Quebec commits $1.2 billion to research and innovation strategy aimed at assisting commercialization and SMEs

Quebec has decided to play hardball in the competition for high-tech talent and investment with the release of an aggressive new Quebec Research and Innovation Strategy (QRIS). Backed with $888 million in new money over three years, the Strategy contains 24 new and enhanced measures with commercialization as its central thrust. They address the ongoing needs of university-based research and the challenges facing smaller businesses seeking to compete in the global marketplace.

The total amount increases to $1.166 billion when $83 million in investments announced in the last provincial Budget and $195 million in appropriations since then are factored in. In contrast, the Ontario government is implementing its own S&T strategy, with a commitment of $1.7 billion over five years.

Entitled An Innovative and Prosperous Quebec, the QRIS's niche-technology focus and the impressive amount of new funding is drawing rave reviews from business and academia.

Raymond Bachand, minister of Economic Development, Innovation and Export Trade (MEDIET), says the decision to build upon the province's 2001 strategy (Knowledge to Change the World) and consult widely with the S&T community has produced a plan that addresses weak links in the value chain from the lab bench to the marketplace.

"I'm crumbling under an avalanche of congratulations," he says. "The 2001 strategy was a good policy but it had no budget to follow afterwards. We needed to look at the weak areas and commercialization was the weak spot. Things are changing quickly and a lot has changed since 2001."

Adding his voice to the chorus of approval is Dr Camille Limoges, architect of the 2001 Strategy (R$, February 15/01) and, more recently, a vocal critic of the Charest government's support for research and innovation. Limoges resigned as co-chair of the Council for Partners for Innovation (CPI) last April following the release of the provincial Budget. At that time, he lambasted the government's failure to act on the CPI's short-term recommendations and expressed pessimism that proactive changes were in the offing (R$, April 14/06). The QRIS has dramatically changed his tone.

"This time we were presented with something totally different … This is a good, well thought-out plan … It's responsive to the needs of university research (and) has a lot of continuity with my old Strategy," he says. "We are grateful to Monsieur Bachand for that. He did an extremely good job."

THREE STRATEGIC THRUSTS

The QRIS is structured around three strategic thrusts designed to build research capacity, increase competitiveness and enhance commercialization: 1) enhancing the excellence of public research; 2) improving support for private sector research and innovation; and, 3) expanding and strengthening mechanisms to develop and transfer research findings.

Research infrastructure is slated to receive $420 million over three years, while measures for strengthening public research, support industrial R&D and innovation and initiatives related to commercialization will receive $400 million. A further $80 million to enhance business R&D will be achieved through enhancement of existing tax credits.

The QRIS's macro objectives are two-fold:

* increase R&D expenditures as a percentage of provincial PGDP to 3% by 2010, up from 2.72% in 2004. Ontario's GERD-to-PGDP ratio stood at 2.44% in the same year.

* increase private sector share of provincial R&D expenditures from 60% in 2002 to more than 66% by 2010. The most recent (2004) Statistics Canada data put Quebec business R&D outlays at 60.2% of the provincial total, compared to 63.6% in Ontario. Nationally, business conducts 55.5% of total R&D expenditures.

"Our (GERD-to-PGDP) is higher than anywhere else in Canada and the sixth highest in the world," says Bachand. "It's mainly due to the tax credit system but we do lots of R&D in aerospace, pharmaceuticals, information technology and multimedia. But the bar is going up in Canada and internationally. This strategy is our core economic policy. We won't win by the quantity of our labour. We'll win in specialized high value-added."

TARGETTING SME WEAKNESS

Bachand acknowledges that, while Quebec is home to many large, R&D-intensive firms, the province's small- and medium-sized enterprises (SMEs) are not nearly as productive as their counterparts elsewhere in Canada or internationally. The QRIS is designed to encourage small business to take greater risks and partner with colleges, universities and other firms. Tax incentives have been enriched, programs are being introduced to help SMEs hire new graduates and funds are being provided to encourage collaboration between companies and the 31 college-based technology transfer centres across Quebec.

Of the $140 million being committed for industrial R&D, $46 million will be used to establish several sectoral industrial research groups. These consortia will be modelled on CRIAQ, the highly successful Consortium for Research and Innovation in Aerospace in Quebec — an organization Bachand calls a "best practice example".

"Sectoral industrial research groups … will act as intermediaries between businesses and research centres to submit mutually worthwhile projects, facilitate loan arrangements and the conclusion of intellectual property agreements," states the Strategy.

The Strategy also pledges to maintain the university research development centres established with funding and direction from the sunsetted Valorisation Recherche Quebec (VRQ). Under VRQ, four such centres were established to represent the provinces universities and designed to add value to technology opportunities emerging from Quebec's universities and affiliated research institutions (R$, November 28/01 & September 28/04).

On the academic front, the government's decision to invest $400 million – including $100 million to support large research organizations like Genome Quebec, Nano Quebec and the National Optics Institute – has been positively received. Cuts over the past three years have raised concerns about the ability of post-secondary institutions to maintain research infrastructure and attract and retain top talent.

The latter was underscored earlier this year by the high-profile departure of Dr Tom Hudson from the McGill Univ-Genome Quebec Innovation Centre to the Ontario Institute for Cancer Research in Toronto (R$, August 21/06). Dr Denis Thérien, McGill's research and international relations, responded with an open letter to Bachand saying that Hudson's departure "underscores the province's vulnerability in scientific competitiveness" and called on the province to "establish a coherent and forward-looking research strategy that will enable Quebec to regain its leadership position in research in Canada and remain competitive in the global knowledge society".

TIME TO FOCUS ON OPERATING COSTS

Thérien says his reaction to the QRIS is "generally positive", particularly new funding for the provincial granting councils, money for researchers to participate in international consortia and funds for 900 additional spaces for graduate students, a 41% increase over the current 2,200. But Thérien is concerned that the new funding for research infrastructure and student support will exacerbate an already critical situation with university operating budgets. One estimate puts the collective deficit of provincial universities at nearly $400 million annually.

"It's a step in the right direction but only a step," he says. "The minister of education will now have to follow through because the underfunding of universities is serious."

Limoges agrees, saying that, as welcome as the QRIS is for the province's universities, operating funds must be urgently addressed. "Quebec has invested hundreds of millions of dollars in new infrastructure in the past decade and this strategy invests $420 million more over three years. This will create even more pressure on operating costs," he says.

While Bachand is being universally applauded for bringing the QRIS to fruition, the cost of implementing the QRIS was reportedly opposed by the provincial treasury board minister and the minister of finance. It was only when premier Jean Charest threw his support behind the Strategy that it received Cabinet endorsement. Before the QRIS becomes law, however, the Charest government must face the electorate.

"It's a plan right now, a promise, and we have to make sure the promises are fulfilled," says Thérien.

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