Report on Review of Federal Support to R&D

It (Innovation Canada: A Call to Action) [ETA Oct. 25, 2011: Title corrected] is not a light read (it weighs in at 148 pp.) as one might expect when a comprehensive review of government programmes is made and given the pace that major reports are being released these days I’ve not had a chance to even skim through the report itself. However, there are some major recommendations being made, notably this one about the National Research Council (from the Review of Federal Support to R&D home page),

  • Transform the institutes of the National Research Council [NRC] into a series of large-scale, collaborative centres involving business, universities and the provinces.
  • The NRC was created during World War I to kick-start Canada’s research capacity. It has a long and storied history of discoveries and innovation, including numerous commercial spin-offs. While the NRC continues to do good work, research and commercialization activity in Canada has grown immensely.  In this new context, the NRC can play a unique role, linking its large-scale, long-term research activity with the academic and business communities. The panel recommends evolving NRC institutes, consistent with the current strategic direction, into not-for-profit centres run with stakeholders, and incorporating its public policy research into other departments.

The panel also suggests cutting down on the number of funding agencies and creating a portal or ‘concierge’ to help businesses find the right funding solution for their needs,

  • The creation of an Industrial Research and Innovation Council (IRIC) to deliver the federal government’s business innovation programs.
    • There are currently more than 60 programs across 17 different government departments. The creation of an arm’s-length funding and delivery agency – the Industrial Research and Innovation Council – would begin to streamline the process as the development of a common application portal and service to help businesses find the right programs for their needs (a “concierge”).

This next one seems more like a ‘buy Canada’ recommendation than anything else,

  • Make business innovation one of the core objectives of procurement.
    • The federal government spends billions of dollars every year but it ranks low internationally when it comes to using that purchasing power to encourage Canadian innovation. The encouragement of home-grown innovation a part of government procurement is commonsense.

I like this idea,

  • Help high-growth innovative firms access the risk capital they need through the Business Development Bank of Canada
    • Innovative Canadian companies face real challenges in getting start-up funding and late stage risk capital financing. In many cases, the gap is filled by foreign investors, which means that too many commercial benefits and intellectual property end up leaving the country. Directing the BDC to work with angel investor groups and develop late-stage risk capital/growth equity funds will pay dividends.

Simplifying certainly seems reasonable,

 ·Simplification of the tax credit system used to support small and medium-sized businesses.

  • The current Scientific Research and Experimental Development (SR&ED) program is unnecessarily complicated: many small businesses hire consultants just to submit an application. This discourages eligible businesses from applying and may cost successful small SR&ED recipients a good portion of the credit received. By basing the SR&ED credit  solely on labour costs, the panel believes SR&ED will be more effective.

This one seems like one of those recommendations that are impossible to implement,

·Establish a clear federal voice for innovation and work with the provinces to improve coordination.

  • Currently, there is a lack of government-wide clarity when it comes to innovation. Responsibility is spread across a number of cabinet portfolios. The Prime Minister should assign responsibility for innovation to a single minister, supported by a whole-of-government Innovation Advisory Committee, evolved from the current Science Technology and Innovation Council (STIC), composed of external stakeholders, who would then work with the provincial and territorial governments to initiate a collaborative dialogue to improve coordination and impact.

I base my comment about the last recommendation on my experience with the gnashing of teeth I’ve observed when someone is going to lose an area of responsibility that is associated with power and other good things. Who do you imagine will want to give up innovation and what will they want in return?  Another question which springs to mind is this one: How are they going to develop a single voice for discussion of innovation across several federal bureaucracies with thousands of people and miles between them when even a small office of 20 people experiences difficulty doing this (again, this is based on my personal experience).

As for the suggested changes to the NRC? Well, those should provide some fodder for lively discussion. I’m sure the other items will provide conversational fodder too but it seems to me that the two I’ve highlighted in these comments are likely to be the among the most contentious.

Hannah Hoag in her Oct. 14, 2011 posting on the Nature news blog notes this,

  In an effort to address Canada’s problem with innovation, an independent panel has recommended a radical overhaul that includes the creation of a new funding council and transforms the country’s largest research entity, the billion dollar National Research Council (NRC).

Study after study has shown that Canada’s businesses invest less on R&D, relative to the country’s gross domestic product, than those of many other OECD countries and, unlike others, has actually decreased its spending over the last decade. Many of these business investments include government support in the form tax credits, training programs, or grants. [emphasis mine]

In an effort to make the best use of the government’s investments the six-member expertpanel developed six broad recommendations include appointing a Minister of Innovation and creating the Industrial Research and Innovation Council (IRIC).

Laura Payton writes in her Oct. 17, 2011 article for CBC news,

Canada’s research and development funding system is too complicated and confusing, a government-appointed panel [for the Review of Federal Support to R&D] said Monday.

Creating a new arm’s-length funding agency and putting a single cabinet minister in charge of innovation would streamline the application process and give the government a clear voice on the issue, Tom Jenkins, the panel’s chair said.

The idea is to cut red tape and make it easier for companies to get access to cash and increase collaboration.

“Going forward, more of the world’s innovations may well happen elsewhere, outside of Canada,” warned Jenkins, executive chairman and chief strategy officer of Waterloo, Ont.-based Open Text Corp.

“Governments in Canada spend more on supporting business R&D per capita than most countries in the industrialized world. And yet, we’re increasingly near the bottom of the pack when it comes to investing in business innovation. So if it’s not a lack of government investment, then why has our business R&D momentum been stalled for almost a decade?”

Gary Goodyear, minister of state for science and technology, said business investment and R&D help create high-paying, high-value jobs and maintain Canada’s standard of living.

Of course, none of the recommendations in the report from the expert panel address the core problem of Canadian businesses not investing in themselves. It simply wasn’t part of the brief and the title seems a little grandiose. Perhaps Government funding for innovation in Canada: A Call to Action might have been a better title.

While I think this review was an excellent exercise I am dismayed that one of the core problems (business investment) with innovation in Canada has not been addressed.

  • Help high-growth innovative firms access the risk capital they need through the Business Development Bank of Canada
    • Innovative Canadian companies face real challenges in getting start-up funding and late stage risk capital financing. In many cases, the gap is filled by foreign investors, which means that too many commercial benefits and intellectual property end up leaving the country. Directing the BDC to work with angel investor groups and develop late-stage risk capital/growth equity funds will pay dividends.

One thought on “Report on Review of Federal Support to R&D

  1. Pingback: FrogHeart (part 2) at the 2012 Canadian Science Policy Conference (or Kennedy Stewart and his proposed science policy) « FrogHeart

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