Quebec Budget focuses on downstream measures to boost provincial innovation

Quebec has delivered a balanced Budget that introduces a series of largely downstream innovation initiatives. But with little for fundamental research, the province's science community is crediting the federal Budget for providing a much-needed funding boost. The March 17th fiscal blueprint supports an ambitious digital strategy, various clean tech measures, funding for key tech sectors including life sciences and an assortment of tax measures for innovative companies.

Finance minister Carlos Leitão announced several financing initiatives that share risk with the private sector for early-stage tech firms. Measures include $16 million in additional capitalization for the Teralys Capital Innovation Fund, matching a federal contribution and leveraging $64 million from private investors to boost the fund's capitalization to $375 million.

A clean tech seed fund has also been established with the province contributing $30 million and leveraging $15 million from other investors. The fund will be used to support entrepreneurs for business plan development and other support services.

"The main objective for the government was to have a balanced Budget and that's done," says Dr Rémi Quirion, Quebec's chief science officer. "The new money dedicated to research and innovation is still relatively small but it's moving in the right direction."

An $8-million fund for female entrepreneurship has been established — Fonds Femmesor Quebec — building upon the Femmessor Network that the government has been supporting since 2011. The fund will be rolled out by Investissement Québec with funding allocated on a 1:1 matching basis.

The tax rate for innovative firms will also be decreased to a combined rate of 19%, 6% below the tax rate for OECD nations and the Ontario manufacturing tax rate. Eligible companies must operate a business in Quebec, have more than $15 million in paid up capital and focus primarily on manufacturing and processing activities.

Digital Strategy

A new Quebec Digital Strategy receives $161.9 million over five years. Although details are pending, the Budget announced several measures including an enhancement of the tax credit for small- and medium-sized businesses (SMBs) in the information technology (IT) sector, a new tax credit for "major digital transformation projects", participation in a Quebec-Ontario data transmission network adapted to next-generation technologies and support for accelerators and technology incubators. The strategy's initial initiatives will receive $78.5 million, while $49.9 million will be devoted to large digital transformation projects. A further $33.5 million will assist SMBs in integrating IT into their operations.

Sector Support

Quebec's key tech sectors were the recipients of new funding to increase capacity, commercialization and markets.

The aerospace sector receives $70 million with $35.7 million allocated to accelerating product development cycle times and making products and services more environmentally friendly, and $31.3 million devoted to improving the position of SMBs in the global supply chain to take advantage of the global trend towards industry consolidation.

For the life sciences sector, $25 million will go towards assembling $100 million for the commercialization of Quebec discoveries, $5.3 million for early-stage clinical studies and $3 million to support the Institut de recherches cliniques de Montreal. A new life sciences seed fund (AmorChem II) will receive $20 million that will leverage $30 million from other investors.

Another new seed fund for the Quebec City region will receive $15 million, matched by other investors.

Basic research

For the second Budget running, however, the provincial research community has been largely bypassed, despite raised expectations when the government reunited science and innovation with the economic portfolio.

"There was no money for the provincial granting councils other than a small thing related to inflation," says Quirion. "We hope next year there will be an increase to the base budgets of the councils."

Quirion notes that the 2015 Budget established four working groups to make recommendations for the province's life science sector. They will submit reports this fall in time for the 2017 Budget cycle.

The Association francophone pour le savoir (Acfas) — the main organization representing academic research — was highly critical of the Budget's lack of support for research, calling the research-focused initiatives "meager". It said the Fonds de recherche du Québec is "starved for funds" and well below the needs of the research community.

On the other hand, Acfas welcomed the research and innovation investments contained in the federal Budget (see lead story), pointing to hikes in the budgets of the federal granting councils, Genome Canada, the Quebec City-based National Optics Institute and the $2-billion Post-Secondary Institutions Strategic Investment Fund.

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