Ottawa is once again implementing intervention without innovation in the Canadian economy, announcing two major, top-down programs in the federal budget similar in approach to the troubled Canada Infrastructure Bank and the supercluster initiative. The federal government is also abandoning a campaign promise to set up a body modeled on the prestigious U.S. Defense Advanced Research Projects Agency (DARPA), which has fueled the development of cutting-edge technologies such as the Internet and GPS. On Thursday, the government unveiled new $ 3 billion in innovation spending in a budget aimed at addressing the country’s chronic weaknesses in productivity, research and development, investment and improving economic prosperity. Highlights of the 2022 federal budget: What you need to know about housing, defense and climate spending See how the 2022 federal budget affects home buyers and consumers Addressing these issues is critical at a time of rising inflation, geopolitical turmoil and climate change, and with Canada needing to modernize its mining industries, a senior economist told reporters. This, the official added, will require huge amounts of capital. The Globe and Mail did not name the official, as the government would not allow the individual to be publicly identified, even though they were available to the media during the budget blockade. “Canadians are the most educated in the OECD… but we are lagging behind in terms of economic productivity,” Finance Minister Chrystia Freeland told the House of Commons. “This is a well-known Canadian problem – and an insidious one. “It’s time for Canada to deal with that.” The budget requires the creation of two long-term bodies that will finance and direct with targeted mandates. The first is a “Canada Development Fund” to be funded by $ 15 billion to be redistributed from money already committed to other parts of government. The other is a proposed innovation and investment agency, designed under programs in Finland and Israel, which it will fund with new $ 1 billion in spending over five years. The government is committing $ 750 million over six years to the Supersystems program, whose initial five-year $ 950 million funding commitment was due to be completed next March. The new money is half of what the five super-cluster companies were asking for – which fund innovative collaborative projects that bring academia and business together. But the new funding comes with ties: They have to compete for money. The budget also addressed long-term criticism of the government’s largest innovation funding program, the $ 3 billion Scientific Research and Development (SR&ED) credit system, which partially compensates companies for research and development in Canada. Critics say the program is too complex, out of focus and too often finances years of failed companies or those that do not need the money. The government has promised to review R&D to ensure that it is effective in encouraging R&D that benefits the country and to explore how to modernize and simplify it. In addition, the review will look at how the government can encourage the development and maintenance of intellectual property (IP) resulting from the R&D conducted here. The budget also committed $ 97 million in new funding over five years to further support the creation and maintenance of valuable intellectual property in Canada. Other budget pledges included $ 30 million in funding to encourage the supply of home technology by healthcare providers and a review of the financial sector that focused on digitizing money. Budget innovation measures have disappointed observers. Jim Balsillie, chairman of the Canadian Innovators Council, which represents domestic innovators, said: “What we needed to see was capacity building within the public administration, not another ad hoc advisory committee or sponsorship agency. “Canada’s issue is not about new investments, but rather its low or even negative returns from previous taxpayer investments.” Rebekah Young, director of fiscal and provincial finance at Scotiabank Economics, expressed similar concerns. “What we are seeing today is not almost a development agenda” but rather “a fragmented approach with individual measures that are not linked to a broad big picture. “They seem to have dug into their existing toolbox and pulled out some things they have tried and tried in the past. [modelled] “around the Infrastructure Bank,” he said. “It borders on the idea that the government is the best at choosing the winners.” One of these things, the $ 15 billion super fund, will be managed by professional investment and will be responsible for achieving three policy goals: reducing emissions and helping Canada achieve its climate goals. diversify the economy by investing in low carbon industries and new technologies in various sectors; and support the restructuring of supply chains, including the natural resources sector. The key to the strategy is to find alternative sources of investment to fill the gap left by an energy sector whose share of total business investment has collapsed to 11% from 32% in 2014, the finance official said. The super fund will provide a range of financing instruments, the government said, including debt, equity, guarantees and niche contracts. The goal is that every $ 1 invested by the government will be equated with $ 3 in private equity. The finance official said the super fund would act as a pension fund manager – but without the goal of maximizing return on investment. The Innovation and Investment Agency, meanwhile, will be set up to work proactively with new and existing Canadian industries and businesses, from technology providers to forestry and mining, helping them invest to innovate, grow, compete and create jobs. work. The finance official said the “functionally independent” organization would be staffed by innovation experts, technologists and entrepreneurs. More details are expected this fall. One of the biggest surprises was the absence of a Canadian version of DARPA. The Liberal Party campaigned on a promise to introduce a $ 2 billion “CARPA” with initial funding, and Prime Minister Justin Trindade instructed Innovation Minister François-Philippe Champagne to move forward with the program last December. The top financial official said that DARPA was ultimately not the right model for Canada, as the US program was designed to fund moonshot innovations. Canada, the official said, needed a more practical program to help innovative companies succeed in the market. Ms Freeland further told reporters that the government went through a “high-level commitment” to set up a CARPA to “look at where the innovation challenge really lies in Canada.” The innovation agency we describe in this budget is the answer. “ CARPA Keynote Speaker Robert Asselin, Senior Policy Vice President for Canada Business Council and former Freeland predecessor’s budget director, Bill Morneau, said he was disappointed. “I hope we do not abandon the model. . I thought it would be perfect for our energy industry. . I really did not understand clearly what they are doing with this new agency. “ But Dan Breznitz, a former critic of federal innovation advocacy efforts who now serves as a visiting economist in the finance department, praised the government for the new service. “There is finally an awareness that the problem with innovation and commitment to new technology is not the lack of new ideas or human capital but the private market; this is a systemic problem.” He added that the service “will need to experiment a lot” to help solve the problem. Personal Finance columnist Rob Carrick highlights how the 2022 federal budget aims to tackle inflation. A family vacation comes in the form of dental care for those who make less than $ 90,000 a year. And a new tax-free savings account for first-time homebuyers aims to be a ramp in the hot housing market. The Globe and Mail Your time is precious. Deliver the Top Business Headlines newsletter to your inbox in the morning or evening. Register today.
