Federal Budget 2017 The Innovation and Skills Plan

Exactly twelve months to the day since tabling his first federal budget, Finance Minister Bill Morneau unveiled Budget 2017. Despite the speculation leading up to the budget, there were very few tax measures and instead, the Budget focused primarily on the Innovation and Skills Plan. Thematically, the budget lays out the Government’s planned investments in ensuring that Canada’s is home to the most skilled workforce in the world and is globally competitive in the innovation economy.

The central story line in Budget 2017 is “making Canada a world-leading centre for innovation, to help create more good, well-paying jobs, and help strengthen and grow the middle class.” As an innovation budget, there were many aspects that signalled the growing support for the technology industry in Canada and alignment with the recommendations set out in the BC Tech Association’s 4 Point Plan. We have attempted to capture the most salient aspects of Budget 2017 as it pertains to the BC Tech community.

Download the Budget 2017 PDF

Talent Measures

Global Skills Strategy. As announced in the 2016 Fall Economic Statement, the Government will launch a Global Skills Strategy by mid-2017 to facilitate faster access to top global talent with a committed two-week standard for processing visas and work permits for global talent. Budget 2017 proposes to expand the Global Skills Strategy with an additional $7.8 million over two years to implement a new Global Talent Stream under the Temporary Foreign Worker Program.

Investing in Skills Development. To address the issues of retraining and emerging skill gaps as we evolve to the innovation economy, the Government plans to invest $225 million over four years to establish a new organization that will work with willing provinces and territories, the private sector, educational institutions, and not-for-profit organizations to support skills development and measurement in Canada.

Work-integrated Learning. In Budget 2016, the Government provided $73 million over four years for job-creating partnerships between employers and post-secondary institutions with a goal of creating up to 8,700 new work-integrated learning placements over the next four years. In Budget 2017, the Government furthered their investment in Mitacs with $221 million over five years to provide 10,000 work-integrated learning placements for Canadian post-secondary students and graduates each year—up from the current level of around 3,750 placements.

Improvements to the Temporary Foreign Worker Program. For the creative and digital entertainment sectors, the Government reiterated their plans to eliminate the four-year cumulative duration rule which had previously created much angst and uncertainty for interactive digital entertainment companies and their employees.

Funding Support for Innovation

Creation of a New Strategic Innovation Fund. Budget 2017 proposes to create a new $1.26 billion five-year Strategic Innovation Fund to consolidate and simplify existing business innovation programming including the Strategic Aerospace and Defence Initiative, Technology Demonstration Program, Automotive Innovation Fund, and Automotive Supplier Innovation Program. The Strategic Innovation Fund will receive an additional $200 million over three years in addition to the funding available through the existing programs to support aerospace and automotive firms, while also expanding its support to emerging sectors, such as cleantech and agri-food.

Accelerating Growth through Super-clusters. Budget 2017 included plans to increase the originally allocated $800 million to now $950 million over five years, to support a small number of business-led innovation “superclusters” that have the greatest potential to accelerate economic growth. The much-anticipated competition will launch in 2017 and focus on superclusters that enhance Canada’s global competitiveness.

Creation of Impact Canada Fund. Budget 2017 proposes to create a new initiative, the Impact Canada Fund, to introduce a new mission- or “challenge”-based approach for the federal government and help focus and accelerate efforts toward solving Canada’s big challenges. The Impact Canada Fund will focus its initial efforts on two problem-solving streams:

  • A cleantech stream, supported by up to $75 million over two years to address challenges such as helping Canada’s rural and remote communities reduce their reliance on diesel as a power source.
  • A smart cities stream, supported by $300 million over 11 years, that will support the Smart Cities Challenge. Modelled on a similar competition in the U.S., the Smart Cities Challenge would invite cities across Canada to develop Smart Cities Plans to improve city planning and implement clean, digitally connected technology including greener buildings, smart roads, and energy systems, and advanced digital connections for homes and businesses.

One-stop shop for Innovation Programs. Budget 2017 proposes to establish Innovation Canada, a new platform led by Innovation, Science and Economic Development Canada that will coordinate and simplify the support available to Canada’s innovators across all federal organizations with the goal of ultimately serving as a one-stop-shop. The Government will also review existing programs with the help of external experts.

Access to Capital

Expanding Access to Late Stage Venture Capital. Venture capital is essential to the success of many Canadian start-ups—and will play a critical role in supporting the growth of Canadian companies. Budget 2017 proposes to invest $400 million towards a new Venture Capital Catalyst Initiative that will be administered by BDC to increase late-stage venture capital. Based on the experience of the Venture Capital Action Plan (VCAP), the investment will be leveraged with private sector funding to approach $1.5 billion in total capital.

Financing for Cleantech. Budget 2017 proposes measures that will provide nearly $1.4 billion in new financing for cleantech companies to grow and expand. The Budget provides additional capital to BDC for equity investments and working capital facilities. The most significant announcement was creation of a Project Finance facility to high-capital-intensive, early commercial-scale clean technology deployment. This Project Finance facility will be created to attract private sector capital for projects and EDC will be provided with approximately $450 million in additional project finance.

Recapitalization of SDTC. Since its launch in 2001, Sustainable Development Technology Canada (SDTC) has invested $928 million in 320 cleantech projects. Budget 2017 proposes to invest $400 million over five years to recapitalize the SD Tech Fund™.

Market Access and Procurement

Canadian version of SBIR. After much discussion with the tech community, Budget 2017 proposes to provide up to $50 million to launch a new procurement program, Innovative Solutions Canada, modelled on the very successful U.S. Small Business Innovation Research (SBIR) program. Under Innovative Solutions Canada, a portion of funding from federal departments and agencies will be allocated towards early-stage research and development, late-stage prototypes and other goods and services from Canadian innovators and entrepreneurs.

Investments in creating a clean economy. The Government proposes to invest the following national programs over the next 11 years:

  • $100 million to support next generation smart grid, storage, and clean electricity technology demonstration projects.
  • $200 million to support the deployment of emerging renewable energy technologies nearing commercialization.
  • $220 million to reduce the reliance of rural and remote communities south of the 60th parallel on diesel fuel, and support the use of more sustainable, renewable power solutions.
  • $120 million to deploy infrastructure for electric vehicle charging and natural gas and hydrogen refuelling stations, as well as to support technology demonstration projects.
  • $182 million to develop and implement new building codes to retrofit existing buildings and build new net-zero energy consumption buildings across Canada.
  • $2 billion for a Disaster Mitigation and Adaptation Fund to support national, provincial, and municipal infrastructure required to deal with the effects of a changing climate.

Establishing an Invest in Canada Hub. As announced in the 2016 Fall Economic Statement, the Government will create an Invest in Canada Hub—a new federal body dedicated to attracting leading global firms to Canada. More trade commissioners will also be placed in strategic markets abroad to support this investment attraction. The Government has committed $218 million over five years to these efforts.

The innovation measures set out in Budget 2017 reflect the collaborative efforts that have been undertaken by technology associations and supporting organizations across Canada to advance the opportunity for the tech sector.

To share insights about public policy issues impacting your company and sector, or to participate in the BC Tech Association’s policy and advocacy efforts, email us at policy@wearebctech.com.

A full copy of Budget 2017 can be found here.