In an election year, the Conservative government delivered a federal budget with the first surplus Canada has seen since the recession while finding some new money to invest in high-tech research and innovation.

Finance Minister Joe Oliver stood in the House of Commons on Tuesday to announce a $1.4 billion surplus, in part boosted by putting aside less for contingency funds. But the government is also introducing new tax breaks including a promise to lower the small business tax rate from the current 11 per cent to nine per cent by 2019.

In between nailing down a surplus and announcing tax hikes for both businesses and individuals, there wasn’t a ton of cash left over for tech-related line items. But the government did dig deep to find money for spending on high-end research and development in specific industries and training.

Federal Minister of Finance Joe Oliver followed tradition and bought a new pair of shoes before announcing the 2015 budget.
Federal Minister of Finance Joe Oliver followed tradition and bought a new pair of shoes before announcing the 2015 budget.

Not deep enough though for Kennedy Stewart, the NDP’s critic for science and technology. While he allows that the Conservatives are putting some money into R&D, he points to numbers from the OECD that show Canada is spending just 1.6 per cent of its GDP towards that area, whereas the U.S. has a goal to spend three per cent minimum.

“They cut off your arm and give you finger back,” he says. “We’re losing the race here and that’s not good for our long-term economy.”

Overall there were few surprises in the budget for John Reid, president of the Canadian Advanced Technology Alliance (CATA). But Reid felt that rather than just cutting taxes for business, the government should have a more ambitious plan in rejigging taxation in order to encourage spending on technology and innovation.

“We were expecting it to be a political platform and the general consensus was it succeeded in that,” he says. “We’re still very much approaching taxation in a piecemeal manner than developing a tax regime in-line with the 21st century.”

For Tom Turpin, president of Randstad Canada, the budget gives reason to be cautiously optimistic. Wanting to see the government creating jobs in high-value sectors like high-tech, Turpin says that the economy has been slogging along at a slow rate of growth since the 2008 recession.

“Is it a budget that I’m going to go and dance a jig over, saying look at all the jobs we created?” he says. “No, probably not.”

First up on budget line items related to technology is $105 million in new funding over five years starting in 2015-2016 for CANARIE, the Ottawa-based operator of the ulta-high-speed National Research and Education Network that connects educational network infrastructure across the country. The 10 gigabit per second network is relied upon by researchers in the field of information communications technology.

 

That money should help Canada compete on an international stage when it comes to luring highly-skilled talent to conduct research and do work here, according to Turpin.

“If you’re not investing in innovation, it sends a message to educators and to students about which way they should go,” he says. “Canada has to be seen as a hub of innovation and to do that you have to invest in technology.”

Funding for advanced research and development also comes in the form of $56.4 million for Mitacs, a national not-for-profit organization that works with universities and the private sector to deliver research and training programs. Mitacs will receive $56.4 million over four years starting in 2016-2017.

“Programs like this are the reason that people come to Canada,” Turpin says. “If you don’t fund them you lose a lot of attractiveness.”

Programs like Mitacs help take advanced research ideas for new technologies and commercialize them for market access, Turpin says.

The official opposition critic, Stewart, agreed that spending on CANARIE and Mitacs are positive actions by the government, but says he’d rather see more. Compared to four years ago, the government has cut $1 billion on spending in the science and technology category.

“Their approach seems to be: give blanket corporate tax cuts and the R&D investment will come,” Stewart says. “After four years of that, it doesn’t seem to be working.”

The Conservative budget also included:

  • $119.2 million over two year’s starting in 2015-16 for the National Research Council’s industry-partnered R&D activities.
  • $1.33 billion over six years starting in 2017-18 for the Canada Foundation for Innovation to support advanced research infrastructure at post-secondary schools and research hospitals.
  • $100 million over five years starting 2015-16 to a new Automotive Supplier Innovation Program that will support product development and technology demonstration by auto parts suppliers.

With notes from Nestor Arellano.

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