Federal Budget 2014: Direct Funding Impact

February 11, 2014 SRED

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How is the government’s 2014 budget supporting research with direct funding?

Canada’s then finance minister, the Honourable Jim Flaherty, tabled Federal Budget 2014 on February 11, 2014. The document ¹ announced changes to direct funding streams such as the Industrial Research Assistance Program (IRAP) and other innovation-focused programs. Mr. Flaherty stated in his speech ² that the 2014 budget featured the largest increase in money for investment in the granting councils. How will this affect Canadian businesses? Read on to find out how this money will be allocated.

IRAP Funding

In contrast to the last two federal budgets (discussed here and here), IRAP is only mentioned once in the entire document.

The government announced $40 million for 3000 full-time internships for post-secondary graduates [Page 73].
Of this amount, $30 million has been allocated to IRAP to support youth internships in small and medium-sized enterprises undertaking technical research and development projects.
The remaining $10 million will be delivered by Employment and Social Development Canada under the Youth Employment Strategy.

The lack of focus on IRAP is concerning, especially compared to the announcements made in the last budget, where the program received an increase of $500 million for innovation projects. The current state of IRAP’s funding levels is currently unknown.

Other Direct Programs

The 2014 budget also contained plans for an increase in overall funding for post-secondary research. The Canada First Research Excellence Fund will provide direct assistance for post-secondary research initiatives. However, the budget itself provides contradictory information on whether this program will be rolled out in the next five years or ten years:

Economic Action Plan 2014 reinforces Canada’s economic strength with new
support for research and innovation totalling more than $1.6 billion over the next
five years. This includes the largest annual increase in research support through
the granting councils in over a decade when fully phased in, providing stable and
predictable funding for leading-edge research, including discovery research
funded through core granting council programming.

[Page 115, Federal 2014 Budget]

This quote states that the $1.6 billion will be allocated over 5 years.

Economic Action Plan 2014 proposes to create the Canada First Research
Excellence Fund, which will help Canadian post-secondary research
institutions leverage their key strengths into world-leading capabilities that
will generate benefits for Canadians. Economic Action Plan 2014proposes
to provide the Canada First Research Excellence Fund with $50 million in
2015–16, growing to $100 million in 2016–17, $150 million in 2017–18,
and reaching a steady-state level of $200 million annually in 2018–19and
beyond. Within the next decade, the Canada First Research Excellence Fund
will provide an additional $1.5 billion to advance the global research
leadership of Canadian institutions.

[Page 115, Federal 2014 Budget]

The above quote, with the associated cost schedule, shows that it will take ~10 years to reach the $1.6 billion value. In addition, it should be noted that the first disbursement of $50 million will not occur until 2015-2016.

The increases in funding for the 2014 fiscal period are comparatively small—$46 million per year will be provided to the granting councils to support advanced research and scientific discoveries [Page 86] .
In addition, $500 million will be directly allocated to the Automotive Innovation Fund over the next 2 years to support the automotive sector.

The ability for small- and medium-sized businesses to access these funds will be limited, though the government is encouraging more industry-academia partnerships.

In the previous budget, a new pilot program had been introduced to help Canadian companies with products that were at a pre-commercialization stage. The Canadian Innovation Commercialization Program (CICP) was recently renamed to the Build in Canada Innovation Program (BCIP) ³ and was expected to continue into 2014 and beyond.

However, there is no mention of this program or similar direct funding programs in the 2014 budget. Other programs designed to foster innovation and technology in Canada, such as funding for the Canadian Youth Business Foundation (CYBF) (now Futurpreneur Canada),⁴ were also absent.

Overall, the 2014 budget provides very limited support for direct funding programs that target innovation and research in Canada.