It was probably the last thing many in Canada's research and innovation community wanted to see, yet there it was - another weighty tome with a buffet of options for improving the country's poor global performance when it comes to productivity, economic growth and competitiveness.
"I'm not sure I can read another innovation report. Maybe a stiff drink will reduce my resistance and then I'll read it and weep," quipped Dr. David Naylor, the former University of Toronto president who participated on expert panels in 2011 (Innovation Canada, aka the "Jenkins Report") and 2017 (Fundamental Science Review) that laid bare the challenges and potential solutions for addressing Canada's decades-old innovation conundrum.
This newest report was prepared by the Senate Prosperity Action Group, comprised of 12 federal Senators who saw the COVID-19 pandemic as an opportunity to tackle many of the country's pre-existing economic and social challenges. Released last fall, the 66-page document represents the latest in a long line of innovation-tackling reports that have attempted to steer both the public and private sectors towards policies and approaches that capitalize on the country's scientific and industrial strengths.
Many of its 15 recommendations are familiar - from reinvigorating the business environment and strengthening the talent pipeline to becoming a world leader in the digital economy and investing more in research and development (R&D). The big question is whether politics, jurisdictional wrangling and vested interests can be put aside to boldly act on a familiar laundry list of promising solutions.
"We keep commissioning reports, putting sector strategy tables together, putting councils together and then not completing the actions recommended by them," said Naylor. "Canada has been teetering on the brink of an outstanding transformation for at least 10 years but there continues to be this lack of resolve by government to make the hard decisions."
Naylor was one of 10 innovation thinkers Research Infosource interviewed for their perspectives on how far Canadian research and innovation has come over the past 20 years, and what further changes are needed to prepare the country for the next two decades.
"The Four Horses of the Economic Apocalypse"
Governments have struggled for decades to come up with the magic mix of policy sticks and policy carrots to encourage companies to invest more in the machinery, equipment and highly skilled talent needed to produce better strategies, capabilities, products, services or processes.
Canada has been teetering on the brink of an outstanding transformation for at least 10 years but there continues to be this lack of resolve by
government to make the hard decisions.
Dr. David Naylor
President Emeritus, University of Toronto
The statistics are stark. Canada's productivity growth has lagged below the Organisation for Economic Co-operation and Development (OECD) average for most of the last 20 years. We rank dead last among peer countries when it comes to government and business spending on R&D, despite having a highly educated work force and some of the world's top universities and research institutions. Canada's business R&D expenditures are over 50% below the OECD average, and our ranking among 60 countries in the 2020 Bloomberg Innovation Index fell to 22nd place, behind Slovenia. The Canadian government alone would need to invest an additional $22 billion per year in R&D just to get on par with the OECD average, according to an analysis by the Ottawa-based Global Advantage Consulting Group.
Diagnosing the problem isn't as difficult as one might think, according to Dr. Peter Nicholson, an innovation expert who has held senior posts in government, business, science, and academia. Necessity, as the saying goes, is the mother of innovation and for the past 150 years Canada's GDP growth rate on a per capita basis has generally matched that of the United States, fueled in large part by a gangbusters U.S. economy with an insatiable appetite for Canada's natural resources.
"Canadian business on the whole has never emphasized innovation in its business strategy because it has been profitable without doing so," explained Nicholson. "As such, there really hasn't been much motivation to change a formula that has worked for over a century."
That is until now. Rapidly shifting global headwinds are forcing Canadian companies to change how they operate in response to what Nicholson describes as "the four horses of the economic apocalypse": a world economic shift towards Asia; a digitally-driven industrial revolution; climate change and the transition to a green economy; and, an aging population and shortage of skilled labour.
While industry will continue to be the major driver of innovation, Nicholson said government has a role to play in developing a comprehensive innovation policy that motivates companies and promotes economic growth.
Attracting More Global Capital
As a first step, make Canada a more inviting place to invest, urged Dennis Darby, President and CEO of Canadian Manufacturers and Exporters (CME), whose members account for about 11% of domestic GDP and three-quarters of our exports.
Canada attracts less than 1% of the approximately USD$2.5 trillion invested annually in the manufacturing sector among OECD nations - a situation that has persisted for most of the last 20 years. CME's goal is for Canada to attract at least 2% of global capital which companies could use to invest in innovation.
