Chapter 3.1 - Supporting the Manufacturing Sector and Investing in Advanced Research

Highlights

Encouraging Investment in Canada’s Manufacturing Sector

• Maintaining a low tax burden on businesses to encourage investment in Canada.
• Providing manufacturers a 10-year tax incentive to boost productivity-enhancing investment.
• Providing up to $100 million over five years, starting in 2015–16, to support product development and technology demonstration by Canadian automotive parts suppliers through the new Automotive Supplier Innovation Program.
• Developing a national aerospace supplier development initiative.
• Providing $2.5 million per year, starting in 2016–17, to increase the analytical capacity needed to support the Defence Procurement Strategy.

Supporting World-Class Advanced Research

• Providing an additional $1.33 billion over six years, starting in 2017–18, to the Canada Foundation for Innovation to support advanced research infrastructure at universities, colleges and research hospitals.
• Creating a more efficient and effective national digital research infrastructure system by providing $105 million over five years, starting in 2015–16, to CANARIE, Canada’s world-class high-speed research and education network.
• Dedicating an additional $46 million per year to the granting councils, starting in 2016–17, focused in areas that will fuel economic growth and respond to important challenges and opportunities.
• Providing up to $243.5 million to secure Canada’s participation in the Thirty Meter Telescope and related domestic work on leading-edge components.
• Providing up to $72.3 million in 2015–16, on a cash basis, to Atomic Energy of Canada Limited to maintain safe and reliable operations at the Chalk River Laboratories.
• Providing an additional $30 million over four years, starting in 2016–17, to support cutting-edge research and technology development in Canada’s satellite communications sector.
• Extending Canada’s participation in the International Space Station mission to 2024.
• Dedicating $119.2 million over two years, starting in 2015–16, to the National Research Council’s industry-partnered research and development activities, helping Canadian businesses increase their competitiveness and develop new, cutting-edge products.
• Helping to develop the next generation of research and development leaders by providing $56.4 million over four years, starting in 2016–17, to Mitacs in support of graduate-level industrial research and development internships.

Introduction

Since 2006, the Government has worked to implement its long-term economic plan for greater prosperity. This plan is anchored on the principle that governments have a responsibility to create the right conditions and opportunities for people and businesses to be successful.

Recognizing the importance of manufacturers and processors to the Canadian economy, the Government has taken action to strengthen the sector’s competitiveness, including by creating a low-tax environment and investing in advanced research and development (see Annex 3 for further details).

The Government’s focus on improving business tax competitiveness has produced clear results: total business tax costs in Canada are the lowest in the Group of Seven (G-7) and 46 per cent lower than those in the United States. Low taxes encourage capital investment, which in turn spurs job creation.

The Government recognizes that the translation of new ground-breaking ideas into the marketplace enhances opportunities for Canadians and Canadian businesses. Since 2006, the Government has invested more than $13 billion in new funding in all facets of the innovation ecosystem including advanced research, talent development, research infrastructure and business innovation.

Economic Action Plan 2015 builds on this foundation by investing in initiatives that will:

• Keep taxes on business investment low to encourage investment in Canada.
• Provide manufacturers a 10-year tax incentive to invest in productivity-enhancing equipment.
• Support innovation in the automotive and aerospace industries.
• Invest in world-class advanced research at universities and colleges and in companies.

Together, these actions will help create the right conditions for businesses to succeed, creating the foundations for jobs, growth and long-term prosperity.

Encouraging Investment in Canada’s Manufacturing Sector

Improving business tax competitiveness has been a central element of the Government’s approach to fostering an environment in which businesses can thrive and compete in the global economy. Taxes are one of the main factors that drive investment decisions.

Actions taken by the Government, including those proposed in Economic Action Plan 2015, will reduce taxes for job-creating businesses by $14.7 billion in 2015–16. To date, the Government has:

• Reduced the small business corporate income tax rate to 11 per cent and increased the amount of annual income eligible for this lower rate to $500,000. Economic Action Plan 2015 proposes to further support small business growth by reducing the small business tax rate to 9 per cent by 2019.
• Increased the Lifetime Capital Gains Exemption from $500,000 to $800,000 and indexed this new limit to inflation, bringing it to $813,600 in 2015. Economic Action Plan 2015 proposes to increase the limit to $1 million for owners of farm and fishing businesses.
• Introduced and subsequently extended an accelerated capital cost allowance for investment in machinery and equipment used in manufacturing or processing. Economic Action Plan 2015 proposes to continue to encourage productivity-enhancing investments by providing an extended tax incentive until the end of 2025.
• Reduced the federal general corporate income tax rate to 15 per cent as of 2012 from 22.12 per cent in 2007.
• Eliminated the federal capital tax and helped to secure the elimination of provincial general capital taxes through a financial incentive.

