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budget 2012

Minister of State for Science and Technology Gary Goodyear speaks during a funding announcement at Carleton University in Ottawa on Feb. 13, 2012.Dave Chan for The Globe and Mail

If Finance Minister Jim Flaherty is the axe man, Gary Goodyear is the tooth fairy.

As Ottawa braces for the harshest federal budget in years, the Minister of State for Science and Technology is flitting across the country handing out cheques and talking up a looming overhaul of federal research and development programs.

Mr. Goodyear is the front man on the innovation file, and his domain is expected to consume a good chunk of the scant good news in the Conservative government's first majority budget next week.

Speaking exactly one week before the budget, Mr. Flaherty acknowledged on Thursday that innovation and productivity will play a big part in Ottawa's spending plans, now and for years to come.

"One of the major themes of the budget is going to be innovation, research and development and narrowing the productivity gap," Mr. Flaherty said. "We're looking at 2020 and beyond. We're not just looking at next year and the year after that."

The highlights of the plan are expected to include a move to more company-focused research in government labs, a shift to more direct funding of business research-and-development and fewer tax credits, and a rationalization of the dozens of government programs available to companies.

Mr. Goodyear, a 54-year-old former chiropractor from Cambridge, Ont., said it will all add up to "transformative" change to the way Ottawa spends nearly $7-billion in R&D funds. But he's cagey about whether that means less money overall, or simply a shuffling of current budgets.

"The bottom line is that we want to wind up with business doing more research, but also the commercialization of that research," he said in an interview.

The government, he explained, is working on two parallel tracks: balancing the budget as well as fixing Canada's woeful record of business spending on R&D. "I'm looking for better outcomes and optimization of taxpayers' dollars," he said.

Mr. Goodyear said the government wants a " better balance between the direct and the indirect" financing of R&D. The magnitude of that shift is for Mr. Flaherty to "sort out," he added.

A federal task-force report headed by chairman Tom Jenkins, chairman and chief strategy officer of software maker Open Text, concluded last year that Canada stands out among developed countries by offering virtually all of its R&D incentives through the tax system. Ottawa's Scientific Research and Experimental Development program doles out $3.5-billion in tax credits a year to about 24,000 companies. Matching provincial credits boost the total payout to nearly $5-billion a year.

But critics say the program is complex and costly, and that some companies do little or no R&D.

The shift has an upside for the government and politicians such as Mr. Goodyear, a four-term MP. They get to show up at plants, labs and universities with cheques in hand.

Like Mr. Flaherty, Mr. Goodyear promised Ottawa would act on some, but not all of Mr. Jenkins' recommendations.

Growing up in Cambridge, money was always tight for Mr. Goodyear, whose labourer father and seamstress mother split when he was young. Destined for a career as a tradesman, he instead took academic night courses to upgrade his technical high school degree. He got into the University of Waterloo, where he took courses in everything from chemistry to kinesiology. But he dropped out after third year to enroll in chiropractic school. After graduating, he set up a successful practice, got married and worked as a chiropractor for 20 years before a friend lured him into politics in 2004.

The minister says he's always had a passion for technology, designing custom chiropractic tools and tinkering with motor bikes. It's all about "how technology can be applied to make things better, whether it is to sell a product or create better outcomes," he said.

Outside experts, and even opposition MPs, applaud Mr. Goodyear's commitment to fixing the country's innovation problems, particularly companies' R&D and their poor record of turning good ideas into successful products.

Kevin Lynch, Canada's former top civil servant and now Bank of Montreal vice-chairman, said it's "great" innovation has become a priority for the government in a world of competitive economic threats.

But Liberal science critic Ted Hsu, a former physicist, said letting industry dictate the kind of pure research that government labs do is a bad idea. "If we let industry drive what we do in our research labs, we're going to miss the disruptive technological changes," he said.

The Globe and Mail talked to Mr. Goodyear as he was driving back to his Southern Ontario riding from Toronto, where he gave a speech and visited a computer plant. The next day, he would be back at the podium again, talking to a group of engineers. "Things are so busy, so fast, you tend not to worry about tomorrow until tonight," he admitted.

With a report from Bill Curry