Late Breaking News

The first shoe has dropped on Industry Canada’s long-awaited overhaul of the much maligned Technology Partnerships Canada (TPC) program. Speaking before the Metropolitan Montreal Board of Trade today, Industry minister Emerson announced the creation of the Transformative Technology Program (TTP), an incubator fund geared towards small- and medium-sized businesses from all sectors. The new program is scheduled to be up and running April 1/06 at which time TPC will cease to exist.

In the coming weeks, a second new program aimed at the aerospace and defence (A&D) sectors will be announced. Emerson is about to submit his request for the program to his Cabinet colleagues.

The new A&D program will not include the automotive sector. Requests for federal assistance from the automotive sector are typically much larger than funding approved through TPC. They will be handled on a case-by-case basis and sent directly to cabinet for approval.

Effective immediately, all new non-aerospace and defence applications will not be accepted. Only those that have already been received will be dealt with through normal TPC procedures.

The current TPC funding allocation of $300 million annually will remain in places for the time being, with two-thirds allocated to defence and aerospace and $100 million for TTP. Emerson made it clear that he will be seeking additional funding but he also emphasized that the program will have far more transparency than its predecessor. A recent audit of TPC has just been extended and expanded after initial investigation revealed that some firms were using unregistered lobbyists and paying commissions in their bid to obtain funding — a clear breach of contract.

“As we head into the budget cycle, we would expect to be fighting for more (funding),” he told his Montreal audience. “I intend to make the new program more transparent, more accountable, more accessible to businesses here and across the country, and more effective at stimulating research and technology adoption.”

An Industry Canada spokesperson confirmed that the department will be seeking additional funding for both TTP and the new aerospace program.

“We will be pushing for additional funding for the SME incubator fund (TTP),” says an Industry Canada spokesperson. “And we are likely to seek more than $200 million for the aerospace and defence fund.”

The program and administrative details of TTP will be hammered out in time for its launch and Industry Canada is seeking a firm or individual to assist in the program’s structure and administration. It’s unclear whether existing TPC staff will be transferred to TTP. Current TPC executive director Tom Wright will stay at least through the transition period and staff possessing relevant expertise in the various sectors and contract negotiation will also likely be retained.

The new A&D program will have an initial budget of $200 million and is closely tied to the ongoing Canadian Aerospace Partnership (see page 1). Emerson says his department’s new aerospace strategy is being designed as an evolving document.

Since its inception in 1997, TPC has been a magnet for criticism. Opposition politicians have routinely attacked it for the low levels of repayment from firms obtaining assistance, while companies have often been frustrated by the length of time between application and funding decisions.

Confusion often arose over how much TPC was actually supposed to recoup from firms receiving repayable assistance. Because the funding was repayable, many assumed that it would be self-sufficient over time. However, the high-risk nature of many of the projects virtually guaranteed that many projects would fail to generate sufficient royalties to repay the principal.

In addition to lack of transparency, Emerson decided to scrap TPC based on its narrow focus, excluding many transformative technologies that he contends will provide the basis for future prosperity and competitiveness.

“It’s had some great successes, but it’s in need of an overhaul,” he says

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