Atlantic Innovation Fund launched with $300 million for wide range of R&D projects

The $300-million Atlantic Innovation Fund (AIF) is finally accepting proposals one year after it was announced with great fanfare as a key component of the $700-million Atlantic Investment Partnership program. Designed to battle the deficit in the region’s innovation capacity, the AIF is the latest attempt to make a break with the federal government’s spotty track record of stimulating economic development and investment in Canada’s poorest provinces.

The Fund will be allocated over a five-year period on R&D projects that emphasize multi-sectoral and inter-disciplinary collaboration and that possess strong commercialization potential. Its designers are encouraging the formation of consortia to combine the expertise and fund raising power of several organizations for projects that have global potential. And in a first for a federal program aimed at the Atlantic region, there will be no notional provincial funding breakdown.

Projects are also being encouraged to leverage other federal funding sources such as the Canada Foundation for Innovation, Canada Research Chairs program and Industrial Research Assistance Program — an acknowledgement that AIF funding is inadequate in single-handedly transforming the economy, or satisfying the growing funding needs of research institutions. Areas in which Atlantic Canada is considered to have emerging capability with strong global growth potential include niche areas of information technology (communications and geomatics), ocean technologies relating to oil and gas exploration, biotechnology, aquaculture, health and medical technologies and environmental technologies.

The potential for AIF to significantly spark innovative economic development in the region may be enhanced with the creation of an advisory board, chaired by Dr Arthur May, former president of Memorial Univ and now an honourary research professor (see box). Where the process of project selection may be called into question, however, is in the area of final project selection. The advisory board will review all applications responding to periodic calls for proposals and make recommendations to the relevant ministers who retain final decision- making authority. The complete Atlantic Investment Partnership program is administered by the Atlantic Canada Opportunities Agency (ACOA).

Along with the other regional development agencies, ACOA has been criticized for acting as a slush fund for federal politicians and exacerbating the cycle of dependence into which Atlantic Canada has arguably fallen. Leaving project approval in the political realm could be the AIF’s Achillees’ heel.

ACOA officials won’t comment on the rationale for retaining final decision-making power at the political level (in AIF’s case, Robert Thibault, minister of state for ACOA). But they point to the talent and positioning of the advisory board within the process as evidence that sound science and competitiveness will ultimately determine which projects receive funding. In addition, a small AIF secretariat within ACOA will assist in the process, augmented by expert advice drawn from federal departments and agencies or beyond.

“The advisory board has a lot of responsibility and it responds to the minister,” says Ray Gallant, ACOA’s DG Programs “I’m just speculating but the minister would have to have a pretty good reason not to take their (the advisory board’s) advice.”

Arthur May doesn’t object to the advisory nature of his board he chairs, although he says the granting councils are his preferred model for AIF.

“The AIF is new creative, it’s different and it’s exciting,” he says. “I tend to take things at face value until I see something different. I expect the advice to be taken and if it’s not, then you get out of the way and do something better with your time.”

One observer says that, on the surface, the AIF appears to be represent a break from the past, but he adds that the apparent transparency of the AIF will only be demonstrated once a full project solicitation and selection cycle is complete. “It’s a competitive process and it’s soliciting projects with more transparent criteria (but) we’ll have to see how ACOA administers its strategic goals,” he says. “For now I’ll give them the benefit of the doubt.”

To be eligible for AIF funding, projects must be in excess of $500,000 and no upset limit has been set, although Treasury Board approval is required for any project of more than $10 million. Projects of a commercial nature are eligible for up to 75% of project costs, rising to 80% for projects from non-commercial and not-for-profit sectors.

“The focus is to assist the private sector and research organizations, research institutes and universities. It’s not essential to have a private sector component,” says Gallant. “Funding is up to 75% for commercial projects less investment tax credits. We use the same criteria for stacking of various levels of assistance as programs like Technology Partnerships Canada (TPC) do.”

Gallant says that like TPC, AIF provide repayable loans, conditional upon sales generated by products or services stemming from the R&D project. The same concessionary features have also been made for the innovation component of ACOA’s core business assistance program — the Business Development Program — which provides loans of less than $500,000.

The deadline for the first round of proposals is September 28 and subsequent rounds will be held periodically, at times to be determined once demand is known.

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