Dr Richard Hawkins

Jenkins Report a welcome breed apart

By Dr Richard Hawkins

The report of the Jenkins expert panel is the latest in a string of federally commissioned studies about innovation policy in Canada. With the notable exception of the 2009 report from the Council of Canadian Academies, which in many respects is the conceptual blueprint for the Jenkins report, these earlier efforts were frankly of indifferent quality and limited vision. The Jenkins report is a breed apart. It strikes out in some refreshingly new directions and we must hope that it does not evaporate from the order paper as happens with most other recent contributions of this kind.

It is a sad fact that since the mid-1980s, successive Canadian federal governments of various political stripes have failed to engage coherently with the industrial policy file, for which "innovation" has become merely a convenient euphemism. Many of the largest federal initiatives have focused only on the more politically neutral supply side — knowledge workers, infrastructure and R&D — on the assumption that by increasing the supply of ideas, a "growth bunny" would somehow leap magically out of a giant hat. The problem is that they forgot the "hat" — the crucial institutions, instruments and rules that facilitate the transformation of ideas into economic value that will stick where it is produced. The reality is that the market can exploit knowledge anywhere. We have to give the market very good reasons to exploit it here in Canada.

The Jenkins report sets out a new approach that might generate more of these reasons. In particular, Jenkins highlights the question of what exactly innovation policy really is, or should become. The theory is simple enough — growth is generated by combining human, natural and capital resources is new ways, thus creating new sources of economic value. On this basis, it is reasonable that an innovation policy would sustain such institutions and rules as could facilitate the creation of new enterprises, products, services and practices across as broad a spectrum as possible.

In truth, however, most so-called innovation policies in the OECD countries — certainly in Canada — are actually technology policies, whose main aim is to promote and sustain R&D-intensive producers of technology goods. The theory here, actually more the propaganda, is that the economy is driven by these sectors. The problem is that the economy is not driven by them. Rather, they are one vital driving factor among many vital driving factors. As Jenkins rightly points out, incorporating the many is absolutely critical to any coherent innovation policy. And indeed, the many already comprises most of Canada's most innovative and internationally competitive industries.

Consider for a moment that none of the kinds of contributions that Steve Jobs made to Apple would qualify for SR&ED tax credits and you will start to see the reasons for extending the horizons of innovation policy beyond technology and R&D. In advocating this broader view, Jenkins is in step with recent initiatives in the OECD and many of its member countries, to fundamentally rethink innovation policy and where it should go. This movement is also firmly aligned with leading-edge scholarship, which long ago broadened its theoretical and analytical sights on the innovation question.

technology oriented

That said, many of the recommendations in this report are oriented to our old friends, technology policy and R&D. Partly this is a melody that lingers on after the band has stopped playing. But certainly no one is arguing that we just stop paying attention to R&D-intensive industries. We urgently need to pay more and better attention to them.

Readers may share my disappointment that Jenkins provides no particularly new or original evaluation of the efficiency of current federal R&D policies, especially SR&ED and enterprise formation models that rely on venture capital. In places the report is oddly wedded to some rather dated views of how entrepreneurial companies form and how they can best be nourished.

Despite such reservations, however, the recommendations contain many positive messages concerning how federal R&D-related programs can be diversified within a more systemic approach to innovation policy. In particular, and at long last, the report sets out reasonable proposals for integrating innovation policy with public procurement. It is ironic that the fame-frame of the Jenkins report was upstaged in effect by this very recommendation as $35 billion in naval procurement contracts were announced within hours of the report's release. How Canadian governments perform in exploiting domestically the tremendously high multipliers on military platforms like these will say more about public sector performance in stimulating innovation than probably any other indicator. I am encouraged that an undercurrent of consensus seems finally to be forming that Canada's innovators don't need subsidies, they need contracts and customers, and that government has a productive role to play here.

Readers will find much to quibble about in this report, particularly concerning how the recommendations could be realized and what it would all cost. This will sustain a healthy debate. For me, the missing piece in this puzzle concerns what is going to yield advantage to Canada in competing with rival jurisdictions. If the Jenkins recommendations could be implemented within just a few years, then the Canadian innovation policy landscape would be roughly symmetrical with those of most other leading OECD economies as they exist today. So how do we go beyond building policy architectures, and towards leveraging them to create competitive advantages for Canada's innovators? As with Alice in the Red Queen's court, are we running just to stand still?

Certainly part of the answer will lie in how well we succeed in linking high tech industries that tend to be highly fungible, to the vast range of other Canadian industries that tend to stay put, for example the resource, agricultural and services industries that make up most of the Canadian economy. It will depend also on how successful we become at tailoring innovation policies to the needs of these industries, which also may involve raising our expectations of them. Jenkins has issued the clear call. Is anyone in Ottawa listening?

Dr Richard Hawkins is a professor and Canada Research Chair in science, technology and innovation at the University of Calgary, a senior fellow at the Center for Innovation Studies (THECIS), and fellow at the Institute of Sustainable Energy, Environment and Economy (ISEEE).