"We call it the 2% challenge," said Darby. "If Canada could double its investment in technology and investment to become more efficient, to improve the resiliency of our supply chains, to become more greenhouse gas-efficient towards net zero, I think that would bode well."
A perception of Canada as "a complicated place to do business", combined with growing protectionism in the US, have convinced many global companies that the US is a safer bet for new investing. "New facilities there would get sited in a matter of weeks, compared to the months or years it would take in Canada to get all the different levels of approval", said Darby.
The other challenge is a lack of skilled labour, made worse when the pandemic put the brakes on most international students and immigration.
"We have to go back to the fundamentals," explained Darby. "We've got to get the people we need. We've got to stimulate investment in plant, equipment and technology so we can compete and improve our productivity and improve our output, and we have to find a way to improve our exports. In short, we need the government to commit to an industrial strategy that tries to grow the sector."
One big motivator, as Nicholson pointed out, is the transition to a net-zero economy. Darby said this will require policies that incent manufacturers, notably big greenhouse gas emitters like food, automotive, fertilizer and chemical producers, but also SMEs, to invest in energy-reducing technologies that make companies more competitive. For example, CME has called for the federal Strategic Innovation Fund to invest at least $2.5 billion annually to support large and small capital projects in manufacturing.
Another priority, added Darby, is for Prime Minister Justin Trudeau to rebuild our relationship with the US, which continues to be the single biggest market for Canadian exports.
"[US President Joe] Biden hasn't shown any particularly affinity for NAFTA or continental free trade. Right now it's all about the US," he noted. "We need a better understanding that we make things together, that we're integrated, because we haven't really been on the radar screen in the U.S."
What Canada is Getting Right
Economists often present an alarmist view of Canada's poor record of innovation and low productivity. But the good news is there is much Canada has got right over the past 20 years thanks in large part to a strong foundation of academic science.
Take the Networks of Centres of Excellence. Created in 1989 under the Progressive Conservative government of Prime Minister Brian Mulroney, the NCE provided the catalyst for a new era of multidisciplinary and multisectoral collaborative science that has transformed Canada's research culture.
The $240 million in funding - a staggeringly large public investment in research at the time - enticed academic researchers to step outside their disciplinary comfort zones to work in teams that transcend traditional scientific disciplines, institutional silos and geography. This made-in-Canada experiment also created new academic, private and public sector partnerships that mobilized a critical mass of resources, funding and expertise capable of addressing areas of strategic importance such as stem cells, stroke, the Arctic and automotive.
The goal was to help universities to produce more research that is needed, and to narrow the widening gap between research and commercialization. Towards this end, two spinoff programs were introduced: the Centres of Excellence for Research and Commercialization (CECR), and the Business-Led NCEs.
Unexpectedly however, and with little explanation, the government decided in 2018 to wind down the 30-year-old NCE program, and replace it with the New Frontiers in Research Fund, which supports high-risk, high-reward research. The Fundamental Science Report's expert panel had recommended that the NCE program be sustained and revised.
"It's left a gap across Canada," stated Dr. Martha Crago, Vice-Principal (Research and Innovation), McGill University and one of the Fundamental Science Review's panel members. "We saw that during the pandemic. We had no programmatic way to get funding out there rapidly; instead it was done in a kind of rapid fire panicky mode. In the absence of the NCE, we need to look at how we can network multiple universities and their combined talents to respond quickly to the next crisis."
The government also decided to consolidate the CECR and BL-NCE programs under the federal Strategic Innovation Fund, managed by Innovation, Science and Economic Development Canada. One concern with this move, cautioned Naylor, is that funding decisions once guided by independent peer reviewers are now made by a government department, "which opens the door to political interference".
A Commercialization Powerhouse
One of the biggest successes to emerge from the CECR program is the 10-year-old Centre for Commercialization of Regenerative Medicine, which is capitalizing on Canada's pioneering work in the discovery of stem cells in the early 1960s to revolutionize the treatment of chronic diseases. CCRM is building a sustainable cell and gene therapy ecosystem by catalyzing manufacturing capability, access to capital and talent development to ensure Canada's leadership in the USD$38.7-billion global regenerative medicine market.
