This week Dominic Barton, Chair and Spokesperson for the Advisory Council of Economic Growth presented a report detailing important, engineering-relevant recommendations to the Federal Government ahead of the Fall Economic Update (November 1) and the next Federal Budget (Spring 2017).
One such recommendation of the Barton Report is that the government overhaul its programs for subsidizing companies that hire highly skilled workers. Of tremendous concern to the engineering community is the possibly that Barton’s Council may target the $3 billion plus Scientific Research and Experimental Development (SR&ED) tax incentive program, which allows tech firms to claim tax credits for hiring engineers.
Many tech firms currently use and rely on the SR&ED to acquire and retain Science, Technology, Engineering, and Mathematics (STEM) talent. In Ontario, this is particularly true for our fledgling start-ups, innovative industries, and tech companies who depend on this program in order to afford leading engineering talent to commercialize their offerings and scale their businesses.
The Council suggests that the SR&ED program and others like it are too unwieldy and offer ‘indirect’ aid too broadly to any applicant, whereas more ‘direct’ subsidies would target firms with a better chance of succeeding.
While OSPE acknowledges that the SR&ED program and others like it could be enhanced, the fact that the government may be advised to dramatically scale back or wholly cancel these forms of critical funding to our most promising and innovative entrepreneurs is worrying.
Throughout his career, Dominic Barton has written and spoken frequently about the need for organizations and CEOs to abandon their fixation on short-term benefits and focus on the long-term strategy ahead. OSPE maintains the position that programs like SR&ED are forward thinking, because they encourage the uptake of talent from our pipeline of world-class researchers, scientists, and engineers—skilled workers who are globally recognized as the wealth creators and entrepreneurs of the 21st century.
“It is critical that the Council and ultimately the federal government take into consideration a whole-systems view of innovation and recognize that engineers empower cutting edge/technological firms to grow and thereby create good, well paying jobs,” said Sandro Perruzza, CEO of OSPE. “Engineers fuel job creation in sectors that are sustainable, growing, and critical to Canada’s long-term economic strategy and the new economy we compete in globally. To think that the federal government would jeopardize these successful sectors at such an uncertain moment for Canada’s economic direction is highly concerning.”
Although it remains unclear which programs will be or overhauled or cut at this time, the Council is beginning to create a list of the more than 200 such programs to start the process.
“The Council’s recommendations and ongoing dialogue with government may influence decision-makers to scale back or cancel the SR&ED tax incentive program without fully understanding the effects it will have,” said Perruzza, citing that everything from innovative firms, to engineering talent to post-secondary education in Canada and beyond could be affected. “Unless these programs are replaced with equal funding, or enhanced delivery methods for incentivizing the hiring and retention of engineers, the Barton Report could have harmful impacts on Ontario’s engineers and the engineering job market.”
Before any major changes or overhauls are introduced, it is essential that the government consult with organizations like OSPE, which as the advocacy organization for engineers working in all sectors of Ontario’s economy, has a pulse on how incentive programs like the ones in question ultimately impact Ontario’s businesses and job market.