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New jobs and tech minister optimistic about soft landing for B.C. amid slowing economy

Minister hopeful investment will continue to flow as economic growth expected to slow to 0.4 per cent next year
Minister of Jobs, Economic Recovery and Innovation Brenda Bailey was named to cabinet Wednesday | Government of B.C.

The former tech executive now leading B.C.’s Ministry of Jobs, Economic Recovery and Innovation says she’s optimistic investment dollars will keep flowing into the province even amid a widely expected slowdown next year.

“We know that as interest rates increase there's restrictions that often follow in regards to investment money,” said Jobs Minister Brenda Bailey, who was appointed to cabinet Wednesday after previously serving as parliamentary secretary for technology.

Venture capital funding in Canada dropped to US$1.4 billion in the third quarter of 2022 – down significantly from the US$2.5 billion raised during the same period one year ago, according to an October report from KPMG.

But the minister told BIV the newly created InBC Crown corporation, which is responsible for divvying up a $500 million taxpayer-backed investment fund, is going to particularly benefit small and medium-sized businesses in the technology sector.

“I'm very excited about that fund. It's often described as patient capital, which is capital that's hard to find. And, of course, we need investments to help our businesses grow,” Bailey said.

The fund’s mandate includes securing financial returns on investments, investing in what the government describes as the low-carbon economy, and investments that result in job creation, the promotion of diversity and further reconciliation with Indigenous peoples. It’s initially investing in venture funds but is expected to begin direct investments in companies next year.

The fund was tasked with delivering five per cent returns when it was created in 2021. Since then, stock markets – and many publicly traded tech firms – have taken a turn as everything from inflation to supply chain disruptions have hampered the global economy.

The province’s Economic Forecast Council sees growth slowing significantly, from 2.9 per cent in 2022 to 0.4 per cent in 2023. Meantime, the Bank of Canada has hiked its key rate seven consecutive times in a bid to tamp down on inflation.

“We really have come out of the difficult [pandemic] years … in relatively good shape compared to other jurisdictions and I think that that's going to [serve] us well as we go into challenging times,” Bailey said.

But it still remains unclear whether InBC will be able to deliver on those initial returns it was seeking.

“Ultimately our goal is to become an evergreen fund, and so as such we do want to demonstrate market-level returns that are risk-adjusted based on obviously all the different variables that go into any investment decisions,” InBC chief investment officer Leah Nguyen said in October.

The $500-million fund has faced criticism that the taxpayer-backed endeavour lacks sufficient transparency.

Information Commissioner Michael McEvoy took aim at it last year for not being subject to the province’s Freedom of Information and Protection of Privacy Act.

Instead, the Crown corporation faces annual reporting in addition to staggered independent audits.

“It's quite a normal procedure to set up a fund like this,” Bailey said. “It's certainly not a fund that I would have guidance on in regards to investment decisions. That's very clear to me.”

Bailey takes over the jobs and innovation portfolio after launching a gaming studio in 2005 and later leading the DigiBC industry association.

“I am not a career politician. I'm really a business person,” she said. “I joined politics because of my passion for these issues.”

She said her top priority in the early-goings serving as minister will be reaching out to stakeholders.

“The minister is certainly delivering on her promise of stakeholder engagement,” Jill Tipping, CEO of the B.C. Tech Association, said in an email Friday. “My office got the call to set something up with B.C. Tech yesterday, which I think is a record for a new minister.”

Tipping said top priorities for her industry include addressing the talent supply gap and capturing better data on the B.C. economy. Her industry group is asking government to earmark $3 million over three years to improve this data collection.

Bailey said part of addressing labour shortages will be to ensure the industry has access to an increasingly diverse labour market.

She pointed to access to cheaper childcare and changes to the Innovators Skills Initiative as among the ongoing efforts to diversify the sector.

“Childcare is related to who can be in workforce and who can't,” said Bailey. “That's just fundamentally important.”

The ISI’s initial goal was to find job placements for 3,000 people facing barriers entering the sector — such as women, Indigenous people, Black people and other under-represented groups — by giving companies access to $5,000 grants.  Those grants have been expanded to as much as $10,000 after two new industry partners agreed to match the province nearly dollar for dollar.

“We revamped the program to ensure that it was designed to incentivize companies to hire folks that might look a little bit different than their traditional workforce,” Bailey said.

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