12 Thoughts About The Budget

Well, the federal budget dropped this week. Pundits seem to be in agreement that the overall budget is long on style and short on substance – at least so far as dollars are concerned (Coyne, Wells, Hébert). To some degree this is true on the innovation and research policy front, though there’s a lot to unpack. 

On the innovation and skills side, there’s a lot to like in the budget – there are a lot of details yet to come, but the potential is encouraging. In fact, I’m a little concerned that this plan may be too ambitious.

Too much ambition is definitely not a problem on the research side. This budget is very thin on research. Actually, it goes beyond thin into strange. We’ll need to spend some time figuring things out.

For a much more complete overview of the implications for the sector, I highly recommend the analysis from Alex Usher and his associates at HESA (.pdf here). This post is going to be more of a personal set of ideas and highlights. Here are 12 thoughts about the budget:

  1. Innovation and Skills Plan. Instead of an “Innovation Agenda”, we are presented with the “Innovation and Skills Plan”. The budget does a pretty good job of laying out what this plan looks like, how the pieces are supposed to fit together, and it even manages to plausibly link it to middle class success. (Note for those of you following along at home: I found Table 1.1 on p. 46 really helped me understand how all the pieces are supposed to fit together.)

  3. Skills. Overall, I think the government did some very good work here. Full marks for working with the province through Labour Market Transfer Agreements – new money and collaborative reform rather than a unilateral federal program is tougher but the right thing to do. Changes to student financing seem like a positive step (though HESA knows much more about this than I).

  5. FutureSkills Lab. As recommended by the Minister’s growth council, the government is allocating $225M over four years to establish a new organization to “support skills development and measurement in Canada”. I’m still not clear on how this isn’t already ESDC’s role, but sometimes a new organization can bring fresh thinking to an issue. This organization has a mandate to identify skills needed, explore innovative ways to develop them, and perform analysis and evaluation. Thankfully, the program doesn’t kick in until next fiscal year, so there is time to work out the details. It would be GREAT if we could get this right (fingers crossed).

  7. Brief aside on program development.  We could do much better on program development in this country, and maybe (hopefully) #futureskillslab will get this right. At Mitacs we embraced a form of ‘rapid iterative prototyping’ for program development. We developed ideas, designed small-scale pilots, and then tested them. Many of them fail (don’t tell anyone from Mitacs I told you this). Others had success but didn’t have a clear path to growth or sustainability. A few made it to fully-fledged programs and have demonstrated enormous success (more on that in a minute).


    We need program development sandboxes to try out policy ideas. But – and THIS IS THE IMPORTANT PART – we also need mechanisms to evaluate their impact and then scale them up or shut them down. It would be great if this fail-fast/rapid iterative prototyping approach to program design could be embedded in the new initiatives announced in this week’s budget.


  9. Mitacs. I’m completely biased, but I’m going to simply come out and say it: I’m thrilled for the investment in Mitacs – $221M over five years. Having spent so many years talking to students and companies who used the programs, I deeply believe graduate research internships confer enormous benefits to students and encourage a culture of research in many small and medium sized Canadian companies. The government, universities, and community should take pride in having supported the growth of such a successful program – a global pioneer in the field (/end_proud_rant).

  11. Youth. I’m also encouraged by measures to increase youth engagement with STEM – particularly through the $10.8M in NSERC’s PromoScience Program. This is an easy investment to overlook, but building STEM literacy and interest in K-12 education makes a lot more sense to me than simply teaching kids to code (wait, what? Right – there’s also $50M in the budget to teach kids to code). All kids, regardless of what careers they pursue or what disciplines they study, will benefit from the critical thinking and fact-based inquiry provided by good STEM experiences in elementary and secondary schools. (Disclosure: I’m a volunteer board member with the great organization Let’s Talk Science which has received PromoScience funding).

