Evaluating Canadian Government S&T Policies and Programs
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1 Evaluating Canadian Government S&T Policies and Programs J. Adam Holbrook, P.Eng., Associate Director, Jang Jin Gyu, Visiting Scholar,, Simon Fraser University Vancouver, BC Adam Holbrook,
2 Canadian S&T policy Because science policy is often associated with education policy, constitutionally it is not a priority central government (federal) responsibility Technology policy is defined, by the central government, through industrial policy While there is no formal S&T policy, there is a strong tradition of technology-based policy initiatives through specific technology-based projects -particularly IT projects. Specific examples : Trans-Canada Telephone System, Telesat, CANARIE
3 Canadian S&T policies: Science versus Technology Canadian government technology-based projects have usually been successful, as opposed to more general science policy initiatives Results-oriented S&T policy has been successful when it has obeyed Porter s rule of satisfying a domestic requirement before attempting to secure a global market niche Initiatives also have had very specific objectives and often have included tightly defined collaboration with other nations (e.g. Canadarm)
4 Canada s Unwritten S&T Policy direct support of basic and early stage applied research in the university sector creation of specialized, decentralized, stakeholder operated granting agencies for university-based research (e.g. Networks of Centres of Excellence) shift from direct support for industrial S&T and innovation to indirect methods (e.g. Scientific Research and Experimental Development tax credit program) reduction of direct R&D spending in government labs active recruitment of S&T HQP through repatriation of Canadian emigrants and encouragement of immigrants participation in international consortia for big science projects such as NASA programs, the Canada-France-Hawaii telescope, etc.
5 Government S&T Policy Options Direct Interventions Indirect Interventions Directed R&D General R&D support Directed Technology activities General Technology support Government laboratories Technology-based projects Testing, standards, data-collection Technology outreach Research grants to universities (& firms) R&D tax credits Regulatory activities S&T education
6 Examples of government interventions in Canadian S&T Direct support for R&D projects Direct support for technology projects Technology Infrastructure Technology subsidies Successes (?) CRC GaAs program Winter wheat Telesat Canadarm CANARIE (Info. Hwy) IRAP Regional jet R&D tax credits Failures (?) NRC Astrophysics Avro fighter CRC Telidon MIL Semiconductors High-speed rail
7 Evaluation techniques for government programs a summary Basic science Technology development Major tech. based projects Multinational S&T projects Regulatory and standards Government Internal expert panels Internal expert panels Expert panels Expert panels Expert panels Industry Contract review Contract review Expert panels & users Expert panels & users User Associations Universities Peer review Peer review Peer review Peer review & govt. panels Govt. expert panels
8 Canadian system for project evaluation Economic and Functional Evaluation by Treasury Board Secretariat Parliament (and Parliamentary committees) Policy Decisions by Cabinet Technical Evaluation by Line Department Project Implementation Annual departmental report; performance indicators Financial and management review by Auditor- General
9 An example of direct support: the Communications Research Centre The Communications Research Centre (CRC) was established during WW II for defence radio and radar research It then moved into civilian space communications and telecommunications technologies to support the development of trans-canada telecomms systems It pioneered in the development of GaAs devices and fibre optics;these technologies were transferred to NorTel and its spinoffcompanies These technologies have led to the development of a significant ICT manufacturing cluster near Ottawa
10 How decision-makers view government labs The Council of S&T Advisors, external advisors to federal government labs, described the role of the government lab as not necessarily to collaborate with the private sector in new product or process innovation, but to act as a conduit of innovative behaviour in the innovation system. According to the Conference Board of Canada, business leaders have stated A future government lab must be a centre of excellence where world-class applied research in the area of its mandate is being carried out
11 What business values in government labs Access to skills and knowledge Strong applied research capability Ability to manage large projects Willingness to collaborate Clear roles and responsibilities International science linkages
12 Five critical characteristics of a government lab Generator of excellent research Performer of multi-disciplinary research Catalyst of collaborative linkages Flexible/empowered Committed to long-term research
