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1 Association of Canadian Community Colleges Submission to the Government of Canada s Sciencee and Technology Consultation February 7, 2014 The Association of Canadian Community Colleges (ACCC) appreciates the opportunity to present its views on how the Government of Canada can further enhance Canada s competitive advantage in science, technology and innovation. ACCC is the national and international voice of Canada s 132 publicly funded colleges and institutess working with industry and social sectors to train 1.5 million learners of all ages and backgrounds at campuses serving over 3,000 urban, rural and remote communities. Aligned with the needs of employers, and operating on the leading edge of skills identification, economic trends, and market shifts, these institutions support business growth and sustainability by supplying graduates with advanced skills and providing applied research and development support. Over the last decade, colleges and institutes have become increasingly important players in Canada s innovationn eco-system. The report State of f the Nation 2012 Canada s Science, Technology and Innovation System: Aspiring to Global Leadership recognizes the value of the demand-pull model of innovation which is an effectivee mechanismm for transferring knowledge that has practical applications and potential commercial value. 1 Att colleges and institutes, this is the foundational approach for conducting research responding to the needs identified by partner SMEs and community organizations. College research is driven by demand-pull, by the users of technology or knowledge, who need to improve, refine or adapt products, technology or processes to meet client needs. Five years of results from the ACCC Survey of College and Institute Applied Research Activities ( to ) confirm increased commitments to building colleges and institutes capacity to support the industry sector and in particular small and medium-sized businesses (SMEs). In , 5,444 companies partnered with colleges and institutes for applied research, up by 19% from , and private sector investment increased by 21% to $72 million. ACCC commends the Government of Canada for recognizing the need for a revised science, technology and innovation (ST& I) strategy to boost business innovation, develop innovative and entrepreneurial people and ensure excellence in post-secondary research and development. An updated ST&I strategy must strengthen policies and programs and support the demand-pull model of innovation. This is key to stimulating business investment in R&D and innovation, increasing the talent pool and fostering a culture of innovation. 1 Science, Technology and Innovation Council (2013). State of the Nation 2012 Canada s Science, Technology and Innovation System: Aspiring to Global Leadership. pg

2 The Association s responses to the specific questions posed by the Government of Canada are: A. Business Innovation Based on the advice provided by the Expert Panel on Federal Support for Research and Development, what more can be done to improve business investment in R&D and innovation? Current federal research policy and funding must be re-focused to encourage business innovation as the principal source of productivity. Ninety-eight percent of companies in Canada are small, with less than 100 employees, and employ close to 80% of the total private labour force. A shift in federal research funding to increase innovation support for SMEs through partnerships with colleges and institutes would have a significant impact on Canada s economy. The OECD Innovation Strategy (2010) emphasizes the need for policies that increase support for SME and non-technological innovations. A 2011 OECD paper on workforce skills and innovation indicates incremental innovation is the principal source of productivity growth in the economy stating while not diminishing the importance of breakthrough innovation or of local discovery, the majority of innovation is incremental, involving improvements in products, processes, methods and so on SMEs need a different type of innovation support focused more on increasing their capacity to absorb knowledge from outside the firm. 3 OECD also confirms that innovation is not just about science and technology, but includes the implementation of new organizational methods, business practices, external relations and marketing all of which can have significant impacts on the competitiveness and productivity of companies. The Government of Canada has introduced innovative policy responses that are in line with OECD recommendations, namely the Tri-Council College and Community Innovation Program, the Canada Foundation for Innovation College-Industry Innovation fund, National Research Council programs through the Industrial Research Assistance Program, and targeted support through regional economic development agencies. Specific recommendations to improve business investment in R&D and innovation include: Sustainable funding to continue building upon the growing capacity in colleges and institutes to support SME innovation through: o Tri-Council College and Community Innovation (CCI) Program; o Canada Foundation for Innovation College-Industry Innovation fund; o National Research Council, Industrial Research Assistance Program, including the renewal of the Digital Technology Adoption Pilot Program, and o Regional economic development agencies to establish targeted research and commercialization programs to address local needs, building on the success of the Applied Research and Commercialization Initiative in Southern Ontario. 2 Toner, P. (2011) Workforce Skills and Innovation: An Overview of Major Themes in the Literature. OECD Directorate for Science, Technology and Industry. Pg OECD Studies on SMEs and Entrepreneurship SMEs, Entrepreneurship and Innovation, OECD Innovation Strategy OECD pg

