Promised fall economic agenda

There is cautious but growing optimism that the new Conservative administration is seriously considering adding innovation and commercialization to its next set of priorities leading into the critical fall decision-making process for the next federal Budget. Evidence is also mounting that if S&T makes the cut, it will be part of a full-fledged economic platform marking a dramatic departure from the current approach, particularly as it relates to the division of federal and provincial jurisdictions.

After declaring its intention in the 2006 Budget to review university research spending and develop its own science and technology strategy, the government has been sending out a series of signals - chiefly through Industry minister Maxime Bernier. The message - couched in the Tory's language of accountability, fiscal responsibility and value for money - is that the completion of the S&T strategy exercise this fall could trigger a series of changes to the existing network of R&D support. Whether that support includes the kinds of investments that the community has been urging for several years is a matter of intense debate.

Uppermost among the S&T initiatives that the government is expected to deal with is commercialization. After several years of seeding the nation's research base, calls for ensuring a social and economic return on those investments have been getting louder. Two major industry-driven reports earlier this year have made it clear that the time to act on commercialization has arrived. The first to be released was People and Excellence: The Heart of Commercialization, by an Industry Canada-appointed expert panel, chaired by Joseph Rotman (R$, April 28/06). Since it was delivered to Bernier, Rotman has been working behind the scenes to gauge the depth of Tory support for his panel's recommendations and provide additional information on exactly what is being proposed.

"Canada has to make up its mind sooner than later ... There's a point at which you'll miss the train," says Rotman. "It's the Panel's view that Canada has been reviewing this agenda for 30 or 40 years ... The next step for Canada is the commercialization agenda while maintaining funding for basic research and education."

CONFIDENCE IN PROCESS

Rotman differs from those who fear that the momentum built up under years of Liberal rule may be lost as the Conservative government executes a narrowly focused strategy designed to garner enough support to win a majority in the next election. Rather than obfuscation or indifference, he sees an administration that knows how to set priorities and deliver on what it promised. He predicts that the knowledge economy and commercialization will be addressed before the next Speech from the Throne.

"You have to be successful by execution rather than theory or vision. This government has demonstrated the ability to organize and prioritize objectives and get on with it. I've been quite impressed ... I am confident we will be given a very fair hearing. The argument (for supporting commercialization) is clearly understood by this government," he says. "We've been in discussions with Industry Canada and other departments and those discussions are ongoing with the clear view of whether this (commercialization) will be one of the next priorities."

That view is supported by the presence of Kevin Lynch, the new clerk of the Privy Council and a highly respected bureaucrat with strong opinions on innovation and what Canada must do to succeed in the global knowledge economy. Those opinions were detailed in a recent column in Policy Options magazine. Lynch said government must emphasize speed, flexibility and adaptability while tackling three major public policy challenges:

* increasing and sustaining productivity growth;

* boosting education and training; and,

* improving Canada's global economic reach through increased foreign direct investment.

Whether those challenges are pursued through a continuation of targeted initiatives or by focusing on the macro-economic environment won't be known for some months yet. Government officials say Bernier comes to the Industry portfolio with a strong pro-market predisposition that is being colored by the reality of running a department with diverse responsibilities. What seems certain is that the Conservative government won't spend as enthusiastically as its Liberal predecessors, leaving its response to the Rotman task force anyone's guess.

The task force recommendations call for initial spending of $278 million annually on its suite of proposed initiatives, ramping up to $1.1 billion a year over several years.

Whether they are regarded as too interventionist will form part of the debate within government over the coming months.

In contrast, the other major commercialization report from the Conference Board of Canada contains no spending recommendations. Instead, it places the onus on the private sector to take the initiative to achieve specific strategic targets in concert with government and academia. Together they would establish a rigorous decision-making pro-cess that would help to strengthen a culture of commerce, leading to greater industrial R&D spending, skilled graduates and venture capital investment (R$, May 16/06).

Rotman says that while the two reports have different strategies and objectives, there are many areas of consensus. One area of alignment is the need for a new industry-driven body to guide the commercialization process and associated policies and programs.

The Rotman Task Force has recommended a Commercialization Partnership Board (CPB). It would serve as a critical element of the decision-making process within government, allowing industry a greater say in aligning programs with the global economic reality.

"Commercialization takes place within the private sector. It's critical when developing policies that the people who will make it happen are in the system in a positive way ... we need to get the best knowledge available into the decision-making process," he says. "It complements the current system but it's a different kind of input and a critical need going forward."

There is also little disagreement that commercialization is a special case. Investors have become more risk averse since the demise of the dot com and telecom booms, leaving many promising R&D projects languishing without start-up capital or support. Add to that the fact that nearly every other advanced economy is stimulating commercialization, and Canada may be left with little option but to move quickly by adapting best practices to the Canadian environment.

"We need a body (like the CPB) to keep on top of the things that have to be constantly evaluated ... The volatility, speed and degree of change that's happening globally boggles the mind and you need a body that understands how to deal with that. This would be a first for Canada."

The pace of change globally places a sense of urgency on the government's response to the Task Force. Rotman acknowledges that failure to place commercialization among the next set of government priorities would represent a setback, and he remains adamant that confident a response must be received this fall.

"Further delay would not be constructive in light of the global competitive scene ... But the thesis that you can't just rely on natural resources is not necessarily carved in stone," he says. "The process (of establishing priorities) is really not decided until all options are on the table. That's democracy and it's served Canada pretty well so far."

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