Canada's 2012 Budget Focuses on Industry-Led R&D

With a new approach to supporting innovation by pursing business-led initiatives focused on better meeting private sector needs, Minister of Finance Jim Flaherty presented Canada’s Economic Action Plan 2012, providing $1.1 billion CAD ($1.1 billion USD) over five years for direct R&D support. The budget also includes $500 million CAD ($502 million USD) to increase private sector investments in early stage risk capital and support the creation of large-scale venture capital funds led by the private sector.

The 2012 budget builds on key recommendations from a report submitted by an expert panel in October 2011 titled Innovation Canada: A Call to Action. The new approach supports high-growth companies, research collaborations, procurement opportunities, applied research, and risk financing, according to budget documents.

The budget proposes to overhaul the National Research Council (NRC) by refocusing efforts on demand-driven applied research – a key recommendation from the panel. To support this new direction, the budget includes $67 million CAD ($67.3 million USD) for the NRC, which was established in1916 to support basic research and development of commercial innovations. The NRC also would receive an additional $110 million CAD ($110.4 million USD) per year to double support for companies through the Industrial Research Assistance program. Additional highlights of the 2012 budget include:

• An additional $95 million CAD ($95.4 million USD) over three years starting in 2013-14 and $40 million CAD ($40.1 million USD) per year thereafter to make the Canadian Innovation Commercialization program permanent. The program, launched in 2010, connects small- and medium-sized enterprises with federal departments and agencies that have a need for innovative products and services.
• $24 million CAD ($24.1 million USD) over two years and $12 million CAD ($12 million USD) per year thereafter to make the Business-Led Networks of Centers of Excellence program permanent. This program supports research on business priorities by teams of private sector researchers and academics.
• $14 million CAD ($14 million USD) in new funding over two years to double the Industrial Research and Development Internship program, which matches graduate students with innovative firms.

In his budget speech, Minister Flaherty said Canada is not keeping up with other advanced economies when it comes to leveraging private sector investment in R&D. To make it easier for entrepreneurs to access risk capital, the budget proposes $400 million CAD ($401.5 million USD) for venture capital activities. Another $100 million CAD ($100.4 million USD) to support venture capital activities of the Business Development Bank of Canada also would be available under the proposed budget.

Several university-based research projects are slated for funding in the budget, including an effort to enhance the federal granting councils’ support for industry-academic research partnerships. Specifically, the plan proposes $37 million CAD ($37.1 million USD) annually for three new research initiatives. Genome Canada, a nonprofit corporation that supports Canada’s research leadership in genomics, would receive an additional $60 million CAD ($60.2 million USD) to launch a new applied research competition and to sustain the Science and Technology Centres until 2014-15. However, this is down from past federal appropriations upward of $160 million CAD ($160.6 million USD), reports Nature.com.

Some of the other funded projects include $40 million CAD ($40.1 million USD) over two years to support operation of Canada’s ultra high-speed research network and $10 million CAD ($10 million USD) over two years to the Canadian Institute for Advanced Research to link Canadians to global research networks. 

Canada’s Economic Action Plan 2012 is available at: http://www.budget.gc.ca/2012/home-accueil-eng.html.