Wednesday, 31 May 2017

Canada's innovation support included in 2017-18 federal budget

Canada’s federal budget for its 2017-18 fiscal year, which was presented in the House of Commons on 22 March 2017, highlights the government’s aim to realize its full potential as a global leader in innovation. To this end, the government has announced its intention to review the programs available to fund innovation and to deliver simpler, more efficient and more coordinated support to Canadian innovators.
In addition, budget 2017 proposes more than CAD 8.2 billion of gross spending over the next five years related to the budget’s “innovation and skills plan.” This ambitious plan focuses on enhancing skills, closing the commercialization gap, simplifying programs and funding businesses.

Enhancing skills
Recognizing that people are at the core of successful innovative companies, the budget proposals address the challenge of acquiring skilled resources. Generally, the budget’s skills-related recommendations center on:

  • Training;
  • Work-integrated learning;
  • Accelerated processing of foreign talent; and
  • The promotion of science and technology in society.

As an example, the budget proposes to renew and expand federal funding for “Mitacs” by CAD 221 million over five years. (Mitacs is the not-for-profit organization that builds partnerships between industry and educational institutions, and its goal is to provide 10,000 work-integrated learning placements for post-secondary students and graduates.)

Closing the commercialization gap
Budget 2017’s initiatives aim to encourage businesses to commercialize their innovation and discoveries in Canada.
The budget proposes to implement a new procurement program that would allow the government to act as a first customer to test and validate new products and solutions: up to CAD 50 million would be provided to launch Innovation Solutions Canada, whose role would be to test and validate early-stage R&D, late-stage prototypes and other innovative products and services.
A significant proposal is the investment of CAD 950 million over five years to support a small number of business-led “superclusters” in highly innovative industries, such as advanced manufacturing, agri-food, “cleantech,” digital technology, health/bio-sciences and clean resources, in addition to infrastructure and transportation. This investment would be funded with CAD 800 million from the 2016 budget provisions for innovation networks and clusters, and CAD 150 million from the provisions in the 2016 Fall Economic Statement for public transit and “green” infrastructure.
Based on best practices from around the world and in Canada, these superclusters would be designed to encourage knowledge sharing, drive business specialization and help attract investment from significant innovators from abroad.

Simplifying programs
The budget proposes the creation of Innovation Canada, a new platform that would be led by Innovation, Science and Economic Development Canada, whose role would include the coordination and simplification of the federal support available to Canada’s innovators. This was one of the recommendations of the recently created Advisory Council on Economic Growth.
No changes to simplify the innovation programs have been announced in this budget, as the government plans to wait for the recommendations from Innovation Canada. Consequently, a review of the programs (including the scientific research and experimental development (SR&ED) tax incentive program) is expected to be undertaken shortly.

Funding businesses
Innovative start-ups and small businesses have a need to find equity funding in Canada to ensure their growth and job-creation capability. The budget proposes to make available, through the Business Development Bank of Canada, CAD 400 million over three years for a new “venture capital catalyst initiative” that would increase late-stage venture capital availability.
Other funding proposals include:

  • CAD 400 million over five years for the promotion of cleantech technologies’ demonstration;
  • CAD 229 million over four years for investment in R&D for clean energy and transportation;
  • CAD 207 million over five years for cleantech firms’ access to additional financing;
  • CAD 200 million over four years for cleantech in the natural resources sectors;
  • CAD 200 million for the new Strategic Innovation Fund that consolidates a number of programs, including the Strategic Aerospace Defense Initiative and the Automotive Innovation Fund (CAD 100 million is new funding and the other CAD 100 million will be drawn from the funding announced in the 2016 budget); and 
  • CAD 125 million for growing Canada’s position in artificial intelligence. 

Source: Deloitte