What Does Budget Day Mean for the Space Sector in Canada?

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Budget 2012

Today is budget day and the government has been clear that this budget will be about cuts to many programs. What does it mean for the space sector?

The Canadian Space Agency (CSA) budget is going to be cut. This we already new from last years estimates and the end of the stimulus funding. What we don't know is whether the CSA will receive an additional 5% to 10% cut on top of that. If the CSA receives an additional 10% cut, sources tell SpaceRef that some job cutting may be inevitable.

The Department of National Defence appears to be headed for a budget cut afters years of increases but it is unclear if any cuts will be felt in the Director General Space department.

One significant change we will see is in research and development (R&D). The government feels that Canadian businesses aren't investing enough in R&D while the government's allocation to R&D is considered too high. The government has made it clear that changes are coming to how R&D funding is allocated.

A related change to R&D is expected changes to how Scientific Research and Experimental Development (SR&ED) tax credit system is implemented. Last fall the The Review of Federal Support to Research and Development, or Jenkins Report, called for changes to SR&ED tax credit to make it easier to apply for the credit. Other recommendations from the report included:

- The creation of an Industrial Research and Innovation Council (IRIC) to deliver the federal government's business innovation programs.

- Make business innovation one of the core objectives of procurement.

- Transform the institutes of the National Research Council into a series of large-scale, collaborative centres involving business, universities and the provinces.

- Help high-growth innovative firms access the risk capital they need through the Business Development Bank of Canada

- Establish a clear federal voice for innovation and work with the provinces to improve coordination.

The budget will be released at 4:00 pm ET and we'll provide ongoing coverage and analysis.