Feds need to provide the analytical basis for new programs, like the superclusters project

TORONTO—In predicting that the promised economic benefits from the centrepiece of the government’s innovation strategy will fall far short of what Industry Minister Navdeep Bains has promised, the Parliamentary Budget Office has turned the spotlight on the government’s much ballyhooed superclusters project. This provides an opportunity for the House Industry Committee to review the program—pluses and minuses—so that Canadians can see whether the project is delivering as promised, or needs to be changed. Programs to advance innovation capacity in Canada are needed for future jobs and prosperity. But it is also important to have confidence that any project, such as the superclusters project, is well-designed and is achieving its promised results—and to do this with a strong commitment to public transparency. The superclusters initiative is investing up to $950-million in public funds over five years, matched by an equal amount from business, universities, and other players, in five so-called superclusters—the ocean economy, artificial intelligence-powered supply chains, advanced manufacturing, protein industries, and digital technology. In documents setting out the competition to choose the winning superclusters, the department said that applicants were expected to demonstrate how they would “build a supercluster advantage that will create high-quality, resilient jobs for Canadians, reinforce Canada’s highly innovative industries (e.g., advanced manufacturing, agri-food, clean technology, digital economy, health/biosciences, clean resources, infrastructure and transportation), enable the growth of innovative firms, and support the development of strong brands that attract investors and mandates.” The winning superclusters were expected to increase the number of high-growth firms, raise the number of new and expanded projects in the cluster, expand the development of new products and processes, commercialize research into new products and processes, increase business investments in technology, research, demonstration projects and commercialization, boost employment growth in small and midsize companies, expand the number of professional, science and technology jobs and position superclusters “as world-leading innovation ecosystems.” Applicants were to set out a strategy to demonstrate how, in their field, they would make Canada “a global leader." What the documents failed to explain was how the program—the government’s innovation strategy “centrepiece”—would make Canada “a global leader." Had the department determined that the principle reason for Canada’s failure to become a leading innovation nation was the absence of such an initiative? What was the evidence? Why would innovative companies use the superclusters for serious projects given the need to protect intellectual property and the tendency to keep core innovation projects in-house for competitive reasons? This failure to provide the analytical basis for new programs is not unusual. In May last year, for example, Bains announced a grant of $52.4-million to three Ontario incubator/accelerator hubs to grow 30 small tech companies into $100-million businesses by 2024, with 18,000 new jobs—without explaining what the barriers to scaling up were or why these three entities, more accustomed to helping start-ups, would have the capabilities to deliver. It would appear that the superclusters project was modelled, at least in part, on the British Catapult project, which consists of a set of technology hubs that were set up in 2011 in specialized technology areas to advance British innovation in selected fields. There are nine such consortia—including digital technologies, connected places (including smart cities), high-value manufacturing, energy systems, compound semi-conductor applications, and cell and gene therapy. But the British approach was much different. Its policy was preceded by two expert studies, both published, and by hearings by the British House of Commons Science and Technology Committee. In Canada there was no such public role. In announcing the names of the five winning supercluster bids in February 2018, Bains boasted that the “superclusters will transform our economy and make Canada into a global innovation superstar.” Moreover, he promised, “superclusters will contribute over $50-billion to our GDP and create an estimated minimum of 50,000 jobs over the next 10 years.” In a column for The Hill Times (Feb. 26, 2018) Bains went further, promising that with superclusters “new businesses will sprout up, investment will pour in and stable jobs will be ours for the taking.” When the superclusters were announced, I was intrigued by how Bains was able to promise that his superclusters would add $50-billion to GDP and create 50,000 jobs over 10 years—what were the assumptions underlying these promised results and how would progress be measured? I was told the details were secret, though no one could explain why; they just were. The PBO estimates that the superclusters would add at most $18-billion to GDP and create just over 27,000 jobs. It also found that while Industry Canada talked of providing performance indicators, none were provided. Similarly, when I asked to see the contracts between each of the superclusters and the federal government, I was again told this was secret. I wanted to know whether there any milestones each supercluster was expected to achieve? And if so, what were they? What were the compensation arrangements? What would be the relationship between the government and each supercluster? I actually called one supercluster to ask about its contribution agreement but was told it had already been ordered by Bains’ department not to discuss this with the media. In both these instances, my interest was in seeing the underlying assumptions and analysis that would show this was a productive way to spend public funds—and to see how the government expected this would make Canada a much more innovative and productive economy. As we look ahead, the need for a more innovative and productive economy is more urgent than ever, which means that the quality of public policies is critical. We are more likely to get it right if policy-making is open, exposed to public debate and discussion and based on solid, publicly available analysis. We don’t have that today so that it is hard to have confidence in what the government is doing. That includes the superclusters. David Crane can be reached at crane@interlog.com. The Hill Times

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Feds need to provide the analytical basis for new programs, like the superclusters project

As we look ahead, the need for a more innovative and productive economy is more urgent than ever, which means that the quality of public policies is critical.

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