Message from the President
As all economists know, business productivity is an essential lever for prosperity and wealth creation. La Presse + reminded us in its December 14 edition that Quebec and Canada are, unfortunately, at the bottom of the class when it comes to productivity. In a ranking produced by HEC Montréal’s Centre sur la prospérité et la productivité, to which the daily referred, GDP per hour worked in Québec and Canada as a whole stands at $79.40 and $84.80 respectively. By comparison, Germany, France and the United States posted performances of $112.90, $108.60 and $104.30 respectively.
This productivity gap is partly explained by Quebec and Canada’s underperformance in their ability to innovate and take advantage of the country’s huge pool of R&D talent. In the Conference Board’s 2024 Innovation Report Card, Canada ranks 15th out of 20 countries analyzed for its overall innovation performance. South Korea, Switzerland and Singapore top the list, followed by Germany, Sweden, Israel and the United States.
More support for research and development
Faced with these worrying facts, it is imperative that our governments in Canada continue to provide significant support to our companies in their R&D work, so that they can innovate further, increase their productivity and enhance their competitiveness. In fact, one of the Conference Board’s recommendations in its report on innovation is to “make intellectual property (IP) and research and development (R&D) the key drivers of commercial success by improving funding and programs.”
Unfortunately, over the past few years, we have witnessed a financial disengagement on the part of governments. Among other things, this has resulted in a reduction in government R&D tax credits available to companies, which has had a harsh impact on the affected sectors. As a company specializing in the financing of refundable tax credits, R&D Capital has seen for itself the negative effects of the Quebec government’s decision last spring to revise downwards the tax credits offered to companies operating in the multimedia and video game sectors.
Prioritizing wealth creation
Rather than giving in to the temptation to cut R&D aid to ease short-term spending, our governments should look to the long term and redouble their efforts to help our companies meet our productivity and innovation challenges. Our future prosperity depends on it.
Wealth creation is mainly generated by our companies and SMEs. The BDC underlines that 99.8% of businesses in Canada are SMEs, and that they employ 85.2% of all workers in the country. Our governments don’t just have a mandate to redistribute wealth. They also have the primary duty of creating the environment and conditions that will enable this wealth to be created. This includes strong support for innovation and structuring assistance programs, including the maintenance of refundable R&D tax credits that directly stimulate investment in technological development by our companies.
In the current difficult economic climate, this is certainly not the time for our governments to lessen their support for our entrepreneurs, who, on the contrary, need to be able to count on predictable, reliable government assistance that is well adapted to their needs.
Pierre Binette
President
R&D Capital
About us
R&D Capital is the Canadian expert in the financing of research and development tax credits (SRED), e-business tax credits and multimedia tax credits. Don’t hesitate to contact us. You’ll receive fast, courteous and straightforward service, and within 10 working days you’ll know what financing is available to you. For more information, you can reach us by e-mail at pbinette@rdcapital.ca or at (514) 798-0493, ext. 222. We look forward to helping you realize your projects and ambitions.