As evidence of the substantial improvement in business tax competitiveness that has been made since 2006, Canada now has the lowest overall tax rate on new business investment in the G-7 (Chart 3.1.1).

Canada leads the G-7 with the lowest overall tax rate on new business investment

Chart 3.1.1

Marginal Effective Tax Rate¹ on New Business Investment, 2015

The competitiveness of Canada’s business tax system is supported by third-party analysis. The KPMG publication, Competitive Alternatives 2014, rigorously analyzed the impact of federal, state, provincial and municipal taxes on business operations. KPMG concluded that total business tax costs in Canada are the lowest in the G-7 and 46 per cent lower than those in the United States.

Recognizing that the ability to attract investment from abroad is vital to the growth of the Canadian economy, particularly in the energy sector where projects can involve immense capital requirements and carry significant risk, the Government has also updated Canada’s foreign investment framework to ensure that Canada continues to benefit from foreign investment that fuels economic growth, jobs and prosperity.

The Government’s low-tax plan and other actions have contributed to a favourable environment for investment by businesses in all sectors of the economy. Canada’s strong appeal as a place to do business has been recognized by third-party analysis. Bloomberg has ranked Canada as the second most attractive place in the world to do business. Canada’s strong economic performance has been supported by the strongest growth in real business investment in the G-7 over the recovery. When Canadian companies invest in state-of-the-art equipment and structures, they increase their productivity and competitiveness. This helps the economy grow, spurs job creation and raises Canadians’ standard of living.

Tax Support for Manufacturing Investment

In light of ongoing fragility in the global economy and the importance of capital investment in spurring productivity and growth, Economic Action Plan 2015 proposes continued tax support for Canada’s manufacturers.

In 2007, the Government introduced an accelerated capital cost allowance (CCA) to encourage investment in machinery and equipment used in manufacturing and processing. This measure, which provides a 50 per cent straight-line depreciation rate, will expire at the end of 2015.

From 2007 to 2014, more than 28,000 businesses in the manufacturing sector, which employs Canadians in all regions of the country, took advantage of the incentive.

In order to support continued investment in machinery and equipment and help bolster productivity, Economic Action Plan 2015 proposes to provide manufacturers with an accelerated CCA at a rate of 50 per cent on a declining-balance basis for eligible assets acquired after 2015 and before 2026.

Providing the new incentive for this extended period of time will help to provide businesses with planning certainty for larger projects where the investment may not be completed until several years after the investment decision is made and for longer-term investments with multiple phases.

By allowing a substantially faster write-off of eligible investments than the usual 30-per-cent declining-balance rate, this measure will defer taxes and allow businesses to recover the cost of capital assets more quickly (see Chart  3.1.2). After four taxation years, more than 90 per cent of the cost of the asset will have been deducted. In the absence of the accelerated CCA, lower annual deductions mean that it would have required seven taxation years to deduct 90 per cent of the cost of the asset.

Accelerated capital cost allowance allows costs to be deducted more quickly

Chart 3.1.2

Illustrative Deductions for a $10,000 Investment in an Eligible Asset in the First Three Taxation Years After the Asset Is Put in Use

The incentive will provide concrete, long-term support, enabling Canadian manufacturers to plan the investments that are needed to compete in a global economy. New investment will help position them to meet both present and future economic challenges, while creating jobs and growth. The deferral of tax associated with this new accelerated CCA is expected to reduce federal taxes for manufacturers by $1.1 billion over the period from 2016–17 to 2019–20.

Unilateral Tariff Relief to Support Canadian Manufacturers

Since 2009, Canada has unilaterally eliminated over 1,800 tariffs, providing more than $450 million in annual tariff relief for Canadian manufacturers. These measures include:

• Eliminating all remaining tariffs on machinery and equipment and manufacturing inputs, making Canada a tariff-free zone for industrial manufacturers as of January 1, 2015.
• Waiving the 25 per cent tariffs on certain imported ships to support a modern and efficient shipping industry that supports Canadian businesses.
• Removing the tariffs on mobile offshore drilling units to support offshore oil and gas exploration.

These actions translate into a direct reduction of production costs, enhance the competitiveness of Canadian manufacturers in both domestic and foreign markets and help them invest and create jobs here at home. In November 2013, the Organisation for Economic Co-operation and Development highlighted Canada’s global leadership through these measures, noting their importance in strengthening the country’s position in global value chains, and its attractiveness as a place to invest and do business. The Government will continue to work with Canadians to identify further opportunities for tariff liberalization.

Recognizing the importance of the manufacturing sector to the Canadian economy, the Government has introduced a number of broad-based and targeted measures that are helping manufacturers create jobs, growth and long-term prosperity across Canada.

