Ottawa halts $4-billion small business program over budget cuts, not demand , documents show
The federal government prematurely cancelled a $4-billion program to help small businesses upgrade their technology because of budget cuts, documents show, and not because of the program’s success, as Ottawa said at the time.
The Canada Digital Adoption Program (CDAP) was first announced in the 2021 budget and was touted as a centrepiece of the government’s efforts to help businesses emerge stronger from the depths of the COVID-19 pandemic.
It launched the next year with a suite of different funding options, including $2,400 microgrants for website creation; $15,000 grants to hire digital consultants to create business plans; and interest-free loans of up to $100,000 to support technology upgrades. It was budgeted to run for four years.
Last February, the government abruptly ended the grant and loan portion of the program – which was the bulk of CDAP’s budget – and posted a notice on its website that the program was ending because it was a success and it was “fully subscribed.” (The microgrant stream is continuing to accept applications until Sept. 30.)
Although the government did not say so publicly at the time, the budget was used up because it had been sharply reduced, according to internal documents obtained under access to information law.
“These cost reduction measures will impact the program’s original timelines and funding projections,” said a briefing note prepared for Small Business Minister Rechie Valdez on Dec. 21, 2023. “Of note, the program may need to close application intake sooner than anticipated.”
When asked about the memo, Ms. Valdez’s office confirmed that CDAP’s budget had been slashed in late 2023 as part of broader efforts in the federal government to reduce expenses. Spokesperson Callie Franson said the part of the budget devoted to grants and advisory services had been reduced to $755-million, from $1.4-billion. And the budget for the interest-free loans was reduced to $494-million, from $2.6-billion.
CDAP also subsidized youth work placements. As of March 31, a total of 2,034 placements were in progress or completed and $3.6-million in wage subsidies disbursed, Ms. Franson said. (Ottawa had estimated in 2022 that 16,800 young Canadians would take part at a potential cost of about $122-million.)
“As Canada recovered strongly from the pandemic, we decided to shift some of the CDAP funding to what Canadians were telling us were their priorities: housing, healthcare, and affordability,” Ms. Franson said in an e-mail.
Dan Kelly, president of the Canadian Federation of Independent Business, said the program got less-than-expected uptake from business owners because it was confusing to apply for, with multiple streams and steps to access funds. He said he wasn’t sorry to see it go, but that Ottawa should have been more forthcoming about the program’s failings when it was cancelled.
“I wish government were just a bit more honest that it was cut for budget reasons and lack of take-up and then use whatever savings it generates to pay for reductions in key tax rates for small and medium-sized enterprises,” he said.
Derek Froese, an information-technology consultant and owner of Koala Technology in Abbotsford, B.C., was one of hundreds of digital advisers who helped small businesses navigate the program. He said the program helped the businesses he worked with and the sudden cancellation was disruptive.
“The government killed the program almost two years early with 43 hours notice over a long weekend,” he said. “The way they handled their withdrawal was irresponsible, damaging and suspicious.”
Mr. Froese had obtained the government memo through an access to information request and shared it with The Globe and Mail.
Ms. Valdez, who spoke to The Globe about the program after an unrelated announcement in Toronto this week, said she thought the program would leave an important legacy for those businesses that did access it.
“The true impact I see is when I get to see an ice-cream company in the Prairies beef up their online presence so they can market their products well,” she said, citing an example of one entrepreneur she met.
The article was first reported by The Globe and Mail
