Navdeep Bains, Minister of Innovation, Science and Economic Development, (formerly called Industry) is overseeing the development of a federal innovation strategy, starting with consultations this summer around six core themes. It's an attempt to make up for decades of failed innovation policies, stagnant productivity and weak research-and-development spending by Corporate Canada. Mr. Bains recently spoke with The Globe and Mail's Sean Silcoff about his plans.
You launched the innovation agenda consultation last month. What key messages have you heard from submissions you've received and meetings you've held with industry players?
They recognize that we have a Prime Minister who's more open and transparent, we have a government which is more open, and more open governments by default should be more innovative. They appreciate the fact we are now putting a greater emphasis on innovation as part of our smart industrial policy going forward. They value the fact we've created a very collaborative approach. So they understand that government alone cannot drive innovation. It really has to be in partnership with civil society, with academia, with business, with our international counterparts.
What are innovation-sector players asking for?
They're looking … for government that can be a meaningful partner. They're also looking for a government that is ambitious. One area that consistently comes up is immigration. …Even though Canada is really strong when it comes to having a multicultural society, they talk about immigration in the context of an aging population, in the context of growth, [and] in the context of a labour force. It's important for job creation, to drive growth in all sectors and to improve the quality of life of all Canadians.
There's a big push to speed up visa approvals for foreign talent joining fast-growing Canadian tech companies. The firms want an approval process that takes three weeks, not six to 12 months. What efforts are under way to deliver on this?
Government has demonstrated leadership in this area. A few weeks ago, I was in Atlantic Canada with the four premiers and the four ministers from that region alongside [Immigration Minister] John McCallum. We launched a three-year employer-led pilot program [that] will accept up to 2,000 applications from immigrants plus their family members until 2017. This is an example of us saying that we are looking at areas around speed, at fast-tracking times, but also at working in partnership with our provinces and industry. If we are successful with this initiative, we are confident that we can deploy this across the country.
We're really trying to demonstrate clearly that immigration should be seen through the economic lens. We're trying first of all to have that very important conversation, because the last 10 years the Conservative Party really viewed immigration in a very negative light. They pitted Canadians against each other, and we have to do a better job of explaining the importance of immigration for nation building and for economic success – and, truly, our competitive advantage globally.
Can you deliver a three-week visa approval process so these firms can bring in sought-after foreign talent in a timely way?
In order to make Canada a global centre for innovation, immigration will be key. We're looking at [speeding up] processing times, we're looking at who we want to bring in, we want to look at potentially increasing immigration levels. Processing is important, targeting the right people is important, making sure we communicate with the Canadian public is going to be critical, and also fundamentally looking at immigration levels. The point about this consultation process … [is that] we truly want to have an inclusive innovation engagement process.
This is an initiative that was really well received. It was a $400-million investment [from Ottawa] that generated about $900-million in private-investor capital. Well over 100 companies benefited [from venture capital investments]. So it is a very strong program. The program initially was really focused on early stage. We want to … build upon that and look at scaling up, because that's a priority for us, and helping really identify high-growth firms and the ones that are export oriented. I think that is where the focus is going to be. I don't want to prejudge the outcome … but there is definitely a lot of interest in this area.
Small companies have had a hard time winning contracts from the government. What can you do to fix that?
In Canada, we spend about $100-billion on procurement in all three levels of government annually, of which $18-billion is spent federally. If you carve out [what] we spend on military and defence, we're left with approximately $9-billion. We have the BCIP (Build in Canada Innovation Program), which is designed to really help small companies. But I can tell you right now it's not as ambitious as it needs to be. We need to make it more open and accessible, and we need the amount of money that we allocate for Canadian startup companies, Canadian innovative ideas, to be much better. This is something that we're seriously looking at.
We've had numerous discussions and meetings with our counterparts in procurement to talk about this area and the potential that it has. One of the concerns I've heard from Canadian companies is they have great innovative solutions, they have great technologies, but unfortunately the process is too cumbersome; there's too much red tape, particularly for the smaller ones. They have to go abroad to validate the technology before they come to Canada in order to be a really meaningful player. And if they're abroad, often the question is asked, "Are you doing business with the Canadian government?" They're unable to respond in a positive way. That is a challenge for us. So we're definitely going to be looking at public procurement as a real means to not only look at low-cost solutions, but look at innovative solutions and help really validate our companies who have great ideas so they can grow and scale up.
A big debate concerns direct versus indirect aid to business. The $3.5-billion Scientific Research and Experimental Development tax incentive program (SR&ED) is one of the government's biggest expenditures on innovation. Many critics would do away with this indirect funding program and replace it with targeted, direct spending. What does your government plan to do?
Eighty-five per cent of the tax policy that we have for benefiting R&D is indirect. The vast majority is driven by SR&ED. The idea is to really stimulate investments in R&D. This is where the business community has really lagged. They ranked No. 22 out of 34 countries. This is a challenge. We're providing opportunities for businesses but they're not really stepping up. … All those tax benefits they're receiving, lower tax rates, SR&ED, etc. indirect – they're not translated into more investments in R&D. Yes we're looking at indirect/direct. Germany, for example, is very much on a direct model. … We're looking at that, but we're also looking at how do we actually tell the business community that you will receive tax benefits you have already received and going forward we're willing to have that discussion with you, but how does it really meaningfully translate into investments in R&D? The issue is how come business isn't investing more in R&D? That's where our focus is., because that's a key metric when we're looking at the innovation agenda.
You've said innovation is "a mindset." In 2011, U.S. President Barack Obama said "In America, innovation doesn't just change our lives. It's how we make our living." How will Canada make its living?
For me, it is really creating a culture of innovation. When we talk about innovation, it has got to be a core Canadian value. We talk about being a diverse society, a multicultural society, an inclusive society. But why can't we be an innovative society? For a county of 35 million people, if we are to succeed and maintain a good quality of life, if I want my daughters to have good job opportunities, if we want to deal with an aging population, if we want to deal with climate change, innovation is going to be critical.