Sweep­ing changes pro­posed for R&D pro­grams

Toronto Star - - FEDERAL BUDGET 2012 - DANA FLAVELLE BUSI­NESS RE­PORTER

Ot­tawa has an­nounced sweep­ing changes to its flag­ship $3.6 bil­lion a year re­search and de­vel­op­ment pro­gram for busi­ness.

Not­ing that Canada con­tin­ues to lag other de­vel­oped coun­tries in busi­ness in­no­va­tion, fed­eral Fi­nance Min­is­ter Jim Fla­herty said the gov­ern­ment needs to over­haul the way it pro­motes pri­vate sec­tor pro­duc­tiv­ity. “As part of our plan for jobs and growth, our gov­ern­ment has made very sub­stan­tial in­vest­ments in sci­ence and tech­nol­ogy,” Fla­herty said in his 2012 fed­eral bud­get speech to the House of Com­mons Thurs­day. “Such in­vest­ments are nec­es­sary to help sus­tain a mod­ern, com­pet­i­tive econ­omy. They en­cour­age in­no­va­tion — new ideas, which lead to new prod­ucts and ser­vices, and ul­ti­mately to new, highly skilled, well-pay­ing jobs.

“The key is to lever­age pri­vate sec­tor in­vest­ment in re­search and de­vel­op­ment. In spite of our ef­forts so far, Canada is not keep­ing up with other ad­vanced economies on this cru­cial front.”

While the over­all amount Ot­tawa spends sup­port­ing cor­po­rate R&D will re­main largely un­changed, the gov­ern­ment is dra­mat­i­cally rewrit­ing the rules of the game, busi­ness groups said.

Among other things, Ot­tawa will re­duce by $1.3 bil­lion over the next five years the amount it spends on tax cred­its un­der its Sci­en­tific Re­search and Ex­per­i­men­tal De­vel­op­ment (SR&ED) pro­gram for busi­ness. In its place, Ot­tawa will hand out $1.1 bil­lion in di­rect grants to busi­nesses in­volved in R&D. The gov­ern­ment will also plow $500 mil­lion into ven­ture cap­i­tal funds to help star­tups con­vert new ideas into com­mer­cial prod­ucts.

Ot­tawa will also dou­ble spend­ing on R&D by small- and medi­um­sized busi­ness next year to $220 mil­lion un­der its In­dus­trial Re­search As­sis­tance pro­gram. The moves, which fol­low a re­view of Ot­tawa’s R&D pro­grams by a bluerib­bon panel headed by Open­text Corp. chair­man Tom Jenk­ins, will make the fed­eral R&D pro­gram less com­plex and more ef­fi­cient, the gov­ern­ment said.

How­ever, busi­ness groups fear it will give Ot­tawa more con­trol over who gets to ben­e­fit from the pro­gram. “Ot­tawa has a ter­ri­ble track record of pick­ing win­ners,” noted Dan Kelly, a na­tional vice-pres­i­dent with the Cana­dian Fed­er­a­tion on In­de­pen­dent Busi­ness.

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