One of the key initiatives of the federal government’s innovation agenda, the Innovation Superclusters are falling behind job and GDP growth targets, according to a report by the Parliamentary Budget Officer.
Introduced in Budget 2017, the program was launched to fund the creation of five “superclusters” of innovation across Canada – Digital Technology, Next Generation Manufacturing, Ocean, Protein, and AI-powered supply chains. These superclusters were expected to lead to the creation of 50,000 new jobs and a GDP increase of $50 billion over 10 years.
However, a recently released PBO report suggests that actual federal spending is only $30 M out of $104 M projected this year, or only 29% of the original budget, as of March 2020. According to the PBO, $97 M from ISED was committed to 45 specific research projects, while non-federal partners committed $180 M. The PBO estimates that 355 projects would need to be completed in order for ISED to meets its targets, or 223 projects using calculations after considering non-federal partners.
The currently announced projects suggest 2,594 jobs are expected to be created, though it is unclear whether these will be full-time, part-time, permanent or temporary. Indirect jobs that could be created as firms grow as a result of the Superclusters were not included in the analysis.
Since March 2020, the Superclusters have announced additional projects and committed more spending, bringing them closer to their allocated budget.
The Supercluster’s performance to-date in the PBO report suggests there is very little understanding in the Liberal government of what innovation is and how to manage it successfully at the commercialization levels. It is difficult to achieve results unless there are operational measurements in place to determine how well you are progressing towards well-established objectives. The Superclusters do not appear to have these measurements in place. If the Superclusters don’t have key components in place to commercialize successfully, achieving their targets will be challenging. It appears unlikely we will start to see real results from the Superclusters until at least five years out.
The government has a role to play in being one of the major procurement sources for startups and working with small companies. Technology industry association Technation recently urged the federal government to dedicate a procurement strategy to the country’s tech sector to help the economy recover from COVID-19.
The government also suffers from a communication problem in that it doesn’t announce their successes and results in the Superclusters Initiative. By raising the profile of this program, Canadians can be kept informed and the Superclusters held more accountable in achieving desired targets.
The Superclusters represent a path forward by focusing innovation funding on industry as opposed to the public sector. However, if efforts towards industry innovation are hindered by dawdling processes, it would be detrimental to Canada.
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