Science, technology and innovation are big winners in Liberal pre-election budget with investments across multiple sectors

Ottawa’s minority Liberal government introduced an election-style budget on Monday with $101 billion in across-the-board largesse, including billions of dollars in new funding across Canada’s science, technology and innovation (STI) sectors.

The proposed budget bolsters key programs such as the Strategic Innovation Fund, Canada Foundation for Innovation and the National Research Council’s Industrial Research Assistance Program (IRAP) as well as providing fresh cash infusions into emerging fields such as quantum research and artificial intelligence.

Related: By the Numbers: Who's getting funded in the 2021 federal budget?

The budget’s STI initiatives suggest a strategic approach that places much of its new research funding in the context of industrial and social policy, including the rebuilding of infrastructure and economic output lost during the era of globalization and the ravages of Covid. A case in point is the $90-million infusion for revitalizing the NRC’s Canadian Photonics Fabrication Centre. The announcement comes five years after a report from the Canadian Photonics Industry Consortium recommending that Canada must move quickly to restore its once-vaunted leadership role in photonics R&D and commerce.

The budget’s single largest STI investment by far is for the Strategic Innovation Fund (SIF), which will receive $7.2 billion over seven years starting this fiscal year. Key technology-based sectors including life sciences, automotive, aerospace and agriculture will receive $2.2 billion over seven years and then $511.4 million per year on a permanent ongoing basis.

The SIF is a four-year-old omnibus program launched in 2017 that consolidated four previous initiatives of the department of Innovation, Science and Economic Development (ISED): Strategic Aerospace and Defence Initiative, Technology Demonstration Program, Automotive Innovation Fund and Automotive Supplier Innovation Program.

The bulk of new SIF funding ($5 billion) goes to the government’s new Net Zero Accelerator (NZA) program, launched last December as part of its climate plan. The NZA is aimed at decarbonizing heavy industry, supporting clean technologies and assisting firms in reducing greenhouse gas emissions by accelerating what the Liberal government calls Canada’s “industrial transformation” to achieve net zero emissions by 2050.

Growing IRAP and Mitacs

The budget reaffirms IRAP’s reputation as the government’s go-to program for business assistance for tech-based firms. IRAP will receive $500 million over five years and $100 million per year ongoing to expand the program, enabling it to support 2,500 additional innovative small and medium-sized firms (SMEs).

Mitacs, a key program in the area of skills training, also received a major budget endorsement with $708 million over five years. The cash infusion will allow Mitacs to expand its support to students with at least 85,000 more work-integrated learning placements.

AI & Quantum

Canada’s vibrant artificial intelligence research ecosystem received a major boost with $443.8 million over 10 years going to the Pan-Canadian Artificial Intelligence Strategy. The funding facilitates the commercialization of artificial intelligence innovation and research ($185 million over five years) a top-up to the Canadian Institute for Advanced Research’s AI strategy for attracting academic talent ($162.2 million over 10 years) and the renewal of its research, training and knowledge mobilization programs ($48 million over five years). It also provides funding to boost computing capacity for researchers at the AI institutes in Edmonton, Toronto and Montreal ($40 million over five years) and the development and adoption standards related to AI ($8.6 million over five years).

Hot sectors such as quantum technologies were also addressed with a $360-million, seven-year commitment to a National Quantum Strategy. Coordination will be provided by a new ISED-housed secretariat with the aim to “amplify Canada’s significant strength in quantum research; grow our quantum-ready technologies, companies, and talent; and solidify Canada’s global leadership in this area.”

Bio-manufacturing & Bio-science

Bio-manufacturing, bio-science and life sciences science and clean tech also comprise a major focus of the budget with a number of initiatives. These encompass a number of mechanisms and programs to introduce zero-emission technologies to heavy emitting industries, including $319 million over seven years to Natural Resources Canada (NRCan) for R&D and demonstrations to enhance the commercial viability of carbon capture, utilization and storage (CCUS) technologies. NRCan also received $36.8 million over three years to support federal R&D “to advance critical battery mineral processing and refining expertise”.

Further incentives for implementing CCUS comes in the form of a new tax credit that aims to take at least 15 megatonnes of CO2 out of the atmosphere annually. Slated to take effect in 2022, “the government will move quickly with a 90-day consultation period with stakeholders on the design of the investment tax credit, after which it will announce more details—including the rate of the incentive”.

Funding for the bio-manufacturing and life sciences sectors amounts to $2.2 billion over seven years and is spread over several existing organizations:

• $500 million over four years, starting this year, for the Canada Foundation for Innovation to support the bio-science capital and infrastructure needs of post-secondary institutions and research hospitals;
• $250 million over four years, starting in this year, for the federal granting councils to create a new tri-council biomedical research fund;
• $92 million over four years, starting in this year, for adMare Bioinnovations (created through the merger of Vancouver-based CDRD and Montreal’s NEOMED) to support company creation, scale up, and training activities in the life sciences sector;
• $59.2 million over three years, starting this year, for the Vaccine and Infectious Disease Organization (VIDO) to develop vaccine candidates and expand its facility in Saskatoon; and,
• $45 million over three years, starting in 2022-23, for the Stem Cell Network (SCN) to support stem cell and regenerative medicine research. This follows an $18-million investment in the SCN in the last budget, replacing funding traditionally secured through the now defunct classic Network of Centres of Excellence program.

