In the industry portfolio, Champagne faces major challenges

TORONTO—In the unveiling of the Trudeau government’s new cabinet, the reappointment of François-Philippe Champagne to the innovation and industry portfolio got no more than passing mention. Yet Champagne holds a key portfolio for the transformation of the Canadian economy into one that can generate the future jobs, industries, exports and wealth on which our competitiveness and prosperity depend. Whether he is up for the job remains to be seen. Champagne was appointed to the now renamed Department of Innovation, Science and Industry in January of this year, after serving successively as minister of international trade, minister of infrastructure, and minister of foreign affairs, in each case for less than two years in each portfolio. So far, Champagne has given little indication of what views he brings to the industry portfolio when it comes to the big challenges Canada faces or what he sees as his priorities. In his previous portfolios, he was not there long enough to make much of an impact. In the industry portfolio, Champagne faces major challenges. Canada is lagging in innovation, slow in transitioning to a new economy based on disruptive technologies, weak in actionable strategies to build Canadian strengths in electric vehicles, aerospace, clean energy, and green technologies, agri-food and biosciences, poor in scaling up small tech companies into world-competitive multinationals ($1-billion stock market valuations reflect future hopes, not current accomplishments) and too quick to sell off promising Canadian companies and their intellectual property to foreign multinationals, so that Canada simply supplies seed corn for others to grow. This makes Canada poorly positioned for the future world, when our traditional strengths such as oil and gas become much less important, and where weak productivity growth and a chronic current account deficit threaten our ability to sustain our future prosperity, including the public goods we value and need, such as health and education. Budget 2021 gives Champagne billions of new dollars to spend on innovation. But how will he spend it? What are the goals for each of his spending initiatives? What analysis is there to allocate this money effectively? What milestones will be set so that programs can be changed or halted if they are not effective? How much transparency and accountability will there be so that the public can assess performance? One challenge is to convert identified needs into strategic opportunities. A recent report from the Royal Bank, The $2 Trillion Transition: Canada’s Road to Net Zero, argues that $2-trillion would need to be invested over the next three decades using existing technologies to achieve 75 per cent of our net-zero emissions goal, or about $60-billion a year, much more than the $15-billion a year we are currently racking up in public and private spending. “While these are large numbers, they’re also affordable, especially when measured against the economic returns of new technologies, products and even entire industries in which Canada can be a global leader,” the report says. But where is the strategy to build Canadian companies to develop the new technologies and industries? This also means we need to invest much more in R&D to develop additional technologies. “Overall,” it adds, “capital is not in short supply. Investable projects, with reasonable returns are.” Which may be one reason so much of our pension savings are invested in projects abroad—the Caisse de Depot et Placement du Quebec has announced plans for investing $15-billion in private assets in Britain and the European Union. This is the tip of the iceberg—Canadian pension funds are investing more in the business growth of other countries than they are in Canada. How would Champagne change that? This connects to another critical challenge. Canada is not benefiting from the intellectual property developed in Canada, based on our investments in talent-building and fundamental science. Instead, we are fostering R&D branch plants that use Canadian talent to create valuable intellectual property to be owned and used for wealth creation in other countries while making it easy for them to buy up promising Canadian tech companies and their intellectual property. We are not alone in facing this as an issue. A year ago, India’s then environment minister, Prakash Javadekap, warned that one of India’s biggest challenges was to start owning innovation rather than being contributors to the innovations owned by others. “When we look at big names, such as Google, Facebook, and Microsoft, they all have Indian brains behind them,” he said, but the innovations were not owned by their creators in India. Ownership of intellectual property is the new source of wealth in the knowledge economy. This is why it is now a priority for China. Its state council recently released, “Guidelines for Building a Powerful Country with Intellectual Property Rights 2021-2035," a document setting out a strategy to improve protection and ownership of intellectual property rights. “Innovation is the driving force for development, and the role of intellectual property as a national development strategic resource and a core element of international competitiveness has become more prominent,” the report said. It planned increasing support for patent-intensive industries with strategic intellectual property positions, and ensuring that Chinese companies were aware of the benefits of different types of intellectual property including patents, copyrights and trademarks, promoting strong Chinese companies with strong intellectual property rights. While Canada clearly has some top-rated talent, some promising tech companies and the capital that can combine to build a successful new economy, it needs to climb down from its risk-averse culture in public and private institutions and significantly improve the quality of business leadership and public sector policy-making. We know what we need to do—but we are still weak in knowing how to do what we need to do. Champagne deserves another year, but not more than that, to show whether he can make a real difference. The country’s future prosperity is at stake. David Crane can be reached at crane@interlog.com. The Hill Times

In the industry portfolio, Champagne faces major challenges

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In the industry portfolio, Champagne faces major challenges

Budget 2021 gives Champagne billions of new dollars to spend on innovation. But how will he spend it? What are the goals for each of his spending initiatives? What analysis is there to allocate this money effectively?

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