It’s harder than you think for the federal government to give away a few billion dollars.

Maybe not for American philanthropist MacKenzie Scott, who has donated US$16 billion in the last five years – with high marks from observers for effectiveness. But our federal government couldn’t manage to give away a budgeted $4 billion for its flagship Canada digital adoption program (CDAP).

The pandemic-era program was launched in 2022 and was intended to cover 90 per cent of the cost to businesses for consultants to help identify ways to update their online technologies. This in turn unlocked eligibility for interest-free government loans of up to $100,000 for implementation.

The government cancelled the program in February, two years early, after spending less than one-fifth of its budget. A smaller grant of up to $2,400 for small businesses to build websites remains open.

The issue has not received the attention it deserves. The $60-million ArriveCAN boondoggle has generated sustained outrage and loud criticism, but the digital adoption program has been largely ignored. It was only mentioned six times in Parliament in the last year – compared to nearly 1,000 for ArriveCAN – despite a budget more than 60 times higher.

That’s an unfortunate imbalance because we need better scrutiny aimed at fixing problems early in implementation, not only for accountability down the road. If something is worth doing – and is worth committing $4 billion – it’s worth doing well.

The CDAP was created because Canadian businesses persistently invest less in digital technology than international competitors. Only one in 20 small- and medium-sized Canadian businesses uses technology effectively.

So, what went wrong? We’ll need more transparency from the government to get the full picture.

Looking at the way the program was designed and managed, it’s not hard to imagine why businesses would turn down a free lunch. Applying was cumbersome. Even before a first conversation with a consultant, businesses had to navigate a jargon-filled website to choose whether they were looking to “grow your business online” or “boost your business technology.”

They also had to find their way through a central application process and government-hosted marketplace. This meant spending time with new accounts and platforms, and sorting through service providers categorized by the program’s rules rather than how businesses would typically vet suppliers.

The program was too rigid. Businesses could choose from a list of only government-approved consultants and it was exactly specified what kind of advice they could provide.

Each digital adoption plan was required to follow a standard template – including an assessment of all current technology – regardless of whether the applicant was a single bricks-and-mortar store, a small manufacturer or an 80-person engineering firm.

There was a shortage of consultants. Applications to be on the list closed early in a desire to move quickly because of the pandemic. Many firms emerged ready to deliver assessments at exactly the $15,000 maximum available from the government, but others were turned off by the program’s limitations or not aware of it in time to meet the deadline.

Prospective clients thus had a limited number of consultants from which to choose, especially if they were hoping for someone familiar with their sector.

It is easy to pile on from the sidelines. But the real issue is not the program’s shortcomings but rather the lack of course correction when those flaws became clear.

The pandemic forced Canadian businesses out of a tech lethargy. What happens next?

Being online isn’t enough for small businesses

Digital transformation of the Canadian economy

What about a policy for innovation and entrepreneurship?

More than a year before the initiative was shut down, journalist Paul Wells wrote about lagging applications in a part of the CDAP. The challenges would have been painfully obvious to the government by that time, but it stuck with the status quo for another year before quietly winding down the program.

Canada faces challenges much more complex than persuading small business owners to move data to the cloud. But on these files in other areas, we too often follow the wisdom of: “If at first you don’t succeed, keep going for a year, then shut it down and hope no one asks too many questions.”

For example, within days of the digital adoption program being mothballed, the Canada Mortgage and Housing Corp. quietly scrapped the first-time home-buyer incentive that only a few years ago was a signature part of Ottawa’s national housing strategy.

Maybe shutting down these programs rather than reforming or replacing them was the right call. But that decision could have been reached sooner with less money on the line and fewer businesses left in the lurch.

A phased approach with user testing could have allowed initial design flaws to be caught and adjusted. That doesn’t need to mean endless consultation or pilots. South of the border, the Internal Revenue Service (IRS) is launching a new tax-filing service and has done so in stages, rapidly updating and scaling up over a few months with regular public reporting.

Getting better results depends on being willing to openly concede when something isn’t working and then doing it differently. However, the federal government remains reluctant to admit that the digital adoption program was not a roaring success.

That head-in-the-sand approach risks dooming us to the same mistakes.

For example, the week after the program closed, the Commons finance committee released a pre-budget recommendation for new grants for farms “modelled after the Canada Digital Adoption Program.”

The least we can do after making billion-dollar mistakes is to learn from them.

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Noah Zon
Noah Zon is a co-founder and principal of Springboard Policy, a public policy research and advisory firm. X: @noahzon.

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