Recommendations for Innovation Nation and Economic Stimulus: Sir Terence Matthews, CATA National Spokesperson
December 21, 2008

CATA’s Competitive Innovation Nation Campaign is designed to boost Canada’s competitiveness and innovation rankings.  We encourage Canadians to lead as creators, innovators and adapters of next generation technologies. 

One of CATA's Competitive Innovation Nation objectives is creating 10 domestic companies in the ICT sector with annual revenues exceeding $5B/by the year 2020. Similarly, we are striving to provide Public Sector reference accounts to 10 thousand SMEs in the same time frame. Let's start today to create the mindset and necessary conditions to achieve this bold objective."

Support documents and videos:  

State of the Innovation Nation: CATAnet TV inteview
Review of Canada's Problems & Prospects in Today's
'Flat World' - Can we do better?
White Paper (pdf)
Innovation Nation Core Planks
 

Calling on all Governments to Formulate and Issue Comprehensive Innovation Plans
that:

·         effectively fosters the creation, retention and growth of IP such that Canadians obtain the full benefits of the country's investment;

·         addresses the dearth of funding available for early stage businesses and the financing of growth opportunities in established businesses;

 ·        promotes a regulatory climate that does not put a drag on innovation; one that encourages Canadians to lead as creators, innovators and adapters of next generation technologies; and

 ·        promotes trade relations that permit Canadian firms to compete, and to effectively seek success and growth in global markets.


2012 Competitive Innovation Nation Action Priorities: The Challenge for Survival for Canada's Tech Sectors

Priorities for Federal action:

Change the ratio of indirect (tax measures) to direct support for R&D intensive companies, by;

-Reforming the SR&ED program along the lines of the considerations raised by the 'Jenkins Report';

          -Permitting all companies to qualify, regardless of ownership, for ‘refundable’ tax credits, so as to provide incentive for Canadian & U.S. companies to continue R&D here,
          -Establishing a ‘pre-commercialization’ tax credit for product development work beyond purely R&D, administered through NRC’s Industrial Research Assistance program (IRAP),
          -Increasing funding for IRAP support of young tech company R&D work, and,
          -Supporting the full range of research for technological innovation achieved in the integrated development environment required by Canadian firms to effectively respond to today's rapidly changing market opportunities.

-Funding these changes through reallocation of a portion of existing SR&ED tax credit expenditures, by focusing on Canada’s ‘Priority Strengths’ defined by Council of Canadian Academies and the Science, Technology & Innovation Council.

Improving availability of Venture Capital, by;

-Introducing a federal equivalent to the B.C. Venture Investment Tax Credit (or ‘Commercialization’ Tax Credit) system, preferably 50/50 cost shared with provinces. (Set ceiling at $250 Million, to be reallocated from SR&ED tax credit system.)
-Having BDC invest existing resources as a limited partner (LP) in Canadian venture funds on a similar basis to the Israeli government, giving up a share of returns in favour of foreign LP investors, to encourage their participation,
-Encouraging pension and mutual funds to invest a small portion in Canadian VC Funds.

Encouraging greater ratio of ‘Basic’ to ‘Applied’ research in higher education institutions and government, by;

-Gradually refocusing Granting Council policies & systems to encourage more applied research,
-Standardizing government labs & departments treatment of Intellectual Property licensing to focus on tech transfer to industry.
-Refocus existing NRC 'Cluster Initiative" to better support sector firms through applied research, commercialization partnerships, consulting services, and direct R&D support to firms with business agreement with large 'anchor' firms within a cluster. All within existing Granting Councial & NRC budgets.

Improving ability of Canadian firms to hire new tech talent, by;

-Providing funding support for hiring of new university tech graduates (PhD, MSc, Bachelor) on a sliding scale over three years. (Estimated cost of $30M 1st year, $100M/ yr after 3rd year, to be funded by reduction of the same amount from the SR&ED tax credit envelope.)
-Introducing a ‘Start-up Visa’ in place of the ‘Investor Class Immigrants’ program
-Speeding up immigration & temporary permit processing for highly skilled personnel.

Supporting exports of Canadian technology products and services, by;

-Increasing role of DFAIT Trade Commissioner field staff in market intelligence, actively seeking out opportunities and encouraging Canadian companies to participate,
 -Funding additional technology sector marketing consortia such as the 'Wavefront Canadian Wireless Consortium" in B.C. to help tech firms achieve the critical mass needed to penetrate major foreign markets.

To be funded from reallocation of existing resources --- First item already underway, and second to be funded from the National Centres of Excellence (NCE) program.

Total additional cost to Federal Crown can be absorbed within existing resources as outlined,

Second Level Priorities for Future Consideration;

Reform government procurement practices to improve tech companies opportunities, by;

-Leveraging planned government technology based procurements by identifying future needs and proactively selecting Canadian firms to develop one or more unique components on an R&D contract basis well prior to RFP action,
-Continue the new ‘Canadian Innovation Commercialization Program’ beyond the current two year pilot, transforming it into a Canadian version of the U.S. ‘Small Business Innovation Research’ (SBIR) program which would encourage development of Canadian solutions for government internal needs,
-Reviewing PWGSC & other departmental practices to ensure that excessive 'reference client' experience requirements and excessive performance bonds or insurance do not continue to result in Canadian technology firms being hindered from bidding on federal work.

