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Technology Stocks : 2000 Date-Change Problem: Scam, Hype, Hoax, Fraud -- Ignore unavailable to you. Want to Upgrade?

To: DR. MEADE who wrote (447)	2/4/1998 2:24:00 PM
From: DR. MEADE	Read Replies (1) \| Respond to of 1361

Year 2000 crackdown urged Ignoring computer problem should mean no loans or insurance, business groups says Wednesday, February 4, 1998 By Patrick Brethour TORONTO -- Canadian businesses should be cut off from loans, insurance policies and government financing unless they come up with a formal plan to deal with the millennium bug, a committee of top business leaders said yesterday. As a measure of the issue's urgency, the 16-member panel tabled its plan for tackling Canada's Year 2000 computer problem three months early. The recommendations go to the private sector and the three levels of government, with the goal of prodding corporate Canada into action by May. In a separate report issued yesterday, the Conference Board of Canada warned that failure to deal immediately with the millennium bug could throw Canada into a recession in the first half of 2000 and derail the country's progress to full employment by 2001. The business committee's 18 recommendations offer a carrot for small- and medium-sized businesses. It proposes that the federal government allow smaller firms to deduct the bulk of their Year 2000-related expenses this year, even if the money isn't spent until the next tax season. In effect, the unprecedented tax measure would be one-year interest-free loans. In December, a Statistics Canada survey found that only 9 per cent of Canadian businesses had a formal plan for dealing with the millennium bug, even though 91 per cent were aware of the problem. While 300 large corporations had yet to begin work on the problem, most of the foot-draggers were small- and medium-sized businesses. Committee chairman Jean Monty, president and chief operating officer of Bell Canada parent BCE Inc., said the committee's recommendations should be enough to goad most Canadian businesses into action and avoid the huge cost of widespread computer breakdowns. Peter de Jager, one of the most prominent Year 2000 consultants, said the report was surprisingly hard-hitting and should be enough to grab the attention of executives with little understanding of or interest in technology. "They don't seem to understand the computer issue, but they understand their loan being called back." But Mr. Monty said some firms will have to learn the hard way. "There are some companies that will not get their loans, not get their insurance policies renewed." The committee's plans call for loans to be cut off as early as April 1. Committee member John Cleghorn, chief executive officer of the Royal Bank of Canada, said most banks will be flexible with customers still working on formal plans. Still, the Canadian Federation of Independent Business warned that the Year 2000 issue should not be used as a pretext to tighten financing for small business. "What I'm concerned about is this being used as an excuse to deny a loan or insurance policy," said committee member Catherine Swift, the federation's president and chief executive officer. Mr. Monty said the committee tried to take a positive approach in the first instalment of its report, hoping that moral suasion will be enough to convince corporate Canada of the need for immediate action. "We're not trying to be punitive," he said, but warning that more drastic measures may be called for in May if Canadian business is still ignoring the Year 2000 problem. The millennium bug has a seemingly simple cause. Many computer programs, especially older ones, use two digits to denote dates instead of four. Originally used to save scarce memory on early computers, the anachronistic programming technique has left many electronic systems that depend on dates unable to cope with the arrival of 2000. When 1999 ends, machines that aren't corrected will think the year is 1900, 1980 or even some random date. The potential results range from the inconvenience of stalled elevators to the extreme danger of malfunctioning air-traffic control systems. Among the report's other recommendations: All businesses should aggressively ensure that their suppliers and customers are preparing for 2000; Provincial and municipal governments should report regularly on their own progress; Any changes to legislation or regulations should be examined to make sure that they don't unnecessarily divert resources from efforts to prepare for 2000. Federal Industry Minister John Manley described the millennium bug as a critical problem, but said companies can't rely on a quick correction or a government handout to deal with it. Mr. Manley said he needs to look at the task force's plan to provide accelerated tax writeoffs for companies that invest in Year 2000 solutions, but ruled out any grants or tax subsidies. "Some companies have made the investment and should not, through their taxes, subsidize the companies that have not." The proposal to accelerate could carry a $30-million price tag in forgone interest for the federal government, but there is no firm estimate of the cost. Mr. Manley said he will work with Immigration Minister Lucienne Robillard to speed up entry of computer programmers who might want to come to Canada and work on the Year 2000 problem. But he said there is not a pool of available talent eager to come to Canada. The full report and related information is at: strategis.ic.gc.ca/sos2000 Recommendations: - Make loans, insurance policies and government financing contingent on firm having formal plan for 2000 problem. - Let businesses deduct 2000- related expenses in 1998-99, even if money not yet spent. - Fast-track immigration for workers with 2000 skills. - Ask securities regulators whether firms should have to disclose 2000 preparedness. [ News ] [ Sports ] [ The Arts ] [ Commentary ] [ Report on Business ] Back to the top of the page We welcome your comments. Copyright c 1998, The Globe and Mail Company