November 16, 2018

Canada’s Innovation Policy Agenda Just Doesn’t Do It: A CATA Op-Ed by Sr. VP, Russ Roberts & CEO, John Reid

Canada’s Innovation Policy Agenda Just Doesn’t Do It

As Canada’s One Voice for Innovation advocacy Group, CATAAlliance (www.cata.ca),  moderates crowdsourced ideas and guidance from over 800,000 opt-in members with strong interests in Canada.   Their commentary and insights provide direction for our efforts to promote positive changes that can provide Canada’s innovation based businesses the environment they need to compete and grow effectively.  

Ultimately, our role is to be the advocate for the changes needed to maximize the return on Canadians’ significant investments in science and technology through its commercialization by Canadians. The commentary we’re receiving tells us that there’s lots of room the Federal Government in this respect, as does Canada’s continuing dismal showing in international comparisons.   

The creation of Canadian super clusters is a good first step to advancing Canada’s competitive innovation ranking, but stops short in having measurable outcomes. And the recent NAFTA/USMCA agreement continues to keep the door open to Canada’s largest market and trading partner, the U.S., an important success.

Despite these positive steps, we would like to point out that the government’s three-year effort to rationalize spending in a more innovative support system for S&T (Science and Technology) and to create a modern IP (Intellectual Property) regime does not address the perennial and key issue.

Specifically, CATA and many leaders have argued – for close to a decade – that the critical challenge facing federal governments is how to significantly improve the return on Canadian Taxpayers’ investments in S&T linked business innovation.  In our experience, the Liberals are not the first federal government to have ignored critical issue as they developed their respective innovation agendas with limited prioritization on what happens to the IP.

Some facts:

  • a large portion of our S&T graduates, particularly information technologists, take their learning straight to the U.S. after graduating.  In the computer sciences and engineering domains, the brain drain at some highly ranked universities can be up to 40% of the graduates.
  • In the past five years, 183 Canadian companies have been acquired, nearly 70 per cent by U.S. firms.  According to PwC, 77 Percent of Canadian tech founders are planning an exit for their company.  How many of these companies selling out to foreign entities were funded with taxpayer money?  Should funding be focused on companies focused on a long-term stay-in-Canada vision? (Carl Rodrigues, Special to The Globe and Mail, published July 10, 2017)

While we have not seen a careful analysis of the cost of the outflow of Canadian innovations from Canada in terms of a net benefit analysis, their impacts cannot be small. We believe that a financial audit is needed to put the issue into perspective.

Throughout its work with the previous Conservative Government, CATA highlighted the need for better returns on our investments.  Specifically, we argued that it is not the lack of Canadian S&T successes, creativity and innovations that are the problem. Rather, it is our governments’ failure to support the exploitation of the country’s successes to the fullest benefit of Canadians.  We have carried forward the same message to the current Government.

CATA does not understand why governments do not seem to grasp that a continued simplistic focus on throwing money at S&T support – either through academia or directly to businesses in the form of SR&ED (Scientific Research and Experimental Development) tax credits, grants, etc. – simply leads to the off shoring of the IP rewards for other countries to exploit?   

Russ Roberts, VP, Tax, Finance & Advocacy, for CATA highlighted this issue to Minister Morneau and Minister Bains in his presentation to the March 2018 meeting of the Canadian Club of Ottawa, a message reiterated by Ken Workun, CEO, Netfore Systems at the same meeting.

So far, we have not seen the federal bureaucracy show much interest.  On the other hand, the importance of the issue has been picked up in a recent spate of well-developed articles/Op-Ed pieces, some offering ideas on what is needed.

To help share the insights, here is a link to recent commentaries and extensive research conducted by the CATA advocacy team: https://cata.ca/2018/innovation-policy-links/

CATA’s position is that it’s time for this Government to demonstrate true innovation leadership. Our call to action to all party leaders is to embrace 5 points:

  1. Recognize that while Canada remains strong in terms of the quality and impact of its scientific output, it is lagging further and further behind in its ability to commercialize that output and generate wealth;
  2. Create a 21st Century Tax Commission focused on improving the nation’s support for innovation through fiscal measures, test all recommended measures through robust public consultations, and deliver a final report in twelve months;
  3. Complete the SR&ED review with proposed improvements and then test them through robust public consultations;
  4. Support current work on developing a modern IP system with appropriate fiscal measures for IP exploitation in Canada and also provide assistance to cover some of the costs of the patent process; and,
  5. Publish benchmarking metrics comparing Canada to other leading countries building innovative capacity.

We ask all parties to embrace this guidance in your election platforms because it will bring us much closer to having a system of innovation in which government, universities and the private sector work more closely together to move from invention to commercially viable solutions. This will not only create jobs, retain our talent in Canada, but also provide more solid returns to Canadians.

Call to Action!
Take a few minutes to send a 2/3 sentence quote or commentary endorsing the Op-Ed to CATA CEO, John Reid at jreid@cata.ca. Reach out to your peers with the Op-Ed and ask them for supportive comments. And then post the Op-Ed on all your social media as part of advancing the 5 advocacy points.

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The Canadian Advanced Technology Alliance (CATAAlliance), Canada’s One Voice for Innovation Lobby Group, crowdsources ideas and guidance from thousands of opt in members in moderated social networks in Canada and key global markets. Supported by evidence-based research, CATAAlliance then mobilizes the community behind public policy recommendations designed to boost Canada’s innovation and competitiveness success.

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Contact: CATAAlliance CEO, John Reid at email jreid@cata.ca, tel: 613-699-8209, website: www.cata.ca, tags: Innovation, Leadership, Entrepreneurship, Advocacy