Health Canada has already approved five gene therapies developed by CCRM, and with more in the pipeline, the Centre expects 10-20 new gene therapy products will be approved every year for the next few years. CCRM has also co-founded one company (AvroBio), incubated a second and supported the launch of nine more that together have raised over CAD$770 million.
Dr. Christopher Paige, a Senior Scientist at the University Health Network in Toronto, credits CCRM's success in large part to its industry-heavy board of directors, along with a network that includes researchers as well as companies, investors and entrepreneurs. CCRM's long-term sustainability is based on a fee-for-service model - called a Contract Development and Manufacturing Organization - that helps companies to scale-up production of cells and viral vectors needed for a growing number of clinical trials.
"CCRM is building an ecosystem at the interplay between research, academia and industry," said Paige, who also sits on CCRM's board. "For example, CCRM partnered with the University Health Network to build and operate a GMP [Good Manufacturing Practices] compliant facility to produce cells and viral vectors for Phase I and II clinical trials, which is helping keep companies in Ontario."
Overcoming Jurisdictional Barriers
Canada is also pioneering a new approach to cancer research and care that overcomes many of the jurisdictional barriers that limit cooperation between provincial health authorities and with the federal government.
Led by the Terry Fox Research Institute (TFRI), the new Marathon of Hope Cancer Centres Network is using $300 million in public and private sector money to unite cancer centres across Canada for the first time. This Team Canada approach will embed research in the cancer clinic, uniting the top-tier cancer researchers and clinicians throughout Canada. Each time a cancer is treated anywhere in the system, clinicians will have access to that data and how the cancer responded to a specific drug or therapy.
Anchoring this pan-Canadian network will be the Digital Health and Discovery Platform, a $150-million initiative led by TFRI and Montreal artificial intelligence (AI) startup Imagia that brings together nearly 100 partners, including AI institutes, hospitals, researchers and industry partners. The platform will overcome the jurisdictional, cultural and geographic barriers to sharing and analyzing the enormous amounts of genetic, clinical and imaging data available in provincial health systems.
"The digital platform allows you to link all that information while still maintaining patient privacy," said Paige, who chairs TFRI's board of directors. "It means researchers will be able to use AI to analyze and make sense of all that data, without it ever leaving the hospital. The goal is to create 15,000 shareable datasets of cancer cases within five years."
Putting Health Research into Practice
One of the most transformational shifts in how research is conceptualized and funded happened in 2000 when new federal legislation replaced the Medical Research Council (MRC) with the Canadian Institutes of Health Research. Whereas the MRC primarily supported basic research, CIHR focuses on both basic research as well as putting that knowledge into practice. Its 13 institutes target every aspect of human health, from aging, disease and gender to health policy, nutrition and indigenous people's health.
"CIHR has a broader mandate than MRC and is very interdisciplinary and cross-cutting", explained Dr. Jeannie Shoveller, Chair of the CIHR Governing Council. "It is focused on investing in biomedical, but also clinical research, health systems and services research and policy research and research that focuses on social, cultural, environmental and population health [CIHR's "Four Pillars"]."
This ability to work across scientific disciplines proved critical throughout the COVID-19 pandemic. Beyond the obvious need for better diagnostics and treatments, CIHR rallied researchers from across the country to address a rapid escalation in mental health cases, domestic violence and opioid overdoses.
"When you think of that fourth pillar which is very focused on the socio-cultural determinants of health, we also funded work that looks at the impact and incidence of anti-Asian racism and finding ways to counter those wild, very detrimental of pieces of misinformation that circulate on social media," said Shoveller.
CIHR recently released a 10-year strategy, the most forward-looking roadmap it's ever produced. A significant new priority, and a sign of the times, is a strengthened focus on health equity.
"Our plan was very much informed by society's reckoning of systemic racism, the pandemic and everything that gets laid bare when you think of the inequalities and inequities that have arisen and continue to arise in this country," said Shoveller.
Health equity, she added, also means dismantling barriers applicants for research funding face because of their sex, gender, age, disability, ethnicity, or even where they live in Canada.
"I'm a strong believer that diversity and inclusion are good for science. It's all about multiple perspectives being unleashed on what seem to be intractable problems," said Shoveller.
