Editorial - 26-8

There's a growing consensus that Canada's innovation policies inordinately favour small and growing firms at the expense of larger businesses which often have to compete internally to win R&D mandates. The scaling back of our flagship R&D tax credit program to help fund more direct R&D support to business has been applauded by many smaller firms and the organizations that represent them.

But for those who speak for large, - often foreign-based companies, the rush to boost direct support at the expense of broadly-based tax credits may be the wrong way to go. Even some mediums-sized firms don't find the Scientific Research and Experimental Development (SRED) tax credit program as useful as when they were small and growing.

The head of one medium-sized company (David Ross of Ross Video) argued at last week's RE$EARCH MONEY Conference that SRED is of little help when expanding overseas and he's come up with a novel suggestion. Ross says SRED should be modified to provide increasing support in tandem with growing export sales. Not only would it assist companies in establishing a global presence but it would help to free up resources to secure the necessary sales and marketing talent for international commerce.

Of course, the shift to greater direct support was urged by the Jenkins Panel and the government has indicated that it may provide further response to panel's recommendations. Let's hope that a more nuanced innovation strategy emerges that places public resources where they can most benefit the private sector, regardless of company size.