Canada needs a more innovation-friendly business environment

With the fragile recovery in everyone’s mind today, Canadian businesses are being encouraged to break the bounds of recession by focusing on innovation and expansion. But before Canadian entrepreneurs can use their brilliance and daring to seize world markets, they need a more innovation-friendly business environment. Or so says Jayson Myers, president and CEO of Canadian Manufacturers & Exporters.

“Innovation is the most significant determinant of business competitiveness, productivity growth and economic prosperity in a world of global markets and rapid technological change,” says Myers. “By providing new and improved solutions in health care, personal security and the quality of our environment, innovation also improves the quality of life of every Canadian.”

The problem is that innovation isn't just a creative process you can turn and off, says Myers. “Innovation is primarily a business investment decision, and is driven by investments in productive assets – in knowledge (R&D), technology (new machinery and equipment), and workforce skills (workplace training).”

If Canada is serious about gaining ground in the global economic recovery, says Myers, “we need to encourage more business investment in those productive assets necessary to improve Canada’s innovation and productivity performance.”

He offers six ways that the federal government can encourage innovation and productivity. Which of these would make your life easier?

• Extend the two-year write-off for investments in manufacturing and processing technologies to at least the end of 2016, and consider making this accelerated capital cost allowance permanent.
• Make Canada’s Scientific Research and Experimental Development (SR&ED) tax credit refundable, and improve administration of the program.
• Introduce a refundable tax credit for workplace training, particularly to offset the impact of rising Employment Insurance premiums.
• Introduce a refundable tax credit for investments required for regulatory compliance purposes.
• Follow through on commitments to reduce the federal corporate income tax rate to 15%, and the average combined federal and provincial tax rates to 25% by 2012.
• Following through on commitments to harmonize provincial sales taxes with the GST.

My advice? Get on the phone to your customers and ask what else you can do for them today. That’ll help you more, and faster, than anything the government can do.