Understanding Human Thought and Behaviour
Over the past 20 years, those multiple perspectives have increasingly included greater participation from the social sciences and humanities (SSH), a chronically underfunded area of research that will be critical to solving some of today's most complex problems.
"I think everyone understands intuitively that if you want to understand almost anything important in the world today you really need to understand human thought and behaviour in the past, present and thinking about the future," said Dr. Chad Gaffield, Research Chair in Digital Scholarship at the University of Ottawa, incoming president of the U15 Group of Canadian Universities, and past President of the Social Sciences and Humanities Research Council (SSHRC) (2006-14).
The science of human behaviour has become paramount during this pandemic as politicians and public health experts navigate difficult questions around vaccine hesitancy, mask mandates, retail lockdowns and private gatherings.
Having the best technology is nowhere near enough.
Successful IT companies are the ones that understand the market the best, and who understand the interface between technology and human beings.
Dr. Chad Gaffield
Research Chair in Digital Scholarship, University of Ottawa and incoming President, U15 Group of Canadian Universities
Gaffield said there is growing consensus on the importance of SSH research, particularly when it comes to tackling complex "wicked problems" such as climate change and the transition to a net-zero economy.
SSH research has also received greater recognition as a competitive tool in business where human behaviours and motivations can often be more important than the technology itself.
"Having the best technology is nowhere near enough," stressed Gaffield. "Successful IT companies are the ones that understand the market the best, and who understand the interface between technology and human beings."
On the academic side, he said more work is needed to ensure that all disciplines - from history to chemistry - understand how their individual area of science fits into big picture problems, what he refers to as "discipline-based interdisciplinarity".
The research granting councils are also embracing this more holistic approach with monthly meetings to discuss how they can support grant applications that bridge traditional disciplinary divides.
"Having that improved coordination across the funding agencies in a horizontal way has been one of the great transformations of recent years, and it's not over yet," he said.
A Bigger Role for the College Sector
Canada's college sector - which includes colleges, polytechnics and cégeps - was a relatively minor R&D player until 2003 when the Natural Sciences and Engineering Research Council (NSERC) launched a pilot program to strengthen innovation at the community level. The College and Community Innovation (CCI) program became permanent five years later, and with additional support from CIHR and SSHRC.
Since 2008, the CCI has invested close to $740 million in 4,400 applied research projects at colleges, polytechnics and cégeps.
"That initial policy decision nearly 20 years ago now has led to greater community and industry engagement with the college sector," said Ray Hoemsen, head of the Manitoba-based consultancy NEXUS Manitoba and the former Executive Director of Research Partnerships & Innovation at RRC Polytech in Winnipeg. "There's many applied research partnerships that weren't there before."
With activities in more than 670 urban, rural and remote locations across Canada, colleges and institutes have a more pervasive regional presence than universities, making them a logical partner for local companies, particularly small- and medium-sized enterprises (SMEs) looking for fast turnarounds to solve immediate challenges.
"Depending on the province you might have a few universities but there's a college in almost every reasonably sized city across the country," said Hoemsen.
CCI also funds 60 college- or cégep-affiliated Technology Access Centres. Each year, TACs provide about 4,200 mostly SMEs with access to the highly specialized facilities, equipment and expertise needed to develop new prototypes, scale-up processes and solve unique business challenges.
For example, companies working with the TAC for Aerospace & Manufacturing at RRC Polytech can tap into over $40 million of facilities. This includes two "industrial campuses" - the Centre for Aerospace Technology & Training (with StandardAero) and the Centre for Non-Destructive Inspection (with Magellan Aerospace), where college-owned equipment is maintained and operated by industry, and made available to other companies, including competitors. The investment also supports three other manufacturing-related facilities - the Model Factory Machine Shop, the Smart Factory (emerging technologies) and the Composites Model Factory.
That initial policy decision nearly 20 years ago has led to greater community and industry engagement with the college sector.
Ray Hoemsen
Principal, NEXUS Manitoba
"The model allows governments to maximize their investment because the equipment is getting more use," explained Hoemsen, a recent board member at Tech-Access Canada, the organization that supports TACs. "The companies are using it for limited development and sometimes production purposes while the college is able to use the equipment for applied research and education, which helps support that industrial sector."
