Industry must take the lead in increasing R&D and become more passionate about innovation if Canada is to have any chance of achieving its goal of moving from 15th to 5th in global R&D spending. But for industry to achieve a nearly tripling of its current R&D spending by 2010 — the goal set down last year by Finance minister Paul Martin — dramatic changes and reinvestment must occur in the government and university sectors.

That was the general consensus of the first annual RE$EARCH MONEY Conference, which attracted more than 160 high-level players to Ottawa on November 13th for a one-day session to discuss the challenges facing Canada as it attempts to transform itself into a truly knowledge-based economy and society. The point was driven home by keynote speaker Adam Chowaniec, CEO of Ottawa’s Tundra Semiconductor Corp and a major backer of an initiative to convince Ottawa to bolster the number of university professors and graduating students in key technology disciplines.

Chowaniec said Canada’s generous tax credit system for corporate R&D may not be as effective as generally assumed, and programs like Technology Partnerships Canada continue to back sunsetting industries while innovative organizations like the Canadian Microelectronics Corp are not replicated for other key sectors.

“We must become more passionate about keeping companies alive and growing,” he asserted. “We need to pick winners and make choices and that includes the strategic use of government financing.”

That sentiment was echoed by John Saabas, VP engineering at Pratt & Whitney Canada, although he directed his advice directly at the private sector. “Business has to take the lead and have a passion for innovation,” he said.

Throughout the day, panelists from industry, universities and government squared off in a series of presentations and debates that were remarkable for their consistency. Each sector was tasked with defining their role in meeting the challenge of moving from 15th to 5th and to offer advice to the other sectors. Once again, consensus seemed to coalesce around the need for government to increase investments in post-secondary education to allow Canada’s universities and colleges to produce the highly qualified personnel (HQP) required for future innovative growth. At the same time, governments were encouraged to strengthen their science and research capacity in areas over which they have jurisdiction, and become far more strategic in how investment is directed.

Andrei Sulzenko, Industry Canada’s senior ADM and a major force in directing Canada’s innovation policy, said the federal government is prepared to meet the challenge in both areas, and that the path the government is taking will become clearer once the Innovation Paper is released in early 2001. He added that the goal of doubling HQP will require government to focus on the innovation environment and provide incentive systems for firms to conduct R&D.

Increasing HQP is the main reason for recent federal investments in university research infrastructure and research chairs, said Sulzenko, as the university sector is a catalyst for innovation and the main creator of HQP.

“I look forward in the new year to engaging in dialogue both formally and informally,” he said.

One indication of Ottawa’s future direction is the funding arrangement behind the new National Institute for Nanotechnology, located on the campus of the Univ of Alberta. Sulzenko said the Institute’s financing represents a “hybrid model” that blurs the distinction between government as a funder and performer of R&D, as collaboration increases across sectors.

Another example is the proposed Federal Innovation Networks of Excellence, that would see collaboration between government scientist with those in the private and post-secondary sectors.

The federal government will also be continuing to alter its policies governing S&T, as well as making appropriate changes to tax policy, the regulatory environment and investment strategy.

When asked where he would invest if he was given $1 billion in new money, Sulzenko said his personal view was to invest in HQP — an area where Canada is currently underinvesting. He added that there were a number of ways to bolster HQP, including the financing of new university or government infrastructure.

“Build and they will come. Investment dollars will follow,” he said. “We need to create a larger pool of HQP.”

Just how much larger was a matter of some debate, which was framed by the presentation of Dr Fred Gault, director of Statistics Canada’s science, innovation and electronic information division. Gault said the convention wisdom behind the 15th to 5th goal is that in excess of 100,000 new researchers will be required. But he noted that the number may not be quite that high, particularly if the amount spent on R&D per researcher is increased.

“If you look at how we are spending our R&D and divide it by the number of researchers... We see that Canada spends $150,000 GDP in US dollars per researcher. Other countries spend more,” he said.

Armed with new GERD data generated by his division (R$, November 13/01), Gault was also instrumental in laying out the statistical challenge of improving Canada’s GERD/GDP standing. The new data contain significant upwards revisions and show that GERD for 2000 surged an impressive 10.9% above the 1999 total.

“That is a major achievement in a good economic climate, but it is doable. The question is, is it sustainable?,” says Gault. “We will have to aim at a GERD to GDP ratio of between 2.8 and 3.0 by 2010 if we’re going to make this (move from 15th to 5th) happen. That means doubling our GERD, going from about $20 billion to $40 or $50 billion, and that’s a growth rate of 7-8% above GDP.... If GDP is moving along at 3% or so, we’re going to have to deliver that 10-11% growth in GERD.”

The issue of HQP was front and centre during the debate on the roles of universities and colleges, with agreement on the need for increased investment and a divergence of views on how best to fund the system. It’s estimated that 30,000 new professors will be required over the next 10 years, with some disciplines facing more severe shortages than others.

To make the post-secondary system work more effectively, however, universities must change on a wide variety of fronts, including increased emphasis on reward systems, a breaking down of silos within universities and a stronger recognition of the role to be played by colleges and smaller universities.

“Universities have to identify what they’re really good at and that does not sit well with the established views of universities,” says Dr William Bridger, president/CEO of the Alberta Ingenuity Fund and former VP research at the Univ of Western Ontario. “We have to enhance their ability to achieve critical mass in areas with the most strength.”

REACTION TO CONFERENCE POSITIVE

For Jeff Crelinsten, the main architect of the conference, the one-day event afforded an all-too-rare opportunity for Canada’s main innovation players to debate an issue that is critical to the nation’s future well-being. He says the main purpose of staging the conference was to provide a forum for influential people who are concerned about various aspects of the innovation system to meet and exchange views — a function he compared to the newsletter itself.

“People took the question seriously and demonstrated that the topic was a useful metric for a discussion of a wide range of issues,” says Crelinsten, a partner in The Impact Group and co-publisher of RE$EARCH MONEY. “There seemed to be a consensus that the HQP issue was one of the most important ones, but there was also a strong resonance that we have to think strategically about what we spend on in the future.”

That sentiment was echoed by Dr Douglas Barber, a former high technology executive who is currently VP of the Ontario Science and Innovation Council.

Barber said it’s no accident that HQP and the need for a strategic focus emerged as the common themes of the day, given the looming shortage of skilled personnel in all areas of the innovation system.

“Our only advantage in the knowledge-based economy will be how we prepare our people to complete in the global knowledge exchange,” he asserted, adding that much of our government polices are still rooted in the industrial economy. “Strategic focus is a key issue for a small country like Canada and a 2-3% player in the global economy. We can’t cover the waterfront and hope to be in the competition.”

Barber also urged universities to work to overcome silos within their institutions that prevent graduates from receiving a broad education, likening it to a question of balance accentuated by the convergence of technologies.

IS THE GOAL REALISTIC?

Curiously, the one issue that participants avoided addressing directly was the theme of the conference itself — moving from 15th to 5th. Is it a realistic target? Is it achievable?

Dr Anthony Eaton, president of PRECARN and Associates Inc and a moderator of the conference’s private sector panel, says the goal may be impossible to reach.

“The private sector numbers are unbelievably high but moving towards fifth is the right thing to do. It might be unrealistic for us to get there but it’s always important to have goals that might be beyond our reach. It movies people in the right direction.”

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