Mr. Chairman and members of the committee, thank you for the opportunity to speak to you today.
I'd like to raise three issues that are important to Canadian small and medium-sized enterprises, SMEs, in the science and technology area, such as my own company, ASL Environmental Sciences, of Victoria, B.C.
Science-based SMEs represent the great majority of companies conducting research and development in Canada. In my industry sector of ocean science and technology, our companies are well established, very active in global markets, and focused on particular science and engineering niches.
Ocean high-tech companies in British Columbia provide a very substantial contribution to our economy, with annual revenues of $1.1 billion and total employment of nearly 5,500 people in this province. This science sector represents about 10% of the total economic activity of the ocean and marine sector in B.C., accounting for annual economic activity of $11.6 billion per year.
To be globally competitive, ocean high-tech companies are continually developing products and services. Science and technology SMEs represent a vital conduit for development and commercialization of Canadian research, whether conducted in universities, such as the VENUS and NEPTUNE projects at the University of Victoria, or government labs, or in their own in-house R and D programs. SMEs have greatly benefited from the major funding program of scientific research and experimental development--SR&ED--and tax credits provided by the Canadian government, supplemented by British Columbia and other provinces.
The SR&ED program was recently improved in the 2008 budget through raised expenditure and revenue ceilings, yet more needs to be done. Specifically, the administration of the SR&ED program should be improved by simplifying and expanding the eligibility of qualifying activities, reducing processing time for claims, and expanding the awareness of SR&EDs among start-up companies, which often do not fully utilize this very important program.
Bringing new science-based products to global markets requires considerable funding for the later stages of R and D. While most other developed countries provide a strategic first-adopter market and/or direct funding for such development activities, Canada is rarely an early client and no longer provides funding for the later stages of R and D since the demise of NRC's IRAP pre-commercialization program in 2005. A replacement program is urgently required to provide partial funding to supplement company investment, with the funding being fully repayable starting when the products reach the marketplace.
The second issue is that we have an extraordinary new opportunity in the combined economic, environmental, and energy wins offered by renewable ocean energy. We anticipate that as much as 5% to 10% of Canada's electricity can be generated from ocean and river currents and ocean waves, representing a very substantial new source of green energy. However, a considerable amount of science and technology must be developed and tested, which will require 10 to 20 years and very large funding investment.
Canadian resources and approaches to date give us the prospect of making Canada a world leader in commercializing this important new technology and power production opportunity, with enormous world markets. To be successful, government programs are required for funding of prototype intercomparison sites for testing new technologies and providing funding assistance for R and D, as I have already mentioned.
If we are to realize the economic opportunities, it is critical that all governments come together with ratepayers to create the early marketplace for marine energy by providing higher green-premium rates for energy delivered to the electrical grid during this extended development period.
Finally, I'd like to raise one more issue, the issue of delays in the regulatory process for new ocean and river energy projects in Canada, whether renewable or non-renewable. Over the past 15 years, cutbacks have reduced the science-based capacity of Canada's major line departments, including the Departments of Fisheries and Oceans, Environment, and Natural Resources. The regulatory review of new developments is a science-based process, but the diminished scientific capacity in the government departments can delay or stop important new energy developments. More funding, focused on expanding the science capacity of the line government departments, is urgently required.