"Innovation Walks on Two Legs"
The old adage "innovation walks on two legs" reflects the central role that highly trained people play in the research itself and in putting that research into practice. One of Canada's most successful programs for doing just that has been Mitacs and its suite of internship programs for aspiring researchers.
Founded over 20 years ago initially as a mathematics-focused Network of Centres of Excellence, Mitacs has evolved to become one of Canada's largest programs for industrial research internships and postdoctoral fellowships. Over its history, it has supported more than 20,000 research projects and trained more than 33,000 students and postdocs working in all research fields, from aerospace systems to childhood literacy. In 2018, Mitacs expanded its internships to include colleges and polytechnics.
Both Naylor and Nicholson credit the program for providing companies with a job-ready pipeline of skilled researchers, as well as its more recent move to place more interns in civil society, government policy shops, and the non-profit sector.
"MITACS has improved career opportunities outside of academe for young Canadians with advanced research degrees, and in the process, strengthened the brain trust and innovation capacity of a wide spectrum of Canadian enterprises," said Naylor.
Set an R&D Spending Target
Money isn't the solution to all of our innovation woes, but it can certainly provide a healthy pipeline of scientific talent and discoveries that companies need to be more productive and competitive.
The return to federal budget surpluses in the late 1990s was a turning point for Canada. It signalled unprecedented new investments in scientific discovery, including the establishment of the Canada Foundation for Innovation (CFI) ($800 million), Canadian Millennium Scholarships ($2.5 billion), 2,000 Canada Research Chairs (CRCs) ($900 million), and Genome Canada ($160 million).
"Those four investments were absolutely transformative," said Dr. Gilles Patry, Executive Director of the U15 Group of Canadian Research Universities, and former president of the CFI (2010-17). "And I would add a fifth one: the indirect costs of research," which includes operational costs like technical support and administration. In 2000, the government awarded $225 million towards indirect costs, an amount that is now close to $430 million annually. However, that investment represents less than 23% of the research expenditures. In comparison, public universities that are members of the Association of American Universities (AAU) received 53% on average in 2014.
Maintaining that investment momentum has been a challenge. The 2017 Fundamental Science Review expert panel recommended that spending across the four research granting agencies (CFI, CIHR, SSHRC and NSERC) increase from approximately $3.5 billion to $4.8 billion. To date, only two-thirds of that amount has been invested, said Naylor.
"The granting councils need generous support for open inquiry. That's the upstream feeder for a lot of the made-in-Canada innovation that will matter," he explained. "A classic discovery is mRNA technology where Canada played a pivotal role in developing that whole area with the nanoparticles and mRNA vaccines for COVID-19. That core work owes a lot to Canadian science."
Despite these successes, Canada continues to lags peer countries when it comes to investing in R&D. Both the Senate Prosperity Action Group and the U15 have recommended that the government invest 2.5% of GDP into R&D over the next few years to bring it up to the OECD average.
The U15 also wants the government to increase the talent pipeline by tripling the number Master's-level students and doubling the number of PhDs and postdocs who receive Canada Graduate Scholarships through the three research granting councils. Other recommendations include funding the full costs of indirect research, and adopting immigration policies that make Canada "the first-choice destination" for international students.
"It's a chicken and egg situation," said Patry. "Our industrial investments in R&D are quite low compared with other countries, but our number of PhD graduates is also quite low, so bootstrapping those two is critically important."
Feeding the Innovation Pipeline
"We're always bemoaning the fact that we're no good at innovation in this country. I beg to differ," said Dr. Alan Bernstein, President and CEO of the Canadian-based global research organization, CIFAR.
In the field of artificial intelligence, for example, the Nature Index ranked Canada sixth out of 25 countries in the number of scientific papers related to AI. Toronto and Montreal are also among the top 10 cities leading the way in AI, according to the AI blog Re-Work.
Canada has come a long way since 2002 when CIFAR launched one of the earliest AI programs, comprised of an unlikely mix of neuropsychologists, physiologists, neurobiologists and computer scientists. These researchers are credited with pioneering the field of deep learning, a market now poised to reach USD$93.34 billion by 2028, according to Vancouver-based Emergen Research.
"Twenty years ago the private sector did not fund AI research. The risks were too high," said Bernstein. "Only government can fund long-term, high-risk research which occasionally will lead to transformative breakthroughs, and only industry can turn those ideas into companies and products.
