National Post (National Edition)
HARNESS THE POWER OF INNOVATION
Canada’s response to the economic crisis caused by the coronavirus pandemic must be different than how we dealt with the Great Recession of 2008. Twelve years ago, our recovery was driven by highpriced Alberta oil buttressed by voracious Asian demand. Today, oil prices have collapsed because of an imbalance in supply and demand, with part of the reduction in demand likely to be permanent.
This time, the foundation of a sustainable economic renewal needs to be built through market-tested, innovative Canadian companies commercializing their ideas to scale globally and expanding their freedom-to-operate into global value chains for the knowledge-based and data-driven economies.
Canada needs to diversify its products, not just its markets. Using a traditional “shovel-ready physical infrastructure” lens — whether roads, bridges or hockey rinks — to stimulate demand and drive productivity has no traction in a 21st-century global economy where intellectual property (IP) and data are the most valuable business and national-security assets.
Since the government-mandated shutdowns, the Council of Canadian Innovators (CCI) has worked with the federal government to develop supports for the high-growth technology firms that were negatively affected by the crisis. The council first asked the federal government to create the Canada Emergency Wage Subsidy for our members and then to increase it to cover 75 per cent of payroll costs. It also successfully advocated for the strategic use of programs such as the Industrial Research Assistance Program, the Scientific Research and Experimental Development Tax Incentive Program and the Strategic Innovation Fund, to assist high-tech companies that did not meet the requirement of having revenue decline by 30 per cent, in order to qualify for the wage subsidy. These programs are essential to preserve the employer-employee relationship, which is a critical component for the survival of any company and for a successful economic recovery.
It is important that Canadian innovators are not just surviving, but working overtime during this downturn because their companies will drive Canada’s future prosperity in the changed economy that will emerge from this pandemic. While the efforts of the federal government were well received by the sector, there are additional priorities that will help Canada not just recover, but position itself to be successful in the 21st-century global economy.
First, we should create an “Innovation Corps” that can mobilize thousands of our brightest co-op students who had their Silicon Valley job offers rescinded. CCI has created a Tech Talent Radar website to help connect thousands of recent graduates with Canadian innovators. The government can build on this tool and use it to reverse the extraordinary costs of our brain drain, so that these brilliant young minds can begin supporting our domestic innovation ecosystem.
Second, the federal government’s IP collective, which was announced two years ago but is still not up and running, should be used to optimize the value of taxpayer investments into R&D and help generate and protect the new, intangible assets that were created with recent emergency government funding. The IP collective needs to be increased in scale and scope, in order to address the threats and opportunities our economy faces, particularly regarding publicly funded research.
Third, the government should create a national data strategy for our health-care sector, as well as other strategic sectors, such as agriculture, smart cities, energy and mining. It has been over two years since Canada’s innovators called for the creation of such a strategy and we have seen no progress on the file. The lack of a national data strategy compromises Canada’s competitiveness, security and democracy.
Fourth, we should fast track the adoption of national standards and regulations for digital identification, data sharing and cybersecurity, to match the accelerated shifts to online service delivery and remote work.
Fifth, the Investment Canada Act (ICA) needs to be updated, to safeguard against the leakage of strategic assets, such as IP at Canadian universities and research institutions and data used by strategic sectors, such as health care, smart cities and agriculture.
The government’s most recent ICA “policy statement” confuses foreign direct investment (FDI) with foreign portfolio investment, and ignores the breadth of strategic assets that are required to protect Canadian interests.
We also need to address both supply chain and value chain resilience and maximize responsible economic growth by reinventing procurement approaches that strengthen Canada’s domestic innovation ecosystem. Much has been said and written about improving traditional supply chains, but entirely different strategies are needed to capture the value chains in the global intangible economy of IP and data.
Finally, we need to use domestic fintech firms to help distribute government stimulus loans to small businesses, just like the United States, United Kingdom and Australia have done. The government should also resume consultations on “open banking,” so that Canadian fintech firms can play a meaningful role in modernizing our closed banking structure, for the benefit of consumers.
These elements constitute a digital policy infrastructure that facilitates productivity, prosperity and security via global value chains. Governments that adapt quickly and invest in the right institutions, sectors and regulatory frameworks in order to generate the proper incentives and supports will have a significant advantage in the postCOVID economy.
Canada’s policy-makers need to jettison the outdated and corrosive neo-liberal orthodoxies that left us vulnerable. Policies rooted in 19th- and 20th-century economic thinking have resulted in a 25-year slide in our national productivity, record household, corporate and government debt and, according to the International Monetary Fund, a decade of reduced GDP per capita, while America’s GDP per capita soared by 35 per cent. Success in the technically complex economy of IP and data demands handson, expert leadership and a whole-of-government approach.
We will only get better prosperity outcomes if our public investments help generate greater IP and data assets that can be commercialized for the benefit of Canada’s economy.
Crises always clarify priorities. The COVID-19 crisis provides an ironic opportunity for Canada because, over the course of a few months, it induced structural changes that are normally spread out over years. We can use this moment to start building an innovative, sustainable, inclusive and resilient national economy.
Every national transformation requires fearless effort by those in power. This moment calls for bold policy-making and a generational effort to make our country resilient and prosperous in the decades to come. By harnessing their proven ambition and ingenuity, Canadian innovators can help the government achieve these objectives. But only if our governments put wind in their backs and strategically use smart policy levers, just like all innovative nations do.
THE LACK OF A NATIONAL DATA
STRATEGY COMPROMISES CANADA’S COMPETITIVENESS.