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Goodyear says Canada must turn its lacklustre innovation record around

By Hill Times Staff      

Or else, Gary Goodyear, Canada’s minister of state for science and technology, says it will affect the standard of living and quality of life.

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Gary Goodyear, minister of state for Science and Technology, says in this fragile world economic recovery, the federal government is focusing on creating jobs, promoting economic growth, and he is urging Canadian businesses to invest more in research and development. 

“The future standard of living of Canadian families is directly connected to how productive our workforce is, and to what extent businesses invest in research, development and innovation today,” said Mr. Goodyear (Cambridge-North Dumfries, Ont.), who has served in this position since 2008 in an email interview with The Hill Times for this week’s innovation policy briefing.  

“Canada is doing a lot of things well. For example, our country leads the G-7 when it comes to investing in basic science. We have also reversed the brain drain of the previous decade that saw some of our best minds leave the country. Canada is now an international destination of choice for many of the world’s leading researchers, thanks to new programs and investments supported by our government,” stated Mr. Goodyear. 

“Where Canada is not doing well is in the area of business investment in research and development. We are, at best, a middle-of-the-road performer compared to other industrialized countries.

“We also need more commercialization.  Canada is a powerhouse of science, but too many of our discoveries languish on the shelves.  We need to get more of our ideas out of the labs and into the marketplace, so Canadians and people around the world can benefit from those discoveries.”

In this role, Mr. Goodyear is responsible for the implementation of Canada’s Science and Technology Strategy. One of Mr. Goodyear’s biggest challenges is in promoting R&D investment by the private sector. In addition to overseeing the government’s investment in scientific research, Mr. Goodyear also serves as the minister of state for the Federal Economic Development Agency of Southern Ontario. 

Mr. Goodyear declined an in-person interview with The Hill Times.

 

What is your top priority as Canada’s Science and Technology minister of state to make Canada a truly innovative nation?  

“During this fragile period in the global economic recovery, our government remains focused on what matters most to Canadians—creating jobs and promoting economic growth.  This is exactly why we have made record investments in science and technology, and why we want to see Canadian businesses invest more in research and development. 

“I am committed to building on the foundation we have established since Prime Minister Stephen Harper launched our Science and Technology Strategy in 2007, but we need the private and public sectors to work together, to demonstrate real leadership in building Canada’s prosperity, powered by science, technology and innovation.” 

 

What is your biggest challenge in meeting this priority right now? 

“The future standard of living of Canadian families is directly connected to how productive our workforce is, and to what extent businesses invest in research, development and innovation today.

“Canada is doing a lot of things well. For example, our country leads the G7 when it comes to investing in basic science. We have also reversed the brain drain of the previous decade that saw some of our best minds leave the country. Canada is now an international destination of choice for many of the world’s leading researchers, thanks to new programs and investments supported by our government.

“Where Canada is not doing well is in the area of business investment in research and development. We are at best a middle of the road performer compared to other industrialized countries.

“We also need more commercialization.  Canada is a powerhouse of science, but too many of our discoveries languish on the shelves.  We need to get more of our ideas out of the labs and into the marketplace, so Canadians and people around the world can benefit from those discoveries.”

 

The Institute for Competitiveness and Prosperity in a recent report called Report on Canada 2011, Canada’s Innovation Imperative, said that “Canada faces an innovation imperative. Our lacklustre innovation record stands in the way of all Canadians realizing their full prosperity potential.” How do you respond to that?  

“I couldn’t agree more. This is a very serious problem for Canada. Compared to other countries, we are slipping in terms of our productivity and innovation.  We need to turn this around, or else it will affect the standard of living and quality of life of Canadian families.

“Recent findings (from, for example, the Council of Canadian Academies study on Innovation) indicate that Canadian businesses do not use innovation as a competitive strategy as frequently as firms in other countries. This innovation gap is then reflected in related statistics like low spending on business R&D, lower levels of skilled researchers being used by Canadian business, and lower levels of investment in information and telecommunications technology vital to improved productivity and competitiveness. These innovation gaps continue to exist despite a high level of federal support for R&D. That being said, we should also note some of our successes so far in this complex innovation system.  Canada’s scientists perform at world-class levels.  The Science, Technology and Innovation Council’s State of the Nation 2011 report, published in June, indicated that Canada has an excellent talent pool and success in basic research.”

