My Budget First Impression

It is good to be young right now!

Looking at this budget at first glance my first response is… wow this is soft! The Conservative government really likes to spend money and as a young professional I am happy to see that they have indicated they are going to spend $2 Billion in innovation with a focus on commercialization. It is very straight forward, very basic and very logical. The most important part of this document for any entrepreneur, business or person between the ages of 18-45 is in Chapter 3. The following is a brief summary of some highlights that are indicated on the www.budget.gc.ca website. 

Political Commentary

A Harsh Beat Down For Environmentalist

From a political policy standpoint there is a direct attack against environmental groups. I have not read for myself but according to sources who have dived deep into the document already Aboriginal Affairs is going to be giving up about 2.7 percent of its budget vs. the 8.9 percent that is suspected Environment Canada is going to have to give up. Clearly those who appose the “Tar Sands” I mean “Oil Sands” this has to be a big kick in the teeth!

It is looking like a “Big Blue Machine”

From a political party stand point this is going to be difficult for Liberals to gain traction. I absolutely loved Bob Rae’s initial comments on the CBC about the holes in this budget and he articulated very well the challenges we are going to face as a country. However  this is still going to be a tough pill to swallow from a public relations stand point and here is why. Although the Progressive Conservative party died and merged with the Alliance Party of Canada over 7 years ago this budget is very progressive in the fiscal spending a classical Liberal draw for the people. It makes you wonder where the Liberal leadership will sit moving forward. The NDP currently own the social justice and environmental agenda, Conservatives pushed through there Crime policy to please the hard core right of their party and now they have sustained and went very soft financially keeping the “Canadian Economic Action Plan” agenda in cruise control not missing a beat.

Conservatives are playing masterful politics pushing free-trade, innovation, and capitalizing the countries greatest asset pleasing most of the business class. While socially they are pleasing their “hard right” supporters with policies that I don’t think the majority of  sitting MP’s really like but are doing so under the guidance of the PMO’s office.  The question now is will this spending be sustainable over time? And will their inability to make the deep cuts many feel was necessary harm the long term fiscal health of Canada in the not so distant future?  The truth is only time will tell, but in the end this budget is a toast to a major majority government who has 4 more years of governing and can literally do whatever they want. I don’t think looking forward they fear the NDP it is Liberals who pose the biggest threat. And this budget proves that the “Progressive Conservative” policies and agendas that have been guiding the economy so far are still a live and well within the “Big Blue Machine”.

Generation Y to the rescue!

I think the  reality is this age of austerity will last for at least a minimum of 15 years. Right now a 30 year term mortgage is 4% in the united states. Anyone who is knowledgeable of the mortgage sector knows that these terms are insane!  The cuts in spending will need to happen but it will happen very slowly because if they slash and burn the budget our countries ability to sustain would be put in jeopardy. We are a young country and now it is time to grow up. The welfare state is under attack and the next political debate will not be about budgets, or social policies but about the very ideological framework of our nation. Will be be a kinder softer gentle country were freedoms, social justice and liberties are protected? or will we adopt the American style of business first, economy first, and leave those who need us the most in society behind?

The government of Canada is challenging and investing heavily in entrepreneurs to innovate and come up with the ideas to grow and strengthen Canada for a long sustainable future.  As a “social entrepreneur” I say challenge accepted! Generation Y to the rescue!

Highlights

Creating Value-Added Jobs Through Innovation

The Government is committed to a new approach to supporting innovation that focuses resources on private sector needs. Economic Action Plan 2012 proposes:

• $400 million to help increase private sector investments in early-stage risk capital, and to support the creation of large-scale venture capital funds led by the private sector.
• $100 million to the Business Development Bank of Canada to support its venture capital activities.
• $110 million per year to the National Research Council to double support to companies through the Industrial Research Assistance Program.
• $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.
• Streamlining and improving the Scientific Research and Experimental Development tax incentive program.

Support for Research, Education and Training

The Government is committed to providing additional resources to support advanced research at universities and other leading research institutions. Economic Action Plan 2012 proposes:

• $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.

Creating Value-Added Jobs Through Innovation

The Government is committed to a new approach to supporting innovation in Canada. Economic Action Plan 2012 announces $1.1 billion over five years to directly support research and development and $500 million for venture capital.

The global economy is changing. Competition for the brightest minds is intensifying. The pace of technological change is creating new opportunities while making older business practices obsolete. Canada’s long‑term economic competitiveness in this emerging knowledge economy demands globally competitive businesses that innovate and create high-quality jobs.

The Government supports an innovative economy and the creation of high-quality jobs through investments in education and training, basic and applied research, and the translation of public research knowledge to the private sector. Since 2006, the Government has provided nearly $8 billion in new funding for initiatives to support science, technology and the growth of innovative firms. The Government is also sustaining a business environment that encourages innovation by supporting financing opportunities for businesses with the potential to become globally competitive, and creating a regulatory environment that promotes competition, business investment and economic growth.

As demonstrated by Chart 3.1.1, supported by federal investments, Canada is a world leader in post-secondary research, outpacing other Group of Seven (G-7) countries on higher education investment.

The Government’s science and technology strategy, Mobilizing Science and Technology to Canada’s Advantage, emphasizes the importance of ensuring that federally supported research contributes to the commercialization of new products, processes and services that create high-value jobs and economic growth. Guided by this strategy, the Government provides significant resources to support research, development and technology.

Consistent with this strategy, and to fully realize the value from our investments in advanced research, Budget 2010 announced that the Government would conduct a comprehensive review of federal support for research and development. The objective was to ensure that federal support is cost-effective and makes the maximum contribution to innovation and economic opportunities for business and Canadian workers.