Fostering Automotive Supplier Innovation

Automotive suppliers are an integral part of Canada’s automotive footprint and success. In order to stay competitive, these companies, many of which are small and medium-sized enterprises, must make new product development the cornerstone of their business strategies. Vehicle manufacturers are demanding a supply of innovative products to meet new fuel efficiency, emission and safety standards and address the growing consumer interest in connected and automated vehicle technologies. Suppliers that can demonstrate an ability to meet these demands will not only succeed in winning business from domestic manufacturers, but will be well positioned to market their solutions globally.

If Canada aspires to remain a large and relevant automotive manufacturing jurisdiction, doing so on the basis of low cost labour is no longer an option. Instead, it must be a leader in productivity, deploying leading edge technology in both products and processes.

Automakers demand creative solutions from their suppliers and they must be confident that new components and systems will be ready for inclusion on global vehicle platforms. This confidence can only be built by physical demonstrations of new technologies under secure, real-world conditions. Only when new ideas are demonstrated and their viability is confirmed, will the automakers commit to new supplier selections for the next vehicle generation.

Economic Action Plan 2015 proposes to provide $100 million over five years, starting in 2015–16, for the creation of the Automotive Supplier Innovation Program, to help Canadian automotive suppliers gain a competitive edge through new innovative products and processes. Of this amount, $50 million over three years, starting in 2015–16, will be reallocated from the Automotive Innovation Fund and new resources of $50 million over two years will be provided starting in 2018–19. The program will help research and development projects to become commercially viable by supporting product development and technology demonstration on a cost-shared basis with participating firms.

The Automotive Supplier Innovation Program will complement existing initiatives supporting the automotive sector, such as the Automotive Innovation Fund, by strengthening Canada’s parts supply base and creating a favourable environment for automotive research and development, while providing firms with new opportunities to enter global supply chains.

Developing the Canadian Aerospace Supply Chain

Canada’s aerospace sector is a global technology leader and a major source of high-quality jobs, directly employing 73,000 people across the country, and is among the most research-intensive industries in Canada. Following the 2012 Aerospace Review, chaired by the Honourable David Emerson, the Government announced in Economic Action Plan 2013 and subsequent months several measures to support the aerospace sector, including:

• Making available $110 million over four years, beginning in 2014–15, and $55 million annually thereafter, for the creation of a Technology Demonstration Program, to be partly funded from the Strategic Aerospace and Defence Initiative. The program, which was launched in September 2013, has held two rounds of competition to date and projects are currently under review.
• Providing stable funding of close to $1 billion over five years, starting in 2013–14, for the Strategic Aerospace and Defence Initiative and reviewing the administration and operation of the program to improve its effectiveness.
• Launching the Consortium for Aerospace Research and Innovation in Canada to facilitate collaboration among aerospace stakeholders (industry, academia and research centres) to foster the development of advanced technologies, support the training of highly qualified personnel and support innovation outreach.

Building on this foundation, Economic Action Plan 2015 announces that the Government will work with the Aerospace Industries Association of Canada and other industry and provincial stakeholders to develop a national aerospace supplier development initiative modelled on the successful MACH program pioneered by Aéro Montréal. Economic Action Plan 2015 proposes to reallocate $6 million in 2016–17 from the Strategic Aerospace and Defence Initiative toward this new initiative. The new program is intended to improve the performance and competitiveness of firms in this highly innovative sector, many of which are small and medium-sized enterprises. It will also benefit large aerospace firms, which require a healthy supply chain to support their global growth.

Maximizing Economic Benefits From Defence Procurement

In 2013, an expert panel led by Mr. Tom Jenkins produced the report Canada First: Leveraging Military Procurement Through Key Industrial Capabilities on maximizing the economic benefits of defence procurement, including by targeting key industrial capabilities within Canada that can meet the operational requirements of the Canadian Armed Forces and foster long-term economic growth. The report also noted the need to strengthen Canada’s analytical capacity in order to maximize the economic benefits from defence procurement.

In 2014, the Government announced the implementation of the Defence Procurement Strategy to ensure that defence procurement delivers the right equipment to the Canadian Armed Forces and generates economic benefits and jobs for Canadians. Consistent with the Jenkins report, Economic Action Plan 2015 proposes to provide $2.5 million per year starting in 2016–17, to Industry Canada to increase the analytical capacity needed to support the Defence Procurement Strategy, by providing expert data analysis and research on the key industrial capabilities within Canada’s defence industrial base and opportunities to generate high-quality jobs, innovation, and exports from procurement.

