Government asks CCA to examine reasons for low business R&D investment

Strategy mute on direct support programs

The S&T Strategy readily acknowledges that Canada's business R&D spending is low by any number of measures and commits to encouraging business to spend more. Before any direction action is contemplated, however, it has requested a study by the Council of Canadian Academies (CCA).

"The Government is requesting the Council to examine the factors influencing relatively low investment by Canadian businesses in R&D and advanced technologies," states the Strategy.

Expert panels convened by the CCA typically take between six and eight months to complete their work, meaning its report should be publicly released by early 2008.

"This is a subject that I've thought about and while I have no preconceived notion of the answer, I think we need to look at it on a sector-by-sector basis," says CCA president, Dr Peter Nicholson. "We currently look at business R&D at too high a level of aggregation."

Nicholson says a list of potential panel members is being assembled and that the panel will be populated by people that have built successful technology-based companies as well as international experts that have expertise in examining the macro data. Up to 16 individuals will ultimately be chosen by the end of June.

"We need a panel with the expertise and patience to address both aspects of the question — is Canadian business underinvesting in S&T, and if so, why? That means a ground-level view and an abstract/academic view."

The generally positive reaction to the S&T Strategy is being tempered by concern over the lack of substantive measures aimed at helping firms to be more innovative and competitive. While the strategy talks the talk about the need for greater R&D spending and innovation by industry, there is little in the way of focused programs to address the well recognized gaps in the innovation chain.

Instead, the strategy commits to examine Canada's intellectual property regime, enhance the scientific research and experimental development (SR&ED) tax credit program, consider new approaches to stimulating the supply of venture capital, encourage foreign direct investment and work with the provinces to remove barriers to trade and labour mobility.

The recent Budget also announced a tax treaty with the US and the write-down of capital cost allowances over two years.

The Conservative government is not predisposed to the use of direct support programs. It has been flexible, however, when it comes to sectors like aerospace and defence that enjoy direct support from competing nations.

The government appears to prefer encouraging businesses to work together with the higher education sector to derive the benefits of Canada's high level of public research investment. The new Centres of Excellence in Commercialization and Research and business-led Networks of Centres of Excellence (NCE) programs attest to that commitment. So does the Budget 07 initiative to launch an Industrial R&D Internship (IRDI) program, which will see up to 1,000 students a year placed with companies for one semester.

The IRDI program will be administered by the NCE program and is modelled after the highly successful internship program run by the Mathematics of Information Technology and Complex Systems (MITACS) NCE.

"I'm very happy that our internship program was recognized in the S&T Strategy," says MITACS scientific director Dr Arvind Gupta. "It recognizes that organizations like ours can make a huge difference."

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