Launch of the IRB Policy Investment Framework

Speaking Points

The Honourable Paradis, PC, MP
Minister of Industry

Etobicoke, Ontario

February 20, 2013

Thank you, Bernard, and welcome everyone. I would like to start by thanking Mr. Gagliardi for your gracious hospitality. Small and medium-sized enterprises (SME) like yours are the backbone of Canada’s economy. Knowing the hard work and dedication that it takes to run your own successful business makes announcements like today’s that much more important.

Ladies and gentlemen, our government is continuously working to build the most favourable conditions for Canadian businesses to create jobs and spur economic growth.

That is the basis for the Industrial and Regional Benefits (IRB) Policy through which our government ensures that every dollar we spend on major defence contracts is reinvested in the Canadian economy. This provides companies with access to global supply chains and the ability to expand into new markets. Which in turn creates and sustains high-paying, stable jobs across the country.

Jroberts is one of the many Canadian companies that is benefitting from the policy. And it is a perfect example of a Canadian small business success story.

Doing business for over 15 years, Jroberts is a leader in the design, production and maintenance of mechanical components and equipment. And it is no surprise that major defence contractors have recognized what it offers.

The strategic partnerships it has built represent an immeasurable opportunity. Enabling the company to develop a long-term business relationship with world industry leaders, expand its capacities and gain valuable global market exposure.

As it stands, almost 70 major procurement contracts are leveraging over $23 billion in reciprocal IRB commitments. But our government recognized that the IRB Policy could be even more effective. That it needed to be more targeted to ensure investments have the maximum benefit for the Canadian economy. That is why, in 2009, we announced seven enhancements aimed to modernize the policy.

Our goal was to maximize the access of Canadian companies to international business opportunities and to improve the commercialization of innovative, made-in-Canada technology. These changes were developed to facilitate investment in Canadian companies—promoting long-term prosperity in regions across the country.

And, ladies and gentlemen, today I am pleased to announce the implementation of the seventh and last of those enhancements: the Investment Framework.

In simple terms, our government is encouraging contractors to engage in innovative R&D with Canadian small businesses like Jroberts.

Previously, contractors received credit towards their IRB responsibility only after their R&D investment in a Canadian company had been fully commercialized and had achieved sales.

The uncertainty of the timeline between research, commercialization and sales made contractors reluctant to incorporate these types of investments in their IRB programs.

That is why, going forward, contractors making innovation-related investments in SMEs will receive more credit for these kinds of targeted investments and they’ll get a portion of it up front.

We are making it much more attractive for contractors to partner with innovative Canadian SMEs—keeping jobs here at home while spurring innovation and economic benefits in communities across the country.

This change will leverage hundreds of millions of dollars of new investments. Private money our companies need to grow, compete and create high-paying jobs for Canadians.

This is the most recent step in our government’s overall approach to supporting SMEs and the manufacturing sector at large. We know that, given the right tools, Canadian companies can compete with anyone in the world. And those tools are as much about what you remove—such as red tape and redundant regulations—as what you add.

Our government has worked hard to make Canada a great place to do business. We created a sound economic framework. Paid down debt. Harmonized regulations. Reduced red tape. And we have the lowest overall tax rate on new business investment in the G7.

And these efforts are bearing fruit. Canada’s net debt-to-GDP ratio remains by far the lowest in the G7. Our top credit rating has been reaffirmed by all of the major rating agencies. Our banks remain the soundest in the world. And we have created more jobs since 2009 than we lost during the recession—the large majority of which are full-time and in the private sector.

But Canada is not an island. Uncertainty abroad does not stop at our borders. As a nation, we must leverage our advantages. The world is becoming smaller and business more global. For Canada to succeed, we must fully engage in this new world. We must create its technology, capture its potential and reap its benefits.

This means investing in research and creating new products and services. It means finding new markets, improving productivity and learning to do business differently.

And it means constantly examining the effectiveness of our programs and policies—especially in a sector that moves as quickly as this one.

That is why we were pleased to receive Mr. Jenkins’ report on leveraging military procurement last week. This will complement the review of the aerospace and space sectors that Mr. Emerson performed for the government over the last year.

As we carefully study both these reports, we will not lose sight of the role that SMEs play in Canada’s long-term competitiveness. And we will continue to encourage investment in long-term, innovation-focused activities that establish strategic relationships. The kind of relationships nurtured by the Investment Framework announced here today.

Our Government will continue to work with Canadian industries to maximize military procurements in support of Canadian jobs, economic growth and the competitiveness of the industries.

As Canadians, we can count ourselves fortunate. We have accomplished a great deal. We have shown the world the strength of the Canadian economic model. But to sustain this, and to carry it forward, we need the hard work and talent of people like you.

At the end of the day, the future of the sector does not lie with some government program. It lies with you. Our government has a plan for the Canadian economy. A plan for the future. But we can’t implement it without you.

You are the job creators, you are the innovators and you are the future of this strong and proud sector. Our government will continue to give you the tools you need to compete and grow—and to create jobs for Canadians across the country.

Thanks once again to Jroberts for hosting us here today. I wish you all continued success.

Thank you.