Editorial - 21-3

From Bill Gates to industry, the federal government is being told in no uncertain terms that investing in knowledge must be a key and substantial component of the upcoming Budget. Even its own committees are delivering the same message: invest in research, people and infrastructure or watch the nation's competitive advantage slip away.

The investments the Harper administration must be prepared to make are numerous, but this is no laundry list assembled by those seeking a piece of the growing budgetary surplus. Canada's requirements as it develops a dynamic, knowledge economy and society include business assistance programs and tax incentives as well as investments in basic research and research infrastructure.

Perhaps the most critical issue emerging from the whirlwind of pre-Budget lobbying is the SR&ED tax incentive program (see lead story). The once widely envied program has not kept pace with sweeping changes in the business environment, and near universal consensus has coalesced around the issues of refundability and scope. If policy makers and politicians are really serious about assisting the private sector in performing more R&D, the program has to change.

Enhancement of SR&ED may be expensive, but it will generate concrete returns all can appreciate — globally competitive industries, higher income jobs and better quality of life. Politically expedient spending like reducing the GST or child tax credits are toothless measures geared for short-term gain. It's up to government to create legislation that can deliver real, positive long-term benefits.