The BC Technology Industry Association (BCTIA) participated in the Expert Panel’s Review of Federal Support to Research and Development in Canada.
In preparing our remarks, we have opted not to undertake a broad consultation with our membership. Instead, we have chosen to rely on a number of studies and consultations that we have undertaken in recent years, including an extensive 2007 study on the SR&ED. Our analysis and conclusions have been further validated with industry representatives from across BC’s technology industry.
While BC technology companies utilize a number of federally funded programs, we have limited our analysis and recommendations in this submission to our Big 3 – SR&ED, NRC-IRAP and WD.
However, other vertically-oriented or lifestage programs including Precarn, STDC and NSERC are also critical complements to the R&D ecosystem. For instance, SDTC, a support program targeted at clean technology projects, has proven extremely beneficial to British Columbia. It has not only provided critical financial support, but has also helped to leverage this federal funding by attracting private and provincial funds. Such strategic investments like SDTC are essential to build and maintain the competitiveness of Canadian companies in key sectors within the technology industry.
The BCTIA welcomes this review as an opportunity to improve the longstanding support mechanisms in place today. Programs such as SR&ED, IRAP and others are used extensively by the technology industry, and many of our companies have built this support into their business models.
When reviewing public policies for growing Canada’s innovation economy, two issues consistently arise: access-to-capital and access-to-talent. Canadian companies are chronically underfunded, yet our rich lifestyle makes Canada a great place for top global talent to reside. Canadian support for R&D helps to de-risk technologies, improving the potential for investment while stretching the limited cash that our companies have. At the same time, capacity-improvement projects help organizations such as the BCTIA create and manage programs to build the talent base within our communities.
With respect to the federal support programs for R&D, the following are some of our high-level recommendations.
- Eliminate ownership structure as a criterion to determine cash refundability.
- Extend the SR&ED program to include early commercialization activities or supplement the SR&ED program with a parallel system to support commercialization.
- Introduce mechanisms to favour companies that show evidence of commercialization success.
- Streamline processes and ensure consistent application of policies and regulations.
5. Increase the IRAP budget for more direct support of R&D and innovation.
6. Introduce larger-scale grant categories using funding stages with competitive processes to qualify applicants
7. Increase IRAP’s ability to build regional R&D and innovation-support capacity.
8. Further emphasize WD’s mandate of long-term capacity building versus short-term project funding.
9. Improve the transparency of the funding process and eliminate the requirement for ministerial sign-off on all funding projects.
Because the programs reviewed are key components of our ecosystem, any changes should be executed carefully to ensure that businesses can adapt in an orderly way. Small start-up companies, which constitute the majority within our industry, can ill afford sudden changes. These companies are often cash-strapped and lack the managerial bandwidth to implement new rules and regulations quickly. Changes must be made in a predictable way.
We also recommend caution regarding the use of Business Expenditures on R&D (BERD) to measure the impact of R&D support programs in R&D-intensive industries such as technology development. Mature technology companies typically spend less of their budgets on R&D than start-up companies because more money is spent monetizing the R&D created through product sales, implementation and support. Within the consultation document, the use of BERD is focused too heavily toward R&D activities and not enough on the commercialization activities that actually capitalize on the R&D created in order to scale companies and create export wealth for Canada.
To download a copy of our submission to the review panel, please click here.
President & CEO
BC Technology Industry Association