"Today," he added, "the private sector in Canada and worldwide is investing hundreds of millions of dollars into AI R&D. AI has turned into a great Canadian research and innovation success story and is a textbook example of how innovation works best - when the public and private sectors complement, not duplicate, each other's strengths and roles in the R&D ecosystem."
AI has turned into a great Canadian research and innovation success story and is a textbook example of how innovation works best - when the public and private sectors complement, not duplicate, each other's strengths and roles in the R&D ecosystem.
Dr. Alan Bernstein
President and CEO, CIFAR
Those companies rely on the discoveries emerging from academia, as well as researchers and their students. "If you don't have talent you don't have ideas, and if you don't have talent and ideas you don't have knowledge-based companies or innovation," said Bernstein.
For example, Yoshua Bengio, Geoffrey Hinton, and Yann LeCun - sometimes called the 'godfathers of AI' - are all current or former CIFAR fellows who straddle both academia and industry. Hinton works at both Google and the University of Toronto; Bengio is a professor at the University of Montreal and co-founder of AI startup Element AI; and LeCun is Facebook's Chief AI scientist and a professor at New York University.
Supporting more "godfathers" of this calibre, added Bernstein, requires ongoing public support of fundamental research.
"We are still not internationally competitive in terms of the level of public funding that goes into fundamental research. Innovation is a pipeline that goes from fundamental research to innovation to product. There's no point building that pipeline unless there's oil in the ground and putting that oil in the ground - the talent and ideas - is the role of government."
Don't Skimp on the Peanut Butter
Trying to please everyone often ends up pleasing no one. This has too often been the approach to funding Canadian research and innovation.
"An unreasonably broad distribution creates the 'peanut butter problem': by spreading funds too thinly, it rewards mediocrity and handicaps excellent researchers by giving them unduly small grants," the expert panel wrote in its 2017 Fundamental Science Review.
The Canada Research Chairs program exemplifies this problem, said McGill's Crago. The CRC has had success in retaining and attracting top-notch scientists, but funding has stayed flat since the program was created over 20 years ago. Tier 1 chairs receive $200,000 annually over seven years while Tier 2 chairs receive $100,000 over five years.
"This program was initially seen as leading the way internationally, but the funding hasn't kept pace with inflation, which means more money is going to salary and less is available for research," said Crago. "And now we hear the
Liberal government is going to create a thousand more CRCs. But they won't be terribly competitive unless the funding levels change."
The government has taken a similar approach to another successful program, Genome Canada. What started 20 years ago with a laser-beam focus on health has expanded to include agriculture and agri-food, forestry, fisheries and aquaculture, as well as the environment, energy and mining.
Crago suggests picking just a few areas where Canada can excel, such as health, the environment and food, and then allow researchers to apply to just one, rather than separately to multiple funding agencies.
"It's a lot of labour trying to knit pieces together that should be coherently and integratively put together in programs that work side by side with each other," she said. "The government needs a clear strategy on this."
Thinly spread funding has also limited the government's ability to encourage more industrial R&D, said Darby from CME. For example, rather than following Korea or Germany's lead in investing big in advanced manufacturing, "We did the Canadian thing," he said, in reference to the $950-million federal program that created Innovation Superclusters in multiple sectors, including advanced manufacturing, digital technology, proteins, oceans and artificial intelligence.
"We have a hard time picking something and saying this is what we're good at," said Darby. "We're good at energy, at transportation, and food/bio production. Let's focus on being globally competitive in a few areas instead of opting for the usual peanut butter approach."
Getting there, most experts agree, will require a national strategy that focuses on science, innovation and prosperity. The report by the Senate Prosperity Action Group called for a "whole of Canada" approach, as well as a "grand alliance" among governments, business, labour, civil society and communities that usher in a new era of constructive and cooperative federalism.
"Crises like the [pandemic] we are enduring," the Senate group writes, "can provide opportunities for creative responses, just as the Second World War provided the impetus for the United Nations and the Great Depression changed the way in which Canadians thought about the economy. This is just such an inflection point."
Debbie Lawes, Debbie@dovercourteditorial.ca, is an Ottawa-based writer specializing in science, technology and innovation..