  13. Innovation. Right, generally I think this is pretty good. As I referenced in my last post, innovation tends to get confused with industrial strategy – a point made explicit here when the Budget outlines the sectors the government is backing through “big bets”: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources. But it also gets into some real innovation policy around program review, venture capital, procurement and more. New programs don’t involve significant new funding (apart from last year’s funding for clusters, now super-sized). But maybe this is a good thing if it means programs have a chance to develop, iterate, evaluate and terminate/scale (see #4, above)

  15. New Innovation Programs. Here’s where I worry about ambition, but am excited about possibility. After years of looking longingly at other countries’ successful innovation programs, we’re finally going to get a couple of our own. Innovative Solutions Canada is going to get $50M to leverage procurement for innovation. More importantly, it will be modeled after the US Small Business Innovation Research (SBIR) program. This would be great – SBIR is often cited as a major driver of American innovation and ingenuity. I could do 12 thoughts on SBIR (and maybe I will, he threatened), but it will be hard to get right given our lack of scale and purchasing power (we simply don’t have anything like US Departments of Energy, Defense or NASA).


    The same will be true for the Impact Canada Fund – which will “focus and accelerate” efforts to solve big challenges. This kind of ‘mission-driven’ research has long been hailed as an innovation-engine based on longing glaces at DARPA and NASA. The fund will get $75M for two years of effort on clean technology (better hurry up!) and $300M over 11 years (whoa, slow down!) for work on Smart Cities. There is a ton of potential in this kind of program, but the devil is SO SO SO in the details of implementation. The program will need to strike the right balance between focus and micro-management – here, the DARPA model should be instructive.


  17. Superclusters. Not a lot to say here. $950M of already-committed money, details are coming later in spring, only $50M allocated to be spent this year, followed by $250M annually and $150M in the last year of the initiative (2021-22). Not a lot of mystery in the identities of the superclusters: the six areas of focus listed in #7 plus infrastructure and transportation are listed as examples of the sort of areas. This is tricky stuff.  Given the amount of money involved, there will be no shortage of advice from potential recipients.

  19. Innovation Canada and Program Review. This could be a big deal. A new platform led by Innovation, Science and Economic Development Canada, Innovation Canada will potentially have an enormous mandate. It will lead the creation of economic growth strategies, conduct a review of all business innovation programs across all government departments (including SRED), and will become a “one-stop shop for Canada’s innovators”. I feel like I’ve heard this before. Unlike the NRC’s Concierge, however, if this were done properly it could actually work. Hopefully the thinking will be guided by the still-relevant Jenkins report on federal support to R&D (actually, that report seems to have its fingerprints all over this budget). One of the key recommendations of that report was the creation of an Industrial Research and Innovation Council that would become the common service platform for all business innovation support programs. It was a good idea then and it’s a good idea now. As with so much here – the devil will be in the details. Will review lead to the consolidation of innovation programs under the administration Innovation Canada? Or will it develop as a true platform that simply serves to connect them with users through a common access point. So much potential here.

  21. National Research Council. Good news: there is a plan to make a plan. Yes, the Government will undertake a review of the NRC in 2017. Not much to go on here, though I think it’s notable that the government wants to “assess how the Council can best support the Innovation and Skills Plan” as well as support “mission-driven, breakthrough research in collaboration with the new Impact Canada Fund”. I know that all this might simply be budget branding and positioning, but it seems to me that the NRC and Canadians would be best served if it were able to first establish its core research mandate rather than (once again) reorient towards the new innovation plan of the government of the day.  I truly, deeply want the NRC to find its feet and reestablish itself as a preeminent institution for Canadian research.

  23. Whither Research? Honestly, what is going on here? Reading through the budget yesterday, I was thinking there were some good ideas, interesting approaches, the usual sprinkling of direct research funding to a few specific organizations, and then… where are the granting councils? CFI? Genome Canada? Did I miss them? Do they have their own section? It slowly dawned on me – and then it dawned on Twitter – they’re not there. Anywhere. Any of them – no NSERC, CIHR, SSHRC. No CFI. No Genome Canada. Nowhere.


