Canadian budget focuses on innovation, new economy skills, superclusters

March 30, 2017

Through Canadian Prime Minister Justin Trudeau’s proposed budget, the country’s 2017 Innovation and Skills Plan will provide significant support for efforts intended to attract talented immigrants to the country, encourage investments in clean tech, and make the government procurement process easier for small, emerging technology firms. While the country plans to spend heavily on innovation, the rest of PM Trudeau’s budget curtails new spending and major tax changes due to political uncertainty in the U.S. – Canada’s largest trading partner. Proposed efforts include nearly $950 million CAD ($709.8 million USD) to develop superclusters in six key national industries; the creation of Innovation Canada to be a one-stop shop for entrepreneurs and startups; and, $50 million CAD ($37.4 million USD) to launch Innovative Solutions Canada – a government procurement program modeled after the United States’ Small Business Innovation Research (SBIR) program.

Innovation

The marquee innovation initiative of Trudeau’s budget is Innovation Canada – a new platform that will act as a one-stop shop to simplify the process of government support for Canada's innovators and entrepreneurs. Using funds already appropriated for several agencies, the intent of the program is to reduce government red tape and increase access to government services and funding. The government also intends to review many of its current innovation efforts and consolidate them under the umbrella of Innovation Canada with the intent of reducing redundancy and streamlining services.

To support innovation at institutions of higher education and other research institutions, the government will make several significant investments including:

  • $3.1 billion CAD ($2.3 billion USD) for research and research training – e.g., scholarships, fellowships, research grants, and support for the overhead costs associated with federally funded research conducted in post-secondary institutions;
  • $741 million CAD ($553.3 billion USD) for investments to accelerate infrastructure projects at universities and colleges and affiliated institutions through the Post-Secondary Institutions Strategic Investment Fund;
  • $340 million CAD ($253.9 million USD) in planned support for equipment and facilities for post-secondary institutions, research hospitals, and other not-for-profit institutions;  and,
  • $158 million CAD ($118 million USD) for several of the country’s public-private partnerships such as Mitacs, Genome Canada, the Canadian Institute for Advanced Research, the Stem Cell Network, the Institute for Quantum Computing, Brain Canada and the Perimeter Institute for Theoretical Physics.

In an attempt to stimulate the availability of capital for entrepreneurs, Trudeau’s proposal includes $400 million CAD ($298.9 million USD) over three years to help drive investment in growth-stage companies. Through the Venture Capital Catalyst Initiative (VCCI), the Business Development Bank of Canada would make late stage venture capital deals with the intent of stimulating co-investment from the private sector.  The government hopes to unlock nearly $1.5 billion CAD ($1.1 billion USD) in private sector investments through these efforts.

The budget also proposes several changes to the government procurement process including $50 million CAD ($37.4 million USD) to launch Innovative Solutions Canada – a government procurement program modeled after the United States’ Small Business Innovation Research (SBIR) program. Through this program, each government agency would be encouraged to set aside funding for early-stage research and development projects that lead to late-stage prototypes to address specific agency needs. The proposal also calls for efforts to encourage procurement from companies led by women and other underrepresented groups.

21st century workforce

In an attempt to create well-paying jobs and grow the country’s middle class, the government’s proposal includes funding for skills development across the lifespan starting with K-12 and continuing through lifelong learning. The majority of the focus will support lifelong learning including:

  • A new $300 million CAD ($223.9 million USD) over three years, to develop and test new approaches to make it easier for adults who wish to return to school after having spent several years in the workforce; and,
  • Reforms to help more unemployed Canadians receiving Employment Insurance (EI) get the training needed to for well-paying, in-demand jobs.

The effort also will expand the eligibility of the Canada Student Grant for Part-Time Studies, as well as grant funding for students with dependent children. In total, the government will invest nearly $454.4 million CAD ($339.3 million USD) over four years, starting in 2018–19, and $46.3 million CAD ($34.6 million USD) per year thereafter, to help Canada’s middle class workers find and keep good jobs.

The country also will commit $225 million CAD ($168 million USD) over four years, starting in 2018–19, and $75 million CAD ($65 million USD) per year thereafter, to establish a new organization to support skills development and measurement in Canada. The public private partnership will

  • Identify the skills sought and required by Canadian employers;
  • Explore new and innovative approaches to skills development; and,
  • Share information and analysis to help inform future skills investments and programming.

To help college students and recent graduates receive real life experiences, the government also would provide $221 million CAD ($165 million USD) over five years to fund up to 10,000 work-integrated learning placements for post-secondary students and graduates each year. An additional $186 million CAD ($138.9 million USD) would be provided to support other, unspecified research and development and related scientific activities in the higher education sector.

To help achieve the development of a 21st century workforce, the government includes funding to attract skilled immigrants to the country including $7.8 million over two years to implement a new Global Talent Stream – a visa program that would allow certain skilled workers to obtain a work permit within two weeks of applying. Part of the previously announced Global Skills Strategy, the Global Talent Stream is scheduled to be in operation by June 12.

The budget would provide $50 million CAD ($37.4 million USD) for a new initiative – Coding Kids. The new two-year initiative would help teach Canadian children how to code to help prepare them for future IT-related careers.

Industry clusters

The budget calls for nearly $950 million CAD ($709.8 million USD) over five years to support a competition for the creation of an industry-driven effort to build "superclusters." Through this competition, the government hopes to establish “superclusters” across the country led by partnerships between anchor companies, post-secondary institutions and specialized talent in order to drive innovation and encourage growth. These super-clusters will focus on six areas including advanced manufacturing; agri-food; cleantech; digital industries; health/bio-sciences; and, clean resources.

To support the growth of the country’s cleantech industry cluster and adoption of clean technologies, the government will make several large scale investments including $380 million CAD ($283.9 million USD) over three years for Business Development Bank and Innovation, Science and Economic Development Canada (ISED)  to support equity financing to support cleantech firms looking to grow. An additional $570 million CAD ($425.9 million USD) in working capital would be made available over the next three years to support other government investments in cleantech firms. 

Other proposed cleantech funding includes:

  • $400 million CAD ($298.9 million USD) to recapitalize the Sustainable Development Tech Fund dedicated to support cleantech projects across the country;
  • $200 million CAD ($149.4 million USD) over four years for the Natural Resources, Agriculture, Fisheries and Oceans departments to invest in clean technologies at various stages of development;
  • $14.5 million CAD ($10.8 million USD) over four years to develop Clean Technology Data Strategy;
  • $12 million CAD ($9 million USD) over four years to establish an inter-agency Clean Growth Hub.

To support the country’s burgeoning artificial intelligence (AI) cluster, the budget will include $125 million CAD ($92.6 million USD) to launch the PanCanadian Artificial Intelligence Strategy for Research and Talent to position the country as a leader in AI. The intent of the effort is to attract and retain top academic talent in Canada, increase the number of post-graduate trainees and researchers studying AI, and promote collaboration between Canada's main centers of expertise across the country. The program would be administered through CIFAR, the Canadian Institute for Advanced Research.