Letter to the Honourable Navdeep Bains regarding Canada’s innovation agenda

Dear Minister Bains,

Congratulations on the extensive consultation process that you and your government successfully launched and executed over the summer. As you now turn to the difficult task of incorporating what you heard into your Innovation Agenda, it is important that you stay focused on specific outcomes and clearly articulate the challenge(s) that this Agenda is going to address.

From a business perspective, businesses – including members of the Business Council of Canada – already innovate every day to keep pace with their global and domestic competitors. Simply stated, the idea that Canadian businesses are not already innovative is not true. To succeed in advancing Canada’s chances at becoming “Innovation Nation” the Business Council sees the following three areas as critical:

• Build the world’s most talented workforce
• Innovate and grow through collaborative partnerships and shared objectives
• Increase access to capital to scale and grow Canadian companies

We can achieve success by leveraging the country’s strengths and working together across regional, jurisdictional, and sectoral divides towards shared objectives. We are already doing a lot on all three fronts and these successes need to be celebrated and shared. But more needs to be done. The Business Council of Canada and its members are committed to stepping up to the challenge.

Building the world’s most talented workforce

Canada’s success depends on the knowledge and skills of its people. Recognizing that not all of the levers sit within the federal government’s jurisdiction, your government must work closely with provincial and territorial counterparts to make the most of our human talent. Canada should position itself as a magnet for the world’s most creative, entrepreneurial, and skilled people. We believe this can be achieved by matching skills with opportunities through work-integrated learning programs, and through smarter immigration policies and more timely access to global talent.

Matching skills with opportunities

A top priority is to assist young Canadians in transitioning successfully from the classroom to the labour force. Through the Business/Higher Education Roundtable, some of Canada’s leading employers are partnering with universities, colleges and polytechnics across the country to promote a wide range of work-integrated learning (WIL) opportunities that prepare students and graduates for meaningful and rewarding careers.

In April of this year Roundtable members demonstrated their commitment to improve WIL by creating a national goal for work-integrated learning – to ensure 100 per cent of Canadian post-secondary students benefit from some form of meaningful work-integrated learning before graduation. Our research shows that approximately 50-60 per cent of students currently participate in a WIL project prior to graduation while 89 per cent of current students and recent graduates support more work integrated learning in their programs.

An important component of the Roundtable’s work is convening partners in priority industry sectors and regions across the country to create and implement innovative WIL pilot initiatives. Federal support, through ESDC’s Industry Education Partnership Initiative and other talent-focused programs, as well as broad promotion of these efforts will be critical to their success.

Smarter immigration policies and more timely access to global talent

Access to executive talent is cited as a key challenge for Canadian companies of all sizes. Canadian companies need easier and faster entry for executive talent when labour force gaps exist that require international expertise to be brought in.

While revisions to Canada’s current and future immigration policies – including the Temporary Foreign Workers and the Express Entry programs – are needed to provide more timely access to top international talent, Canada also needs a tax system that attracts highly skilled workers and facilitates their movement. Tax differences between countries can penalize workers who change their residence, be it foreign workers in Canada or Canadian workers abroad.

The Business Council recommends that the federal government make recruitment and retention of international talent – including international students – a top priority.

Innovate and grow through collaborative partnerships and shared objectives

Canadian-led research drives innovation, strengthens the economy and improves our quality of life. Although many industries and institutional partners have built strong relationships, silos, misaligned incentives, and complex systems complicate broader co-operation. Better linkages and shared objectives among key players across the innovation ecosystem – from idea generators and basic scientists to entrepreneurs and R&D specialists at large multi-national enterprises – will lead to more commercialization and greater growth of Canadian companies. The Business Council urges the federal government to focus on the following priorities:

• Facilitate the development of large-scale industry-led clusters
• Coordinate, align, and simplify private sector R&D support
• Leverage government procurement to drive private sector R&D

Facilitate the development of large-scale industry-led clusters

Industry-led clusters and research consortia are an effective mechanism to organize relevant industry actors to identify sector-wide challenges, pool resources, collaborate on R&D, and interface with the wider innovation ecosystem to develop new technologies. These clusters should be built with a large anchor company, or companies, at their core; they are the key to innovation.

The federal government needs to facilitate the development of industry-led clusters and support the work of existing clusters. To be successful, it is important that the government resists the temptation to “spread the peanut butter too thin”. These clusters require scale if they are to be successful and follow best practices that exist in Canada and around the world. For example, Canada’s Oil Sands Innovation Alliance (COSIA) – an alliance that brings together leading thinkers from industry, government, academia and the wider public – is driving innovation in the oil sands with collaborative projects aimed at improving environmental performance. To date, COSIA member companies have shared 814 distinct technologies and innovations that cost almost $1.3 billion to develop. As well, the German Fraunhofer model provides a strong example of what could be achieved here in Canada.

Coordinate, align, and simplify private sector R&D support

Supporting private sector R&D requires an enabling environment that includes streamlined access to government programs and strong ties with the broader innovation ecosystem. The current federal funding landscape is too challenging to navigate, is not supportive of risk taking, and is in need of review to ensure that it is meeting key objectives. There are currently over 60 federal programs – all of which are sub-scale – that collectively create an overly complex, bureaucratic and inefficient system incapable of reaching its stated goals. This is not the way to support innovation in Canada.

One way to address these criticisms is through the creation of an Industrial Research and Innovation Council. This was the primary recommendation that came out of the Jenkins report from 2011. While the creation of a new council would take time, there are several measures that could be implemented more quickly based on some of the work already taking place. For example, the National Research Council’s Industrial Research Assistance Program is cited as one of the most effective programs in supporting SMEs. Many want to see their ‘Concierge’ service extended to other government programs.

Leverage government procurement to drive private sector R&D

The federal government should leverage its significant purchasing power to spur innovation in Canada. It can use procurement to help support Canadian SMEs to develop new technologies, products and processes. The U.S. Small Business Innovation Research program (SBIR) is a global best practice that could serve as a model.

Increase access to capital to scale and grow Canadian companies

Canada’s venture capital environment is not supporting the growth of Canadian companies to its full potential. One way to get our high-growth potential companies over the famed “valley of death” is by providing them with access to growth capital and mentorship. Here we see an important role for the private sector. One way to do this is through providing your support to the private sector-led initiative, Canada Scale-UP Program (CSUP).

CSUP is gaining interest and support among the major Canadian banks and will focus on providing entrepreneurs with the key aspects they need to create Canada’s next great companies. It will focus on providing entrepreneurs with the key aspects they need to create Canada’s next great companies: patient (up to 10 years) high-risk minority capital on entrepreneur-friendly terms; successful and experienced mentors, advisors and board members; and access to a network of business, finance, legal, and governmental contacts unmatched in Canada.

This is an exciting time in Canada. We look forward to working with you and would be ready to discuss any of these ideas further at your convenience.

Sincerely,

The Honourable John Manley