    I can’t overstate how profoundly weird this is. I know there was some socializing about reduced expectations for research dollars in the last few months. And yes, the granting councils got a bit of an extra bump last year. But nothing? In a budget all about “Innovation and Skills”?Look – one might argue that the Government is waiting for the results of the Naylor panel before committing funding. One might argue that there simply isn’t any money and so there’s no funding to be had. One might even argue that the councils already have precisely the right level of funding and don’t deserve any more. None of these things are true – but still the government could take these strategies, but it doesn’t. The budget simply ignores them.


    Boy oh boy, this is not going to go over well. For nine years the research community largely embraced a narrative that small, below-inflation increases in funding were ideologically driven by science-hating Conservatives. Therefore, once the Conservatives were removed, research would be back in business and falling success rates, shrinking grants and financial pressure would be alleviated. Dare I say, the community was encouraged in this impression by the Liberal platform – by the fact that two ministers have the word “Science” in their title. Last year’s modest increases were pitched as a “down payment”. And here, the promise of an “innovation budget”. And yet. This will feel like a betrayal.


    I have long maintained that we should not conflate research and innovation – that they are not the same, that there isn’t a direct correlation between them. But an innovative economy is still built on a strong foundation of research and development. And funding for basic science in Canada has been stagnant for a decade. At this moment, when Canada is uniquely attractive to highly qualified researchers from around the world, the best we can do is rebrand a recruiting tool like Canada Excellence Research Chairs but without the granting council increases that will support their research? I don’t get it.


    There are some targeted investments. The AI consortium out of Toronto, Waterloo, Montreal and Edmonton was awarded $125M (which, oddly, is the only item in the science and innovation spend that is allocated to this fiscal year, 2016-17 – better hurry). There are modest but important bits of funding for Stem Cell Network ($6M for one year), Canadian Space Agency ($80M over five years), Institute for Quantum Computing ($10M over two years), Community and College Social Innnovation Fund ($10M over two years) and CIFAR ($35M over five years). With all due respect to these institutions, apart from the AI windfall, this is pretty thin gruel for Canadian research.


    Maybe I’m missing something. Maybe I’m wrong about the Naylor report and it will soon be released instead of buried when the sun comes out. Maybe it will call for transformative funding and the government will be eager to comply. Maybe.


    But in the meantime, things look pretty grim.



12 Thoughts on Innovation

So, here we are. A week to go before the federal budget. It’s late March, but it’s snowing and -15C in Ottawa so the budget doesn’t feel as late as it might otherwise.

12 thoughts on innovation:

  1. There’s a Canadian tendency to complain about innovation policy, particularly around how little our politicians understand what it really means. Let’s stop it.

First, it’s just generally tiresome to be so urbane and pedantic — particularly about something as arcane as innovation policy. Second, we need to realize that we’re talking about two very different and distinct things when we talk about “innovation policy”. On the one hand, there’s actual innovation policy as economists and policy wonks understand it. Policy meant to encourage innovation, which increases productivity and competitiveness, and results in lower prices, higher wages and a higher standard of living. This is a very big deal and is something we need to figure out.

On the other hand, “innovation policy” is also being used as politically-acceptable shorthand for “high-tech industrial policy”. This is the sort of innovation policy that leads to suggestions about coding skills, STEM investments, and clusters in AI, quantum computing and so on. The first use of the term is about making our existing economy more productive. The second term is about building a different sort of economy. There’s overlap, but they’re fundamentally different concepts.

