Canada needs regulatory reforms to support innovation, a mission-oriented approach to a national innovation strategy, and strengthening of public-private partnerships, according to a report by the Canadian Science Policy Centre (CSPC).

As part of a flexible and adaptive national innovation strategy, Canada also needs to adopt a sector-specific and regional approach, invest in critical infrastructure, support startups and SMEs, develop a coordinated workforce strategy, and commit to sustainability and climate goals, the report says.

The report is the result of the CSPC hosting three industry consultation sessions: 1) agriculture and agrifood; 2) advanced manufacturing and natural resources; and 3) health, biosciences, digital and high-tech.

The consultations aimed to gather insights for shaping a flexible and adaptive innovation strategy that addresses both current and future needs of Canadian industry. The discussion focused on three core topics:

• Topic 1 – Emerging trends and challenges in the sector.
• Topic 2 – Designing an innovation strategy to adapt to the emerging trends and challenges.
• Topic 3 – Priorities for a national innovation strategy.

"We noticed there is a huge appetite for more national conversation around Canada’s long term innovation strategy and how we should do better," Mehrdad Hariri (photo at right), founder, CEO and president of the CSPC, said in an email to Research Money.

The CSPC started the project with the objective of the private sector associations from different sectors to lead the conversations and present their views and their sectors views  on fundamental question about Canada’s long term innovation strategy, he said.

Key deliverables of the project included a mini-magazine, of 33 opinions pieces from different sectors, plus a series of consultation sessions with industry associations and also a symposium as part of the CSPC's annual science policy conference in November 2024.

"We are hoping to expand on this project by bringing individual firms as well as more engagement from regional stakeholders, both governments and associations to present their views," Hariri said. "In the wake of uncertainty around our trade with the U.S., I believe this conversation is more essential than any other time. "

The CSPC’s cross-sector synthesis and summary document identifies the common and recurring themes across all sectors in the consultations for each topic, along with an overarching set of recommendations common across the three consultation sessions.

Emerging Trends and Challenges

• Labour and talent shortages, particularly in skilled trades, technical roles and specialized fields, were consistently identified as significant barriers.
• Regulatory burdens: Lack of clarity and consistency within the regulatory framework are causing delays, which impacts domestic and foreign investment and threatens competitiveness.
• Capital and scaling constraints: Limited access to venture capital, high tax rates and funding gaps are significant issues affecting SMEs and startups and hindering the ability of smaller firms to scale domestically.
• Infrastructure gaps: Agriculture needs better rural digital connectivity, health sciences require more wet labs and production facilities, and advanced manufacturing faces a shortage of manufacturing infrastructure to support large-scale production.
• Environmental sustainability and climate adaptation: Participants noted that most industrial sectors are fully committed to meeting carbon reduction, emission and sustainability policy goals, but need practical, economically viable strategies that balance environmental policy imperatives with the realities of competing in a global market.
• Policy misalignment and lack of coordination: Policy misalignment, conflicting goals, lack of coordination within and across all levels of government and inadequate oversight, inadequate follow through, and evaluation on policy implementation are key challenges in all sectors. Health and biotech sectors noted that uncoordinated policies slow down processes like clinical trial approvals and AI regulation. In the agriculture sector, policies that lack the flexibility needed for practical application across diverse regions and scales of operation are a barrier to innovation.

Designing an Innovation Strategy to Address Challenges

• Workforce development and skills training: Developing a coordinated workforce strategy to address critical skill shortages is a priority. Public-private partnerships for apprenticeships, upskilling and digital literacy programs are needed across all sectors. 
• Adaptive, innovation-friendly regulatory frameworks: Modernization and harmonization of the regulatory system would address sector-specific challenges while supporting innovation, growth and competitiveness.
• Public-private collaboration and ecosystem building: There is consensus that an innovation strategy should prioritize industry-driven ecosystem capacity building that brings together academia, industry and government to address sector-specific commercialization challenges. Government procurement policies are critical to supporting domestic innovation.
• Targeted infrastructure investments: Suggestions included expanding digital infrastructure in rural areas, building wet labs and specialized manufacturing facilities for health sciences, and supporting scale-up, commercialization, pilot testing and demonstration infrastructure.
• Sector-specific and regional customization: A sector-specific and regional approach to a national innovation strategy was emphasized, recognizing that Canada’s geographical diversity and industry-specific needs require tailored solutions.
• Accountability, transparency, and coordination in policy implementation: Participants across sectors recommended stronger oversight mechanisms, clearer accountability structures and transparent metrics to evaluate policy implementation.

