Thursday, November 01, 2018

The REAL Path Towards Revitalizing the Canadian Space Industry

          By Chuck Black

It's worth noting that a great many academic, non-governmental and business organizations want the Federal government to give them bucketloads of new money for various projects and insist that this will revitalize the Canadian space industry.

They are wrong. Totally and irrevocably wrong. Our current worldwide explosion of private sector space accomplishments has nothing whatsoever to do with simply shoveling new government money into traditionally structured programs.

The problem is the structure of the program, not a lack of funding.

The only real way to revitalize the Canadian space industry and make it competitive in the marketplace of ideas (not just as a component manufacturer) is to change the procurement methodologies of government departments such as the Canadian Space Agency (CSA) and update the Federal tax code to support innovative, Canadian based, private sector corporations.

This is what the US and Luxembourg are currently doing and it is the main reason why companies like Hawthorne, CA based SpaceX,  Las Cruces NM based Virgin Galactic, Betzdorf Luxembourg based SES SA and even Ottawa ON based Telesat are currently investing so heavily in the final frontier.

Oddly enough, back in 2012, the Canadian Space Commerce Association (CSCA) did look at those areas in the first two of its three part series of submissions to the 2012 David Emerson led Aerospace Review.

As outlined in the June 30th, 2012 CSCA submission to the Aerospace Review under the title, "Submission to the Aerospace Review Part 1 of 3 - Fostering Innovation, Creating New Markets: Novel Approaches to Space Policy and Programs," the CSCA recommended that government "explicitly encourage the development of entrepreneurial or “commercial space” industries and approaches," using a variety of policies and programs.

These included:
  • Updated government policies and regulations covering the experimental permitting, safety standards, liability limitation and launch licencing for commercial launch providers in Canada. 
  • The ability to commercially access existing US and Canadian government civilian and military facilities related to the space industry and the encouragement of the creation of appropriate new facilities (such as spaceports and satellite receiving facilities) and build new ones, as required. 
The often discussed "unlicensed" Nunavik ground station, last covered in the June 21st, 2018 post, "The Special Senate Committee on the Arctic Holds a Hearing on Northern Infrastructure & That "Unlicensed" Inuvik Groundstation," would surely have benefited from some of the proactive approaches discussed in this paper. 

Halifax NS based Maritime Launch Services (MLS), although saddled with the obsolete, expendable Cyclone-4M launch vehicle at the core of its plan to build a launch facility on Canada's east coast, would also have benefited from at least knowing the process required to gain government approval to build a spaceport. 

And, as outlined in the May 11th, 2017 post, "CATAAlliance Calls for Adaption of the US Small Business Innovation Research (SBIR) Program," other organizations have also called for the use of novel contracting approaches for Federal procurement.

According to the May 25th, 2017 post, "Attempting Relevance, the Canadian Space Agency Announces Industry Focused & Small Business Funding," the Canadian government has at least begun to take a few small baby steps down this path. 

But it's the second of the three CSCA submissions to the Aerospace Review, "Using Tools from the Mining Industry to Spur Innovation and Grow the Canadian Space Industry," which may hold the most unique lessons for Canada's space industry.

The second submission doesn't suggest adopting new methodologies or co-opting techniques from others.

It suggests only that the techniques and tax breaks already in place to grow our mining industry, can also be used to grow our space industry.

The second submission contained two recommendations:
"Canadian companies engaging in extraterrestrial resource development should be granted all tax and other benefits now granted to them in their terrestrial exploration and development activities."
"The Federal government should create provisions in Canadian law for clear, transferable title to extraterrestrial mining claims and returned resources and work to negotiate international agreements to the same effect"
  • To support this recommendation, the paper referenced the specific terms of the 1967 United Nations Outer Space Treaty, referenced a number of independent authors with expertise in this area and reviewed how the implementation of certain "revenue neutral" changes to Canada's tax code changes led to the massive growth of the Canadian mining industry, beginning in the 1980's. 

As noted above, the changes recommended in the CSCA submissions are "revenue neutral" for the Federal government to implement. Large new buckets of funding are not required to change the tax code or modify procurement contracts.

They're also changes which are being adapted in the US and in smaller jurisdictions, like Luxemburg, with great success.

Once the recommended changes have been made, our domestic space industry will begin to grow in the same way that Canada's mining industry (which grew in response to the tax changes) and private sector companies like SpaceX (which thrived at NASA under the various COTS programs and used its resulting expertise to dominate the launch market) have started to thrive.

It's simply a question of seeding the industry with the proper resources and opportunities needed to make things grow.

Of course, the whole plan is a least modestly dependent on the willpower of our political class. They certainly didn't have the willpower to implement those recommendations six years ago. They may not have the willpower now.

But if they do then maybe one day, even some of those who've left Canada for more favorable regimes will return to put down new roots in their country of origin. They might even relocate their corporate head offices. Mining companies have certainly done that over the last thirty years.

Here's hoping.
Chuck Black.

Chuck Black is the editor of the Commercial Space blog. 

He contributed to the CSCA's three part submission to the 2012 David Emerson led Aerospace Review. 

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