 

Why is Canada’s innovation record ‘lacklustre’? What’s the problem and what are you doing to try to turn that around?  

“In spite of our many achievements, Canadian productivity continues to lag, as does business investment in research and development. As my colleague the Minister of Finance, Jim Flaherty, recently mentioned in a speech given at the Innovation Nation Symposium, there are many reasons to explain innovation performance, but it is clear that other countries are outperforming Canada. Businesses in other countries spend more on research and development. Put simply, we need our private sector to prioritize innovation and better integrate it into business strategies.

“That’s why last October, I asked an independent panel of experts to undertake a comprehensive review of all federal support for business R&D. The panel has conducted its own research and developed an informed view through broad consultations with the private sector, academic leaders, provinces and territories, and subject matter experts. We expect their report in the next few weeks, and look forward to studying their recommendations.”

 

What role should the federal government play in encouraging innovation in Canada’s industry?

“Quite simply, we want to make sure that businesses have the tools they need to succeed in the global economy.  That means creating an effective environment in the marketplace for competition and investment.  We also want to make sure that federal support for business R&D is delivering results for Canadians, and that is the focus of the R&D Review Panel.”

 

The Institute’s report also states that Canada’s “long-term challenge remains—raising our productivity, which is synonymous with improving our innovation capabilities and performances. Robust innovation results can be achieved through more key business investments and by the right government policies and strategies for innovation.” What is the government’s long-term strategy on innovation? Do you think your government is making the “key business investments” and “right government policies” to ensure that Canada is a competitive nation when it comes to innovation?

“As Prime Minister Stephen Harper has said, ‘science powers commerce.’ One of the principle reasons why Canada is a leader among industrialized nations and has a strong economy today is because of the discoveries of Canadians like Alexander Graham Bell, Frederick Banting and Joseph-Armand Bombardier, and many others.  These discoveries were also commercial successes.  But we need to keep doing this in the future. The global economy today is getting more and more competitive, and the rate of change is increasing exponentially. Our competitors are no longer just in Detroit and Silicon Valley, they are in Shanghai and Mumbai.

“It was with this in mind that the Prime Minister launched Canada’s S&T Strategy four years ago, and also why we asked the R&D Review Panel to look at what we need to do in terms of support for business research and development in order to get better results.”

 

BioteCanada says that “action is needed now to secure innovative technology [is] researched and developed in Canada [and] to see technology adopted.” There has been a general consensus over the years that while R&D in Canada is good, adoption and commercialization are lacking. What’s the federal government’s role in helping to boost innovation and remain globally competitive when it comes to commercialization of innovative products? 

“As I mentioned earlier, Canada is doing very well at supporting basic research. But too much of our research isn’t getting out the door. Discoveries need to be developed and that takes talent, time, effort and money. Over the last few years, through the S&T Strategy and new investments, we’ve made good progress on making sure that we are developing, attracting and retaining top researchers.  We also have good support in place to encourage business to develop new technologies, processes and other innovations.

“There is no question, however, that Canadian businesses need to invest more in R&D.  Despite the fact that the Government of Canada’s financial support—estimated at some $7-billion a year—is among the most generous in the world, we are not getting the results we want.  That’s why I asked the R&D panel to look at all our federal programs to see if there are changes we can make that will bring us better results.  The government isn’t the solution though.  In order to turn this situation around, business must be willing to invest more in their own future.”

 

Rx&D, Canada’s research-based pharmaceutical companies, wrote in a recent issue of The Hill Times that “intellectual property protection is the catalyst for discovery and most Canadians agree that we need to upgrade our IP regime to world class standards in order to attract more research jobs and investments that lead to the development of new cutting edge medicines and vaccines.” Do you agree? 

