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CME welcomes R&D study findings

Published by Steve Coleman on October 17, 2011

CME congratulates the R&D review panel for the outstanding work they have done in the last year. The report is an excellent overview of the current programs supporting R&D and innovation in the country and includes some very interesting solutions to increase innovation in Canada. The report will be critical in evaluating how the federal government and other organizations can strengthen support for research, development, and industrial innovation.

The report recognizes the contribution of the manufacturing sector into the country's R&D efforts: manufacturing is the most intensive R&D sector in the country. Manufacturers account for 88 per cent of all business R&D expenses and for 90 per cent of all patents filed by Canadian businesses.

CME agrees that governments must ensure a competitive environment for investment, innovation and growth. The report is very important in that sense because it identifies a number of gaps in Canada's current programs, and proposes solutions to rebalance direct and indirect support for business R&D expenses. CME is on record in its support of the panel's recommendations to:

  • Create a national commercialization voucher program, which would help SMEs defray the costs associated with commercialization of their product. As pointed out by the panel, government support for commercialization only constitutes 11 per cent of total direct support for R&D, and indirect support is mainly available for experimental development.
  • Leverage government procurement to spur innovation, make the procurement process simpler and more flexible, establish targets for departments and agencies for contracting out R&D expenditures, and expand the current Canadian Innovation Commercialization Program into a permanent and larger program.
  • Expand the role of the Business Development Bank of Canada by supporting early and late stage risk capital funds for high-growth firms.
  • Expand the role of Regional Economic Development Agencies in support of regional innovation initiatives. By their connections and knowledge of regional economies, these agencies can play a vital role in increasing direct support for business R&D, especially in sectors that are highly concentrated within one region.

CME agrees with the panel that improvements must be made in providing businesses easier access to programs in support of innovation. The report states that one-third of the firms surveyed by the panel were unaware of R&D support programs offered by government. Establishment of an Industrial Research and Innovation Council (IRIC) to help companies find the right information about the multitude of assistance programs available is an interesting proposal about which we will want to consult our members.

However, CME has some concerns with respect to some of the panel's recommendations regarding the administration of the Scientific Research and Experimental Development (SR&ED) tax credit and, particularly, with respect to limiting the eligibility criteria of the tax credit.

We will consult with our members across Canada on the recommendations of the report and advise the government within a month on their feedback. We congratulate the panel's members on their hard work and thoughtful analysis, and we look forward to collaborating with the government in implementing some of the measures proposed in this report.

The full report can be found at the following link.

 

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