Supporting World-Class Advanced Research

The translation of new ground-breaking ideas into the production of high-value goods and services contributes to enhanced opportunities for Canadians and Canadian businesses, including job creation, economic diversification and increased trade. These activities fuel a growing economy and improve productivity, increasing the standard of living of Canadians.

As the economic opportunities stemming from the application of new knowledge increase, it is crucial for Canada to possess a strong science and technology base, robust research infrastructure and a highly qualified workforce. Since 2006, the Government has invested more than $13 billion in new funding in all facets of the innovation ecosystem (illustrated below) including advanced research, research infrastructure, talent development and business innovation. The Government has also nurtured the strategic interactions between research institutions, researchers and enterprises required to seize the array of opportunities resulting from this ever-expanding knowledge base.

Federal Investments in Science, Technology and Innovation Since 2006

The Government intends to continue to support the pillars of a knowledge-based economy, guided by its renewed science, technology and innovation strategy, Seizing Canada’s Moment: Moving Forward in Science, Technology and Innovation 2014. The Strategy, released in December 2014, highlights the Government’s commitment to support research excellence in areas of strength and relevance to Canada. It also highlights the Government’s commitment to lever the collective efforts of the post-secondary education sector, industry and government institutions through research partnerships focused on developing talent and advancing innovation in Canada.

Canada has the necessary ingredients for building an innovation economy: world-class research strengths, a highly-educated and skilled workforce and one of the best business environments on the planet. Canada must seize this moment and leverage our many advantages by promoting global research leadership, strengthening our skills and abilities as well as pushing for world-leading business innovation.

Economic Action Plan 2015 proposes to provide more than $1.5 billion over five years to advance the renewed science, technology and innovation strategy’s objectives, including long-term sustained advanced research support through the Canada Foundation for Innovation and the federal granting councils. Economic Action Plan 2015 also continues to improve federal support for business innovation, including by increasing the availability of direct support for research and development in the automotive, forest and health sectors (see Chapters 3.1, 3.5 and 4.2). In addition, Economic Action Plan 2015 proposes to streamline existing innovation programming to make it more relevant and accessible to businesses, consistent with the recommendations of the 2011 Review of Federal Support to Research and Development, chaired by Tom Jenkins of OpenText Corporation.

Supporting Research, Infrastructure and Talent

Canada’s capacity for knowledge creation is among the most impressive in the world. Backed by a strong commitment from the Government, Canada continues to rank first in the G-7 for research and development expenditures in the higher education sector as a share of the country’s gross domestic product. Canada also performs strongly in terms of research excellence and in developing, attracting and retaining highly qualified personnel.

Canada ranks first among G-7 countries in higher education research and development spending as a share of the economy

Chart 3.1.3

Research and Development Investment in the Higher Education Sector, 2012

With almost 100 universities and some 130  polytechnics and colleges, Canada has a world-class post-secondary education sector that embraces its role in the innovation system, collaborating with the private sector to apply new knowledge and developing the highly skilled workforce required throughout the economy. While the provinces and territories are primarily responsible for the post-secondary education system, the federal government plays an important role through transfers to the provinces and territories as well as through considerable direct support for students and post-secondary research.

The higher education sector is the second largest performer of research in Canada after the private sector. Canadian universities undertake nearly $12 billion in research activities annually, just over half of which are externally funded. The Government is the largest external funder of university research, providing $3.2 billion in 2013 for the direct costs of research, associated institutional costs, infrastructure and salary support, primarily through the granting councils and the Canada Foundation for Innovation. The Government also provides research support through leading not-for-profit organizations such as Genome Canada, which plays an important role in funding specialized research that creates benefits for Canadians and opportunities for businesses.

Economic Action Plan 2014 provided the largest annual increase in research support through the granting councils in over a decade when fully phased in, providing stable and predictable funding for leading-edge research. This includes creating the new Canada First Research Excellence Fund with resources of $1.5 billion over the next decade to help Canadian post-secondary institutions excel globally in research areas that create long-term economic advantages for Canada.

Economic Action Plan 2015 demonstrates the Government’s continued commitment to support world-class post-secondary research and help sustain Canada’s strong capacity for developing knowledge and talent, with new support for the Canada Foundation for Innovation, digital research infrastructure, the granting councils, and premier Canadian research strengths in physics, astrophysics and astronomy through TRIUMF and the international Thirty Meter Telescope project.

Investing in Leading-Edge Research Infrastructure

The Canada Foundation for Innovation is a not-for-profit corporation that supports the modernization of research infrastructure at universities, colleges, research hospitals and other not-for-profit research institutions across Canada. Through the Foundation, the Government invests with other partners in state-of-the-art facilities and equipment that play a crucial role in attracting and retaining the world’s top minds, training the next generation of researchers and supporting private sector innovation.

