I'm the director of intellectual property and innovation policy at the Canadian Chamber of Commerce, an organization I think you're all familiar with.
When I was here before you on March 7, talking about the Internet and broadband in Canada, I indicated that Canadian business is not online. While I think that's still true, I did use a statistic in response to a question about how many businesses have websites, and you've heard here today that this number was probably inaccurate. It's one I shouldn't have used as it was somewhat outdated, and I apologize for that. The most recent number I have corresponds with what the CFIB suggested, 70% of businesses in Canada now have websites, and we're talking specifically about SMEs, but I still find that a surprisingly low number.
The good news is Canadians have access, as I alluded to at our last meeting, and are making use of that access. A Chamber of Commerce survey indicated that 96% of businesses surveyed used the Internet for business purposes and Canada already serves 98% of its population with broadband access. We have a study that estimates that by 2050, 86% of the Canadian population will live in urban centres, where the bulk of digital infrastructure investment is being made. It's clear that Canadian consumers are overwhelmingly digital adopters. A good demonstration of the digital adoption by consumers is the growth of social media. The Calgary Herald noted on April 29 that “One in three anglophone Canadians says not a single day goes by without [their] checking into their social media feeds”. Like the evolution of search engines on the Internet, social media has become a part of the way we live.
Where Canada continues to lag is in the adoption of e-commerce and mobile application technology by business. When it comes to looking at how businesses are using their websites, 27% accept online payments and 31% of businesses provided the ability for online ordering and tracking of goods. When it comes to the adoption of e-business solutions for business-to-business online transactions, the results were mixed: 42% of businesses surveyed said they did use an automated electronic data exchange system to send orders to suppliers, 51% are receiving and sending electronic invoices, 46% are able to receive orders from customers, 65% send or receive product information, 46% send payment instructions to financial institutions, and 45% send and receive data to and from governments, so, for example, they file their taxes online.
A recent study of G-20 countries by the Boston Consulting Group indicates that Canada is behind in the adoption of technology by business and in the size of our Internet economy. They conclude this gap will widen over the coming years and that Canada will further lag behind its global competitors. The study estimates that by 2016 the global Internet economy will reach $4.2 trillion, and that will largely pass Canada by. For example, online retail in Canada in 2010 was only 3.4% of total retail. That's only expected to reach 5.4%, or $33 billion, by 2016.
It's no secret that productivity is directly linked to innovation and the adoption of technology. Countries like the United States, Britain, Australia, and Denmark are pouring resources into the digital economy and in some cases creating federal ministries to oversee opportunities and challenges. Canada's productivity gap compared to the United States remains problematic. While the business community understands the government's current financial constraints, there are pioneering ways to work together to advance the digital economy strategy. More can be done to stimulate the adoption of information and communication technologies. Many countries have recognized that investments in e-commerce and ICT result in increased productivity and growth in the overall economy, and Canada needs to be a leader in this area. The recognition of the growing digital learning divide between large and small business is one example of how the Government of Canada can provide an essential service in connecting small business to online training through service portals.
For Canadians to continue to enjoy a high quality of life and standard of living, we must improve our productivity and competitiveness through innovation. The Conference Board of Canada has noted that “innovation is the ability to turn knowledge into new and improved goods and services” and that Canada's performance on innovation over the past three decades rates a consistent D. That's simply not good enough. According to the “Connectivity Scorecard” report, overseen by the then University of Calgary business school dean, Leonard Waverman, Canada ranks eighth in useful connectivity, reflecting both the world-class networks available to Canadians, but also deficiencies in the adoption and usage of broadband, and investment in ICTs generally across the economy.
Clearly, Canadian business needs the right incentives, such as continued improvements to the SR and ED program to keep investing in next-generation infrastructure, if Canada is to rise to the very top of the international rankings and most effectively lever broadband for competitive advantage. Further addressing the availability of broadband is not sufficient without a focus on the adoption and usage of ICT.
Across the economy, as a larger user of information technology, the government can play a larger role by mandating online interactions for its partners, for citizens, and for suppliers. Already, tax returns can be filed online, and like any large user, by undertaking a commitment to online commerce and the related technology, government can defray costs for suppliers and provide valuable incentive to adopt technology. To this end, the government should design initiatives to drive demand and adoption among key user groups, such as small and medium-size enterprises, and set milestones to measure success.
We think Canada can become a global innovation leader. With the right plan, Canada can dominate the digital economy. By building on our strengths and working together with the federal government, Canadian business will be in the right position to realize the benefits of the digital technologies and achieve a competitive advantage internationally.