Instead, it is promising a review of its support programs and to improve the administration of its primary R&D credit system.
It will also introduce a pilot program for government departments to adopt and demonstrate prototype products and technologies developed by small and medium-sized businesses, a long-standing request of some Ottawa technology companies.
But those hoping to see the federal budget expand the eligibility rules for the scientific research and experimental development program, known as SR&ED, are out of luck.
Prior to Thursday’s budget, the Ottawa Centre for Research and Innovation and the Canadian Advanced Technology Alliance separately suggested modernizing and reforming SR&ED, which was worth $3 billion last year.
CATA recently polled tax managers on the impact of the high Canadian dollar on where companies will be conducting their R&D. Forty per cent of respondents said they were likely to move their R&D offshore.
To prevent this shift, the Alliance suggested technology-intensive companies be allowed to convert a portion of their unused R&D investment tax credits into refundable tax credits or, alternatively, be permitted to sell their credits to other entities.
But the federal government has no plans to enhance the SR&ED program in this year’s budget, beyond a handful of administrative reforms such as publishing quarterly reports on the time it takes to review SR&ED claims and providing government reviewers with more training and support.
But changes could be on the horizon.
The federal government says it is drafting the terms of reference for a comprehensive review of how it supports R&D.
In the meantime, the federal government is promising direct financial support for granting councils that support research at universities, colleges and hospitals, as well as for specific institutions such as Genome Canada ($75 million) and TRIUMF, a nuclear and particle physics research laboratory in British Columbia that is receiving $126 million in new money over five years.
There’s also $135 million over two years for the National Research Council Canada’s regional innovation clusters program. The program supports 11 technology clusters across the country, including Ottawa’s Photonics Cluster. The local cluster encompasses traditional telecom as well as health-care technology, such as point-of-care blood tests, sensor applications and energy innovations like solid-state lighting and solar power.
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The government is also promising to allow a small number of businesses to work with federal departments as a way of demonstrating their products and technologies.
This appears to fulfil a key suggestion made by CATA, which has advocated for the creation of “technology test beds” that allow businesses to use government departments as an incubator to conceive, develop and sustain new solutions for government productivity.
It’s also seen as a way for emerging technology companies to obtain reference accounts in pursuit of international customers. Some firms say one of the first questions they are asked by prospective foreign clients is whether their own government uses their technology.
The 2010 budget proposes launching a two-year, $40-million pilot program, called the enterprise innovation commercialization program, to support up to 20 demonstration projects. Details are scheduled to be announced later this spring.
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Other budget highlights include:
- An additional $15 million annually for the College and Community Innovation Program, which funds applied research collaborations between colleges and local companies;
- $397 million more over five years for the Canadian Space Agency to work with the country’s space industry to develop the next generation of advanced radar remote sensing satellites, known as the RADARSAT Constellation Mission;
- $10 million in new funding for the Canada Youth Business Foundation, which provides mentorship, learning resources and start-up financing where commercial lending is unavailable;
- $45 million over five years to establish a post-doctoral fellowship program;
- $8 million over two years to extend the international science and technology partnership, which promotes collaborative R&D activities with foreign partners such as India, China and Brazil;
- Eliminating all remaining tariffs on manufacturing inputs, machinery and equipment.