13 An example of a direct project -Telesat Based on both cultural and technological policy requirement A need to provide both Canadian programming in both English and French across the country A decision to build subsystems rather than the complete system The development of a unique data processing and satellite control system An explicit requirement to development Canadian private sector capabilities and spin off companies
14 Connectivity -a national infrastructure project Started with a mundane bureaucratic problem -how to dispose of computers which were technologically obsolete but still perfectly functional. Initially the Computers for Schools program, which gathered major political support Expanded to the Community Access Program, VolNetand the Student Connections program for SMEs. Enabled by the CANARIE Internet backbone project. A rare occurrence: a technology policy solution that preceded the social problem
15 The new transcontinental railway Broadband access is the millenium version of the transcontinental railway. the electronic equivalent of a super-highway Small towns competed for the fibre optic routing to ensure their access to the high-capacity system The fibre optic system is based on technologies developed by government laboratories Social (sovereignty and cultural) issues were elements of this project
16 An indirect S&T Policy: the R&D tax credit Accepting that knowledge can be created but not destroyed, there have been many attempts to measure the spill-over, the public good value to an NSI of R&D funded by a rentseeking institution Estimates vary widely, but there is evidence to suggest that the total value to an NSI lies between 1.3 1nd 1.7 times the original investment. Differences between tax credits and industrial research grants (such as the NRC Industrial Research Assistance Program)
17 The Canadian R&D tax credit: a two-tier system The Canadian R&D tax credit system allows firms to deduct a percentage of the costs of R&D from corporate income taxes payable. For large firms, regardless of ownership, this tax credit (20%)flows directly through to the bottom line since it is a direct reduction of an expense that would otherwise reduce profits. For small Canadian-controlled private corporations, most of which are startups, operating at a loss, or making no taxable profits, this tax credit is replaced by a direct cash payment, which is released after the fiscal year in which the R&D takes place, and after auditing by tax authorities.
18 Eligible Activities Eligible R&D is defined by regulation. The work must achieve a technological advance, through a process of systematic investigation overcoming a technological uncertainty and conducted by qualified people. Basic or applied research or eligible experimental development includes engineering, design, operations research, mathematical analysis, computer programming (software development), data collection,testing or psychological research. All work must pass the test of new and unique
19 Comparison of R&D tax credit regimes -the B index The Conference Board of Canada has developed a method to compare the relative tax treatment of R&D in different national jurisdictions. The value of the B-index depends on the tax treatment of R&D and is based on the before-tax income required to break even on a $1 R&D outlay B = after-tax cost/(1- corporate income tax rate) B often varies within a country due to differential rates for small and large businesses, and with differences in provincial or state tax rates The Conference Board calculations take into account differential tax rates for operating costs, capital equipment and buildings
20 Comparative B Index Source: Conference Board of Canada Large Co. Small Co. 0 Canada US Australia France Korea MEXICO UK Japan Italy Germany
21 The case of GM grains Independent Farmers Public Opinon (media) AgCan Canola Plant Breeding Removes Eucric acid Monsanto GM Selection For Round-up resistance Farmers and Grain Market Boards Courts Activist Organizations European Union sanctions
22 Pre-Project Evaluation Policy Decisions by National Authorities Technical Evaluation by Line Department Economic Evaluation by Financial Authorities Evaluation by Public Governance Committee Public Review by Stakeholders Including Secondary Stakeholders
23 Proposed order for pre-project evaluations Technical evaluations Scientific developments / needs technical feasibility of developing successful products Economic evaluations Potential market(s) for this project Potential for Canadian industry Infrastructure issues/costs
24 Proposed order of pre-project evaluations (continued) Public governance Regulatory issues Integration/convergence Social evaluation Primary stakeholders Secondary stakeholders
25 The social assessment of technology Does technology mold society, or does society mold technology? Innovation is driven as much by social as economic issues Technology Assessment Started as impact assessment; now design, social shaping and management of technology Constructive technology assessment Active contribution to the process of project design as opposed to independent analysis
26 The case of GM grains (again) Independent Farmers Public Opinon (media) AgCan Wheat Breeding Monsanto GM Selection For Round-up resistance Farmers and Grain Market Boards Courts Activist Organizations European Union sanctions
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