Budget Offers Cuts and New R&D Funding

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Budget 2012

Today's budget offered $5.2 billion in cuts and we now know that 19,200 civil servants will be cut over the next three years with the government asserting that 6,000 of those will be through attrition.

The government said that innovation would be an important factor in this budget and they delivered $1 billion for innovation projects. Included is $400 million for early-stage risk capital and to support the creation of large-scale venture capital funds. The Business Development Bank will receive $100 million for venture capital activities. The National Research Council will get $110 million per year to the to double support to companies through the Industrial Research Assistance Program.

Also included was:

- $14 million over two years to double the Industrial Research and Development Internship program.
- $12 million per year to make the Business-Led Networks of Centres of Excellence program permanent.
- $105 million over two years to support forestry innovation and market development.
- $95 million over three years, starting in 2013-14, and $40 million per year thereafter to make the Canadian Innovation Commercialization Program permanent and to add a military procurement component.
- $67 million in 2012-13 as the National Research Council refocuses on business-led, industry-relevant research.

For universities and other institutions the government is offering:

- $37 million annually starting in 2012-13 to the granting councils to enhance their support for industry-academic research partnerships.
- $60 million for Genome Canada to launch a new applied research competition in the area of human health, and to sustain the Science and Technology Centres until 2014-15.
- $6.5 million over three years for a research project at McMaster University to evaluate team-based approaches to health care delivery.
- $17 million over two years to further advance the development of alternatives to existing isotope production technologies.
- $10 million over two years to the Canadian Institute for Advanced Research to link Canadians to global research networks.
- $500 million over five years, starting in 2014-15, to the Canada Foundation for Innovation to support advanced research infrastructure.
- $40 million over two years to support CANARIE's operation of Canada's ultra-high speed research network.
- $23 million over two years to Natural Resources Canada to enhance satellite data reception capacity.

With respect to Scientific Research and Experimental Development (SR&ED) tax incentive program the government said it will streamline and improve the program but gave little details on how and whether there will be in an increase or decrease in the approximate $5 billion a year in the program.

What they did say is that they will shift resource from indirect support to direct forms of support. $1.1 billion will allocated over 5 years for direct research and development (R&D) and as mentioned before $500 million for venture capital through the private sector and the Business Development Bank.

The government will remove capital from the expenditure base of the SR&ED program which they say will make it "more cost-effective through design improvements and a measured rate reduction, and providing greater predictability through administrative improvements".

The government is also proposing to reduce the general 20-per-cent SR&ED investment tax credit rate applicable to SR&ED qualified expenditure pool balances at the end of a taxation year to 15 per cent.

The government is still reviewing the Review of Federal Support to Research and Development recommendations and said they will announce further changes in the coming months and in the next budget.

The government made a point of reiterating Canada's commitment to the International Space Space (ISS) through 2020 though the terms of Canada's commitment are still to be negotiated with NASA. It was curious to note that they specifically mentioned NASA instead of all of the other ISS partners. This could just be a mistake.

There will be no immediate changes in the space sector until after the Aerospace Review completes its review and provides its suggested recommendations in mid-December later this year.

budget12-1.jpgCanadian Space Agency "Savings"

The Canadian Space Agency will see modest cuts this year but larger cuts in the next two years. This includes $7.9 million in what the government terms "savings" this year, $24.7 next year and $29.5 in 2014-15. The government characterizes the cut as "savings measures target reductions in administrative expenditures, office consolidations and more efficient research and analysis functions." There were no other details with respect to the Canadian Space Agency.

Recognizing the importance of satellite data from satellites like RADARSAT Natural Resources Canada will receive an additional $23 million over two years for new satellite data stations and the development of a data management system.

Updated at 5:39 pm ET.