CATA champions proposal to merge industry and science portfolios

Also call for more small business support

Canada's largest high-tech organization is wasting no time in advocating for dramatic changes to the way the federal government supports innovative businesses. The Canadian Advanced Technology Alliance (CATA) is proposing to consolidate the positions of minister of industry and minister of state for science and technology, and introduce a new funding program modelled on the US Small Business Innovation Research (SBIR) program.

The changes are contained in CATA's Working Agenda for the newly elected Liberal government. They are part of a torrent of proposals unleashed in the wake of the election and aimed at reversing sagging business R&D and what's been perceived as a decade of decline in Canada's research policies, innovation, and global competitiveness.

CATA says the new, beefed up ministerial position and refocused department (entitled Department of Science, Technology and Business Innovation — DSTBI) would "lead and facilitate discussions" with Cabinet colleagues, the provinces and cities. Industry Canada and Finance Canada would share responsibility for the innovation portfolio.

Consolidation of the minister positions was first proposed in 2012 by Dr Peter Morand as part of a RE$EARCH MONEY Opinion Leader column entitled Priming Canada's innovation engine (R$, May 22/12). Morand conceived of the new position in response to recommendations made by the expert panel for the Review of Federal Support to Research and Development, chaired by Open Text Corp chairman Tom Jenkins. (R$, October 17/11 & 31/11).

"This will start some debate because there are a lot of issues. They will have to offload many things Industry Canada does now ... Industry Canada is supposed to be a policy ministry but it continues to adjudicate programs which is not what they should be doing," says Morand. "CATA has been frustrated that nothing is happening (on the innovation front) and they jumped on this … The more momentum we get the better."

Morand says Industry Canada should no longer oversee funding programs, nor should it be responsible for organizations such as the Communications Research Centre due to potential conflicts of interest. Instead, the National Research Council should be designated the gatekeeper of strategic R&D.

"A pure policy ministry would help to increase Canada's BERD (business enterprise R&D)," says Morand, adding that the Jenkins panel's recommendation to create an arm's length Industrial Research and Innovation Council (IRIC) to support business innovation (never implemented) would merely "add another later of bureaucracy".

It's a view shared by Paul Dufour, a science policy analyst and former long-time employee of Industry Canada. Dufour says the department is responsible for too many branches covering everything from aerospace to spectrum allocation.

"I do agree that Industry Canada is way too big a department for all the pieces it has. It's got too many mandates," he says. "Innovation is the responsibility of other players, the business sector being number one. Government should provide the tools and incentives to incent that and move it along."

But Dufour questions whether the CATA proposal for a DSTBI is the appropriate response given that such a ministerial configuration — Industry Science and Technology Canada (ISTC) — was attempted in the late 1980s before being disbanded when the previous Liberal government came to power in 1993.

"(The CATA proposal) is a linear model and within the policy apparatus, nothing is that straightforward. Nothing works that way," says Dufour. "If they want to make machine-in-government changes I have no problem with that but is this the best way? I'm not so sure."

"Rather than identify a lead minister responsible for innovation as recommended by the (Jenkins) Panel, why not consolidate the current Minister of State (Science and Technology) and Minister of Industry positions into a Minister of Science, Technology and Business Innovation as a high profile Cabinet position? ... Such a move would bring Canada in line with the government structure of the world's leading industrialized countries. The bottom line is to provide the leadership for improving Canada's business innovation performance and this has to begin at the political level." — Dr Peter Morand, (R$, May 22/12)

One policy document Dufour says should be revisited is Canada's Future as an Innovative Society: A Decalogue of Policy Criteria, which was released in 2013 (R$, October 10/13 & November 9/12). It specifies that an effective innovation policy must cross jurisdictional boundaries, focus not on technology but innovation, promote the creation of new knowledge skills, stimulate the transformation of existing industries and recognize the Canadian context.

"The policy for innovation is complex and multistakeholder," says Dufour. "If the government wants to encourage innovation, it should look at the Decalogue."

SBIR model promoted

Another key component of the CATA Working Agenda is the call for a Canadian SBIR program. The association released a paper reviewing the American program and the proposed Canadian version.

Unlike Canadian business assistance programs that typically require matching funds, no such provision is required when bidding for an SBIR grant. The US program — which has allocated more than $20 billion to small businesses — provides firms with an initial $250,000 grant. If the project is successful, an additional $1 million is provided with no strings attached. If a new product is developed, the government department involved will usually become its first purchaser, thereby incorporating procurement into the program's outcomes. Companies are also not limited in the number of SBIR grants they secure.

The CATA proposal would create a Small Business Agency modelled on the Natural Sciences and Engineering Research Council, focused on companies with less than 100 employees and "condensing all funding for research and product development ... into a single program".

"SBIR has been a big success and has had a major impact. A Canadian version would be a start in the right direction," says Morand. "Canadian BERD is 16th out of 17 comparator countries which is pathetic. SR&ED (Scientific Research and Experimental Development tax credit program) and IRAP (Industrial Research Assistance Program) are not doing their job."

Comprehensive CATA agenda

As part of the CATA Working Agenda, the proposed DSTBI and a Canadian SBIR program would be augmented with several other initiatives, including:

• Cabinet-level discussions to draft regulations relating to crowdfunding;

• adopt British Columbia's Angel Investor Tax Credit nationwide;

• introduce a capital gains exemption for founders and early-stage employees at start-ups;

• establish a Canada Seedling Market to encourage and attract start-ups that incorporate in Canada;

• match or beat New York State's Startup New York tax exemptions; and,

• commit 10% of federal procurement funding to start-ups.

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