To date, the Foundation has committed more than $6.2 billion in support for over 8,880 projects at 144 research institutions in 69 municipalities across Canada. These contributions, along with those from institutions and their partners, have resulted in a total investment of almost $14 billion in Canadian research infrastructure since the Foundation’s creation.

Economic Action Plan 2015 proposes to provide an additional $1.33 billion to the Foundation over six years, starting in 2017–18. This investment will strengthen Canada’s capacity for highly competitive research and technology development by supporting advanced research equipment and facilities, including digital research infrastructure; industry-relevant research infrastructure at colleges through the College-Industry Innovation Fund; and the ongoing operations and maintenance needs of national research facilities. This additional funding underscores the Government’s continued commitment to investing in research excellence in Canada.

Strengthening Digital Research Infrastructure

Digital research infrastructure refers to the elements required to perform data- and computationally intensive research and data management. It includes high-performance computing, storage, high-speed networks and other resources. Digital research infrastructure is increasingly recognized as being essential to advanced research in both the public and private sectors.

As set out in the renewed Science, Technology and Innovation Strategy, the Government is committed to enhancing Canada’s research capacity through investments in transformative infrastructure projects that enable world-class research and enrich Canada’s research landscape. This includes the development of a Digital Research Infrastructure Strategy that includes new policies on research data management and storage and a coordinated long-term approach to the funding and provision of networking, high-performance computing, and software tools. A new Digital Research Infrastructure Strategy will promote coordination among the federal agencies involved in the delivery of digital research infrastructure and will help to optimize the following new Economic Action Plan 2015 investments in digital research infrastructure.

Supporting Digital Infrastructure Through the Canada Foundation for Innovation

In addition to the funding being proposed for CANARIE to support its national research and education network (see below), a total of $100 million from the Canada Foundation for Innovation ($25 million from the Foundation’s unallocated interest income as set aside in Economic Action Plan 2013 and $75 million out of the $1.33 billion in new resources provided to the Foundation in Economic Action Plan 2015) will be targeted to digital research infrastructure. This funding will build on the $50 million announced by the Foundation for its ongoing Cyberinfrastructure Initiative.

Supporting Canada’s High-Speed Research Network

As Canada’s national ultra-high-speed backbone network, CANARIE enables data-intensive, leading-edge research and big science across Canada and around the world. Researchers in academic institutions, major science facilities and federal labs use CANARIE to maximize the impact of their findings by disseminating knowledge and collaborating effectively in national and international research projects. CANARIE also benefits entrepreneurs and small businesses by providing access to cloud resources that can help to accelerate product development and sharpen their competitive edge in the global marketplace.

Economic Action Plan 2015 proposes to provide $105 million over five years, starting in 2015–16, for CANARIE to continue to support the operations of Canada’s ultra-high-speed research network. Funding will support the evolution of the network to meet growing demand and ensure it will continue to support world-class research collaborations across the country and internationally.

Supporting Leading-Edge Research Through the Granting Councils

The Government recognizes the importance of fostering a strong advanced research environment in Canada. The creation of knowledge, application of scientific discoveries and development of highly qualified people bring vast social and economic benefits for Canadians.

To strengthen the research capacity of post-secondary institutions and support their growing interactions with the private sector, Economic Action Plan 2015 proposes to provide an additional $46 million in 2016–17 and ongoing to the granting councils focused in areas that will fuel economic growth and respond to important challenges and opportunities, as follows:

• $15 million per year to the Natural Sciences and Engineering Research Council, of which $10 million per year is directed to collaborations between companies and researchers from universities and colleges under the new consolidated suite of similar business innovation programs (as described below in the section entitled “Strengthening the Delivery of Business Innovation Programs”). This new funding will target research areas such as natural resources and energy, advanced manufacturing, and environment and agriculture. The balance of $5 million per year will be directed to industry-driven research initiatives at Canada’s polytechnics and colleges through the College and Community Innovation Program (see below). The Natural Sciences and Engineering Research Council will also continue to support collaborative research in the automotive, manufacturing, forest and fishing industries, further to the direction and resources provided in Budget 2008.
• $7 million per year to the Social Sciences and Humanities Research Council for its Partnership Grants, which support collaborations between academic researchers, businesses and other partners to advance research and knowledge mobilization in the social sciences and humanities.
• $15 million per year to the Canadian Institutes of Health Research, of which $13 million is for the expansion of the Strategy for Patient-Oriented Research, to advance health care innovation in partnership with provincial governments, research institutions, and the private and not-for-profit sectors, with a view to increasing the effectiveness and efficiency of the health care system. The balance of $2 million per year will support additional research to better understand and address the health challenges posed by anti-microbial resistant infections.
• $9 million per year to the Research Support Fund to support the indirect costs borne by post-secondary institutions in undertaking federally sponsored research.

