Ottawa’s R&D system too complex and full of gaps

OTTAWA — Improving how the federal government supports private-sector research and innovation may include overhauling the agency that got Ottawa into that business almost a century ago.

Chopping up the National Research Council is one of six recommendations made Monday by an expert panel that examined why $5 billion in annual research funding isn’t spawning more Canadian innovation. The year-long review found the existing system is too complex for businesses to take best advantage of federal funds.

The panel also said the government needs to encourage businesses with measures as simple as buying Canadian-made products to encourage their development and establishing a clear federal voice for innovation.

The panel, led by technology entrepreneur Tom Jenkins, spent a year reviewing the tax breaks and grants that support research and development across Canada. It emerged with six recommendations.

“They are ambitious but they are practical and they are necessary,” Jenkins told a news conference.

At the top of their list is bringing all existing innovation programs under control of a new arm’s-length funding and delivery agency to make it easier for business to access available money and services.

Meanwhile, the panel found that the current structure of the National Research Council needs change. The NRC was established during the First World War to advise the government on science and industry.

“While the NRC continues to do good work, research and commercialization activity in Canada has grown immensely,” the report found.

The panel is recommending separating NRC institutes into not-for-profit centres, each with a different research focus, and bringing public policy-related research back into government departments.

“The end result of this reorientation would be greater resources for these institutes, better research and strong commercial outcomes,” Jenkins said.

The Opposition New Democrats agreed with the call for a new approach. They want a national innovation strategy to streamline government support and bolster made-in-Canada technology. The NDP also said incentives should be linked to job creation.

“Canada must cut the red tape and offer simple and effective programs which focus on small-business innovation and job creation,” said Dan Harris, the party’s deputy critic for science and technology.

The panel’s work follows earlier studies examining the disconnect between how much government spends on research and development and Canadian innovation and productivity.

The minister of state for science and technology, Gary Goodyear, acknowledged the government is repeatedly told it needs to change or risk Canada falling further behind.

“When businesses don’t invest in research and the development of new products, it will become harder for them to remain competitive and to grow into the future,” he said.

At least one recommendation may not go over well with the Conservatives. The Harper government champions the use of tax credits to spur economic growth and business development but the panel suggested an existing tax-credit program for research and development isn’t working as well as it should.

The current Scientific Research and Experimental Development program is so complicated that small businesses are spending money to hire consultants to apply for it, the panel found. There’s also not enough being done to measure whether the tax credit actually works. Changing it would free more funds for the direct-to-business grants that companies are clamouring for, Jenkins said.

“It saves money for the firms and it saves money for the government to administer it,” Jenkins said.

But it’s not just about funding programs, the panel found. The government needs to put its mouth where its money is, it suggested. Canada is one of only a few countries that doesn’t gear its government procurement program toward spurring innovation within its own borders.

“Businesses want the government of Canada to be their first customer and we on the panel agree with that,” Jenkins said.

The panel also recommends the designation of a minister responsible for innovation who could co-ordinate with provinces.

Under to its mandate, the panel was not allowed to suggest cutting existing funds or spending more on research. Its work is separate from the government-wide spending review which is seeking to cut funds to wrestle down the deficit.
© 2011 The Canadian Press