3 Simplify and streamline the Scientific Research and Experimental Development (SR&ED) tax incentive program. Company research expenditures in conjunction with a university project are automatically eligible for the SR&ED tax credit while expenditures incurred in a college project have to be qualified on a case by case basis, the same as any project carried out by a company on its own. Unlike universities, colleges and institutes are not eligible to be considered approved entities for SR&ED third party payment purposes. Colleges and institutes who are working under the Tri-Council CCI Program should be automatically seen as third party entities. This would ensure clarity across the system, be more equitable and allow colleges and institutes to promote the SR&ED program with their industry partners. What actions could be taken, by government or others, to enhance the mobilization of knowledge and technology from government laboratories and universities, colleges and polytechnics to the private sector? The 46 College Centres for Technology Transfer in Quebec have proven to be very effective in supporting SME innovation and local economic growth. The introduction of a similar model through the Tri-Council CCI Program, the Technology Access Centres, enables colleges and institutes across Canada to provide local companies with accessible college/institute applied research services and expertise, as well as access to state of the art equipment and technology. Current federal funding through the Tri-Council CCI Program is supporting 18 Technology Access Centres. Additional technology access centres could provide more SMEs with a wider range of research and innovation services from conception to commercialization, and enable SME employees to acquire innovation skills through the evolution of applied research projects. This is a positive measure to capitalize on the existing expertise and infrastructure at colleges and institutes to strengthen R&D and commercialization support, in particular for SMEs. The College-University Idea to Innovation (CU-I2I) Grants within the CCI Program are fostering collaborations to enable colleges and universities to work with local industrial partners and transfer expertise and technology to benefit local communities. This enhances and builds upon existing partnerships of colleges, institutes and universities, simplifies their ability to work together, and broadens their reach to industry and within communities. Specific recommendations to enhance the mobilization of knowledge and technology to the private sector include: Fund 30 additional college/institute-based Technology Access Centres under the Tri- Council CCI program. To build on the CU-I2I program, provide other opportunities for colleges, institutes and universities to collaborate through existing federal programs. Many current programs are not open to colleges and institutes due to limitations in eligibility criteria. A more simplified, flexible and equitable approach to eligibility criteria would encourage greater collaboration across post-secondary systems. 3

4 B. Developing Innovative and Entrepreneurial People How can Canada continue to develop, attract and retain the world s top research talent at our businesses, research institutions, colleges and polytechnics, and universities? To meet labour demand and promote business innovation, Canada must ensure that companies can access high quality research expertise and graduates to address real-world problems. In , 29,356 college and institute students were engaged in applied research, up by 22% over last year. The OECD emphasizes the link between innovation and the development of entrepreneurial skills. Colleges and institutes respond to the applied research needs of industry, produce graduates with industry-driven applied research skills, and support student entrepreneurship through the integration of entrepreneurial skills into curriculum and through the services of oncampus entrepreneurship centres and incubators. In , 5,021 college/institute students were supported to pursue an entrepreneurial idea, nearly five times more than last year. The Government of Canada post-secondary recruitment program has failed to recognize college and institute graduates as potential public servants in general. This impacts upon the ability of the government to hire talented college/institute graduates with science, technology and innovation skills that have real-world applications and experience. Many government departments would benefit from the contributions these graduates could make to federal research initiatives. Specific recommendations to develop top research talent in colleges and institutes include: A dedicated envelope for applied research awards for college and institute students in diploma, post-graduate and degree programs. Budget 2013 announced that college/institute degree programs would be eligible for the NSERC Industrial Undergraduate Student Research Awards. Students in diploma and post-diploma programs are not eligible. A more college-inclusive program is needed to provide more students with industry-relevant research experience to support business innovation. Create equal opportunities for college/institute students to participate in Mitacs-funded research and innovation student placements with industry in Canada and internationally. Colleges and institutes are currently not eligible under Mitacs programs. The expansion of Industrial Research Chairs for Colleges under the Tri-Council College and Community Innovation Program. IRC grants support college/institute applied research leaders and their development of business-focused applied research programs to ensure increased delivery of innovative applied research solutions to local companies, enhanced teaching and curricula and increased opportunities for faculty and students to gain industrial problem-solving experience. Review the Government of Canada post-secondary recruitment program to ensure that college and institute graduates are eligible and have the same opportunities as university graduates. The ManPower Group 2013 Talent Shortage Survey results indicate that 34% of employers in Canada have difficulty filling jobs, with the most difficult jobs to fill being skilled trades, 4