Colleges and polytechnics play an important role in helping small and medium-sized enterprises bring new technologies, products and processes to the marketplace. As indicated above, Economic Action Plan 2015 includes an additional $5 million annually for the College and Community Innovation Program starting in 2016–17, increasing its budget to $55 million per year. This program supports collaboration between colleges and industry on research and development projects that focus on company needs, helping firms to become more innovative and productive.

Together these new investments reflect the Government’s commitment to support research excellence at Canadian post-secondary institutions and will enable the granting councils to support the implementation of the Government’s new science, technology and innovation strategy, Seizing Canada’s Moment: Moving Forward in Science, Technology and Innovation 2014.

Confirming Canada’s Participation in the World-Leading Thirty Meter Telescope

Canada’s world-leading strength in astronomy and astrophysics was noted by the Council of Canadian Academies in its report, The State of Science and Technology in Canada, 2012. Canadian research publications in this field are highly impactful and Canadian expertise in astronomy is sought after internationally. Canadian university researchers and federal scientists have made significant contributions to the instrumentation of leading international observatories since Canada first participated in the construction of an international observatory, the Canada-France-Hawaii Telescope, which saw first light in 1979.

As announced by the Prime Minister on April 6, 2015, Economic Action Plan 2015 proposes to build on this scientific leadership by providing $243.5 million over 10 years toward securing a viewing share for Canadian researchers at the Thirty Meter Telescope, in partnership with the United States, Japan, China and India. A combined $100 million is proposed to be reallocated from the existing resources of the National Research Council, the Canada Foundation for Innovation, Western Economic Diversification Canada, the Federal Economic Development Agency for Southern Ontario, Canada Economic Development for Quebec Regions and Public Works and Government Services Canada.

The telescope will be constructed at the summit of Hawaii’s Mauna Kea volcano and operational in 2023–24. It belongs to the next generation class of telescopes called Very Large Optical Telescopes, which are expected to lead the next wave of astronomic discoveries. When completed, the telescope will be the world’s most advanced ground-based observatory, with optical and infrared capabilities, as well as one of the world’s largest and most powerful telescopes¾nearly three times the size of the largest telescopes that currently exist. The telescope will enable astronomers to study a broad range of astrophysical phenomena, including the processes that lead to star and planet formation, as well as subjects such as supermassive black holes. It will also enable star-by-star observation of galaxies located several million light years away.

The majority of the support allocated in Economic Action Plan 2015 will be spent in Canada on the design, construction and assembly of key telescope components, including a precision-steel enclosure and cutting-edge adaptive optics technologies. As part of the project, dozens of Canadian businesses are expected to develop advanced capabilities and products transferable to future applications in the health, defence and telecommunications sectors. The final terms of Canada’s commitment are subject to approval by the Thirty Meter Telescope’s Board of Governors this spring.

Investing in Canada’s Premier Strengths in Physics

TRIUMF, located in Vancouver, is Canada’s premier physics laboratory and home to the world’s largest cyclotron particle accelerator. The facility brings together leading scientists, postdoctoral fellows and graduate students from across Canada through a unique 18-member university alliance, and connects these talented individuals with leading counterparts from around the world to explore the fundamental structure and origins of matter. Through TRIUMF’s ambitious international partnerships, Canadian researchers have been at the centre of some of the most important international research projects, most recently making critical contributions to the discovery of the Higgs Boson particle at the Large Hadron Collider at the European Organization for Nuclear Research.

TRIUMF has also forged highly successful partnerships with industry leaders in order to commercialize its scientific breakthroughs. It is recognized globally for its innovative work in the production of the world’s most popular medical isotopes with Nordion, used for treating thyroid, breast and other cancers. TRIUMF’s contribution to the safe and reliable production of medical isotopes in hospitals has earned one of its research teams the Natural Science and Engineering Research Council’s 2015 Brockhouse Canada Prize for Interdisciplinary Research in Science and Engineering.

Economic Action Plan 2015 proposes to provide $45 million over five years, beginning in 2015–16, to enable the continuation of world-leading research taking place at TRIUMF. The Government expects TRIUMF’s research partners and end-users, including health care organizations and businesses, to also increase their contributions towards the continued success of the facility, in order to fully capture the scientific and economic opportunities arising from public investments to date.

Supporting Atomic Energy of Canada Limited

Atomic Energy of Canada Limited (AECL) is a federal Crown corporation that specializes in a range of nuclear products and services. Building on the successful sale of AECL’s commercial reactor division to CANDU Energy Inc. in 2011, the Government is moving forward with the restructuring of the nuclear laboratories at AECL to ensure that its operations are efficient and continue to meet the needs of Canadians.

