Canadian R&D is Feedstock for Other Nations’ Growth -- Terry Matthews Calls for Pan Canadian Innovation Plan: community mobilization for a new Vision of Canada
January 25, 2010

Media Contact: Emily Boucher, at email  or John Reid at 

Ottawa, January 25, 2010…CATAAlliance National Spokesperson, Sir Terence Matthews is calling on political parties and all Canadians to adopt a new vision for Canada, an Innovation Nation vision that will lead us  from 13th to 1st place or an A grade in Innovation performance.


"The award of national prosperity will go to those countries that can generate international confidence in their ability to lead in the design, development, production and distribution of goods and services. These countries will attract and retain investment. For Canada to prosper we must become a leading Innovation Nation; we all need to do our part to get there." 


Canada's Innovation Gap is a fundamental challenge to Canada’s economic growth in a world where our competitors are focused on becoming the world's innovators.  In their report highlighting the Innovation Gap, the Council of Canadian Academies emphasized [1] that Canadians are good at research but are equally weak when it comes to leveraging the results into successful businesses that mature to become world class.  Canada’s technologies and researchers have become the feedstock for our competitors’ growth. 


In a September 2009 Update, CATA highlighted the Federal Government’s emerging commitment to developing a “High-Tech Plan” to address Canada’s Innovation Gap.  However, there is still no plan to discuss.


Matthews added, “While we recognize that there have been a number of distractions and that significant discussions are occurring on whether a structural budget deficit exists, everyone agrees that Canada has a structural deficit in innovation that continues to impede growth in many of our communities across the country.”


Russ Roberts, CATA’s Senior Vice President, Tax and Finance, points out, “The decades-long inability of Canada's governing leaders to provide a coherent and effective innovation policy framework for leveraging our creativity as scientists and technologists into viable business ventures is a critical challenge.”


He notes that "This is particularly true as the Canadian dollar approaches and likely exceeds parity with the U.S. dollar, a situation that is expected to remain for some time.  CATA finds that the economics of investing in Canadian innovations are becoming less favourable.  Over 40% of the respondents to a recent CATA poll indicated that it is likely they will have to move their R&D offshore to counteract the high cost of doing R&D in Canada."


CATA's Board of Directors calls on all Members of Parliament to step back while they look at the options for managing the deficit and focus on the national benefits of immediately tabling an Innovation Plan that addresses the negative impact of the Innovation Gap on their constituencies and local business.  


We do know that the Government is taking a close look at its investment in the SR&ED Tax Incentive Program.  Extensive discussions have taken place with the community on behalf of the former Minister of National Revenue and Minister of State for (Agriculture and Agra-Food) The Honourable Jean-Pierre Blackburn. 


CATA has been consulted.  Our experience with these discussions and the feedback we have received from members who were consulted is that the review of the SR&ED Program appears to be thorough. 


However, as Russ notes, “We understand that changes to the SR&ED Program are being announced but we have not seen any comprehensive, transparent plan.  The community is looking for a comprehensive plan, given the systemic and long entrenched nature of the issues being brought forward to the Minister.” 


On the venture financing front, CATA has just received commitments that barriers to obtaining clearance certificates exempting foreign investors (particularly U.S. investors) from withholding taxes on their Canadian venture investments will be addressed by the Department of Finance.


While a little encouraging, improvements to the administration of the SR&ED tax incentives and clearance certificates are only a couple pieces and only the beginning of the puzzle for solving the Innovation Gap. 


What Is Needed?


CATAAlliance is looking for a plan that goes well beyond SR&ED and piecemeal fixes - here and there interventions.  CATA is looking for an Innovation Plan that clearly addresses the country’s systemic imbalances and focuses on how to leverage the creativity of Canada's science and technology capital into successful, internationally competitive technology intensive businesses.


John Reid, President, CATA, stresses, “At this critical crossroad in Canada's economic history, we urge all Members of Parliament to not lose focus on the broader challenge of crafting the environment needed to dig Canada out of its perennial Innovation Gap.”

Canada needs a comprehensive, coherent and effective Innovation Plan that reflects CATA’s “Innovation Nation” Plan, a plan which:


  • 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 for the financing of growth opportunities in established businesses;
  • promotes a regulatory climate that is not 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 seek success and growth in global markets effectively.

The plan includes a comprehensive set of recommendations that enable Canada to become a leader as an Innovation Nation.  Sir Terence Matthews, together with CATA, is currently promoting dialogue by outlining the risks for Canada of inaction and the advantages of action.


Matthews concludes, “Governments at all levels and all Members of Parliament need to hear that it is time to put a cohesive Innovation Plan on the table.”


++ Call to Action:


MP and Community Mobilization
Please send electronically and/or print out and fax this communiqué and follow up with a phone call to your local MP at the federal and provincial levels, elected officials, such as, the Mayor of your  City and Counselors,  media and network of public and private sector contacts, inclusive of posting on your social media. This will help us get across the need for change and the consequences to your firms and communities if they do not act.  

Organizational Mobilization
Please circulate this communique internally to all your employees and alumni and ask them to engage in the MP and Community Mobilization.



[1] “Canada’s Innovation Gap  Estimating Its Size; Explaining Its Causes” by Peter J. Nicholson, President, The Council of Canadian Academies, Presentation to Socio-Economic Conference 2009, Gatineau, QC, 5 May, 2009 
Read: Tycoon plans fund to fill Nortel void Matthews seeks $100M-$200M to finance startups before ex-Nortel staff leave area (Ottawa Citizen, Bert Hill)