Long-awaited SR&ED review to start in January.
The federal government has announced it will delay plans to fully implement the Canada Innovation Corporation (CIC) until after the next scheduled federal election.
The delay to 2026 at the earliest was revealed in a statement released by the Department of Finance on Tuesday afternoon, which also announced the government will begin its review of the Scientific Research and Experimental Development (SR&ED) program in January 2024, as well as plans to implement recommended improvements to the Business Development Bank of Canada (BDC) following a recent legislative review.
For an organization that has yet to be formally established, the CIC has already gone through multiple iterations. First unveiled as a campaign promise in 2021, the CIC was originally packaged as a Canadian version of the United States’ Defense Advanced Research Projects Agency (DARPA). Budget 2022 proposed the CIC as an innovation investment agency structured as a Crown corporation.
In February of this year, the federal government announced it would move the National Research Council Industrial Research Assistance Program (NRC IRAP) under the CIC umbrella, a move that led the government to double the budget of CIC to $2.6 billion over four years.
The Department of Finance statement statement notes that the transition of NRC IRAP to the CIC “will now take place following the full implementation of the CIC no later than 2026-2027.”
The statement attributes the delay to ensuring that NRC IRAP “can seamlessly provide its essential support to the thousands of small and medium-sized enterprises it works with each year.” The statement also notes the government will seek advice “from leading Canadian investors, including pension funds, about the launch of the CIC.”
The federal government had not passed legislation to officially establish the CIC, nor its mandate and governance. The government had previously stated that “enabling legislation … will be introduced in 2023.” As of December, no such legislation has been introduced.
The CIC is also waiting for leadership to be announced, though one of the chief architects of the agency, Dan Breznitz, co-director of the Innovation Policy Lab at the University of Toronto, offered ideal qualifications for the role on an episode of The BetaKit Podcast.
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The government first announced it would undertake a review of SR&ED in Budget 2022, specifically to measure its effectiveness, explore opportunities to modernize and simplify the program, and encourage companies to generate and protect intellectual property resulting from their own R&D.
Tech sector advocates such as the Council of Canadian Innovators (CCI) initially praised the decision to improve the program, but since the release of the Fall Economic Statement in 2022, have bemoaned the continued delays of the review.
“Today’s statement from Minister Freeland and Champagne’s departments is, frankly, disappointing news for the leaders of the Canadian innovation economy. More than anything else, Canada needs productivity growth to drive higher wages and broad-based prosperity,” CCI president Benjamin Bergen told BetaKit in a statement. “It’s hard to see how today’s announcement achieves that goal.”
“When it was first announced, we applauded the government for creating the Canadian Innovation Corporation, and we were excited for the refreshing approach to innovation policy it represented. Nearly two years later we now hear that it will be delayed by a further two years, and in reality, it is unlikely to ever be fully established in the way we had hoped.”
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