“Our government is committed to modern intellectual property protections and enforcement. 

“Canada currently provides strong protections for patented drugs.  

“In order to strike the right balance, changes to Canada’s intellectual property protections would need to balance the interests of industry, consumers and other groups.  

“Intellectual property is not the only catalyst for R&D.  I am looking forward to hearing what the R&D Review Panel has to say about how we can strengthen the impact of federal support for business R&D. 

“We will continue to work with the pharmaceutical industry—one of Canada’s leading investors in R&D—and other industries based on the R&D Panel’s recommendations.”

 

Do you think that Canada’s IP regime is preventing innovation in Canada? 

“There are too many factors in creating a business climate that encourages innovation to single out Canada’s intellectual property regime in that fashion.  

“As was stated in the Speech from the Throne, our government will look for ways to support innovation while maximizing the results of our investments in research and development. We are working on enhancing Canada’s digital infrastructure, and on encouraging Canadian businesses to adopt digital technologies and train their employees in how to use them.”

 

What are you doing to stimulate private sector investments, to increase venture capital, and to encourage entrepreneurship in Canada’s innovative industries?

“Our government has substantially reduced taxes in order to free up resources for businesses to invest and create jobs. In addition to reducing the corporate tax rate, we have eliminated the corporate surtax for all corporations, eliminated the federal capital tax, and increased the income limit for the small business tax rate.

“In Budget 2011, we extended the temporary Hiring Credit for Small Business, and extended the accelerated capital cost allowance treatment for investments in manufacturing and processing machinery and equipment for two years.

“In order to increase public awareness of the important role played by small businesses, the Government has declared 2011 the Year of the Entrepreneur. We have also made it easier for Canadian entrepreneurs to access funding for business growth and development. 

“The Business Development Bank of Canada has been and will continue to be one of the small business community’s most helpful and supportive lending partners. The BDC provides financing, venture capital and consulting services to Canada’s small and medium-sized enterprises in all industries.

“In addition, we have raised the maximum loan amount under the Canada Small Business Financing Program to stimulate small enterprises, changed the tax code to allow businesses to attract venture capital with greater ease, and enhanced support to connect younger entrepreneurs with mentors, business resources and start-up financing.

“In my role as the minister of state for the Federal Economic Development Agency for Southern Ontario, last year I launched a new program called Investing in Business Innovation. This initiative is helping small and medium-sized businesses in southern Ontario get better access to venture capital and angel investments. I’m very proud of the success that we have seen to date.

“Taken together, these reforms and programs represent significant initiatives that will encourage investment and entrepreneurship among Canada’s innovative industries.

 

You’ve been quoted as saying, “To remain at the forefront of the global economy, we must continue to invest in the people and ideas that will produce tomorrow’s breakthroughs.” What are some specific policy measures the government has taken to stimulate Canada’s knowledge-based economy?

“Since our Science and Technology Strategy was launched in 2007, we have committed record amounts of funding to new investments in Canada’s science and technology infrastructure. Budget 2011 alone provided more than $700-million in new S&T funding, building on the more than $6.3-billion in S&T funding provided during the first two years of the Economic Action Plan. 

“These investments have helped tremendously in bringing discoveries to market, building science infrastructure, and attracting and retaining talent. We have introduced a number of programs (such as the Business-led Networks of Centres of Excellence and the Centres of Excellence in Commercialization and Research) that help to build networks among the private, public and academic sectors. We have made huge investments in research infrastructure, notably through the $2-billion Knowledge Infrastructure Program to upgrade facilities at postsecondary institutions. We have introduced highly prestigious programs (such as the Vanier Graduate Scholarships, the Banting Postdoctoral Fellowships, and the Canada Excellence Research Chairs) to develop, attract and retain talent here in Canada. 

“One area where Canada has started to do well is in encouraging partnerships between businesses and universities/colleges, especially small businesses that often don’t have access to the resources to develop new ideas. Everyone benefits when business that have promising ideas can work with researchers at post-secondary institutions. Businesses get access to the research muscle found at our colleges and universities, while researchers learn how to commercialize new discoveries. Our government wants to see more of this.