  1. It seems there is a certain amount of disagreement within the federal government between those who want the “Innovation Agenda” to be about the former and those who want the “Innovation Agenda” to be about the latter. And the result is the current logjam/mashup.
  1. “Industrial Policy” has a seriously negative reputation in Canada, conjuring memories of state intervention in the economy of the 60s and 70s. Canada has been proudly free-market in its industrial support for a couple generations now, though there are calls for this to change. The UK is dipping its toes back into industrial policy, though with the gong-show that is post-Brexit UK economic policy, who knows what will happen there.
  1. Speaking of the UK, they released their spring budget last week. If a Canadian government were interested in promoting skills, talent, and technology they could perhaps have a look. There is £270 million in targeted R&D investments in things like electric vehicle batteries, AI and robots, and drug manufacturing (ahem, industrial policy). Impressively, there is £160 million in fellowships for early- and mid-career researchers – in “areas aligned to the Industrial Strategy”. The UK’s Campaign for Science and Engineering is cautiously impressed.
  1. The UK budget also commits £90 million over four years to support an additional 1,000 PhD spaces. 400 of these will be committed to “strengthen collaboration between business and academia through industrial partnerships”. Sounds awfully familiar.
  1. The UK budget also targets 85% of the new PhD funding to STEM disciplines. Look, I have a PhD in Biochemistry and I think science is awesome. But I’m starting to worry that our laser-like focus on STEM is overshooting the mark and missing the point. There are two issues: first, students in Arts, Social Sciences and Humanities aren’t cloistered away with quills and quires. They’re learning all sorts of digital and technical skills that are perfectly suited for today’s workforce. Second, given that we’re all worried about automation, aren’t the really technical jobs the ones most likely to be automated? To prepare for a world of robot labour, shouldn’t we be focusing on the human skills? Like those that are taught in the arts, social sciences, and humanities?
  1. Full marks to my colleague and friend Alex Usher for his unrelenting calls for the Naylor Report to be tabled. There’s certainly frustration around Ottawa that this hasn’t yet been released, but also a resignation that this is how politics works. We’ll get to see it after the budget, at which point it will be too late to ask for new spending this year.
  1. In fact, the Naylor report is just one part of an important upcoming few months where this government is going to have to establish its mark on research and innovation strategy. In addition to the Science Review panel, we are on the cusp of important decisions on a Chief Science Advisor, new leadership at CIHR and CFI, the budget, and the Innovation Agenda.  Yes, it’s been a tumultuous year for politics, especially for a realtively new government still finding its feet. But now it’s time to demonstrate some leadership and direction for Canada’s research enterprise.
  1. Speaking of the Innovation Agenda, the results of the consultations by esteemed Canadian innovation leaders were quietly released on Dec 22. It seems most of us missed it. The big take home message is that the government’s agenda should focus on People, Technology and Companies. Fair enough, it not exactly earth-shattering. But then it devolves into a confusion around clusters, digital and clean technology and workforce diversity. If this is the agenda, perhaps it’s best left on the shelf.
  1. Not that there are any shortage of smart people advising on how to do innovation, including the recent announcement of Ivey prof Mike Moffatt as Chief Innovation Fellow at ISED. Moffatt co-authored some big recommendations in a recent 2020 report on innovation. (aside: Moffatt had me at the creation of a Parliamentary Coherence Officer. Not sure it’s the right mechanism, but it’s definitely the right idea. We could do more for innovation in Canada by removing barriers than by investing more dollars.). Moffatt joins some real innovation heavyweights on Dominic Barton’s Growth Council who are also advising. No shortage of advice in Ottawa these days.
  1. Speaking of the Growth Council, their second set of recommendations are worth revisiting ahead of next week’s budget. I actually quite enjoyed the paper on innovation. Though I’m still not entirely sure what “innovation marketplaces” look like in practice, the group has it right that our big issue isn’t the creation of innovation, it’s adoption. There’s little innovation advantage in developing quantum computers if 85% of Canadian executives admit they don’t take full advantage of existing technology.
  1. More confusing is the Growth Council’s skills recommendations: the creation of a FutureSkills Lab. Goofy name aside, what’s this about? Fund pilot initiatives, identify and fill gaps for labour information and inform government policy. Isn’t that already the mandate for Employment and Social Development Canada. I’m confused.

That’s it folks. We’ll see if I can come up with another 12 thoughts on innovation next week. I’m sure I’ll have plenty of thoughts after the budget…


March 14, 2017