A group of high-tech CEOs says university graduates who immediately leave for jobs in the United States after taking advantage of Ontario’s subsidized tuition should have to reimburse taxpayers for their education – arguing Ontarians are paying to educate Silicon Valley’s employees.

Their demand comes amid concerns that top graduates from Ontario universities are flocking to high-tech firms in California, New York and the Boston area, where salaries are much higher because of the weak Canadian dollar and workplace perks are more attractive. Some firms here just can’t compete, they say, and are finding it hard to attract new talent.

In addition, they say there should be consequences for grads leaving the country – especially as the provincial government is investing $1.3-billion in the new Ontario Student Grant, making tuition more affordable.

The CEOs are members of the newly formed Council of Canadian Innovators (CCI), a lobby group co-founded by Jim Balsillie, former co-CEO of Research In Motion, the forerunner to BlackBerry.

Benjamin Bergen, CCI’s executive director, said government policies are needed to retain talented grads in Canada.

“We must look at Ontario’s heavily subsidized tuition as not just a carrot but also a stick, in critical subjects such as computer engineering,” he said. “We should examine if an Ontario graduate leaves for Silicon Valley, the merits of reclaiming our collective investment in their education and repurposing these funds to make Canadian tech salaries more competitive.”

The group has not provided specific examples of how money could be repaid, but it believes there needs to be a public-policy solution to the problem.

Statistics to back up its claims of a brain drain are hard to find, and most of the concern is based on anecdotal evidence. But high-tech CEOs, especially in the Kitchener-Waterloo area of Ontario, say hiring talented people is a problem because University of Waterloo graduates are in high demand in California.

“I’m all for giving free education … but there need to be prerequisites,” said Dan Latendre, CEO of Igloo Software, a company he started in 2008 in Waterloo. He has 125 employees and 30 job openings for technology positions, quality assurance and even executives because he can’t find talented people to fill them.

In fact, he has had to outsource some of his work to an eight-member team in Poland. Next year, he said he expects to spend between $1.5-million to $2-million in outsource development.

Mr. Latendre said he believes student grants shouldn’t be based on family income, such as in the Ontario Student Grant program, but on benchmarks, much like a scholarship program. If the student maintains certain grades and stays in Canada for five years after graduation, for example, the tuition money would not have to be reimbursed.

He and nine other tech CEOs wrote to federal Small Business Minister Bardish Chagger in April, requesting a meeting with Prime Minister Justin Trudeau on the challenge of retaining highly skilled graduates. There has been no response from the Prime Minister. The group is also trying to set up a meeting with Deb Matthews, Ontario’s Minister of Advanced Education and Skills Development, to discuss policy solutions, including subsidies, incentives and punitive measures to stop the “exodus of Ontario talent,” CCI spokesman Chris Salloum said.

Ontario government spokeswoman Melissa Di Costanzo did not directly address the issue. In an e-mail, she wrote that Ontario students who work out of the province or the country “help spread the word about our excellent postsecondary institutions and the strong quality of life we share in Ontario.”

“And, when graduates travel to places like Silicon Valley, they enhance their skills, which they will transfer back to their home location as they return,” she wrote.

Derek Ting, a 2010 University of Waterloo graduate, started his own company in Waterloo that makes mobile-phone service more affordable. The firm, TextNow, has 80 employees and a branch office in San Francisco with five full-time employees.

Of about 100 students in his graduating class, Mr. Ting estimates about half left for the United States. He said software engineers in Canada earn from $60,000 to over $100,000 a year, compared with about $200,000 south of the border – making the lure of a higher salary and working for a brand-name company, such as Google or Facebook, compelling for many students.

And like Mr. Latendre, he believes there should be some consequences for students educated in Canada leaving for jobs in the U.S.

“We have invested quite a lot in their talent … it’s not beneficial for the country if they leave and don’t give back,” he said. “But at the same time, I want to stress that it’s important as a country we maintain freedom. I think we have to make sure the system is fair so that the government isn’t investing in all of these people and not getting the return.”

A statistic commonly used when referring to the brain drain is that 350,000 Canadians live in Silicon Valley. However, Dan Munro, a principal research associate in public policy at the Conference Board of Canada, recently researched the number and found through U.S. community surveys and the census that there are no more than 25,000 Canadians living there.

Mr. Munro called the 350,000 figure a “zombie statistic. … It just won’t die,” he said.

His colleague, Michael Bloom, vice-president of industry and business strategy at the Conference Board, was recently in Silicon Valley and agreed that the numbers of Canadians working there are exaggerated. However, he said, those who are there will be hard to lure home.

“I talked to a lot of them and many of them are interested in coming back to Canada,” he said. “But they love the lifestyle. The question is: Can they get the same kind of opportunity to do well-paid, interesting work with enough capital to build their businesses and bring their products to market? That’s the issue.”

Fraser Stark, vice-president of talent at Influitive, a Toronto marketing software company, sees the situation differently. Three and a half years ago, his firm had 25 employees. Today it has 175, with 140 in Toronto and a dozen or so each in Boston and California.

He said the onus is on business leaders and entrepreneurs in Canada to up their game and provide a “California calibre” experience. His company, for example, offers some of the same perks as the California high-tech firms: catered lunches, a gym in the office, an education allowance and an unlimited vacation policy. It draws the line, however, at free dry-cleaning.

“We do have to compete,” he said, “and these are things we do.”

TORONTO — The Globe and Mail
Published Thursday, Jun. 23, 2016 7:59PM EDT
Last updated Thursday, Jun. 23, 2016 10:19PM EDT