Genomics research also received considerable new funding with $400 million over six years to establish a Pan-Canadian Genomics Strategy. From that amount, Genome Canada will receive $136.7 million over five years, starting in 2022-23 for “mission-driven programming” to “kick-start the new Strategy and complement the government’s existing genomics research and innovation programming”.

The budget also supports a new British Columbia-based Centre for Innovation and Clean Energy with $35 million “to advance the scale-up and commercialization of clean technologies in B.C. and across Canada.” The Centre is part of BC’s CleanBC plan to “coordinate research, development and demonstration of clean technologies, including carbon capture, utilization, and storage, and clean fuels”.

Equity, Diversity & Inclusion

The STI measures also embrace the government’s commitment to equity, diversity and inclusion. In her budget speech on Monday, Finance Minister Chrystia Freeland described her party’s jobs and growth plan as “very much a feminist plan” and “feminist economic policy.” To that end, the Budget seeks to underpin its feminist-infused policies with a new National Institute for Women's Health Research, providing $20 million over five years, starting this fiscal year, to the Canadian Institutes of Health Research.

The new CIHR institute is tasked with advancing “a coordinated, intersectional research program that addresses under-researched and high-priority areas of women’s health and ensure new evidence improves women’s care and health outcomes.”

In a similar vein, the budget provides $12 million over three years starting this fiscal year to the Social Sciences and Humanities Research Council “to fund academic research into systemic barriers facing diverse groups” helping to “inform actions to address social disparities related to race, gender, and other forms of diversity.”

VC & IP

Start-ups and firms preparing to scale received a major boost with a top-up in funding for the Venture Capital Catalyst Initiative (VCCI), first introduced in Budget 2017 as part of the government’s Innovation and Skills Plan. Budget 2021 provides an additional $450 million on a cash basis over five years to renew VCCI, with $50 million dedicated to support venture capital investments in life science technologies and $50 million for a “new Inclusive Growth Stream to increase access to venture capital for underrepresented groups, such as women and racialized communities”.

The budget did not contain any new measures for its Scientific Research and Experimental Development (SR&ED) Tax Credit Program, despite calls for a revamp from the business community and others.

The continuing inability of Canadian firms to add value to their intellectual property (IP) within Canada has prompted the addition of $165 million to assist firms in accessing IP services.  To that end, the budget authorizes the creation of a Strategic Intellectual Property Program Review to assess IP provisions in Canada’s innovation and science programming, from basic research to near-commercial projects.

The new funding will allocate $90 million over two years starting in the 2022-23 fiscal year to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert IP services. A further $75 million over three years, starting this year, will give IRAP greater ability to provide high-growth client firms with access to those services.

The Budget’s other STI investments include:

• Canadian Institutes of Health Research: a new Clinical Trials Fund - $250 million over three years, starting this fiscal year;
• Canadian Institutes of Health Research: pediatric cancer research - $30 million over two years;
• Public Health Agency of Canada, Health Canada, and the Canadian Food Inspection Agency: antimicrobial resistance - $28.6 million over five years with $5.7 million annually ongoing;
• Public Health Agency of Canada: new Diabetes Challenge Prize - $10 million over five years;
• Health Canada: research on diabetes (including juvenile diabetes), surveillance, and prevention, a national framework for diabetes - $25 million over five years;
• Canadian Space Agency: next generation of Earth observation satellites - $9.9 million over two years;
• NRCan and Environment and Climate Change Canada: replace and expand ground-based infrastructure to receive satellite data - $80.2 million over 11 years;
• Canadian International Innovation Program: expand opportunities for Canadian SMEs to engage in R&D partnerships with Israeli SMEs - $10 million over five years and $2 million annually ongoing;
• Innovation Superclusters Initiative: top up existing funding - $60 million over two years;
• Natural Sciences and Engineering Research Council’s College and Community Innovation Program: additional research partnerships between colleges, CEGEPs, polytechnics, and businesses - $46.9 million over two years;
• Polar Continental Shelf Program: support pan-Arctic scientific research - $25 million over three years;
• North American Aerospace Defense Command (NORAD) modernization: R&D for technologies to detect and defend against threats to the continent - $163.4 million over five years;
• NRC Medical Production and Partnership-Building: enable the NRC to manufacture and produce medical products such as vaccines on a large scale to respond to public health needs and to establish and take interests in corporations to facilitate new partnership operating models – requires legislative action.
• NRCan Critical Battery Minerals Centre of Excellence: Coordinate federal policy and programs on critical minerals, and work with provincial, territorial, and other partners. Help implement the Canada-U.S. Joint Action Plan - $9.6 million over three years starting this year.

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