2022 Annual report

From: Innovation, Science and Economic Development Canada

 

ITB Policy 2022 Annual Report: Economic and Innovation Impact Anaylsis
[PDF: 1.25MB 13 pages]

The Report Context

• The Industrial and Technological Benefits (ITB) Policy contractually requires companies awarded defence procurement contracts to undertake market-driven business activity in Canada equal to the value of the contracts they have won
• The ITB Policy:
  • Supports employment and economic growth across the country
  • Drives innovation and exports
  • Scales up small and medium-sized businesses (SMBs^Footnote1)
  • Advances gender equality, diversity, and inclusion
• ISED publishes two reports each year in an effort to be transparent about the results and status of the ITB Policy

1) ITB Annual Report^Footnote2

Highlights the economic and innovation impact of the ITB Policy

2) Report on Contractor Progress

Demonstrates contractors’ progress in meeting their ITB obligations

Presentation Overview

1. Economic Impact
2. Regional Industrial Strengths
3. Obligation Progress Report
4. Business Activity Across Strategic Areas
5. Scaling Up SMBs ^Footnote1
6. Academic & Research Organisations R&D and Skills
7. Gender and Diversity Plans
8. Key Findings
9. Annex–Economic Impact Methodology Principles

1. Economic Impact

The ITB Policy is estimated to contribute more than 41,000 jobs and over $4.6B to GDP annually in Canada

Figure 1: GDP Economic Impact

 (5-Year Annual Average^{Footnote 3} Currently Active^{Footnote 4} ITB Projects^{Footnote 5})

Figure 2: Employment Economic Impact

(5-Year Annual Average^{Footnote 3} Currently Active^{Footnote 4} ITB Projects^{Footnote 5})

2. Regional Industrial Strengths

ITB business activity aligns closely with regional industrial strengths

Figure 3: Breakdown of ITB Business Activity^Footnote6 by Industry^Footnote7

(Currently Active^Footnote4 ITB Projects)

3. Obligation Progress Report

Currently active ITB projects result in more than $44B of ITB economic obligations

Figure 4: Economic Obligations^Footnote8 $44B

(89 Currently Active^Footnote4 ITB Projects)

• Over $8.6B of economic obligations to be identified in the next decade

4. Business Activity Across Strategic Areas

The introduction of the Key Industrial Capabilities (KICs) Policy resulted in 85 Commitments from 34 ITB Projects

Figure 5: Number of KICs Commitments by Strategic Area ^{Footnote 10}
Currently Active^Footnote4 ITB Projects

5. Scales up small and medium-sized businesses (SMBs^Footnote1)

Over 715 Canadian organisations are benefiting from the ITB Policy, of which close to 65% are SMBs^Footnote1

Figure 6: ITB Recipients Breakdown: Number of Recipients by Type (2021) and SMB Activity Volume Breakdown by Type (2021)

6. Academic & Research Organisations R&D and Skills

Over 70 Canadian academic and research organisation^{Footnote 13} projects^Footnote4 are focused on areas of skills development, emerging technologies and leading competencies

7. Gender and Diversity Plans

8. Key Findings

In conclusion, the ITB Policy drives innovation and fosters economic growth in Canada

• Contributes to close to 41,000 jobs and over $4.6B GDP annually in Canada
• Is market-driven and aligns closely with regional industrial strengths
• Stimulates business activity across strategic areas, notably KICs in Direct Work, R&D, Supplier Development, Skills, Defence and Exports
• Supports more than 715 Canadian organizations, including 450 SMBs
• Benefits over 70 Canadian academic and research organization projects focused on areas of skills development, emerging technologies and leading competencies
• Promotes gender equality, diversity, and inclusion

9. Annex: Economic Impact Methodology Principles

• Methodology concepts are informed by subject matter experts from the Organisation for Economic Co-Operation and Development and Statistics Canada.
• Foundation data is based on ITB credits and commitments of active ITB projects in 2021 over the period of 2016-2032 as specified on each slide.
  • Annual average economic impact analysis is based on the ITB credits over the period of 2016-2020, with adjustments reflecting the intangible business activity and ITB Policy credit multipliers to evaluate the job and GDP impacts.
• Economic model is based on Statistics Canada Input-Output (I/O) multipliers.
  • Each ITB activity has been linked to the latest (2018) and most relevant economic impact multiplier.
    • All values have been adjusted for inflation based on the Consumer Price Index (CPI) as well as the Bank of Canada's target CPI of 2% and are expressed in 2018 dollars.
  • I/O multipliers have been adjusted to reflect the ITB 100% Canadian content requirement wherever applicable.
  • Job and GDP impact is reported on an annual average basis.
  • Job impacts are measured in terms of full-time equivalent (FTE) employment.
    • Jobs cannot be additive as they are maintained for an extended period after creation.
  • Total economic impact includes the activity that occurs within ITB recipients, Canadian value chain, as well as consumer spending by associated employees across the Canadian economy.
  • All project analysis are based on 2016-2020 ITB credits and 2021-2032 ITB commitments of active ITB projects in 2021 to date.
  • Economic impact estimates are reported at the national level and cannot be broken down at the regional level.
  • All totals are in Canadian dollars. Foreign currency amounts were converted to Canadian dollars using the Bank of Canada’s annual average exchange rate for 2021.