The federal budget for 2013 should include initiatives to foster investment in start-up businesses, according to the Toronto-based Investment Industry Association of Canada (IIAC).

On Wednesday, Barb Amsden, director, IIAC, presented the organization’s recommendations for budget 2013 to the House of Commons Standing Committee on Finance in Ottawa. While the IIAC supports the government’s current policies in regards to the corporate tax rate level and its decision to tighten the mortgage-lending rules, it believes the government could be doing more for small businesses and therefore the economy.

“The creators of jobs in Canada has always been smaller businesses,” said Amsden in an interview, “so, that’s why it’s very important to help get them started.”

Some of the IIAC’s recommendations for budget 2013 include:

The government should find ways to encourage research and development start-ups to remain in Canada instead of opting to move or being bought out by foreign-owned companies. “It’s about finding the next RIM and keeping them [here],” said Amsden.
The IIAC recommends that a portion of the $400 million in venture capital funding from the 2012 budget should be redirected to foreign venture capital as an incentive for foreign funds to build and expand in Canada.
The federal government should also re-introduce “broker warrants,” which were eliminated after a change was made to traditional warrants in 2008.
Although there is not much government interest, said Amsden, the IIAC would like to see flow-through shares extended to sectors with long-development profiles such as the bio-tech industry.
Governments and regulators need to collaborate more to ensure regulatory changes are cost-efficient. “Moving towards a single securities regulator really resolves a lot of issues,” said Amsden, “but certainly if we continue with the current approach then there’s a lot more that still could be done.”
The IIAC recommends that investors have more access to education about their portfolios. Amsden points to the federal government’s recently created online resource “Your Financial Toolkit,” as an example of increased education for the general public. However, Amsden argues that federal and provincial governments as well as the financial industry need to work together to do more to give Canadians a better understanding of their investments.

Click here to view the IIAC’s 2013 pre-budget recommendations.