Navdeep Bains’ work on Canada’s economy unfinished
C.D. Howe, Canada’s famed minister of everything, was tasked during the Second World War with turning the country from an economy built around farms to one built around factories.
A country that largely grew wheat and grain was transformed it into one that built an armada of ships, enough planes to black out the sun and the tanks, bullets and guns to invade Europe.
Howe kept that turnaround going after the allies won and forever changed the country’s economy.
Howe’s name is emblazoned on the Industry Canada building in downtown Ottawa and Navdeep Bains, the outgoing minister of the department, said he was trying to make another transformation of the economy.
“If you go back to C.D. Howe, the focus then was how do we take an agriculturalbased society and make it an industrial powerhouse. And my view has been how do we take this industrial powerhouse and service-oriented economy and create an innovative economy,” he said in an interview.
Bains announced his retirement from politics last week to spend more time with family. His full title was Minister of Innovation, Science and Industry and he said he’s proud of his time in office, because until the pandemic it led to real growth in the economy.
“We inherited an economic situation where we saw a very low growth rate from the previous government. We saw unemployment rates that were above seven per cent, and we needed to put together a plan to generate more growth and generate more jobs.”
Due to the pandemic, Canada’s employment rate is now 8.6 per cent, but in January, before the pandemic, it had fallen to 5.5 per cent.
Bains said he’s also particularly proud of the changes the government has made on immigration to attract more highly skilled workers to Canada.
He argues that pays off as the workers come and then start firms of their own, further growing the economy.
“If you look at the last five years, Toronto and Vancouver have recruited more technology workers than San Francisco and Seattle combined.”
The Liberals spent almost $1 billion in a superclusters initiative designed to spur
certain sectors of the economy through research and industrial collaboration. Earlier this year, the Liberals announced nearly $300 million, matched by Doug Ford’s government in Ontario, for auto giant Ford to help the company start up an electric vehicle plant in Oakville, Ont.
During the pandemic, that work became even more direct as the government spent enormously to set up a homegrown industry to manufacture personal protective equipment.
The outgoing minister said Canada isn’t alone in making big investments like that and they’re necessary to build a sustainable economy.
“Other countries are pursuing a similar strategy, these public-private partnerships are designed to unlock more capital, to de-risk certain projects,” Bains said.
“You got to focus on Canadians, you got to focus on researchers and scientists and entrepreneurs and innovators and make sure they have the right tools to succeed.”
The department’s own numbers show company spending on research and development has stayed essentially flat on Bains’ watch, even declining as a share of gross domestic product. At the same time, it rose in other OECD countries.
Robert Asselin, a vice-president with the Business Council of Canada, said Bains did a lot of good during his tenure and making investments is important, but the government isn’t doing the follow-through to find out if the investments are worth it.
“It’s broader than this minister but unfortunately this department, industry, innovation, whatever it was called in the last few decades, have had this kind of patchwork approach of subsidies and programs,” he said.
“The government’s investments could have value, but there is no followup, no way to see what they have done.”
Asselin applauded Bains’ digital charter, a bill currently before Parliament that sets rules on data collection and storage from big companies. He said having clear rules is essential for companies that are going to do more and more work online.
“I give him a lot of credit for tackling this because, obviously, without data, strong data privacy provisions Canadian companies won’t be able to use data as other companies are doing in other countries.”
Benjamin Bergen, executive director of the Council of Canadian Innovators, said on balance Bains has been good for the economy and he highlighted the immigration push, something he said will have to continue under new minister François-Philippe Champagne.
“Canada has a massive deficit of talent; there’s about 220,000 positions that are currently not filled in tech because we just don’t have the domestic capacity.”
Bergen agrees the government’s investments have been good, but there are structural problems around patent protection and intellectual property that can prevent companies going from startups to giants.
He said the very nature of an innovation agenda is that the work is never done, and constantly has to change.
“Expenditure and support is critical, but making sure that you actually have an infrastructure to capture the wealth and prosperity that comes out of it is equally part of it,” he said.
“If you have a hole in the bucket and you keep pouring in more water, or in this case more money, but don’t actually plug the hole, you’re gonna lose it.”
Bergen points to Blackberry’s move to sell 90 patents to Huawei last week and to companies like Element AI, which received government funding before being sold to an American firm last year.
He said Canada needs to think of intellectual property in the same way it considers essential natural resources like potash or energy and find ways to protect it and keep it in the Canadian economy.
“That’s where a lot of the work of Minister Champagne may need to focus on is how do you create these structures that allow companies to grow, to become global giants, and not have to kind of sell out at a certain stage because they basically hit a wall,” said Bergen.
He said that isn’t easy and it will constantly be changing, but it’s essential to the country’s future.
“They’re not just offering capital to firms to grow their businesses. This is actually building the correct plumbing of a prosperity strategy,” Bergen added.