Priorities for a National Innovation Strategy

• Long-term, outcome-oriented goals: Each sector advocated for a mission-driven strategy with long-term goals, especially to address the lengthy timelines inherent in R&D and commercialization.
• Enhanced industry-academic partnerships for commercialization: Participants emphasized the need for partnerships between academia and industry to bridge research and commercialization gaps, with a focus on creating pathways from discovery to market.
• Streamlined and consistent regulatory frameworks: Regulatory modernization is essential to support quicker project approvals, reduce costs and foster alignment between regulatory standards and industry needs. Harmonized regulations across federal and provincial levels were seen as crucial for enabling the successful commercialization of Canadian innovations.
• Capital and scaling support for SMEs: Participants recommended creating more accessible funding mechanisms, such as grants, low-interest loans and tax incentives, particularly for high-growth companies across all sectors. These measures would enable SMEs to grow and remain in Canada.
• Public-private partnerships and sector-based strategies: Effective public-private partnerships, along with sector-specific strategies, would allow for better alignment between government and industry priorities, ensuring that each sector’s unique challenges and opportunities are addressed comprehensively.
• Accountability and follow-through in policy implementation: Enhanced coordination across government levels and departments is essential to maintain consistency and alignment with industry needs, creating a supportive environment for innovation.
• Focus on climate goals and sustainability: A national innovation strategy should prioritize alignment with Canada’s climate commitments, emphasizing sustainable practices across sectors.

The CSPC’s report made several recommendations, including:

Workforce development and skills training

• Develop a coordinated workforce strategy focusing on apprenticeships, digital literacy and specialized training for evolving technological needs.
• Tailored programs should be implemented to increase completion rates in trades, support skill transitions, and ensure new talent pipelines in areas like AI, digital health and precision agriculture.

Regulatory reforms to support innovation

• Streamline and modernize regulatory processes to be more innovation-friendly, reducing approval times, simplifying compliance, enhancing transparency and improving regulatory adaptability.
• Introduce regulatory “sandboxes,” where new technologies can be piloted in a controlled environment prior to regulatory approval.
• Develop sector-specific regulatory frameworks that address unique sector challenges. Coordinate standards across federal and provincial governments and create metrics for regulatory effectiveness and efficiency.

Ensure policy alignment, transparency and accountability

• Improve policy alignment with industry needs and strengthen internal oversight, transparency and follow-through in policy implementation.
• Implement clear accountability structures to measure progress and ensure that promising policies translate into practical actions.
• Set up cross-sector working groups that include government, industry and academia to guide policy development and implementation.
• Establish regular reviews and transparent reporting mechanisms to evaluate policy outcomes, making adjustments as needed to stay aligned with industry requirements.

Investment in critical infrastructure

• Prioritize infrastructure investments, including supporting digital infrastructure for data-driven farming, wet labs for biotech, and manufacturing facilities for scaling production in advanced manufacturing.

Support for SMEs and startups

• Establish funding mechanisms specifically designed to help startups and SMEs scale domestically.
• This could include venture capital incentives, tax credits, grants and low-interest loans to alleviate financial barriers and reduce the need for companies to seek foreign investment.

Strengthening public-private partnerships

• Build robust public-private partnerships to create innovation ecosystems that support the entire lifecycle of innovation, from research to commercialization.
• These ecosystems should foster collaboration between academia, industry and government.
• Support industry-led innovation hubs and centres of excellence that align academic research with industry needs.
• Create incentives for partnerships that focus on commercialization, ensuring that R&D translates into tangible market benefits and economic growth within Canada.

Long-term, mission-driven approach

• Implement a mission-oriented approach to a national innovation strategy that incorporates a long-term vision and clear objectives.
• A national innovation strategy should seek a balanced policy environment that fosters competitiveness while promoting sustainability.

Sector-based strategy and regional customization

• Adopt a sector-specific and regional approach to address Canada’s geographical diversity and the unique needs of Canada’s industrial sectors

Commitment to sustainability and climate goals

• Canada’s innovation strategy should align with climate and sustainability goals, encouraging sectors to adopt environmentally friendly practices that reduce carbon footprints.
• This can include supporting sustainable practices in agriculture, green technologies in manufacturing, and eco-friendly production processes in health.

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