Business groups are panning the federal government’s decision to delay a new agency meant to boost innovation and productivity in the country. Here’s what you need to know.

How it’s going: Late Tuesday, Finance Minister Chrystia Freeland and Innovation Minister François-Philippe Champagne announced that “full implementation” of the Canada Innovation Corporation (CIC) will now take place “no later than 2026–27.” Ottawa had originally promised the program would get going this year. 

How it started: Freeland proposed the new, arm’s-length agency in her April 2022 budget, positioning it as a fix for two long-standing drags on the Canadian economy: stagnant productivity growth and the failure to turn inventions into saleable innovations. The program would use $1-billion over five years to back startups and larger firms doing R&D, commercializing discoveries and boosting technology adoption in laggard industries.

In February, Ottawa announced the agency would absorb the National Research Council’s popular Industrial Research Assistance Program (IRAP). It would offer firms advice, as well as funding of between $50,000 and $20 million for R&D projects. Parliament has passed enabling legislation to establish the agency, but Ottawa has yet to name a CEO or directors.

The response: The decision to punt on the agency “shows a lack of seriousness on innovation,” said Robert Asselin, senior vice-president of policy at the Business Council of Canada, which represents the CEOs of some of the country’s largest firms. He also cited what he said was Ottawa’s general inaction on R&D, noting it has not implemented the recommendations of its own advisory panel, which called for significant increases in science funding.

“What we’ve seen is all the eggs put into the EV basket with heavy subsidies, but nothing else really in terms of domestic innovation plays,” Asselin said.

The delay is “disappointing news,” said Benjamin Bergen, president of the Council of Canadian Innovators, in a statement. The group represents the CEOs of over 150 scale-ups, who he said were initially “excited for the refreshing approach to innovation policy” the CIC represented. But both Bergen and Asselin said the extended timeline means the agency may never be established as proposed. The delay takes it past the next federal election, scheduled for October 2025. Asselin acknowledged, however, that no action is better than the government starting work before it’s sure what it wants.

What’s next: IRAP will stay put until the CIC is ready to go. Ottawa plans to consult with pension funds and other investors about what the agency should do. Freeland’s office did not provide on-the-record answers to The Logic’s questions about why it’s delaying the CIC, or whether it’s picked a chair and CEO, instead pointing to Tuesday’s announcement. Ottawa will also launch consultations next month on updating the scientific research and experimental development tax incentive, for which tech executives have been calling for many years.