Commons committee recommends changes to R&D funding regime

Funding for research and development in this country should be changed quickly, a Parliamentary committee recommends. The House of Commons Standing Committee on Finance made the suggestion as part of a larger pre-budget report, released late last month. The study points out that several bodies help promote R&D, including the Natural Sciences and Engineering Research Council of Canada (NSERC), the Social Sciences and Humanities Research Council of Canada (SSHRC), the Canadian Institutes of Health Research (CIHR), the Canadian Institute for Advanced Research (CIAR) and the Canada Foundation for Innovation. In the 2001 budget, the annual budgets of NSERC and SSHRC were increased by seven per cent each. That worked out to an additional $36.5 million for NSERC and $9.5 million for SSHRC. During hearings for its pre-budget review, the committee was told that the granting councils aren’t afforded the same level of funding, with the SSHRC singled out for a deficient level of funding. Accordingly, the committee recommends that the government increase the money for federal granting councils and ensure that the SSHRC receive a fair share. The Scientific Research and Experimental Development (SR&ED) investment tax credit came under close scrutiny as well. Under current rules, qualifying companies with under $200,000 of taxable income are eligible for a refundable investment tax credit of up to 35 per cent of qualifying expenses, with a cap of $2 million. The limit drops by $10 for every dollar of tax income between $200,000 and $400,000. Other firms are eligible for a 20 per cent non-refundable tax credit. The Ottawa Centre for Research and Innovation (OCRI) has been at the forefront of groups advocating the improvement of the SR&ED. The Canadian Advanced Technology Alliance and the Canadian Manufacturers and Exporters also urged the committee to seek changes. "Throughout this report, the committee stresses the importance of prosperity and growth, productivity and innovation, research and development," the Finance committee report states. "Like many Canadians, we are convinced that our future prosperity depends on the research and development activities that will enable enhanced productivity and innovation." To that end, the committee suggests simplifying the process by which firms gain access to the SR&ED credit. In addition, it says changes should allow companies to use the credit during times when they are not profitable, thus spurring R&D investment. The committee also recommends the creation of a commercialization office within Industry Canada. It criticizes the government for not determining the economic effects of regulatory and policy change. It concedes, however, that governments must walk a fine line between changing policy in response to alterations in the competitive marketplace and the potential harm caused by those changes.

Commons committee recommends changes to R&D funding regime

News | 12/16/2002 5:00 am EST

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