Flaherty on Canadian R&D: “It’s a mixed story”

Maclean’s has published a wide-ranging interview with Canadian Finance Minister Jim Flaherty. Flaherty discusses stimulus spending, surprise deficit increases, and automotive bailouts. Maclean’s also asks the minister to address concerns about Canada’s R&D deficit. Flaherty expresses confidence, but also concern, and then confidence again, but still some concern, and then finally confidence, before observing that the story is a bit of both:

Q. If Canada’s fiscal fundamentals are strong, these are still unsettling times. For instance, R & D by Canadian companies is perennially weak. And now the future of two of the very biggest research spenders, Nortel and AECL, are in doubt. Should we be worried about our innovative capacity shrinking?

A. As a government we are among the largest funders of R & D in the world. We’re low on the private-sector side, which has been a persistent concern. One of the things I’ve talked about with my Economic Advisory Council, which is important to me, is that in the IT sector we have a tremendous success. We have more than half a million people working in that sector and it has not gone into recession. It’s a tremendous source of research and development innovation. In the financial services sector we have sources of innovation.

So there are some bright spots. I am concerned about the Nortels of this world. On the other hand, in the auto sector, most of the intellectual property and innovation is in the parts sector—Magna, Linamar, Woodbridge—and these are all companies helped by what we’re doing with GM and Chrysler. So it’s a mixed story.