Growth council targets infrastructure, FDI and immigration; innovation and skills up next

By Debbie Lawes

The first shoe has dropped in the federal government's plan to implement "bold and innovative ideas" to boost Canada's lacklustre productivity and competitiveness, with some innovation players cautiously optimistic that the country may finally be on the right path. On October 20, Finance minister Bill Morneau joined with Dominic Barton, global managing director at McKinsey & Company, and other members of the Advisory Council on Economic Growth to release that group's first recommendations.

They include establishing a Canadian Infrastructure Development Bank (CIDB), creating a foreign direct investment (FDI) agency, boosting annual immigration from 300,000 to 450,000 and making it easier for skilled foreigners to move to Canada.

The Trudeau government has launched two parallel consultations aimed at growing Canada's sluggish economy—the Barton-chaired growth council under Finance Canada and the Innovation Agenda review under Innovation, Science and Economic Development Canada (ISED). The latter has garnered more than 1,300 responses to an online consultation and sent "innovation leaders" from the private and not-for-profit sectors, and academia, across the country to lead workshops and roundtables.

Dr David Wolfe, co-director of the Univ of Toronto's Innovation Policy Lab, points out that the Barton council's mandate is to promote economic growth and that innovation is just one tool for doing that. In contrast, the ISED consultation is focusing on actions government can take to improve its track record of turning ideas into marketable products, services and business models. He says the two mandates are causing some confusion outside of government.

"Where and how do the two mandates overlap and fit together?" asks Wolfe. "By assigning responsibility to (ISED) minister (Navdeep) Bains for an Innovation Agenda and then commissioning this advisory group to minister Morneau and giving them a very broad and inclusive mandate, the government has created a lot of confusion about who's doing what."

The biggest recommendation from the growth council is the CIDB, which would leverage $40 billion in public funding to attract another $160 billion in institutional funding over 10 years. Preference would go to revenue-generating greenfield projects, such as toll highways and bridges, high-speed rail, port and airport expansions, smart city infrastructure, national 5G broadband networks, power transmission and natural resource infrastructure, with an emphasis on "smart, strategic infrastructure".

An October 13 report released by the Public Policy Forum also called for the creation of an infrastructure development bank, as well as a new centre for smart infrastructure and construction, modelled after a similar entity at the Univ of Cambridge. The Cambridge centre launched in 2011 with $20 million in funding from two British agencies, including the UK's innovation agency, Innovate UK. While the government here has identified infrastructure investments as key to modernizing and bolstering the Canadian economy, PPF notes that "Canada appears to be lagging in the adoption of advanced connectivity infrastructure".

The PPF recommends that Canada create a centre similar to the Cambridge Centre for Smart Infrastructure and Construction, or "launch a fund to encourage universities across the country to do similar research and collaboration with the sector".

COUNCIL'S NEXT PHASE

The growth council's next recommendations, due later this year, are expected to shift to innovation policy and skills shortages. The Globe and Mail reported this month that the council plans to look at how to use procurement to grow start-ups and a fund to help start-ups scale. RE$EARCH MONEY has learned that the growth council is also looking to Germany's innovation ecosystem for ideas to improve collaborations between industry and researchers, specifically its Fraunhofer Society, the Leibniz Association, Max Planck Society and Helmholtz Association.

One member of a former expert panel on business innovation is hoping for greater attention to the needs of small business, and not just start-ups. "The challenge is not simply exports, but local and regional innovation too. Canada's challenge is to grow the number of companies in the small business sector," says Nobina Robinson, CEO of Polytechnics Canada and a member of the Expert Panel on the Review of Federal Support to Business R&D (R$, October 31/11).

Robinson, along with many small- and medium-sized enterprises in Canada, continue to advocate for a Canadian Small Business Innovation Research program, modelled on a 34-year-old US program that uses government procurement to stimulate technical innovation and commercialization by small business (R$, September 22/16).

"It's about government putting capital out there and calling on companies to come together to solve a particular challenge, like saying, we want best-in-class water treatment plants for First Nation communities or more innovation in our health systems," she says. "This is something that has never been acted on since we reported in 2011. It's the missing tool in our toolkit."

The government is also considering a major overhaul to the unwieldy number of innovation support programs, possibly even SR&ED. The biggest issue with SR&ED will be deciding if a greater proportion of its funding should go to direct subsidies for innovation, as opposed to indirect support. Some critics say SR&ED should also reflect the realities of business research and innovation, for example by allowing market research as an eligible expense, which companies need to develop export strategies.

Robinson says the growth council hasn't been shy in recommending changes to the "machinery of government", such as creating a CIDB and FDI agency, to stimulate long-term economic growth. In its next phase, she wants to see similar changes for innovation support programs.

"If they can do that for infrastructure and for foreign direct investment, then why don't we have a robust set of recommendations around how you consolidate the machinery of business innovation R&D programs that the federal government offers to the tune of $1 billion a year?"

The growth council's recommendations will feed into Morneau's Fall Economic Statement on Nov. 1 and next year's budget. The prospect of a new infrastructure development bank will likely be a hot topic Nov. 14 when the world's largest asset manager, Blackrock, hosts a meeting with major international investors and government officials to talk about Canada's infrastructure plans.

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