Prime Minister Justin Trudeau has been talking about tech as a way to get the Canadian economy out of a funk, but innovation policy experts are worried the federal bureaucracy could be holding him back.
Innovation, Science and Economic Development Minister Navdeep Bains has promised to deliver a new innovation agenda in the coming months, but the briefing book prepared for him by his department is underwhelming, say several experts who have seen the document after it was obtained through Access to Information by The Globe and Mail.
"It's a window into our non-innovation innovation policy, whereby we do the same things over and over again and expect different results," said former Research in Motion co-CEO Jim Balsillie, who has been pressing Ottawa for several years to update its approach to innovation. "I think Minister Bains deserves better because he is genuinely committed to help improve our poor innovation record."
The briefing book, sent to Minister Bains following last fall's election, summarizes several hot issues in the portfolio. The "digital economy" appears alongside such topics as Bombardier and the auto sector. According to the four pages devoted to the digital economy, in order for Canada "to reap the economic and social benefits of the digital economy, including strengthening productivity and competitiveness … the digital capabilities of business must be strengthened, the workforce readied to embrace new digital skills, and access to digital network and research infrastructure enhanced."
Many commentators, including former top public servant Kevin Lynch and past prime ministerial adviser Peter Nicholson, have called on Ottawa to overhaul its innovation agenda, which they say is key to improving the country's overall economic performance over the long term. Canada is a long-term laggard when it comes to innovation and productivity growth, according to numerous studies over the years. Successive governments have focused on handouts and tax credits for research and development but haven't launched comprehensive, long-term industrial policies to help foster the growth of successful domestic technology companies, unlike other countries. Domestic spending on R&D has lagged other OECD countries.
"We need to be looking at sophisticated policy options" to help companies commercialize their ideas, said Mr. Balsillie. That requires "a systemic and deliberate exercise" such as those undertaken in other countries, he said. "Canada does not have the infrastructure required to generate money from its ideas and help entrepreneurs scale up" and should focus on that, he added.
The brief raises some valid points: The bureaucrats inform the Minister that building value in the digital economy will require attention to strengthening management capabilities, access to financing "and improving the quality and quantity of talent available." But much of the document's focus is on Canada's "world class" digital network infrastructure, and on past efforts by government to help build digital equipment and tools. Whatever advice the department has offered the Minister is scant – a whole two to three lines of text that has been redacted. Meanwhile the document pays little more than lip service to the need to support the growth of startups and ensure Canada is "agile and well positioned" in the digital economy.
Dan Breznitz, the Munk Chair of Innovation Studies at the University of Toronto's Munk School of Global Affairs, says the document's focus on infrastructure doesn't reflect that "the most important thing in innovation is the agent, meaning both the company and the people who actually innovate. Coming up with new or better or improved products or services and then trying to sell them on global markets are just assumed to somehow happen. From [what the documents show], it seems a lot of what the ministry is set to do is to build the infrastructure, put some finance in, and somehow, magic will happen." He'd like to see "a jolt by the government to actually change the equilibrium," for example, helping improve Canada's weak record in commercializing university research. "I want to see an innovation policy whose stated goal is to see higher maximization of research and development activities in the private sector," he said.
David Wolfe, co-director of the innovation policy lab at the Munk school and former national co-ordinator of the federally funded Innovation Systems Research Network, said the briefing "seems to be based on programs and priorities designed and implemented under the previous government" and that "the discussion of the digital economy is based on the old digital strategy released several years ago. The key policy issue for the department going forward will be whether they stick with this view of the digital agenda or recast it as one that cuts across the mandates of all its different branches of the department from Communications to Industry to Innovation. That will require a significantly different conception of what the digital revolution means for the Canadian economy than the previous government had."
Meanwhile, a new lobby group chaired by Mr. Balsillie and representing some of Canada's successful startups is pushing the government to focus less on handouts and more on policy changes that would make it easier for tech startups to hire talent and grow revenues. At the top of their list is a plea to the government not to proceed with their election pledge to increase taxation of stock options – a move they say will harm their ability to recruit staff. Unfortunately, Minister Bains's briefing note says nothing about that.