QUESTION PERIOD — Innovation, Science and Economic Development
Innovative Solutions Canada
June 6, 2024
Senator Gold, Treasury Board committed to refocus $14 billion in spending over five years and gave departments the opportunity to reallocate funding that “made the most operational sense.”
Astonishingly, Innovation, Science and Economic Development Canada, or ISED, decided to cut funding to Innovative Solutions Canada, or ISC, a program the department claims returns $1.40 in tax revenue for every dollar. The ISC program delivers a much-needed procurement advantage to Canadian innovators and is a crucial tool that enables the pockets of innovative public servants that exist to acquire and test effective solutions.
Senator Gold, please explain why the ISC program funding was cut, how many companies had their pre-approved projects cancelled, how much money will be saved and what alternatives the government proposes for these companies, many of whom now face a liquidity crisis as a result of ISED’s decision?
Thank you for your questions, senator.
The changes in the budgeting reductions were done as part of a broader exercise to refocus government spending. Agencies across the federal government, as we know, had to meet spending targets. That required difficult trade-offs and difficult decision making. I’ve been informed that the refocusing government spending initiative reduced the ISC budget by $28.2 million in 2024-25, by $70 million in the following year and is ongoing.
The main impact of the budget reduction is on the ISC’s Challenge Stream activities. It’s a competitive research and development program stream designed to solve internal departmental operational issues and/or to fill a gap in the marketplace in line with a given department’s mission and mandate by leveraging the ingenuity of Canadian small business.
Innovation Solutions Canada continues to engage with the affected companies and has made efforts to direct them to other resources where they can learn more about alternative funding opportunities and other government supports.
Senator Gold, hundreds of innovative Canadian companies were already approved under the ISC program, and then it was cancelled without warning. This is mismanagement at best — gross mismanagement — and unethical, in my mind, at worst.
This program was promised to be a pathway to commercialization. These entrepreneurs spent years pursuing this opportunity and years developing a relationship with the corresponding customer and government.
How does ISED plan to reverse the harm they have caused from this decision?
Thank you for your question. I understand the challenge and the disappointment that those companies must be experiencing.
As I said, the government is working with these companies to direct them and help orient them to other sources of support. The government had to make — and has to make, as governments do — difficult decisions, which sometimes have consequences for those whose expectations are disappointed.
