François-Philippe Champagne, Minister of Innovation, Science and Industry, acknowledged Monday that challenges related to productivity and innovation policy have been an issue in Canada ‘for decades.’Heywood Yu/The Globe and Mail
Its latest attempt is the Canadian Innovation and Investment Agency, announced in the 2022 budget as a surprise replacement for a program the party had promised in the 2021 election campaign, but pulled: a Canadian version of theU.S. Defense Advanced Research Projects Agency, which spearheaded the creation of technologies such as the internet.
Like other federal innovation programs, the CIIA, which will help underwrite business expenditures on research and development, is inspired by success elsewhere. The Finnish Funding Agency for Innovation helped transform the Nordic country’s low-tech sectors, such as forestry, into innovative, competitive industries.
Ottawa’s idea won plaudits from longtime government innovation critic Dan Breznitz, co-director of the Innovation Policy Lab with the University of Toronto’s Munk School of Global Affairs and Public Policy. He praised the idea when the CIIA was announced.
“There is finally a realization that the problem in innovation and engagement with new technology is not the lack of new ideas or human capital but the private market … this is a systemic problem,” said Mr. Breznitz at the time, when he was a visiting economist with the Finance Department.
He added that the CIIA could succeed if it is nimble, independent, engaged with business and free to experiment.
A backgrounder prepared by the Canadian government last fall shows it has been listening to critics: Funding proposals will be assessed based on whether projects have potential to create and retain intellectual property in Canada and commercialize resulting products globally.
Industry groups consulted by Ottawa said the program must be easy to navigate, reach entities that have not traditionally done R&D, get companies to commercialization and scale and keep the economic value of investments here.
The government did not deliver details about the agency in its fall economic update, as it initially promised. Innovation policy watchers are now waiting to see if Ottawa selects the right leaders and governance structures to deliver on the agency’s mandate.
What also isn’t clear is how much the CIIA can change chronically uninventive Canadian companies or whether an agency modelled on a small country in the European Union will work here.
And while the agency’s focus on business investment in R&D, IP and commercialization is promising, Benjamin Bergen, president of the Canadian Council of Innovators (CCI), said “if the CIAA winds up being another funding agency, rather than a focused organization to steer policy structures and improve innovation policy outcomes across Canada’s economy, it will fail to move the needle.”
Another question is how much innovation funded companies can patent and claim as their own after a long head start by global competitors. Waterloo patent lawyer Jim Hinton said the CIIA “won’t work unless it recognizes the existing technology foundation that any new company would necessarily be building on is currently not owned by Canadian companies.”
He worries companies may have to pay holders of existing patents, which would “simply be another wealth transfer of Canadian funds” abroad.
Where do we go from here?
To make innovation work, the Canadian government might need something that has been lacking in an advanced country blessed with national resources, relative geopolitical stability and a big trading partner to the south: a sense of urgency.
Robert Asselin, who was budget director for then finance minister Bill Morneau and is now senior vice-president of policy with the Business Council of Canada, says that urgencyhas been a common thread in government-led creation of innovative clusters in several other countries.
In the Netherlands, he said, postwar food security concerns sparked creation of a huge agri-food exporting sector. For South Korea, a successful electronics industry gave a small country in a geopolitically tense region economic might. When the Soviet Union got to space first, it jolted the United States into action; the space race had major spinoff benefits for U.S. companies.
“These three didn’t succeed because of market forces; they were designed as public-private partnerships,” Mr. Asselin said. “This is where industrial policy needs to go, as opposed to subsidies we throw everywhere.”
Asked about Ottawa’s continuing struggle to turn its innovation investment into real productivity growth, which The Globe and Mail has been reporting on in a story series, Innovation Minister François-Philippe Champagne said Monday, “Innovation is a journey, it’s not a destination.” He acknowledged challenges related to productivity and innovation policy have been an issue in Canada “for decades, but we’re really serious in terms of focusing on that and bringing perhaps novel solutions.”
Perhaps it will take a crisis to focus minds in Ottawa – maybe resulting from an inward-lookingU.S. leaving Canada vulnerable in a mercantilist world. But the government doesn’t have to wait; there are plenty of suggestions for what to do.
Mr. Bergen says government must build capacity in the public service for navigating the knowledge economy and setting clear evaluation metrics for policies. Some observers feel the government has relied too much on consultants for ideas.
Diverting procurement dollars to startups has helped expand the U.S. economy. Our government has a similar program, Innovative Solutions Canada, that has been underused. The program can do more and needs a champion in government, Mr. Bergen says.
There are also many proponents for an overhaul of the Scientific Research and Experimental Development tax credit, Ottawa’s largest expenditure on innovation. The tool provides $3-billion-plus in credits to companies that perform R&D here.
But it doesn’t cover expenses related to commercialization, which would reward companies that take their innovations to market and deliver economic returns. That should change, the CCI says. The government promised last year to reform the program.
Focusing innovation initiatives on helping promising startups grow into global giants should be the top priority. That has been the clear call from many observers, and was the first recommendation in fall 2018 from Canada’s Economic Strategy Tables, made up of advisers in six sectors and commissioned by Ottawa to propose economic growth ideas.
Ottawa could also incentivize domestic pension funds to direct more investment dollars to Canadian tech, Mr. Asselin says.
Meanwhile, said Angela Mondou, CEO of technology lobby group Technation, “Canada’s global competitiveness depends on bringing Canada’s technology adoption rate to par with our global counterparts. A clearly defined digital strategy is non-negotiable.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
