Canada’s science and its 2022 federal budget (+ the online April 21, 2022 symposium: Decoding Budget 2022 for Science and Innovation)

Here’s my more or less annual commentary on the newly announced federal budget. This year the 2022/23 Canadian federal budget was presented by Chrystia Freeland, Minister of Finance, on April 7, 2022.

Sadly the budgets never include a section devoted to science and technology, which makes finding the information a hunting exercise.

I found most of my quarry in the 2022 budget’s Chapter 2: A Strong, Growing, and Resilient Economy (Note: I’m picking and choosing items that interest me),

Key Ongoing Actions

  • $8 billion to transform and decarbonize industry and invest in clean technologies and batteries;
  • $4 billion for the Canada Digital Adoption Program, which launched in March 2022 to help businesses move online, boost their e-commerce presence, and digitalize their businesses;
  • $1.2 billion to support life sciences and bio-manufacturing in Canada, including investments in clinical trials, bio-medical research, and research infrastructure;
  • $1 billion to the Strategic Innovation Fund to support life sciences and bio-manufacturing firms in Canada and develop more resilient supply chains. This builds on investments made throughout the pandemic with manufacturers of vaccines and therapeutics like Sanofi, Medicago, and Moderna;
  • $1 billion for the Universal Broadband Fund (UBF), bringing the total available through the UBF to $2.75 billion, to improve high-speed Internet access and support economic development in rural and remote areas of Canada;
  • $1.2 billion to launch the National Quantum Strategy, Pan-Canadian Genomics Strategy, and the next phase of Canada’s Pan-Canadian Artificial Intelligence Strategy to capitalize on emerging technologies of the future [Please see: the ‘I am confused’ subhead for more about the ‘launches’];
  • Helping small and medium-sized businesses to invest in new technologies and capital projects by allowing for the immediate expensing of up to $1.5 million of eligible investments beginning in 2021;

While there are proposed investments in digital adoption and the Universal Broadband Fund, there’s no mention of 5G but perhaps that’s too granular (or specific) for a national budget. I wonder if we’re catching up yet? There have been concerns about our failure to keep pace with telecommunications developments and infrastructure internationally.

Moving on from ‘Key Ongoing Actions’, there are these propositions from Chapter 2: A Strong, Growing, and Resilient Economy (Note: I have not offset the material from the budget in a ‘quote’ form as I want to retain the formatting.),

Creating a Canadian Innovation and Investment Agency

Canadians are a talented, creative, and inventive people. Our country has never been short on good ideas.

But to grow our economy, invention is not enough. Canadians and Canadian companies need to take their new ideas and new technologies and turn them into new products, services, and growing businesses.

However, Canada currently ranks last in the G7 in R&D spending by businesses. This trend has to change. [Note: We’ve been lagging from at least 10 or more years and we keep talking about catching up.]

Solving Canada’s main innovation challenges—a low rate of private business investment in research, development, and the uptake of new technologies—is key to growing our economy and creating good jobs.

A market-oriented innovation and investment agency—one with private sector leadership and expertise—has helped countries like Finland and Israel transform themselves into global innovation leaders. {Note: The 2021 budget also name checked Israel.]

The Israel Innovation Authority has spurred the growth of R&D-intensive sectors, like the information and communications technology and autonomous vehicle sectors. The Finnish TEKES [Tekes – The Finnish Funding Agency for Technology and Innovation] helped transform low-technology sectors like forestry and mining into high technology, prosperous, and globally competitive industries.

In Canada, a new innovation and investment agency will proactively work with new and established Canadian industries and businesses to help them make the investments they need to innovate, grow, create jobs, and be competitive in the changing global economy.

Budget 2022 announces the government’s intention to create an operationally independent federal innovation and investment agency, and proposes $1 billion over five years, starting in 2022-23, to support its initial operations. Final details on the agency’s operating budget are to be determined following further consultation later this year.

