Canada tightens controls on R&D

Successor to technology partnership programme requires faster repayments and will be more transparent

Canada's new government has announced its anxiously awaited aerospace research and development support scheme, which has tighter requirements and faster repayments than the programme it replaces.

The Strategic Aerospace and Defence Initiative (SADI) will invest almost C$900 million ($780 million) in industry R&D over the next five years, with an annual budget of up to C$225 million. This compares with the C$300 million a year provided under the previous Technology Partnership Canada programme, only two-thirds of which was for aerospace and defence

According to Peter Boag, president of the Aerospace Industries Association of Canada, the Ottawa government has said that big-ticket items, such as the already tentatively approved C$350 million in federal support for development of the Bombardier CSeries airliner, if launched, will not come out of the SADI budget.

While in opposition, the Conservative government was critical of TPC, which shut down at the end of December after its mandate expired. As a result the new initiative includes "strong transparency and accountability requirements, and faster repayment features", says Industry Canada.

Industry will be required to invest C$3-4 for every C$1 the government provides, and SADI's repayment structure will be "formula-based and standardised". Repayments will be based on gross business revenues of the recipient company and will start regardless of the success of the technology developed. Average repayment periods will be limited to 15 years.

Boag says Canadian industry is encouraged by the government initiative, which fills the gap left by the demise of TPC. "It continues the concept of TPC - a risk- and reward-sharing model that provides critical investment leverage." Key changes from TPC include a focus on strategic R&D "to position Canadian companies in the global supply chain and on major military programmes like the [Lockheed Martin F-35] Joint Strike Fighter", he says.

Project assessments and repayment updates will be made public under the new programme. Boag says "the devil is in the detail" and industry is now discussing with government how the scheme will work. One issue is identifying the appropriate business revenues on which to base repayments. "TPC's focus was on revenues derived from the technology. This looks more at company's aerospace revenues."

Source: Flight International