5 engineers, management, sales representatives, technicians, accounting, finance staff and ICT staff. These skills shortages indicate that science, technology, engineering and math (STEM) skills are in high demand. A wide range of strategies are needed to engage young people in STEM learning to promote college education options and career choices, and develop a science culture. C. Excellence in Public and Post-Secondary Research and Development How might Canada build upon its success as a world leader in discovery-driven research? Canadian researchers are recognized worldwide, but would benefit from greater opportunities to collaborate with partners abroad and to have international researchers contribute to projects in Canada. This applies to both discovery-driven and applied research. Colleges and institutes are engaged internationally through applied research projects. In , colleges and institutes were involved in 48 international research partnerships in 21 countries. ACCC is disappointed that college and institute students are not currently eligible for international research internships through Mitacs funded by the Government of Canada. To build a culture of innovation and foster global citizenship among young Canadians, college and institute students must benefit from the same targeted opportunities that benefit university students. Current federal department funding for research with other countries such as Japan, India and Brazil benefit only university researchers. The science and technology committees created for these international research partnerships systematically exclude college and institute representatives. The specific recommendations for Canada to build upon its success as a world leader in research include: Invest in programs that allow college/institute, university and private sector researchers to initiate, establish and participate in international research and innovation partnerships. Open international research opportunities for college and institute students, either through eligibility in existing programs such as Mitacs or a new program targeted for college/institute students. Adopt a more inclusive approach that brings together all actors in Canada s ST&I system, for federal international research initiatives, thus including college and institute representation on federal S&T committees with partner countries. Is the Government of Canada s suite of programs appropriately designed to best support research excellence? The Government of Canada offers an excellent suite of highly valuable programs that support research excellence. However, with the shift in R&D priorities toward innovation that focuses on private sector needs, new policy approaches are required. Current federal research policy and programs must be re-focused in part to stimulate business investment in R&D and innovation, and to foster collaboration across sectors, disciplines, as well as across provinces and territories. 5

6 Specific recommendations to best support research excellence in public and post-secondary R&D include: A more balanced approach to support the demand-pull model of innovation is needed. Current federal investments are beginning to make a difference in building college and institute applied research capacity in support of SMEs, however these allocations represent just 2.4% of the $2.98 billion of annual federal funding for research conducted by the higher education sector. Inclusion of the Tri-Council CCI Program under the Indirect Cost Program (ICP) to strengthen applied research support services capacity. Although the CCI Program allows up to 20% of the grant to be used for overhead and administration, this comes at the expense of reducing the grant funds available for the research project. Eligibility under ICP would allow all CCI grant funding to meet the innovation needs of industry partners, in particular SMEs. Currently, 96 colleges and institutes have NSERC eligibility and 59 have SSHRC eligibility. It would be fitting to include the CCI program under ICP to ensure equity and uniformity across the research system for all research activities (be it basic or applied) and reinforce the Government of Canada s commitment to both types of applied research activities. Federal government bodies responsible for overseeing Canada s science, technology and innovation policies and programs must include college and institute representatives, to provide a more balanced vision for the ST&I strategy. This would include the Science, Technology and Innovation Council, Tri-Council Board of Directors, granting councils strategic committees and peer review committees. ACCC and its Presidents Committee on Science, Technology and Innovation would welcome the opportunity to work with the Government of Canada in an advisory role. Value and recognize researchers not only by the number of peer reviewed publications but also in relation to links to industry sectors, projects completed, articles in technical and sector-specific publications, conference presentations and mentoring of students and interns. The ST&I strategy must foster greater synergies among researchers across provinces and territories and industry sectors to broaden and improve the mobilization of knowledge and make federal research investments more cost-effective through the sharing of expertise and emerging technologies. Conclusion A dynamic and visionary ST&I strategy is needed to focus on a more balanced and equitable approach to federal government R&D investments. This will more effectively address the practical side of business innovation and continuous improvement, which is at the very root of productivity. Canada is fortunate to have a strong network of colleges and institutes from coast to coast to coast with a core mandate to support economic and social development. With the reach of colleges and institutes across the country and with their strong ties to SMEs and communities, 6

7 they are the primary vehicle for providing the resources to engage students, businesses, industry and communities in fostering a culture of innovation and entrepreneurship. ACCC applauds the Government of Canada s leadership in supporting college/institute applied research and these investments must be leveraged further to maximize the potential of college and institute industry partnerships. Stimulating innovation in Canada s SME sector will do more than any other measure to improve productivity and create jobs. 7

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