Review of Tax Support to R&D and Intellectual Property

The Scientific Research and Experimental Development (SR&ED) program provides tax incentives to encourage Canadian businesses of all sizes and in all sectors to conduct R&D. The SR&ED program has been a cornerstone of Canada’s innovation strategy. The government intends to undertake a review of the program, first to ensure that it is effective in encouraging R&D that benefits Canada, and second to explore opportunities to modernize and simplify it. Specifically, the review will examine whether changes to eligibility criteria would be warranted to ensure adequacy of support and improve overall program efficiency. 

As part of this review, the government will also consider whether the tax system can play a role in encouraging the development and retention of intellectual property stemming from R&D conducted in Canada. In particular, the government will consider, and seek views on, the suitability of adopting a patent box regime [emphasis mine] in order to meet these objectives.

I am confused

Let’s start with the 2022 budget’s $1.2 billion to launch the National Quantum Strategy, Pan-Canadian Genomics Strategy, and the next phase of Canada’s Pan-Canadian Artificial Intelligence Strategy. Here’s what I had in my May 4, 2021 posting about the 2021 budget,

  • Budget 2021 proposes to provide $360 million over seven years, starting in 2021-22, to launch a National Quantum Strategy [emphasis mine]. The strategy will amplify Canada’s significant strength in quantum research; grow our quantum-ready technologies, companies, and talent; and solidify Canada’s global leadership in this area. This funding will also establish a secretariat at the Department of Innovation, Science and Economic Development to coordinate this work.
  • Budget 2021 proposes to provide $400 million over six years, starting in 2021-22, in support of a Pan-Canadian Genomics Strategy [emphasis mine]. This funding would provide $136.7 million over five years, starting in 2022-23, for mission-driven programming delivered by Genome Canada to kick-start the new Strategy and complement the government’s existing genomics research and innovation programming.
  • Budget 2021 proposes to provide up to $443.8 million over ten years, starting in 2021-22, in support of the Pan-Canadian Artificial Intelligence Strategy [emphasis mine], …

How many times can you ‘launch’ a strategy?

A patent box regime

So the government is “… encouraging the development and retention of intellectual property stemming from R&D conducted in Canada” and is examining a “patent box regime” with an eye as to how that will help achieve those ends. Interesting!

Here’s how the patent box is described on Wikipedia (Note: Links have been removed),

A patent box is a special very low corporate tax regime used by several countries to incentivise research and development by taxing patent revenues differently from other commercial revenues.[1] It is also known as intellectual property box regime, innovation box or IP box. Patent boxes have also been used as base erosion and profit shifting (BEPS) tools, to avoid corporate taxes.

Even if they can find a way to “incentivize” R&D, the government has a problem keeping research in the country (see my September 17, 2021 posting (about the Council of Academies CCA’s ‘Public Safety in the Digital Age’ project) and scroll down about 50% of the way to find this,

There appears to be at least one other major security breach; that involving Canada’s only level four laboratory, the Winnipeg-based National Microbiology Lab (NML). (See a June 10, 2021 article by Karen Pauls for Canadian Broadcasting Corporation news online for more details.)

As far as I’m aware, Ortis [very senior civilian RCMP intelligence official Cameron Ortis] is still being held with a trial date scheduled for September 2022 (see Catherine Tunney’s April 9, 2021 article for CBC news online) and, to date, there have been no charges laid in the Winnipeg lab case.

The “security breach” involved sending information and sample viruses to another country, without proper documentation or approvals.

While I delved into a particular aspect of public safety in my posting, the CCA’s ‘Public Safety in the Digital Age’ project was very loosely defined and no mention was made of intellectual property. (You can check the “Exactly how did the question get framed?” subheading in the September 17, 2021 posting.)

Research security

While it might be described as ‘shutting the barn door after the horse got out’, there is provision in the 2022 budget for security vis-à-vis our research, from Chapter 2: A Strong, Growing, and Resilient Economy,

Securing Canada’s Research from Foreign Threats

Canadian research and intellectual property can be an attractive target for foreign intelligence agencies looking to advance their own economic, military, or strategic interests. The National Security Guidelines for Research Partnerships, developed in collaboration with the Government of Canada– Universities Working Group in July 2021, help to protect federally funded research.