This extensive review was conducted by an Expert Panel, led by Mr. Thomas Jenkins, Executive Chairman and Chief Strategy Officer of OpenText Corporation of Waterloo, Ontario. The Panel’s far-reaching consultations resulted in nearly 230 written submissions, supplemented by in‑person group sessions held across the country and a detailed survey of more than 1,000 innovative businesses of all sizes representing a wide array of sectors and regions. The Panel also consulted innovation leaders in other countries to learn from their experiences.

In October 2011, the Expert Panel submitted a report to the Government, Innovation Canada: A Call to Action, with findings and recommendations on how to improve support for innovative businesses and help them grow into larger, globally competitive companies.

Broadly, the Expert Panel found that:

• Canadian businesses find the Scientific Research and Experimental Development tax incentive program to be complex, with an approval process that can be unpredictable and costly.
• Relative to peer countries, Canada has an over-reliance on tax incentives in the mix of federal support for business research and development compared to direct expenditures that support innovative firms and public-private research collaborations.
• The numerous federal programs that promote business innovation can be difficult for companies to navigate, and may create inefficiencies.
• Canada lags behind peer countries in leveraging government procurement to promote private sector innovation.
• Unlike peer countries, Canada lacks an organization with the capacity to act as a central hub for business-driven research.
• Canada’s risk capital sector needs further development to effectively support the growth of innovative companies.
• Canada needs a stronger “whole-of-government” approach to innovation.

Informed by this advice, the Government is committed to a new approach to supporting innovation in Canada, by pursuing active business-led initiatives that focus resources on better meeting private sector needs. Economic Action Plan 2012 begins to deliver on this commitment, announcing $1.1 billion over five years for direct research and development support and making available $500 million for venture capital.

This new approach will promote business innovation through improved support for high-growth companies, research collaborations, procurement opportunities, applied research and risk financing. This will provide a solid foundation on which Canada’s globally competitive businesses can build by making the investments in innovation required to create high-value jobs and long-term economic growth. In particular, the Government will:

• Double the contribution budget of the Industrial Research Assistance Program to better support research and development by small and medium-sized companies.
• Support private and public research collaboration through internships for graduate students and funding for business-led research and development.
• Support innovation through procurement by connecting small and medium-sized companies with federal departments and agencies to build their capacity to compete in the marketplace.
• Refocus the National Research Council on demand-driven business-oriented research that will help Canadian businesses develop innovative products and services.
• Help high-growth firms access risk capital by committing significant funds to lever increased private sector investments in early-stage risk capital and to support the creation of large-scale venture capital funds led by the private sector.
• Streamline and improve the SR&ED tax incentive program by removing capital from the expenditure base, making it more cost-effective through design improvements and a measured rate reduction, and providing greater predictability through administrative improvements.

The Panel’s recommendations are wide-ranging and the Government will continue to study them carefully. In particular, the Government will explore options to consolidate the suite of programs that supports business innovation to make it easier for businesses to access government support and improve efficiency. In addition, the Government will help innovative companies have greater access to private sector risk capital. The Government will announce further actions in response to the Panel’s recommendations in the coming months and in Budget 2013.

Helping High-Growth Firms Access Risk Capital

Economic Action Plan 2012 will make available $400 million to help increase private sector investments in early-stage risk capital and to support the creation of large-scale venture capital funds led by the private sector. Also, it confirms the previous commitment to make available an additional $100 million to the Business Development Bank of Canada.

Young knowledge-based firms often have difficulty in accessing capital from traditional financial institutions because they have few tangible assets beyond their ideas. Yet some of these firms have the potential to become future global market leaders. Facebook, Google and Research In Motion were all start-up companies financed by venture capital. Angel investors and venture capital funds play an important role in supporting the growth of these high‑potential firms by providing much-needed capital as well as hands-on business advice.

The Canadian venture capital market has had mixed results in the last decade. Further, the venture capital market faces a broad range of challenges including a decline in fundraising, which is partially attributable to the market’s inability to consistently attract private investors, including large, well-funded institutional investors such as pension funds.

The Government recognizes the crucial role played by private sector risk capital in driving business growth and innovation, and has taken important steps to strengthen its availability, including through the Business Development Bank of Canada and by removing impediments to foreign venture capital investments.

To help increase private sector investments in early-stage risk capital, and to support the creation of large-scale venture capital funds led by the private sector, Economic Action Plan 2012 proposes to make available $400 million for venture capital activities. This will increase the amount of funding available for growth-oriented innovative firms while focusing resources on those that are likeliest to become global leaders. In the coming months, the Government will consider how to structure its support in order to incent private sector investments and management of seed and large-scale venture capital funds.

In addition, Economic Action Plan 2012 confirms the previous commitment to make available an additional $100 million to support the venture capital activities of the Business Development Bank of Canada.

Increasing Direct Support for Business Innovation

Doubling the Industrial Research Assistance Program

Economic Action Plan 2012 proposes an additional $110 million per year starting in 2012–13 to double support for companies through the Industrial Research Assistance Program.

The National Research Council’s Industrial Research Assistance Program, which supports research and development projects by innovative small and medium-sized businesses, is a cornerstone of Canada’s innovation system and is regarded worldwide as one of the best programs of its kind. Economic Action Plan 2012 proposes an additional $110 million per year starting in 2012–13 to the National Research Council to double the Industrial Research Assistance Program. This will allow the National Research Council to support additional small and medium-sized businesses that create high-value jobs, and to expand the services provided to businesses through the program’s Industrial Technology Advisors. The National Research Council will also create a concierge service that will provide information and assistance to small and medium-sized businesses to help them make effective use of federal innovation programs.

Highlights published by the Government of Canada and has not been produced in affiliation with, or with the endorsement of the Government of Canada.