Federal government delays funding programs targeted towards R&D and SMBs

The Department of Finance Canada and Innovation, Science and Economic Development Canada (ISED) announced in a joint statement yesterday that the launch of Canada Innovation Corporation (CIC), initially slated for 2023, will be delayed to 2026-2027. That means CIC might not happen at all if there is a change in government after the next general election in October 2025.

The integration of the National Research Council of Canada Industrial Research Assistance Program (NRC RAP) into the CIC, announced in February, is consequently also delayed until 2026-2027. In the meantime, NRC IRAP will continue to be delivered by the NRC, the departments said.

The government said in February of this year that the CIC “will not be just another funding agency”, but rather be a “focused, outcome-driven mandate to increase Canadian business expenditure on R&D.” The CIC would have received C$2.6 billion over four years, the government announced in last February’s budget.

A senior government official told The Globe and Mail that the delay is due to the challenge in building an agency from scratch, and difficulty finding the right people from the private sector to run the agency.

As a matter of fact, the government still has not announced who will run the CIC, despite promising in June that CIC will be up and running in 2023, with a board and executive.

The president of Council of Canadian Innovators (CCI), a lobby group for 150 of Canada’s technology-intensive companies, Benjamin Bergen, referred to the delay as “disappointing news for the leaders of the Canadian innovation economy.”

“When it was first announced, we applauded the government for creating the Canadian Innovation Corporation, and we were excited for the refreshing approach to innovation policy it represented. Nearly two years, later we now hear that it will be delayed by a further two years, and in reality it is unlikely to ever be fully established in the way we had hoped.”

However, Bergen welcomed the review, also announced yesterday, of the Scientific Research and Experimental Development (SR&ED) tax incentive program, which he said he hopes will bring transparency to the recipients of the tax incentives. 

This program, which seeks to encourage businesses to conduct research and development and employ knowledge workers, provides about C$3 billion a year in tax incentives to over 20,000 claimants, of which 75 per cent are small businesses.

The announcement said that consultations will begin next month on a “cost-neutral modernization” of the program.

Further, it said that the government will implement improvements to the Business Development Bank of Canada (BDC), following recommendations from a legislative review. The BDC is a financial Crown corporation that provides support exclusively to SMEs and entrepreneurs.

The legislative review advised the government to strengthen support for under-represented entrepreneurs as well as improve the reach of BDC in underserved regions. It also concluded that the BDC should review its “risk appetite” to support entrepreneurs with the greatest need.

“The fact that the government has heard the concerns we’ve raised about BDC’s lack of risk appetite, and its unwillingness to support our best and brightest companies to allow them to achieve their full potential is positive,” said Bergen. “The proof will be in the actual decisions of BDC’s leadership team and staff in the months and years ahead, but we hope they are hearing loud and clear that the support they have been delivering thus far is not what Canadian innovators actually need.”

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Ashee Pamma
Ashee Pamma
Ashee is a writer for ITWC. She completed her degree in Communication and Media Studies at Carleton University in Ottawa. She hopes to become a columnist after further studies in Journalism. You can email her at [email protected]

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