  • To implement these guidelines fully, Budget 2022 proposes to provide $159.6 million, starting in 2022-23, and $33.4 million ongoing, as follows:
    • $125 million over five years, starting in 2022-23, and $25 million ongoing, for the Research Support Fund to build capacity within post- secondary institutions to identify, assess, and mitigate potential risks to research security; and
    • $34.6 million over five years, starting in 2022-23, and $8.4 million ongoing, to enhance Canada’s ability to protect our research, and to establish a Research Security Centre that will provide advice and guidance directly to research institutions.

Mining

There’s a reason I’m mentioning the mining industry, from Chapter 2: A Strong, Growing, and Resilient Economy,

Canada’s Critical Minerals and Clean Industrial Strategies

Critical minerals are central to major global industries like clean technology, health care, aerospace, and computing. They are used in phones, computers, and in our cars. [emphases mine] They are already essential to the global economy and will continue to be in even greater demand in the years to come.

Canada has an abundance of a number of valuable critical minerals, but we need to make significant investments to make the most of these resources.

In Budget 2022, the federal government intends to make significant investments that would focus on priority critical mineral deposits, while working closely with affected Indigenous groups and through established regulatory processes. These investments will contribute to the development of a domestic zero-emissions vehicle value chain, including batteries, permanent magnets, and other electric vehicle components. They will also secure Canada’s place in important supply chains with our allies and implement a just and sustainable Critical Minerals Strategy.

In total, Budget 2022 proposes to provide up to $3.8 billion in support over eight years, on a cash basis, starting in 2022-23, to implement Canada’s first Critical Minerals Strategy. This will create thousands of good jobs, grow our economy, and make Canada a vital part of the growing global critical minerals industry.

I don’t recall seeing mining being singled out before and I’m glad to see it now.

A 2022 federal budget commentary from University Affairs

Hannah Liddle’s April 8, 2022 article for University Affairs is focused largely on the budget’s impact on scientific research and she picked up on a few things I missed,

Budget 2022 largely focuses on housing affordability, clean growth and defence, with few targeted investments in scientific research.

The government tabled $1 billion over five years for an innovation and investment agency, designed to boost private sector investments in research and development, and to correct the slow uptake of new technologies across Canadian industries. The new agency represents a “huge evolution” in federal thinking about innovation, according to Higher Education Strategy Associates. The company noted in a budget commentary that Ottawa has shifted to solving the problem of low spending on research and development by working with the private sector, rather than funding universities as an alternative. The budget also indicated that the innovation and investment agency will support the defence sector and boost defence manufacturing, but the promised Canada Advanced Research Projects Agency – which was to be modelled after the famed American DARPA program – was conspicuously missing from the budget. [emphases mine]

However, the superclusters were mentioned and have been rebranded [emphasis mine] and given a funding boost. The five networks are now called “global innovation clusters,” [emphasis mine] and will receive $750 million over six years, which is half of what they had reportedly asked for. Many universities and research institutions are members of the five clusters, which are meant to bring together government, academia, and industry to create new companies, jobs, intellectual property, and boost economic growth.

Other notable innovation-related investments include the launch of a critical minerals strategy, which will give the country’s mining sector $3.8 billion over eight years. The strategy will support the development of a domestic zero-emission vehicle value chain, including for batteries (which are produced using critical minerals). The National Research Council will receive funding through the strategy, shared with Natural Resources Canada, to support new technologies and bolster supply chains of critical minerals such as lithium and cobalt. The government has also targeted investments in the semiconductor industry ($45 million over four years), the CAN Health Network ($40 million over four years), and the Canadian High Arctic Research Station ($14.5 million over five years).

Canada’s higher education institutions did notch a win with a major investment in agriculture research. The government will provide $100 million over six years to support postsecondary research in developing new agricultural technologies and crop varieties, which could push forward net-zero emissions agriculture.

