Canadian Advanced Technology Alliance calls for simplified delivery of industrial innovation assistance programs

The Canadian Advanced Technology Alliance (CATA) is poised to recommend combining the administrations of three key industry R&D support programs within an arm’s length institute, council or agency. The idea of promoting what’s been described as a holding company for industrial innovation was approved by CATA’s board of directors last month and was publicly floated during an October 2 CATA presentation to the Standing Committee on Finance. Following further review and analysis of the concept, CATA will pitch it to senior bureaucrats and politicians in the coming months.

At issue are the administrations of Industry Canada’s Technology Partnerships Canada (TPC), the National Research Council’s Industrial Research Assistance Program (IRAP) and the Scientific Research and Experimental Development (SR&ED) tax credit program administered by Canada Customs and Revenue Agency (CCRA). CATA asserts that operating these programs under a single administrative banner would significantly streamline the process of industrial R&D assistance, providing companies with a one-stop shopping approach in which assistance can be tailored to specific needs, circumstances and time frames.

“These three programs have one direction, which is essentially to improve the technology in our products and hence their competitiveness (but) they are out of sync with the basic mandates of their home departments,” says Dr Russ Roberts, CATA’s senior policy director and prime architect of the proposal. “We’re looking at some sort of institute or council. If NSERC (Natural Sciences and Engineering Research Council) can exist and effectively support university research funding, why can’t there be an organization in parallel supporting industrial innovation?”

The CATA proposal forms a key component of the association’s advocacy agenda for the coming year, which includes a study of the SR&ED program to determine its impact on attracting and retaining investment, and achieving best practices of goods and services at all levels of government.

The proposal is also well timed to feed into the annual consultation process leading up to the next federal Budget and fits neatly with the government’s goal of moving Can-ada from 15th to 5th place in R&D spending among major industrialized nations.

Roberts adds that the proposal will almost certainly evolve over time as the concept gels and discussions with government get underway. He doesn’t rule out expanding it to include organizations such as the Canadian Space Agency, but says it would steer clear of attempting to incorporate organizations that are currently operating effectively, such as the granting councils. There are also no immediate plans to recommend changes to the programs currently offered by TPC, IRAP or SR&ED.

PROPOSAL RAISING QUESTIONS

Many in industry have complained for years that programs such as TPC are burdened by excessive bureaucracy and delays that discourage firms from even approaching them for assistance, particularly smaller companies.

IRAP has historically been assessed in a far more favourable light, but it targets only a portion of the R&D spectrum and typically works with smaller firms. CCRA’s SR&ED tax credit program has been a favourite industry whipping boy, but the often harsh criticism of the past has softened recently as industry associations have worked with program officials to improve its administration and delivery.

“We’ve been through two and half years with SR&ED to get it to function better and great progress has been made,” says Roberts. “Now we’re looking at how to complement what has been achieved by CCRA. I think it’s a legitimate discussion in light of government getting the most out of their investments.”

None of the programs affected have responded publicly to CATA’s proposal, but there have been informal discussions between the various parties. From IRAP’s perspective, it’s still too early to say how viable such a plan might be.

“From my perspective, it’s not easy to see what the advantages are going to be,” says an IRAP official. “Part of what makes us effective and efficient is IRAP’s culture. If we move it into another organization, will we be able to keep that culture alive? We’re a relatively small program compared to the other two programs.”

The Aerospace Industry Association of Canada (AIAC) is taking a more positive view of the proposal in its recent innovation paper. It is also recommending a radical review of R&D assistance programs and takes credit for the government’s decision to deliver some TPC funding through IRAP (see page 6).

“All these programs are stove piped,” says AIAC president Peter Smith. “We would be supportive of and approve of any measure that would combine the three programs.”

CATA’s Roberts says the challenge of moving from 15th to fifth combined with the success the organization has experienced with making the SR&ED program more effective and user friendly makes this proposal one worth serious consideration.

“The fact is, we’re not in fifth place and we’re not getting what we want out of what we’re investing,” he asserts. “We want to maximize the performance of these organizations and we want to bring this into the discussions. We’ve seen over the years how the effectiveness and impact of R&D spending can be effected in how programs are administered.”

Significant strides have been made in changing the culture of the SR&ED program. It now has a separate directorate and program officials have worked hard to encourage its field workers to adopt a stronger client focus. But many consider further improvements to be fatally constrained by the fact that CCRA remains its administrator.

In his presentation to the Finance Committee, CATA executive director David Paterson said, “It’s very difficult to fit the words ‘incentive’ and ‘audit’ into the same sentence and come out with a productive result.”

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