Expand availability of business credit for Canadian businesses, by;

-Encouraging greater foreign entry into commercial banking sector to increase competition,
-Introducing regulations aimed at preventing unwarranted calling of a firm’s line-of-credit without adequate notice or without adequate evidence of inability to continuing to meet existing commitments,
- Establishing with the federal government a joint Fed/Prov agency with the mandate and resources to support new start-up firms in selected technology sectors through issuance of limited loan guarantees to financial institutions on behalf of qualifying firms.
-Strengthening the role of BCD in credit financing of tech company operations, with less emphasis on current policy of not competing with commercial lenders in the field.

Priorities for Provincial Action:

Changing the ratio of indirect (tax) to direct support for R&D intensive companies, by;

-Amending provincial SR&ED programs to provide greater extent of ‘refundable’ tax credits in place of regular tax credits for small companies, regardless of ownership,
-Establish a ‘Pre-commercialization’ tax credit to take companies beyond bench R&D and support developing product for market, in concert with a proposed federal program,
--Consider introduction of R&D flow-through tax credits for Canada’s tech sectors, similar to natural resource exploration flow-through provisions, in hand with the federal government.
-All to be funded from within existing SR&ED, by prioritization towards tech sectors considered highest priority by the provincial government.

Improving availability of Venture Capital, by;

-Introducing a venture investment tax credit system modelled on the proven B.C. system, or amending existing provincial tax credits to more closely resemble B.C. ‘best practice’, partnering with federal government should it agree to introduce a shared FPT venture investment tax credit similarly modelled on the B.C. approach,
-Investing as an LP in Canadian venture funds on a similar bais to the Israeli government, giving up a share of returns in favour of foreign LP investors, to encourage their participation.

Encouraging greater ratio of ‘Basic’ to ‘Applied’ research in education institutions, by;

-Encouraging through policy and funding provincial colleges / CCGEPs to partner with local universities and businesses to carryout commercially oriented applied research projects,
-Requiring universities to develop a single province wide intellectual property (IP) licensing regime focused on encouraging local business to commercialize such IP quickly with licensing fees based on profits realized.

Improving ability of Canadian firms to hire new tech talent, by;

-Providing funding support for hiring of new tech college / CCGEP graduates on a sliding scale over three years.
-Requiring provincial professional licensing bodies to develop plans for acceleration of review of credentials & experience of foreign trained personnel such as engineers, doctors, accountants.

Supporting exports of Canadian technology products and services , by;

-Increasing financial support for the participation of local tech companies in international trade shows, in coordination with DFAIT Trade Commissioner staff,
-Providing companies with financial support for translation of marketing materials and 'localization' of Canadian products for sale in foreign markets.

Second Level Priorities for Future Consideration; 

Reform provincial procurement practices to improve tech companies opportunities, by;

-Leveraging planned provincial department & agency technology based procurements by identifying future needs and proactively selecting Canadian firms to develop one or more unique components on an R&D contract basis, well prior to RFP action,
-Reviewing provincial procurement practices to ensure that excessive use of ‘solutions based’ contracting to large systems integrators, excessive ‘reference client’ experience requirements and excessive performance bonds or insurance do not continue to result in Canadian technology firms being blocked from bidding on provincial work.

Expand availability of business credit for Canadian businesses, by;

- Establishing with the federal government a joint Fed/Prov agency with the mandate and resources to support new start-up firms in selected technology sectors through issuance of limited loan guarantees to financial institutions on behalf of qualifying firms.

Priorities for Private Sector Action:

Improve foreign market penetration to increase sales and reduce local dependency, by;

-Seeking out foreign opportunities as soon as practical, so as to establish an early reputation as a global player in your technology area,
-Looking for other Canadian firms in complementary areas with which you can partner to increase scale and scope of your offerings and be more attractive to foreign customers.
-Seeking local partners in China and India that can help you sell into those markets, while protecting intellectual property through patents, copyright and solid contracts, and
-Making better use of the federal 'Trade Commissioner' services in Canada's DFAIT Missions abroad, as well as of provincial trade promotion offices and services where possible

Increase the currently low level of business R&D expenditures, by;

-Assessing current products and competitive environment to determine where best business opportunities exist for innovation in product or service offerings,
-More actively using support services offered by the National Research Council and similar provincial bodies to facilitate and help fund the R&D needed to develop the next generation of products and services.
-Seeking out domestic and international partners in similar but not directly competitive businesses, negotiating cooperative agreements for joint R&D and innovation commercialization work.

Improve skills and experience of company management personnel, by;

-Committing to a minimum number of days per year of funded training for management staff in a manner similar to what is often already done for working level personnel,
-Covering the membership costs for managers to join professional and industry bodies so as to take advantage of learning experiences and training materials such groups often offer,
-Considering the hiring of management personnel with international experience (including recent immigrants) when openings make it necessary to select new team members.