Federal Budget in step with CATA Direction: More changes to come
March 20, 2007

Ottawa, March 20, 2007 -- Yesterday's Federal Budget captured the tone of CATA's proposals aimed at enhancing the effectiveness of the Federal Governments initiatives to promote the knowledge economy, and to better lever the results in economic growth and in the retention of skilled workers in Canada.

"They have recognized the essence of what we have been saying for years -- that this is the single most important issue for Canada to achieve sustainable business growth," said CATA's senior Director, Dr, Russ Roberts. "The initiatives to link centres of excellence with commercialization, and "research to business needs" -- a $300 million plus commitment over three years -- is in the right direction."

However, he added that "we had hoped to see specific tax measures to fix inequities in the SR&ED tax credit program and improve its availability to all Canadian businesses."

The budget did commit to "identify opportunities to improve the SR&ED program including its administration" over the next two years and committed to a "leading role" in the Government's initiatives to promote a dynamic business environment in Canada.

"We are now waiting to understand how the Government will approach the identification of these opportunities and the need to better leverage the results of SR&ED into successful Canadian businesses".

CATAAlliance has argued that the SRED program needs to be much better integrated with other tax measures and that the legislation itself needs updating and improvement if the tax system is to be a fully effective tool for promoting innovation by Canadian businesses in all sectors. CATA's SR&ED campaign is based on research reports and analysis developed through on-line consultations and Roundtable discussions that were carried out throughout the summer on how to improve the SR&ED tax credits.

"We are also pleased with the direction the Government is going with its modest tax relief measures. Lowering taxes will provide more disposable income, which will lead to higher business activity. Another Government measure will ensure that this activity will be more effectively carried out, as there are provisions for increased training and enhancement of skill levels for the labour force."

Other measures that CATA has successfully advocated include a reduction in the federal paper burden on business and the development of a global strategy on commerce. There will be an accelerated depreciation for computers and assistance to provinces to accelerate elimination of capital taxes. Four hundred million dollars will go to Canada Health Infoway to support the development of electronic health records -- a measure pushed by CATA in its drive to strengthen global competitiveness as well as improve the lives of patients through the adoption of technology.

"We congratulate the Government for moving in the direction of the Innovation Nation, and we look forward to seeing more of our recommendations enacted."

The SR&ED Campaign is an integral part of the CATAAlliance, Innovation Nation platform, entitled "Setting the Gold Standard" -- Technology Agenda for Canadian Growth Aims at Building on Success -- Adoption Will Help Ensure Canada's Prosperity." CATA's Innovation Nation Platform calls for:

  1. Developing a National Brand for Canada based on Regional Advantages;

  2. Creating an Industrial Strategy for Canada, linked to strategic approaches to government procurement, supply chains, outsourcing, exports, and increased international mandates;

  3. Responding to the Flat World of global competition with the removal of trade barriers, provision of support to equal the playing field for Canadian competitors and investment in the infrastructure needed to preserve and expand market strength;

  4. Maintaining the best practice aspects of Canada's SR&ED tax incentive program;

  5. Attracting, retaining and training best talent;

  6. Fostering executive leadership for industry growth, including a commitment to lifetime learning;

  7. Developing the IT capacity of women and encouraging women to join the technology market and enrol in technology-related studies;

  8. Creating best practices for Public Safety and National Security with an eye to protecting privacy, including fostering the growth of the advanced security sector; and

  9. Advancing measures to speed ICT adoption by the public and private sectors, particularly for small to mid sized (SME) businesses.

Barry Gander
EVP, CATAAlliance