Economic Action Plan 2015 proposes to provide up to $72.3 million in 2015–16, on a cash basis, to AECL to maintain safe and reliable operations at the Chalk River Laboratories, and to meet licensing requirements and other regulatory obligations.

Renewing Funding for the Council of Canadian Academies

The Council of Canadian Academies provides the Government with independent, multidisciplinary and evidence-based assessments on a wide breadth of science-related issues of importance to Canadians, drawing from the expertise of Canadian and international leaders in their fields. As governments in Canada and around the world continue to address matters of increased complexity, the robust science advice provided by the Council remains valuable to policy development. The 2013 evaluation of the Council’s work highlighted its considerable influence in shaping important federal policies, and it was credited by the Organisation for Economic Co-operation and Development for providing assessments valuable to other international jurisdictions.

Economic Action Plan 2015 proposes to provide $15 million over five years, starting in 2015–16, to enable the Council of Canadian Academies to continue to contribute to the development of evidence-based policies and regulations through expert-driven science assessments.

Supporting Business Innovation

To maintain Canada’s prosperity, Canadian businesses must capitalize on our country’s sound economic framework, world-class science and entrepreneurial spirit and make innovation a cornerstone of their business strategies.

In Economic Action Plan 2015, the Government continues to foster the conditions that enable businesses to increase their innovative intensity. This includes increasing the responsiveness of federal support to the needs of businesses, including small and medium-sized enterprises, by continuing to scale up successful approaches and helping to mitigate the risk inherent in developing new technologies.

Economic Action Plan 2015 also includes commitments to key international science and technology initiatives that create significant business opportunities for innovative Canadian firms.

Fostering the Growth of Canada’s Space Sector

Canada has a proud history in space. In 1962 it became the third nation in space, and it was the first country in the world to have its own satellite—beaming television to the far corners of Canada’s North. Following the 2012 Aerospace Review, chaired by the Honourable David Emerson, the Government announced several measures to support the space sector, including:

• Launching Canada’s Space Policy Framework, which provides a comprehensive approach to Canada’s future in space to ensure our continued commitment to exploration, commercialization and development.
• Creating a new Space Advisory Board to provide advice to the Government on Canada’s role and future in space.

Building on this foundation, Economic Action Plan 2015 announces three measures to foster the growth and competitiveness of the space sector.

Supporting Commercialization of Space Technologies

Canada’s global leadership in satellite communications began with the launch of Anik A-1 in 1972, followed by Anik A-2 in 1973, when our country became the first to employ satellites for domestic communications. Canada also holds the unique position of being the only non-European member of the European Space Agency (ESA). This membership provides Canadian businesses with the opportunity to access the European space market and to participate in projects through the ESA’s Advanced Research in Telecommunications System (ARTES) program. The ARTES program offers Canadian companies in the satellite communications sector the ability to simulate their technologies in space, an essential part of commercialization.

Economic Action Plan 2015 proposes to provide $30 million over four years, starting in 2016–17, to the Canadian Space Agency to support cutting-edge research and technology development through the ARTES program at the European Space Agency. These additional resources will enhance the competitiveness of Canada’s satellite communications sector throughout its supply chain, opening new markets for Canadian innovations and supporting Canada’s role in space.

Extending Canada’s Participation in the International Space Station

Space exploration has driven significant advances in scientific research for Canada, and has enabled the development of leading-edge space technologies to the benefit of all Canadians. Canada is a trusted and sought-after partner in international space projects, and our contributions to the International Space Station are critical to its ongoing operations and maintenance. The knowledge and effort dedicated to building the world-famous Canadarm2 and Dextre have generated significant spin-offs, including robots for breast cancer detection, pediatric surgery and neurosurgery.

To secure Canada’s place among the top space-faring nations and ensure a presence in space for Canadian astronauts, Economic Action Plan 2015 announces that Canada will continue its participation in the International Space Station mission to 2024. The Canadian Space Agency will engage with the National Aeronautics and Space Administration to define the terms of this continued participation.

Fostering Business-Driven Research and Development at the National Research Council

In 2012, the Government announced that the National Research Council would be refocused to better support collaborative research and development projects that are driven by industry needs. Since that time, the Council has embarked on a transformative new strategic direction that is concentrated on demand-driven, industry-relevant applied research that will help Canadian businesses increase their competitiveness and develop the innovative products of tomorrow.

Economic Action Plan 2015 proposes to provide $119.2 million over two years, starting in 2015–16, to enable the Council to continue to fulfill its new role as Canada’s research and technology organization by supporting business innovation initiatives across Canada.

