Innovation Canada: A Call to Action

Overview of Programs to Support Business R&DBox 3.1 Expenditure Reviewed by the PanelThe Panel was mandated to review federal expenditure encouraging business R&D. Based onfigures provided by departments and agencies, it is estimated that expenditure in support ofbusiness innovation was approximately $6.44 billion in fiscal year 2010–11, which comprisesmore than 100 programs and institutes.Expenditure in Support of Business R&D, 2010–11($ billion, including federal program administration costs)SR&ED tax expenditure(2010 projected amount)$1.30Direct support to business R&D$3.53Direct support to public/non-profitcommercially-relevant R&D$0.98Direct support not reviewed by the Panel(based on preliminary estimates)$0.63Source: Based on figures provided by departments and agencies.Of this amount, the Panel reviewed 60 programs and institutes totalling $5.14 billion (or$4.96 billion when federal program administration costs are removed). These programs weredrawn largely from an illustrative list that accompanied the Panel’s mandate letter. The Panel hadthe flexibility to choose the programs for review. It refined the initial list by removing a limitednumber of programs whose primary purpose was not to support business innovation. Inaddition, it added others to ensure representative coverage of the diversity of instruments in theportfolio. The resulting list (Annex A) captures key programs and the majority (about 80 percent)of federal R&D expenditure supporting business innovation.In the 2010–11 fiscal year, the 60 programs inthe review — hereafter referred to collectively asthe “envelope” — had estimated expenditureof approximately $4.96 billion (excluding federalprogram administration costs). 3 Of thisamount, about 70 percent ($3.47 billion) is the3 Business Development Bank of Canada (BDC) venture capital is excluded from this total, since BDC disbursements areinvestments rather than expenditures. In addition, while the government capitalizes BDC, it does not provide specificfunding on a regular basis for this specific activity. As of the third quarter of 2010, the BDC venture capital portfoliocommitment for direct investments was about $550 million and was about $267 million for fund investments. Note as wellthat the federal tax credit provided to individuals for the acquisition of shares in labour-sponsored venture capitalcorporations costs the federal government $125 million a year.3-3