It's remarkably little work to do the paperwork. It's annoying, sure. Who the hell likes paperwork? But a "distraction"? Oh please.
If I wasn't getting the money I would honestly be a little annoyed at how little accountability there seemed to be to get public money.
And the whole political connections thing ... I don't even know where to start with that one. I have none and no one I know has any.
I notice no one here has firsthand experience with either. I wouldn't have commented here but I felt I had to leave something here so that other readers wouldn't come away with an opinion that's ... let's say "uninformed".
For one, the people you are talking to have zero experience in running a business, let alone a new one. They do have, however, extensive experience in drawing out meetings, death by powerpoint and producing forms in triplicate.
The grants generally come with a lot of reporting and strings attached, and generally require very large investments to be worthwhile.
We can get R&D tax concessions which are quite useful but the amount of money you need to spend in order to qualify excludes any sort of early-stage tech venture.
The entire process was a giant waste of time for me, and I get the impression they are political operations rather than genuine ones. In fact in my research I found out that infrequently do the funds ever actually give out all the money, but a good portion of the advertised spend (ie, $x00 million in new company grants) actually goes to the departments that spend their days handing out the money.
Not to say that the guys weren't genuinely trying to be helpful, they were. But they are hamstrung by their own reporting requirements and lack of understanding as to what people need money for, and when they need it.
My ultimate conclusion is that special economic zones with, say, 10 years of a tax holiday for a new company starting within that area would be a much better way to go about things. That would spur local investment and employment, have a specific end date and be much easier to administer. It would also favor bootstrapping as opposed to trying to capture large starting funds, which IMO for the outside-the-valley world is a better way to go.
I have a bit of experience with SRED in Ontario, and quite a bit with the Alberta Foundation for the Arts.
Grants are nicer for you (me), but tax credits are doing it right as far as the government is concerned. Canada wants you to create employment. If you have a business that is generating revenue and creating jobs, they'll "give back" money that equates to, sometimes, paying wages at 50 cents on the dollar.
Tax credits are an economically efficient way to distribute government funds.