Ron Freedman, partner, The Impact Group

Assessing the last eight years of S&T

By Ron Freedman

As we wait for the federal government to release its refreshed S&T Strategy, I thought it would be fun to reprise a piece I wrote in 2006, just prior to the release of the federal government's 2007 version of the strategy, and see what progress we've made on the issues I then highlighted. Circumstances change (and so does my thinking) but some of the themes are still relevant today. Here's what I propounded eight years ago and what I think today.

1. Then: Eliminate tuition fees (or provide full scholarships) for graduate training in science, engineering and health disciplines. Provide half-price tuition for undergraduate training.

Now: Canada still needs more people trained in STEM disciplines. Many of our university STEM programs only survive because of the large number of overseas students. If we're serious about building national capacity we could still use market incentives such as free or reduced tuition to lure qualified Canadian students into these fields.

2. Then: License all technology developed in our universities and government labs free, on a non-exclusive basis, to any Canadian company. Royalties can be negotiated based on sales, but not on licenses.

Now: It's still the case that the returns to institutions from IP licensing are very small and half of technologies are licensed outside the country. A free non-exclusive licensing pilot project is still worth testing.

3. Then: Advertise innovation resources. Why are company owners and managers not beating down the doors of our post-secondary institutions for help ... The biggest challenge is to stimulate industry demand for the knowledge and technology ... Start a campaign of hard-core radio, print (and possibly TV) advertising aimed at business owners and managers concerned with their companies' future, to drive them to universities and colleges.

Now: Most university and college outreach to business is done in a "soft marketing" way — for instance, making presentations at industry association meetings. This is great, but we need a proactive approach to selling (not marketing) higher education capabilities to firms. It would take only a small amount of money (say $75,000) to launch a regional pilot project aimed at stimulating industry awareness and demand using traditional radio advertising.

4. Then: Start a comprehensive push towards industrial modernization. Canada needs to ensure that all its industries are modern and competitive. Even such prosaic industries as forestry, mining and agriculture are already high tech activities competing with other high tech industries abroad. It's going to be a very long time (if ever) before such glamour industries as biotech or nanotech make any noticeable contribution to national prosperity or GDP.

Now: Too much effort is still focussed on "high tech" industries. Every industry today is already high tech, regardless of sector. We need to adopt a philosophy of across-the-board improvement as the basis of our innovation policies and programs.

5. Then: Create flow-through shares for emerging technology companies. We need to treat emerging technologies such as nanotech and biotech in the same way as we do oil exploration — high-risk enterprises with long term payoff at best. We need to lessen risk for investors and entrepreneurs and extend the same tax benefits as we do for exploration.

Now: Still a good idea. Still resisted by federal and provincial finance departments.

6. Then: Reform the SR&ED tax credit system. Most users are opportunistic companies seeking handouts for normal business activities. Few companies are consistent R&D performers. Program leverage is scant. This is Canada's largest single innovation program and it's in dire need of updating.

Now: Still the case. First step; dump hypothesis-based scientific research as a necessary condition for funding in favour of improvements to company technical capacity aimed at new products and services.

7. Then: Reinstate the Unsolicited Proposal Fund. Possibly no other federal innovation program did as much to launch and nurture new high-tech Canadian companies as did the old UP program ... Update the UP program and bring it back.

Now: The federal government's replacement program lacks the key ingredient that made the UP program a success: direct dealings between suppliers and customer departments, with financial support provided by UP. Give the money to the departments and get rid of the middleman.

8. Then: Adopt a Small Business Innovation Research Program (SBIR)-style program. By reserving a specific percentage of federal R&D funds for small businesses, SBIR protects them and enables them to compete on the same level as larger firms.

Now: Federal departments and agencies are too under-funded to allocate a portion of existing budgets to an SBIR-style program. Nice idea. Too late.

9. Then: Rejuvenate IRAP. Canada's flagship technology outreach program is in the doldrums. Not only is the IRAP budget in decline, but for the past number of years the program hasn't been able to spend the funds it did receive. Canada needs a new IRAP; one that is less risk-averse and is designed for the economic realities of the 21st century.

Now: Mission accomplished. IRAP's budget has been doubled. But still more funds should be shifted from indirect (i.e. SRED) to direct (IRAP).

10. Then: Drive health science and technology innovation through medicare. The billions of dollars Canadians spend each year on health care do little or nothing to stimulate technology-based economic development, at least at home. We need to harness medicare as a tool of economic development.

Now: Canada will eliminate surgical wait times before we effectively tackle this conundrum.

11. Then: Revitalize federal labs. Federal government laboratories have been languishing for a decade. It's not merely a question of financial resources and infrastructure — which are sorely in need of renewed investment — but of role. No government in the past 20 years has been able to articulate what it wants its federal labs to accomplish. We need to renew federal labs in a 21st century context.

Now: Don't hold your breath. The least-bad outcome will be enhanced partnerships between federal labs and universities/ research hospitals.

Conclusion. Then: They seemed like good ideas at the time. Now: Some hits, some misses.

Ron Freedman is a partner with The Impact Group and co-publisher of RE$EARCH MONEY. ron@impactg.com