Federal Minister of Industry Alan Rock, in a speech before the Canadian Chamber of Commerce Tuesday, announced a four part strategy to help increase Canadian innovation to help meet the demands of the next decade.
The four parts include: creating new knowledge and bringing it to market, making sure Canada has the skilled workforce necessary to compete in the knowledge economy, creating the right business and regulatory environment to help entrepreneurship, and creating communities which attract investment while remaining a great place to live.
The result of Canada’s lagging innovation is a decline in the standard of living when compared to the U.S., Rock said. “That decline is explained primarily by our relatively lower productivity.”
Rock asked business leaders if they were “ready to make the commitments we are asking of you. The strategy I propose takes a longer view, not just over the next budget cycle, not just the next few years but to the end of the present decade,” he said. “Over the next few months, we will engage Canadians in a discussion of this strategy. We want to know if we’ve got it right, if our targets are aggressive enough.”
Rock admitted the job of increasing Canadian innovation is one that government can neither do alone nor is particularly adept at doing. In many ways the government is less innovative than the private sector, he conceded
Of the four main elements of his speech, the first was undoubtedly the most interesting to the IT industry. It was about the “creation of new knowledge and bringing it to market more quickly.”
“That means making more private venture capital available so that our best ideas get developed right here, by Canadian companies,” he said.
Venture capital spending has never been a Canadian strong suit when compared to south of the border. Ottawa’s goal is to increase the per capita levels of venture capital financing to match that of the U.S. by 2010. But given Canada’s relatively conservative track record in this domain, it is debatable if the target is achievable, one attendee said.
“That’s a hell of a goal,” said Gaylen Duncan, president of the Mississauga, Ont.-based Information Technology Association of Canada. When asked if Canada can get venture capital levels to that of the U.S. by 2010, his response was simple: “Probably not.”
But Rock’s suggestion that it’s time Canadian pension funds get on the VC bandwagon was met with praise. “We have been after the government to get pension funds in on venture capital funding for quite some time,” Duncan said. “But we are going to have to increase the reward to increase the investment.”
Dealing with the high levels of taxation on VC funding would be a starting point, Duncan added.
Rock said the federal government will also at least double the amount of federal funding invested in research and development over the same time period.
Ottawa will also play a role in making sure Canada has the necessary skilled workforce in order to achieve these goals, Rock added. The government intends to create a scholarship program, similar to the Rhodes Scholarship, to help Canadian universities attract and keep the best students from Canada and around the world. In addition, there will be a move to increase the number of PhD and Master’s level candidates in Canadian universities by five per cent a year to 2010.
In a final note directed at business leaders Rock said the government will ensure that Canada’s corporate taxes continue to be competitive with other G-7 nations.
Over all Duncan was pleased with the government’s announcement. “There was nothing new really but that is a good thing, they are not looking for a silver bullet,” he said.