Canadian Budget 2018 Impacts on Business Innovation Funding

The Canadian Federal Budget 2018 was released last week to much interest from business leaders and industry analysts. This year, innovation was again a top priority of the federal government, highlighted by the increase in funding support for several research and development funds. Unlike the previous two Liberal budgets, however, there will be considerable changes to the way these programs are administered.

There are many Canadian government funding highlights in Budget 2018, including a top-up of funds provided to the NRC Industrial Research Assistance Program (IRAP).

Despite an overall increase in the amount of funding provided for business innovation, the total number of funding programs available is being reduced from 92 down to 35. Another 22 programs administered through Canada’s Regional Economic Development Agencies are currently under review and could also be simplified over the coming year. These changes are meant to streamline and “modernize” the way government funding programs are provided to businesses and research institutions.

Budget 2018 Focuses on Workforce Equality and Business Innovation

Budget 2018 was tabled last week under the title “Equality + Growth – A Strong Middle Class”. At surface level, it’s clear to see the two main components of this year’s budget. In 2018, the Liberal Government will use its funds to strengthen the opportunities of workers while also providing businesses with the resources needed to thrive.

Although budget allotments do not always provide a clear picture of what will happen to specific government funding programs over the year, they provide some guidance as to what the government has chosen to invest in, and what business might have to do to qualify for them.

This year’s focus on workforce equality and business innovation has, and will continue to shape the government funding landscape over 2018. Some key points to consider in this trend include:

Canadian Government Funding Insights: Workforce Equality

As identified by The Globe and Mail’s Michelle Zilio, “In the federal Liberals’ first budget, in 2016, the word ‘gender’ appeared twice. This time around, ‘gender’ was used 358 times.” Since being elected into government, the Liberals’ gender equality platform has been a leading force in many of their policies. Now, gender equality is in the federal budget with many government funding programs and incentives aligned to support women in the workplace.

Canada Summer Jobs

“Equality” is also being applied to youth entering the workforce. Budget 2018 has extended an additional $448.5 million top-up to the Canada Summer Jobs (CSJ) program. Canada Summer Jobs is the federal government’s main source of grants for businesses and non-profits to offset the costs of students as they work over summer months. In 2019-2020, the program will double the amount of work placements it can fund, helping more youth find meaningful work experiences.

Women in The Workforce

Budget 2018 also focuses on increasing access to capital for women-led companies. Of the new funding announced last week, some of the most important investments include women-focused lending programs through the Business Development Bank of Canada (BDC), Export Development Canada (EDC), and Farm Credit Canada (FCC). Specialized grants and other incentives are also available for the hiring and training of women in technology, construction, and other under-represented industries.

Apprenticeship Funding Programs

The budget also includes over $65.9 million in grants and financial incentives to support apprenticeship and pre-apprenticeship programs.

Canadian Government Funding Insights: Business Innovation

Canadian businesses’ ability to innovate and remain competitive in the global economy is a central focus in Budget 2018. While many commitments were made towards research and development in Budget 2017, this year’s plan clearly demonstrates a progression in the government’s commitment to stimulate an innovation economy.

Some of the major innovation funds relating to the deployment of business grants and loans include the consolidation of innovation funding programs, and increased funding to fundamental research organizations, cybersecurity, and the Canada Media Fund (CMF).

Consolidation of Innovation Funding Programs

The Federal government’s decision to consolidate 92 active funding programs down to 22 will streamline the administration of these funds, making it more cost-effective for the government to administer. As these programs are modernized, it will also make it easier for businesses to understand the full range of options available. Most innovation-related programs will be consolidated into “suites” that will act as integrated support options. Among these suites, four “flagship platforms” will focus on:

  1. Industrial Research Assistance Program (IRAP): The government proposes to invest $700 million over five years, starting in 2018–19, and $150 million per year ongoing to support IRAP. The IRAP funding platform will now support small-to-medium-sized investments with up to $10 million in Canadian government funding per project. Previously, IRAP funding contributions were limited to a maximum $1 million per project.
  2. Strategic Innovation Fund (SIF): The Strategic Innovation Fund was established as part of the Federal Government’s 2017 budget. Now in its second year, the program will be updated to better complement IRAP and support large projects which lead to significant investment and job growth. SIF now provides a minimum $10 million in government funding per project and is seeking highly-innovate projects among Canada’s highest growth businesses.
  3. Canadian Trade Commissioner Service: The Federal Government will consolidate five programs aimed at supporting export market development into the Canadian Trade Commissioner Service. Current programs to be simplified include CanExport, Going Global Innovation, the Canadian International Innovation Program, and Canadian Technology Accelerators.
  4. Regional Development Agencies: The government also proposes to provide an additional $911 million to six regional development agencies to support its Innovation and Skills Plan. Specific government funding programs provided through these agencies (such as FedDev Ontario) have not yet been consolidated, but it’s expected that they will.

Fundamental Research

Budget 2018 provides $3.2 billion in funding over the next five years to support its granting councils (Natural Sciences an Engineering Research Council, Social Sciences and Humanities Research Council, and Canadian Institutes of Health Research) and Canada Research Chairs.

Cybersecurity

$155.2 million will be invested over the next five years to establish the Canadian Centre for Cyber Security. Another $116 million will be invested to support the RCMP in creating a National Cybercrime Co-ordination Unit.

Canada Media Fund

The Canada Media Fund (CMF) will receive additional funds of $172 million over the next five years to support the development of Canadian-produced media projects. CMF provides funding to support all stages of media projects, from concept development, to production, and even accessing international markets.

Increased Canadian Government Funding Support in 2018

Budget 2018 reaffirmed the Government of Canada’s commitment to invest in business innovation and workforce equality. While much of this new funding must still be allocated to specific programs, it’s worth noting which strategic priorities will be incentivized over the coming year(s).

To learn more about how government funding programs are structured on the federal and provincial levels, download the free Canadian Small Business Funding Guide.

Canadian Small Business Grants and Loans

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Written by

Jeff Shepherd holds an Honours Bachelor of Business Administration at the University of Guelph. He is passionate about Canadian business, economics, and politics. As Marketing Coordinator for Mentor Works, Jeff educates business leaders about proactive funding strategies.

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