Internships for the Next Generation of Research and Development Leaders

Mitacs supports innovation in Canada by facilitating research collaborations between Canadian universities and companies and helping graduate students and postdoctoral fellows to become future innovation leaders. Mitacs’ programming includes the Accelerate research internship program, which allows graduate students and postdoctoral fellows from over 60 Canadian universities to apply their specialized expertise to business-related challenges. Since 2006, the Government’s support for Mitacs’ Accelerate program has translated into over 10,000 internships being awarded across Canada.

Economic Action Plan 2015 proposes to provide $56.4 million over four years, starting in 2016–17, to Mitacs in order to expand its Accelerate program, increasing the number of internships being delivered by 1,500 per year. Going forward, Mitacs’ Accelerate program will become the primary delivery agent for federally supported graduate-level industrial research and development internships, as the Natural Sciences and Engineering Research Council’s Industrial Postgraduate Scholarships Program will be wound down following the fulfillment of current commitments. Mitacs will work with stakeholders to broaden the parameters of its Accelerate program to accommodate internships of longer duration, similar to those currently supported by the Industrial Postgraduate Scholarships Program.

Strengthening the Delivery of Business Innovation Programs

Economic Action Plan 2015 announces the Government’s intent to streamline a number of similar programs administered by the Natural Sciences and Engineering Research Council to simplify business access to federal support for research and development.

For example, the Natural Sciences and Engineering Research Council will consolidate its programs supporting research partnerships undertaken by college researchers and businesses with its programs offering similar support for universities. While maintaining existing support for research activities at colleges and universities, this integration of similar programming will offer companies a single window through which they can undertake research collaborations with a university, a college, or both depending on project needs. Details on the additional consolidation measures will be announced by the Government in the coming months.

This consolidation of business innovation offerings delivers further on the Government’s commitment to streamline programs with similar objectives and scale up the most successful approaches, consistent with the recommendations of the 2011 Review of Federal Support to Research and Development.

Economic Action Plan 2015 further proposes to support new collaborations between companies and researchers from both universities and colleges by providing $15 million per year on an ongoing basis to the Natural Sciences and Engineering Research Council (as described in the section entitled “Supporting Leading-Edge Research Through the Granting Councils”).

Strengthening Linkages Between Complementary Programs

In addition to the program enhancements noted above, the Natural Sciences and Engineering Research Council will develop an online business portal to provide companies with a single entry point to its partnership programs. The new portal will be connected to the National Research Council’s Concierge Service for innovative companies. In addition, the Natural Sciences and Engineering Research Council, the National Research Council and Mitacs will collaborate to streamline and integrate application and review processes, enabling interested applicants and companies to more easily access a comprehensive range of available innovation support.

Fostering International Science and Technology Partnerships

The International Science and Technology Partnerships Program funds projects and partnerships under Canada’s science, technology and innovation agreements with select countries (Brazil, China, India and Israel). Prime Minister Harper and South Korean President Park announced their intention to negotiate a Canada-South Korea science, technology and innovation agreement during the Prime Minister’s September 2014 visit to South Korea. Once an agreement is in place, funding will be used to finance collaborative industrial research and development projects with commercial potential. This will enhance opportunities for Canadian firms, research institutes and universities to gain access to networks, technology and talent in South Korea, a country well known for its capacity to commercialize research and development. It will also complement the Canada-South Korea Free Trade Agreement and foster a deeper and broader bilateral relationship.

Enhancing Business Use of Intellectual Property

Intellectual property is a valuable strategic asset for businesses competing in local and global markets. The Government has a strong record of taking action to ensure Canada’s intellectual property framework provides robust, balanced protection for consumers and rights holders. The 2012 Copyright Modernization Act updated Canada’s copyright laws for the digital age; the Combatting Counterfeit Products Act implemented new measures to address the serious problem of counterfeit goods; and Economic Action Plan 2014 harmonized Canada’s intellectual property administration framework with international norms, helping innovative Canadian businesses access international markets, lowering costs and reducing the regulatory burden and red tape.

Building on these measures, Economic Action Plan 2015 proposes to further modernize Canada’s intellectual property framework to keep pace with internationally recognized best practices. The Government will propose amendments to the Patent Act, Trade-marks Act and Industrial Design Act to provide intellectual property agents with a statutory privilege for confidential communications with clients, enhancing Canada as a place in which to invent and market inventions. This measure will bring Canada’s framework in line with other common law countries such as Australia, New Zealand and the United Kingdom. Amendments will also be proposed to modernize administrative practices and increase clarity and legal certainty for businesses. For example, proposed amendments would provide the Canadian Intellectual Property Office with the ability to extend key deadlines in cases of force majeure events such as floods or ice storms.