Supercluster program co-creator defends initiative's sluggish rollout
One of the architects of the federal government's supercluster program is pushing back on criticism of the initiative, saying it has helped boost business innovation investment, connected firms across and within industries and established Canada's strength internationally in key growth sectors.
Policy experts and spending watchdogs have panned the $950-million supercluster initiative for a slow rollout and the difficulty of achieving promised economic-growth and job-creation impacts. But speaking about the program for the first time to The Logic, John Knubley, former deputy minister of the federal industry department, says focusing on those factors ignores its role in promoting industry collaboration and shifting government support for innovation.
“Innovation today, if you want to (go) deep and achieve something, requires collaboration,” he said.
“If you want to (go) fast and get things out the door … you're not likely to be a global leader.”
Knubley's new paper — published Wednesday by Ryerson University's Brookfield Institute for Innovation & Entrepreneurship — comes at a crucial moment for one of the Liberal government's signature innovation programs, four years after it was first announced, and days before the feds lay out an economic-recovery plan in the first federal budget in two years.
Superclusters are non-profits whose members include multinationals, small firms and startups as well as universities and research institutions.
Private-sector participants must typically match government funding for R&D, skills development and other projects. The Liberal government announced the program in its 2017 budget, pledging capital over the following five fiscal years.
Then-innovation minister Navdeep Bains unveiled the winning bids of an industry competition in February 2018, calling them “innovation hotbeds” that would churn out new technologies and jobs.
The five superclusters focus on digital technology, plant-based proteins, advanced manufacturing, artificial intelligence and ocean technology.
Knubley said the program has shown early promise in some areas.
According to his analysis — based on data the groups provided, which he said was consistent with that of Innovation, Science and Economic Development Canada (ISED) — the federal government has committed $510 million so far. Private-sector participants have pledged $1.40 for every dollar of public-sector money in projects, higher than the program's match requirement.
Stagnant business spending on R&D has been a longstanding economic issue in Canada.
The superclusters' large member lists show they're creating new networks, which could lead to “much more collaboration around (the) development of technologies and commercialization,” said Knubley. His paper also noted that each organization has launched training initiatives focused on workers traditionally underrepresented in the innovation economy, and that the program has brought international attention to sectors in which Canada has a relative advantage. The St. John's-based ocean group has backed a project led by a Norwegian firm, for example.
Innovation-economy executives, opposition parties and watchdogs have criticized the program's approach, goals and implementation.
In an October 2020 report, the Office of the Parliamentary Budget Officer (PBO) calculated the federal government had spent just $30 million of the $104 million it had planned to by early March of that year, and estimated the superclusters would create 27,341 direct jobs over five years instead of ISED'S projection of more than 50,000 over a decade.
The analysis also said the program was “highly unlikely” to increase GDP by the department's forecast of $50 billion, citing comparable efforts in other countries.
The five superclusters pushed back on the report, noting that they'd committed hundreds of millions in additional funding to projects after the period covered by the PBO ended.
Criticisms of the program that focused on the slow pace of project selection “completely misunderstand (the) purpose of cluster development,” Knubley said.
“It's not about individual projects.” Innovation in the digital economy requires “capacity-building (and) collaboration.”
Bains regularly cited the program's Gdp-growth and job-creation targets. The former innovation minister favoured those figures “because that's what Canadians understand,” said Knubley.
But his paper acknowledges that this focus “masked the key objectives” of the program such as encouraging commercialization and collaboration. It recommends the superclusters be evaluated on measures such as whether they increase business spending on R&D and encourage firms to focus on IP and data, as well as qualitative factors like fostering networks.
Governments traditionally highlight the success of business-support programs in terms of job creation, but should instead evaluate how they contribute to exports, R&D and productivity growth, said David A. Wolfe, co-director of the Innovation Policy Lab at the University of Toronto's Munk School of Global Affairs & Public Policy.
Despite its name, the superclusters initiative is “an industry research program,” not a “networking and cluster program.”
As The Logic reported in January, three of the five superclusters have lobbied the feds for top-up funding as they get close to allocating all the capital they're due to receive. ISED has not ruled out providing further financing.
“I don't think at the end of five years — and this is why I emphasize it's about long-term gain — it would be fair to expect (the superclusters) to be self-sustaining,” said Knubley.
While businesses should assume an even greater role in supercluster leadership, he said the manner in which some of the organizations shifted to COVID -19-focused projects in early 2020 shows they can pivot investment activities if the feds give them a task, like tackling pandemic challenges or supporting emissions-reduction efforts.
Both are likely to be major themes of the federal budget next week.