Federal budget to begin ‘bit of a reset’ on how Ottawa backs innovators

Finance Minister Bill Morneau appears at Commons committee for pre-budget consultations on Parliament Hill in Ottawa on Tuesday, Feb. 23, 2016.
Finance Minister Bill Morneau appears at Commons committee for pre-budget consultations on Parliament Hill in Ottawa on Tuesday, Feb. 23, 2016. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA – The federal budget will signal a “bit of a reset” on how Ottawa helps Canadian innovators transform research and ideas into stronger productivity and growth, a government official says.

Every time Finance Minister Bill Morneau comes under fire for his deepening deficit — $18.4 billion by Monday’s reckoning — he tries to change the subject by teasing, among other things, the innovation investments coming in the March 22 budget.

He bills them as a long-term solution for Canada’s hobbled resource-exporting economy, which has been taking a beating in recent months from a sharp and protracted slide in commodity prices.

In their election platform, the Liberals committed at least $900 million over the next three years to beef up support for organizations like incubators, which aim to help small and medium-sized tech firms innovate and grow into global companies.

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“We have an absolute commitment to making our country more innovative,” Morneau told the House of Commons this week.

“We have an absolute commitment to dealing with the productivity challenge in this country. We are moving forward to do what has not been done for the last decade, and that is to invest in innovators, invest in innovation across this country.”

The budget will mark the start of a longer process to make innovation a tool for growth, said a government source, speaking on condition of anonymity because the details were not yet public.

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“To be honest, the government of Canada has been a bit bureaucratic about innovation,” the source said.

“The programs are in place. Some of them work but I don’t think the approach is always right. So, I think it’s a bit of a reset on that file and how to actually come up with something that, in the long term, will have a real impact.”

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The industry, however, should not expect major near-term changes on innovation in the budget because the adjustment will be more incremental, the source added.

The government is searching for ways to revive growth in Canada.

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It is now projecting a shortfall nearly twice the $10-billion limit promised by the Liberals — and one that’s widely expected to grow even more, thanks to the party’s big-ticket spending commitments.

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As an immediate way to ease Canada’s economic concerns, the Liberals have pointed primarily to their promise to pour billions into infrastructure projects. Strengthening innovators remains a longer-term objective.

On Thursday, Prime Minister Justin Trudeau will signal the government’s interest in high-tech sectors with a personal visit to Ubisoft, a world-renowned Montreal video-game studio with some 2,700 employees.

Indeed, industry players like Jim Balsillie, the former co-CEO of BlackBerry inventor Research In Motion, have been pressing Ottawa for more support.

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Balsillie has asked Ottawa for funding to create an office dedicated to improving innovation and to provide education on all aspects of commercializing domestic ideas for civil servants and the business community.

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Balsillie, who helped Canadian entrepreneurs establish the Canadian Council of Innovators lobby group, has also called for domestic and international judicial innovation strategies.

The Liberal government recently said it’s studying recommendations on how to help Canadian tech startups grow into billion-dollar, global players.

The Centre for Digital Entrepreneurship and Economic Performance listed several priorities, including better identifying companies with high potential and helping them scale up their operations.

The think tank’s report also called for more accountability for public investments through better reporting and more data transparency from startup assistance groups, like incubators.

The report also called for better mentorship possibilities for high-potential companies and exploring new models to increase the role of investors in startups.

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Budget details related to innovation have yet to be finalized, the source said.

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Internally, the previous Conservative government has warned that chronically sluggish business innovation was “of great concern” for productivity, according to a 2014 self-assessment for Morneau’s predecessor, Joe Oliver.

The document, obtained by The Canadian Press through the Access to Information Act, acknowledged that billions of public dollars spent over two decades had done little to reverse Canada’s long decline in innovation.

More recent documents show Economic Development Minister Navdeep Bains has also been advised that improving the science, technology and innovation system was “vital.” The documents focus on several challenges, including the aging population, too little domestic research and development and the lack of an “innovation culture” among Canadian businesses.

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