Small firms to receive more direct support as IRAP develops plans for new funding

Budget permanently doubled

The Industrial Research Assistance Program (IRAP) is gearing up to strengthen its status as the federal government's primary mechanism for direct innovation assistance and boosting its impact on innovative small- and medium-sized enterprises (SMEs). As the major S&T winner in the recent Budget (R$, April 17/12), IRAP receives a permanent $110-million funding increase to double its direct assistance to business, expand service offerings, and help to deliver the National Research Council's new mandate for providing a concierge service for innovation support, government-wide and beyond.

The precise details of how IRAP will allocate its new funding will be known once the NRC concludes discussions with Treasury Board and prepares a Memorandum to Cabinet. What's clear is that the Budget has responded to IRAP's significant impact on the Canadian economy and the firms it assists either through financial support or services, including technological and financial advice, making linkages to other organizations, mentorship and market intelligence.

The transformation of the NRC into a portfolio- and program-based research technology organization (RTO) has also significantly raised the profile of IRAP within the NRC.

In an interview with RE$EARCH MONEY, IRAP DG Bodgan Ciobanu says the changes have resulted in IRAP being incorporated into the NRC more profoundly than at any time in recent history.

"It's the first time that IRAP sits at the … strategic table (senior executive committee) and reports directly to the president. It's actually now one of the four business lines of the NRC," says Ciobanu. "We are an important component of the NRC and we are trying to do what we can do to help the NRC with its strategy … It's a key element."

$180M a year for firms

The new funding will effectively double the amount of financial assistance IRAP currently provides to SMEs from $85-$90 million annually to as much as $170-$180 million. The increase will be evident in every part of the country expect perhaps Ontario where IRAP delivered $45 million on behalf of the Federal Economic Development Agency for Southern Ontario to enhance the innovative capacity of SMEs. That funding has since sunsetted, however, and has not been replaced.

There will also be more ITAs to accommodate the increased activity. IRAP was hit with jobs cuts last year as part of an 8%, year-over-year cut to NRC's budget (R$, June 22/11). The staff reductions totaled 66 and resulted in the reduction in ITAs from 236 to the current level of 210.

new impact evaluation pending

IRAP officials are eagerly waiting the latest five-year impact evaluation of the program. Slated for completion this summer, the evaluation will include an assessment of the government's $200-million injection of stimulus funding in 2009 and 2010, which had a direct influence on the government's decision to follow the advice of the Jenkins Panel and many other reports urging for a major increase in IRAP funding.

"The money in the budget won't go to IRAP, it will go to our clients. It's an investment in the SME community. We are the vehicle for this money to be invested in the companies but this money is a sign that the government wants to increase the direct support to allow more SMEs to develop into medium-sized global companies."

— IRAP DG Bogdan Ciobanu

The last evaluation — completed in 2007 — shows that every dollar invested by IRAP contributed $12 to the Canadian economy and generated more than $10 in sales by its clients. Between 2002 and 2007, the "total wealth creation benefits" of IRAP ranged between $2.3 and $6.5 billion.

Ciobanu says the new funding won't substantially change the way IRAP current does business. The types of assistance will remain the same and the concierge service is similar to the role the organization's Industry Technology Advisors (ITAs) already play.

"Our ITAs are located with most of the organizations involved in innovation in Canada — universities, regional centres, colleges incubators. They know what's going on in their communities, their regions and their provinces in terms of programs and other resources like experts, research infrastructure and linkages. They do this kind of thing as a regular part of their business," says Ciobanu. "What I think the government wants now from IRAP is to structure this service and deliver it to all the companies that need help, to navigate through this system and programs. We do it now but informally."

DTAPP in full deployment

IRAP's latest Budget increase is the second time in two years that it has been tapped to deliver new services to SMEs. In the 2011 Budget, IRAP was tasked with running a three-year, $80-million Digital Technology Adoption Pilot Program (DTAPP) as part of the (still unreleased) Digital Economy Strategy. The program speeds the rate at which SMEs adopt digital technology and develop digital skills through collaborative projects between SMEs and colleges.

DTAPP does not support the acquisition of capital equipment. Rather, it assists in virtually every other aspect of digital technology adoption from benchmarking and designing new plant layouts to technology testing and staff training.

"Canadian companies invest less (in digital technologies) than our counterparts south of the border and Europe. Not only do our companies invest less, the technologies they bring in are not those that maximize potential," says Ciobanu. "We can look at what technology can help you achieve your growth objectives, reach your market and increase competitiveness … We have a limited time to deliver this program until the end of fiscal 2013-14 … The government is testing what is the right way of helping companies. They may come up with a different program. We don't know."

In addition to traditional direct funding, IRAP also delivers Youth Employment Strategy funding for Human Resources and Skills Development Canada (HRSDC) and financially supports organizations such as colleges, universities and business accelerators to deliver research and expertise to clients.

Of the 8,000 clients it reaches each year, about 3,000 receive financial assistance while 5,000 receive a variety of services.

"In order for this type of model to continue, we will certainly need to increase our capacity," says Ciobanu.

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