SR&ED Report: “Canada’s R&D Deficit — And How To Fix It” (2005)

Reference Article (>5 Years Old)
Please note that the information herein may be outdated, links could be inactive, and policies discussed may have evolved. For the most current data, consult our latest publications. If you would like us to refresh this article as it is of interest to you, please contact us.

SR&ED Knowledge and News

At SREDucation, we’re taking the time to document all of the changes that have occurred to the SR&ED program over the years. In our “From the Archives” series, you’ll be able to see how the program has evolved since its inception in 1986.

In 2005, the C.D. Howe Institute published a report entitled “Canada’s R&D Deficit — And How To Fix It”. The paper discerned that Research & Development (R&D) in Canada was in decline. It addressed the roadblocks to greater success in this area and proposed different measures to help the Canadian meet the lofty goals it had set for R&D spending.

A Broken Innovation Environment for R&D

The author states that Canada had been falling behind in world R&D rankings in recent years; he references the idea that this is due to a broken “innovation environment.”

“Significant improvements to the innovation environment, particularly those which generate new private sector jobs and enterprises, are only likely to emerge if governments provide stronger incentives for business investment,” he said.

The author says that a major factor will be improving government R&D incentives, such as the Scientific Research & Experimental Development (SR&ED) tax credit.

“Existing federal and provincial resources aimed at supporting business sector R&D should be more focused than those provided by the existing R&D tax credit system,” he said.

SR&ED Conclusions

An important issue raised by the author is that government spending on R&D tax credits such as SR&ED hasn’t necessarily produced the desired results.

“One cause for concern about Canada’s current public R&D programs is the long-standing observation that, despite having one of the OECD’s most generous tax subsidy programs for R&D, Canada continues to rank low on the organization’s global scale,” he said.

However, it’s noted that R&D incentive programs can and do work, saying that countries employing this type of program are “some of the most successful states in terms of achieving high levels of business-funded R&D and success at commercializing that research.” Instead, the author suggests moving program administration powers to the provincial level rather than federal.

“The countries using such plans all tend to be small both in population and in geography, enabling efficient internalization of the relevant external effects and the minimization of pressure from special-interest groups,” he said. “That points to the provinces as being potentially the best administrators of the grant programs.

This article is based on a SR&ED report at the time: Canada’s R&D Deficit And How To Fix It.1


Do you have questions about SR&ED history or current trends?

Connect With Us! 

Share your thoughts by commenting below or joining the conversation on our LinkedIn page, Facebook page, or via Twitter. 

Show 1 footnote

  1. Harris, R. (May 1, 2005.) Canada’s R&D Deficit — And How To Fix It. (Accessed: September 3, 2017.) Retrieved from:

Elizabeth Lance

Elizabeth is known as the "SR&ED Maven" in the industry. With a love of documentation and the nuances of language, she is often engaged by multi-million dollar companies to help improve documentation and workflow processes. Her favourite sentence (which she hears regularly) is "Accepted as Filed". Find out more about her on LinkedIn.

Leave a Reply