Innovation Canada: A Call to Action

Innovation Canada: A Call to Actionprojected contribution of the SR&ED tax credit, 4with the balance of 30 percent ($1.5 billion)coming from 59 direct expenditure programs.The distribution of expenditure across the manydirect spending programs is highly skewed: thelargest five represent about 40 percent of directexpenditure, while the largest 15 account forabout 72 percent (Figure 3.2). Only oneprogram — IRAP — accounted for more than15 percent of direct expenditure in 2010–11,while more than 50 percent of the programseach spent less than 1 percent of the$1.5 billion direct expenditure total.There is considerable diversity among the directprograms, as the examples below show.IRAP is a broad-based program that providesadvisory services and contribution funding tosupport high-risk R&D projects by small andmedium-sized enterprises (SMEs). It alsoprovides support to non-profit and postsecondaryinstitutions for the provision oftechnical and commercialization advice toSMEs.Sector-focussed initiatives include theNational Research Council’s (NRC) Institute forAerospace Research, which performscollaborative R&D with business, in additionto licensing and fee-for-service arrangements.Examples of arm’s-length delivery of businessinnovation support include FPInnovations, apublic–private partnership with the forestproducts sector, and SustainableDevelopment Technology Canada, a federallyfunded non-profit corporation that providesfunding for environmental technologyinitiatives.The Strategic Aerospace and DefenceInitiative (SADI) is the second largest directspending program and, as announced inBudget 2011, will be part of a specific reviewof all federal policies and programs related tothe aerospace industry. The Panelconsequently did not reach specific findingsregarding SADI, although it welcomes theopportunity to provide advice and any otherassistance in support of the review.Seventeen NRC institutes, including theIndustrial Materials Institute and the abovementionedInstitute for Aerospace Research,undertake a great variety of basic and appliedresearch for business and public sectorclients. Expenditure of appropriated funds bythese institutes was $276 million in 2010–11,about 19 percent of federal direct spendingin support of R&D.The Atlantic Innovation Fund, the WesternDiversification Program and the Business andRegional Growth Program (Quebec) areregional development programs. (Smallerprograms, not shown among the 15 largestin Figure 3.2, are provided by the Ontarioregional agencies FedNor and FedDev ON.)The regional agencies, which collectivelyaccounted for about 14 percent of directexpenditure in support of business innovationin 2010–11, generally provide repayablesupport to businesses and non-repayablesupport to not-for-profit entities.Several programs link the post-secondaryeducation sector to business innovation.For example, the Networks of Centres ofExcellence and Strategic Network Grants fundlarge-scale, multisectoral collaborativeresearch, and the Collaborative R&D Grantsaim to support joint research projects amongbusinesses, universities and researchers.4 Note that the 2010 amount for the SR&ED tax credit is a projection for the 2010 taxation year (see Department of Finance2010b).3-4