The Canada Excellence Research Chairs program received $38.3 million in funding over four years beginning in 2023-24, with the government stating this could create 12 to 25 new chair positions.

To support Canadian cybersecurity, which is a key priority under the government’s $8 billion defence umbrella, the budget gives $17.7 million over five years and $5.5 million thereafter until 2031-32 for a “unique research chair program to fund academics to conduct research on cutting-edge technologies” relevant to the Communications Security Establishment – the national cryptologic agency. The inaugural chairs will split their time between peer-reviewed and classified research.

The federal granting councils will be given $40.9 million over five years beginning in 2022-23, and $9.7 million ongoing, to support Black “student researchers,” who are among the underrepresented groups in the awarding of scholarships, grants and fellowships. Additionally, the federal government will give $1.5 million to the Jean Augustine Chair in Education, Community and Diaspora, housed at York University, to address systemic barriers and racial inequalities in the Canadian education system and to improve outcomes for Black students.

A pretty comprehensive listing of all the science-related funding in the 2022 budget can be found in an April 7, 2022 posting on the Evidence for Democracy (E4D) blog,

2022 budget symposium

Here’s more about the symposium from the Canadian Science Policy Centre (CSPC), from the Decoding Budget 2022 event page,

Decoding Budget 2022 for Science and Innovation

The CSPC Budget Symposium will be held on Thursday April 21 [2022] at 12:00 pm (EST), and feature numerous speakers from across the country and across different sectors, in two sessions and one keynote presentation by Dave Watters titled: “Decoding Budget 2022 for Science and Innovation”.

Don’t miss this session and all insightful discussions of the Federal Budget 2022.

Register Here

You can see the 2022 symposium poster below,

By the way, David Watters gave the keynote address for the 2021 symposium too. Seeing his name twice now aroused my curiosity. Here’s a little more about David Watters (from a 2013 bio on the Council of Canadian Academies website), Note: He is still president,

David Watters is President of the Global Advantage Consulting Group, a strategic management consulting firm that provides advice to corporate, association, and government clients in Canada and abroad.

Mr. Watters worked for over 30 years in the federal public service in a variety of departments, including Energy Mines and Resources, Consumer and Corporate Affairs, Industry Canada (as Assistant Deputy Minister), Treasury Board Secretariat (in charge of Crown corporations and privatization issues), the Canadian Coast Guard (as its Commissioner) and Finance Canada (as Assistant Deputy Minister for Economic Development and Corporate Finance). He then moved to the Public Policy Forum where he worked on projects dealing with the innovation agenda, particularly in areas such as innovation policy, health reform, transportation, and the telecommunications and information technology sectors. He also developed reports on the impact of the Enron scandal and other corporate and public sector governance problems for Canadian regulators.

Since starting the Global Advantage Consulting Group in 2002, Mr. Watters has assisted a variety of public and private clients. His areas of specialization and talent are in creating visual models for policy development and decision making, and business models for managing research and technology networks. He has also been an adjunct professor at the Telfer School of Management at the University of Ottawa, teaching International Negotiation.

Mr. Watters holds a Bachelor’s degree in Economics from Queen’s University as well as a Law degree in corporate, commercial and tax law from the Faculty of Law at Queen’s University.

So, an economist, lawyer, and government bureaucrat is going to analyze the budget with regard to science and R&D? If I had to guess, I’d say he’s going to focus in ‘innovation’ which I’m decoding as a synonym for ‘business/commercialization’.

Getting back to the budget, it’s pretty medium where science is concerned with more than one -re-announcement’. As the pundits have noted, the focus is on deficit reduction and propping up the economy.

ETA April 20, 2022: There’s been a keynote speaker change, from an April 20, 2022 CSPC announcement (received via email),

… keynote presentation by Omer Kaya, CEO of Global Advantage Consulting Group. Unfortunately, due to unexpected circumstances, Dave Watters will not be presenting at this session as expected before.

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