Renewal seen as coup for Atlantic caucus

The Atlantic Innovation Fund (AIF) has a new lease on life, courtesy of promising initial results, demonstrable need and a strong Atlantic Liberal caucus. The recent Budget renewed AIF at an existing level of $300 million over five years starting in FY05-06 and preparations are underway to launch a new round of competitions to further stimulate the region’s research capacity and commercialization.

The decision to recapitalize AIF was based in large part on two key documents produced in 2004. An evaluation of the AIF and the projects it funded in 2002 and 2003 was largely positive and concluded that the Atlantic Canada Opportunities Agency should “seek renewed funding past its current period” for its flagship innovation program. Conducted by Ottawa consulting firm, Performance Management Inc, it said there was preliminary evidence that AIF is increasing regional R&D capacity, strengthening linkages and “showing signs of contributing to the development and commercialization of new products”.

The second and perhaps more influential document was produced by the powerful Atlantic Liberal Caucus Subcommittee on Economic Development. Entitled The Rising Tide, its role in obtaining new AIF funding and renewing the National Research Council’s Atlantic cluster strategy can’t be underestimated, says ACOA minister Joseph McGuire.

“The Rising Tide was crucial. We had to demonstrate that what we got in 2000 was working. Cabinet felt we should be continuing this,” says McGuire. “There’s been a great response. We’ve barely touched the hunger out there. We received more than $1 billion in proposals in the first rounds.”

INCREASING RESEARCH CAPACITY

The evaluation report shows that much of the R&D supported by AIF was incremental achieved a leverage of 1:1.14 for a total of $620 million, although that amount has dropped slightly. The first two rounds committed $294 million to 101 projects selected from 369 proposals. But McGuire says some did not proceed when funding from other sources fell through. About $30 million from Phase I is still unspent.

Delivery of the next phase of AIF will be largely unchanged from the first phase although competitions will be held more frequently and there will be a stronger sectoral approach to encourage specific research, technology and commercial niches.

The decision to increase the frequency of competitions is a direct result of criticism over the length of time AIF took to determine which proposals would be funded.

It was the first time through for the AIF and maybe it took too much time to make sure projects were successful,” says McGuire. “Now we will have more but smaller rounds. We want to do three or four rounds a year and bring in expertise to assist.”

POLITICAL INTERFERENCE WON’T BE REPEATED

McGuire also says that it’s highly unlikely that there will be any political interference in the selection process, as there was during the initial competition. During that round, then ACOA minister of state Gerry Byrne added eight projects to those selected by the advisory board, headed by Dr Arthur May.

“The minister at the time felt there were not enough private sector projects and that it was top heavy with university projects. The advisory board recognized that,” he says. “That’s the only time it happened. There’s discretion for a minister to point out a lack like that but I don’t intend to get involved.”

McGuire notes that AIF is part of a large funding package that includes $110 million over five years to extend the NRC’s cluster strategy initiatives. However, he asserts that NRC funding should not be drawn6 from ACOA’s budget.

“A lot of good work can be done by the NRC in the provinces and I’m pleased to see it continue,” he says. “I’d like to see it go from the ACOA budget to the Industry budget and put it in the A-base.”

UNDENIABLE NEED

The Atlantic caucus’s Rising Tide document attempts to dispel any doubts that innovation-related funding is needed in Atlantic Canada. Using Statistics Canada data, it shows that the four provinces lag far behind most other provinces in the level of funding it received from virtually every national program. From the granting councils to the Canada Foundation for Innovation and Technology Partnerships Canada, Atlantic Canada comes up short. In fact, the region’s share of federal R&D funding dropped between 1990 and 1999 while other provinces registered strong increases.

“We’re not getting the R&D dollars. In the national program we should be getting 8% but we’re getting more like 3%,” says McGuire. “We’re left out of that whole development of knowledge-based industry and R&D support. We felt that we should try a new method of developing the economy and that’s why we started the AIF. ”

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