Thank you, Mr. Chair.
The recommendation from AIAC today is partnered with one from the Canadian Manufacturers & Exporters: we both made the same recommendation. The purpose of the recommendation is to mobilize and get some more leverage from the money that has already been allocated to the scientific research and experimental development program.
As you know, companies that do not qualify as CCPCs—effectively small Canadian companies—take their SR and ED credits not as refundable tax credits but as non-refundable credits. The net result is that some of them are not in a tax position to claim all or even any of the credits they have actually earned and had approved, and so the money probably sits on their balance sheets as a deferred reduction of taxes in future years until they are in a position to claim it.
Of course, when they do claim it, there is nothing that guarantees that this money will be used to further R and D objectives, because it will simply be a reduction of their taxes and can be used for any purpose they decide.
What we are proposing is that the government offer a targeted program that would allow companies to exchange these earned tax credits for cash contributions to R and D capital projects, in effect offering companies a quid pro quo whereby they could monetize those credits now in exchange for the government having a role in deciding how that money should be spent—in effect, in support of R and D capital projects. Essentially this money would be spent on improving R and D infrastructure.
As you can see in our submission, we believe it is possible to arrange such a program such that is both manageable and fiscally neutral. We think the effect of this will be to make the government's money work three times. Firstly, it will work through the credits that have already been earned—credits that the companies have actually earned by doing R and D. Secondly, it will go towards improving R and D infrastructure, because those credits will then be directed towards R and D infrastructure projects. And thirdly, when that infrastructure has been built, the money will then be facilitating future R and D within the country.
We believe that this is basically giving the government an opportunity to use its money three times to improve the R and D climate in Canada and improve the amount of business R and D done in the country.
Thank you.