“Our country now attracts the best and brightest minds in many scientific fields. And we have an enviable capacity to develop the talent and produce the discoveries that are the foundation of innovation.” 

 

The Conference Board of Canada’s annual competitiveness report recently ranked Canada 12th internationally in terms of competitiveness—down three spots from 2009. The report noted that Canada faces difficulty in adapting to globalization. What are some of the challenges to Canada’s global competitiveness and what needs to be done to address these challenges?

“The Word Economic Forum report confirms that Canada is one of the most competitive economies worldwide. In assessing how productively countries use their resources, it highlights several of Canada’s strengths: the quality of scientific research institutions, university-industry partnerships in R&D, and the availability of scientists and engineers. 

“The report also identifies areas where Canada can improve—including increasing business investment in research and development, and reducing government red tape. Our government has already begun work to address these issues—through the R&D Review Panel and the Red Tape Reduction Commission. 

“Improving Canada’s competitive standing in the world will require hard work to stay ahead of fast-rising global competitors. That means moving ahead with the government’s focus on the economy and jobs—by attracting investment, supporting innovation, and encouraging research and development. 

“One of the imperatives associated with maintaining global competitiveness is the need to strengthen Canada’s presence in global markets. The Government is moving aggressively to complete negotiations on free trade agreements with large, high-growth markets, starting with the European Union and India. New trade agreements will ultimately open up vast new markets for Canadian goods and services, and offer new economic opportunities for Canadian businesses, workers and entrepreneurs, while attracting new capital, investment and talent from around the world.”

 

What industries does the federal government consider to be leading innovators in Canada’s economy?

“There are leading innovators all across the Canadian economy. Canada’s Survey of Innovation and Business Strategy, released in November 2010, shows that, over the 2007-2009 period, two out of three enterprises (67 per cent) in Canada reported having introduced some kind of innovation.  

“According to one innovation measure—business expenditure on R&D as a share of GDP—three industries in Canada stand out as having high R&D intensity: information and communication technologies, aerospace and pharmaceutical. 

“However, businesses in all industries can be innovators. For example, financial services firms offering new payment methods, transportation and warehousing companies developing new supply chain management software, or beauty salons offering online booking services. 

“Given this scope of innovation, our government focuses on stimulating innovation throughout the economy, by ensuring a world-leading business environment, and aligning innovation incentives so that firms continue to improve production, expand into new markets, adopt more efficient business structures, and embrace new technologies. To use an old expression, it’s not just about working harder, but also working smarter.”

 

In The Hill Times’ recent biotechnology policy briefing, a number of industry stakeholders emphasized the need for Canada to have a senior minister of science and technology. Are you satisfied with the amount of attention your portfolio receives in this government?

“Science and technology have been very important to this government because of their role in the economy and creating jobs.  That is why the Prime Minister himself launched Canada’s S&T Strategy in 2007, and why our government has made record investments into science and technology, topping $11.7-billion last year.

“Our government is going to continue to focus on jobs and the economy, and that means that science and technology will remain an important file for our government.”

 

 The world economy is weak, but some experts and critics say Canadian companies have to improve productivity by becoming more innovative, and some say the government should specifically boost funding for the Industrial Research and Assistance Program. Do you agree? 

“There is no question that the National Research Council’s Industrial Research Assistance Program has been tremendously successful as helping Canadian businesses develop new technologies and innovations, and getting those into the marketplace.

“The R&D review panel conducted public consultations on a number of specific areas related to strengths and weaknesses of existing programs, program delivery, the balance between direct and indirect support, and gaps and opportunities. 

“I look forward to seeing their recommendations in the coming weeks.

“Our government wants to strengthen the National Research Council, and that’s why we’ve increased our investments in the NRC by more than 20 per cent. We also named a new president of the agency.  Our government is very proud of the people and scientists at the NRC, and we want the NRC to do more research that delivers results for Canadians.”

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