End funding to Labour-Sponsored Venture Capital Corporations

A paper released today by The School of Public Policy finds that the Federal Government’s most recent attempt to solve Canada’s dearth of business innovation errs on several fronts.

Professor Jeffrey MacIntosh examines the findings and recommendations presented this past fall in the Jenkins Report – which assessed federal and provincial support for research and development – and finds that the authoring panel both overlooked and incorrectly evaluated policies designed to foster innovation in Canada.

Above all, MacIntosh criticizes the panel for its failure to address current funding of Labour-Sponsored Venture Capital Corporations, which he argues represents a “squandering of both federal and provincial resources.”

“It is time to end the subsidies to LSVCC funds,” MacIntosh writes. “LSVCCs have generated poor returns, displaced more effective private funds, and in net, have impoverished, rather than enhanced the Canadian venture capital industry.”

MacIntosh also takes issue with the panel’s recommendation to scale back the current Scientific Research and Experimental Developmental tax credit. He argues that this recommendation was based on incomplete data that did not represent the true benefits of the tax credit.

Furthermore, MacIntosh argues that the SR&ED credit serves as a lifeline to many small starts-up seeking further government funding or private investment. Cutting these firms off in their infancy denies them the opportunity to develop into larger success stories.

The full study can be found by clicking here.