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by Daniel Gloade on July 3, 2015

Glen Murray, the Ontario minister of the Environment and Climate Change addressed the Kitchener-Waterloo Chamber of Commerce on 25 June 2015.  Click here to read the article from the Record.

In summary, the Honourable Mr. Murray advocates for Ontario’s Cap and Trade System. True, the government would receive money from polluting companies, but it is not a “tax grab”.  The money will not be used to reduce the debt or on increased spending.  Instead, revenue from the fines will be used to research and develop innovative solutions to climate change.

But should the government spend money to encourage business innovation in Canada?  In another article from in yesterday’s Globe and Mail an internal memo to the federal Finance Minister Joe Oliver suggests that Canadian business spends far less on innovation than any of its G7 partners.  Of greater interest, however, are the explanations as to why.   Federal grants have failed to produce dividends.  This reason for this failure is the inherit structure of Canada’s economy.  Canada’s economy is so small and so integrated with the American economy that Canadian businesses wait until the Americans try innovations first.  Also, Canada’s economic climate is less competitive and Canadians are more risk adverse.  You can read the full report here.

The proximity and relative size of the economies in North America’s two countries will not change.  Reports like the one recorded above raises questions as to whether government funding on innovation may be futile.

I believe that Canada will always be a resource based economy tied closely with the United States.  These fundamentals will not change.  I further believe, however, that the Green Economy is the new area of growth.  It may make a better business case for Canadian business to grow using new technologies than trying to branch out to new markets (China, India).

If you want to see an example of innovation investment in the Kitchener-Waterloo area then please read the article from the The Record located here.

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