Quebec Budget provides $370 million to support new science policy, optics and creation of biotech development centre

The Quebec Budget has provided a first glance at the financial commitment the provincial government is willing to make in support of its freshly minted science and innovation policy. Flush with surplus cash and cognizant of the need to bolster the province's innovative capacity in selected niches sectors, the Budget once again demonstrates the unique approach to supporting science and technology (S&T) through a combination of tax incentives and funded initiatives geared towards the needs of the high technology and medical business communities.

Of the $370 million the Budget dedicated to various innovation measures, $300 million has been tagged for the Ministry of Research Science and Technology (MRST) - $250 million over three years for research infrastructure, and $50 million to fund R&D initiatives as selected by the MRST's new minister in consultation with other government departments and the S&T community at large.

The larger sum will be made available through debt financing, and will go towards the purchase of fixed assets such as equipment and new facilities related to research and innovation. MRST will receive $40.5 million over the next three years ($4.5 in FY02-03; $13.5 million in FY03-04; and, $22.5 million in FY04-05) to cover the interest and capital payments on the debt. The $50 million will be credited to MRST's account and is being sourced from a new $950-million reserve created by the government from the FY00-01 surplus. In addition to the MRST's portion, $600 million goes to health and social services, $200 million is devoted to education and $100 million has been tagged for "social solidarity".

"I have the privilege of implementing a beautiful policy developed by my predecessor Jean Rochon," says David Cliche, who was installed at the Ministry's helm March 8. "This $50 million in new money will be added to the Ministry's $200-million budget for this year, although I may allocate some of it exceeding the current fiscal year. There's lots of flexibility."

(Cliche comes to MRST after serving as minister of Information Highways and Government Services for three years, replacing Rochon who has moved to the Ministry of Employment and Social Solidarity. Prior to joining politics in 1994, Cliche was a partner with Groupe Consensus Inc, a provincial centre for environmental and social mediation.)

The Budget's funding dedicated to implementing the science and innovation policy falls far short of predictions and its use must wait until Cliche decides what is most deserving, but Cliche says previous estimates of between $500 million and $1.4 billion were "wishful thinking" since the province must first build the capacity to absorb more funding.

"The reaction that I and my deputy minister, Camille Limoges, have been getting has been very positive. If we had more, that would have been fine but let's get this policy going."

In addition to money in support of new policy implementation, the Budget extended provincial support for the National Optics Institute (NOI) with a $35-million grant over five years. The money comes from the FY00-01and will be flowed through the MRST. Negotiations between NOI and MRST on a detailed business plan outlining how the funding will be spent are almost complete, and discussions with the federal government on matching funds are ongoing.

In addition, training in the areas of optics and photonics will receive $15 million to address shortages in skilled personnel. The funds will go towards the purchase of equipment and short-term training programs to be delivered in Quebec City, Montreal and Hull.

Following the successful implementation of special tax jurisdictions for targeted high-tech sectors, the Budget announced another for biotechnology and human health in the city of Laval. Existing and new businesses that locate in the Parc scientifique et de haute technologie de Laval will be eligible for a 40% refundable tax credit on the hiring of new employees in the areas of manufacturing and commercialization. A new corporation - La Cité de la Biotechnologie et de la Santé humaine du Montréal métropolitain - has been created to assist in the park's development.

Cliche says a major objective of the tax credit is to stimulate the spin-off of firms from existing companies and research institutes. Laval is home to the largest concentration of biotechnology and human health companies in the province, including the Institute Armand-Frappier, BioChem Pharma Inc, Hoffmann-Laroche Canada and The Servier Group. Like the other special tax jurisdictions, firms with eligible employees can receive up to $15,000 per employee annually for the next five years.

TAX INCENTIVE CHANGES

The Budget also contained minor changes to the rules for tax credits under the federal Science Research and Experimental Development tax incentive program, technical changes regarding the previously-announced tax holiday for foreign researchers, and changes to the deadline for filing arm's length sub-contracting returns. Details can be found in the "Additional Information, Section 2" portion of the Budget documents at http://www.finances.gouv.qc.ca/budget_2001-2002/en/maillon/doc.htm.

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