History of Innovation in the Federal Budget Part 2: 2002 – 2007

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Looking back at innovation in the Canadian 2002 – 2007 federal budgets.

In this post, we take a look back at research and development (R&D) and innovation in past federal budgets since 2002 (our previous summary focussed on budgets ranging from 1995 – 2001).

The federal Canadian budgets falling between 2002 – 2007 bear the mark of the post-2001 Tech Burst/Dot-com bubble. The dot-com bubble (also referred to as the Internet bubble and the Information Technology Bubble)¹ was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the Internet sector and related fields. It reached its peak on March 10 2000, and series of closely related events shaped the inevitable decline as many major “dot-coms” became “dot-bombs.”²

During this period there was also a shift towards environmental initiatives. The budgets speak to growing interest in climate change, both as an environmental issue and also as an opportunity for innovative, sustainable technologies.

 

A comprehensive overview of how SR&ED features in each federal budget since 1995 is also available on our SR&ED in Federal Budget (Summaries) page.

2002 Federal Budget – MIA

Liberal Party

It appears that in 2002, in place of a budget, the Minister of Finance, John Paul Manley, provided only an Economic and Fiscal Update.³ In this update there is no mention of innovation or scientific research and experimental development.⁴

2003 Federal Budget

Liberal Party

The 2003 budget took a more aggressive stance with respect to Canadian innovation than in the past. Finance Minister John Manley made a powerful statement, saying that:⁵

[Canada’s] economic prosperity, our quality of life and our standard of living require Canada to be a world leader in innovation and learning and to be a magnet for talent and investment–the mark of a ‘Northern Tiger’

The budget also reflected growing concerns about environmental issues, while also positioning these issues as an economic opportunity for the development of environmentally-friendly technologies through the following:

• $2 billion toward Climate Change Plan for Canada ⁶
• $250 million for Sustainable Development Technology Canada Fund ⁷
• $1.7 billion over five years to “support partnership, innovation and targeted measures to promote energy efficiency, renewable energy, sustainable transportation and alternative energy sources.”

2004 Federal Budget

Liberal Party

As with all previous budgets, the 2004 budget championed education as a bridge that would ultimately lead to innovation and prosperity. The budget was also framed in a simple equation for success that leaned heavily on technological progress: “ingenuity plus technology equals productivity“.

Additionally, the budget called for increased depreciation rates for computers and Internet/broadband technology to “reflect their useful life” as a means of benefiting entrepreneurs and innovators on a wide-scale.⁸

2005 Federal Budget

Liberal Party

Building on the environmental focus of the 2003 federal budget, the 2005 budget also emphasized the “tremendous opportunities” presented by climate change. The budget slated $200 million for a Sustainable Energy Science and Technology Strategy over a span of five years to position Canada as “the birthplace of the next generation of the the best ideas and innovation.”

The 2005 budget also outlined the Liberal Party’s past contributions to innovation–$11 billion over the past eight years which “fostered a world-class research environment” and also helped aid commercialization.⁹

2006 Federal Budget

Conservative Party 

The 2006 budget was exceedingly practical in its focus, as evidenced by its “Focusing on Priorities” tagline. There were no overt references to innovation, the most relevant being reducing business taxes. Instead, the budget was stripped down to five core commitments, including the following:¹⁰

• Accountability — transparency of framework, limiting growth in spending, and
• Opportunity — reducing GST by 1%, reducing personal/business taxes

2007 Federal Budget

Conservative Party

In the 2007 budget, (titled “A Stronger, Safer, Better Canada”) Finance Minister Flaherty spoke about the necessity of restoring fiscal balance, which in turn would allow “Canadians [to] come out ahead through real tax relief.” $39 billion was promised over a span of seven years to help fund, among other things, better-equipped universities and colleges, job training, and environmental preservation through contributions such as the $1.5 billion promise to create the Canada ecoTrust for Clean Air and Climate Change:¹¹

The Canada ecoTrust for Clean Air and Climate Change will allow each province and territory to develop technology, energy efficiency, and other projects that will provide real results. The Government of Canada will work with all provinces and territories to fully develop this new, national fund.

 

A comprehensive overview of how SR&ED features in each federal budget since 1995 is available on our SR&ED in Federal Budget (Summaries) page.