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Government support for business reaches new heights

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teri-kirk_metro-2-150x150By Teri Kirk

Government incentives paid to the top 500 business recipients in Canada are on the rise, according to the 2016 Funding Portal Top 500 index released earlier this month.

The annual index identifies the 500 largest award recipients in Canada under federal and provincial grants and contributions programs. According to this year’s data, overall support to the Top 500 rose from $1.03B in 2014 to $1.35B in 2015. The average sum to businesses that made the Top 500 ranking rose from $2.06 million in 2014 to $2.70 million. The largest sum, $101.1 million, went to Ontario-based Toyota Motor Manufacturing Canada, which was funded under a combined federal repayable contribution agreement and provincial grant. Four of the top five companies that made this year’s Funding Portal Top 500 are in the manufacturing sector—Toyota, Linamar Corporation, Wescam Inc., and Essar Steel Algoma Inc. The fourth ranked company, Medicago Inc., received $74.5M and is in the biopharmaceutical sector.

This support for Canada’s manufacturing sector was overwhelmingly directed at advanced manufacturing and technology adoption, with a view to driving improved outcomes in productivity, innovation, and global leadership.

The Top 500 Index aggregates data released by federal, provincial and territorial governments in Canada related to grants and contributions programs. The sums reported do not include additional amounts these companies may have received under R&D or other tax credits, as this data is not disclosed by governments as a matter of tax policy.

Looking beyond the Top 500 companies, funding disclosed by governments under federal and provincial grants and incentives programs reached $25.9 billion for 2015. Of this sum, $13.2 billion, or 51%, was distributed to businesses through both direct (grant programs) and indirect (tax credits) support programs, largely to support corporate R&D; $7.5 billion, or 29%, was distributed to help fund institutional R&D, largely at universities and hospitals; and $5.2 billion, or 20%, was paid to support activities executed by non-profit organizations.

From a regional perspective, Ontario-based organizations did best, receiving $9.42 billion from federal and provincial sources in 2015. From a sectorial perspective, support for the cleantech and life sciences sectors grew, while support to the manufacturing sector declined, despite several large awards to the Top 500.

Awards to the information and communications technology (ICT) sector grew in volume while the average award size declined over last year.

There is no doubt that data released by governments demonstrate increases in the amounts disbursed; however, disclosure levels vary across thousands of federal and provincial programs and, allowing for undisclosed data, actual amounts disbursed are estimated to be approximately 10% higher than these numbers reflect. At Funding Portal, we are seeking to play a constructive role in making this important area of public spending more open and transparent and assist companies to navigate within Canada’s funding environment.

Government incentives are tied to political as well as economic trendlines and this year’s high level of stimulus appears to be linked to some of the seismic changes in Canada’s political climate.

Election years tend to bring higher levels of government spending on incentives and 2015 was no exception. Furthermore, several governments committed to higher levels of financial support for business and this trendline is evident here.

The Funding Portal Top 500 is published annually by The Funding Portal Inc., together with its interactive infographic Funding Map, to improve information and access to the funding programs that exist to support businesses, academe and non-profits in Canada.

Teri Kirk is Founder and CEO of Funding Portal. You can reach her by email at [email protected]. 

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