Innovation Canada: A Call to Action

The Context of the Review%1151101051009590858075706560555045403530Figure 2.7 ICT Investment per Worker in the Business Sector,Canada as a Proportion of the United States, 1987–2009 (current US dollars)Total ICT InvestmentComputer ICT InvestmentCommunications ICT InvestmentSoftware ICT InvestmentUS = 1001987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Source: CSLS (2011b).The Institute for Competitiveness & Prosperity(2010, pp. 39–40) underlines two mainchallenges that have inhibited the willingness ofCanadian businesses to ramp up investments intechnology: relatively high tax rates on capitalinvestment and a lack of competitive intensity.Significant progress has already been made, andcontinues to be made, on the tax front — forexample, a steady reduction in corporate taxrates, elimination of capital taxes and thefurther harmonization of provincial and federalsales tax regimes. The comparative lack ofcompetitive intensity in Canada is morerecalcitrant and is due primarily to a relativelysmall and geographically fragmented marketand to policies that insulate some sectors frominternational competition. Initiatives to promotecompetition — and specifically, as noted earlier,those recommended by the “Wilson panel” —constitute an essential foundation forinnovation policy in Canada.Having now situated the Panel’s mandate in thewider innovation context, the next chapter drillsdown into the programs at the core of theReview of Federal Support to Research andDevelopment. Thereafter, the Panel presents itsadvice on how the government can enhance theimpact of those programs.2-19