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A requiem for CARPA: how Ottawa is rethinking innovation policy

The federal government is instead earmarking $1 billion to create an agency inspired by initiatives in Finland and Israel.

BY MATTHEW HALLIDAY | JUN 01 2022

Few words are as popular with campaigning politicians as “innovation”– and last year’s federal election campaign contained plenty of innovation-themed promises from both major parties. Among the most noteworthy was an idea in both the Liberals’ and Conservatives’ platforms to develop a new research agency modelled after the United States’ Defense Advanced Research Projects Agency (DARPA).

DARPA is the blue-sky outfit which has been tasked since 1958 with dreaming up new innovations for the U.S. military, and has helped incubate technologies from GPS to mRNA vaccines. (The idea discussed during last year’s election campaign for a Canadian version – call it CARPA – would have seen the military-first focus stripped away.)

But when the budget dropped in March, CARPA was notably absent. In its place was a pledge to create a Canadian innovation and investment agency. Rather than funding pie-in-the-sky research, it will focus on more down-to-earth work: fostering and commercializing innovations already generated within Canada’s research community, as well as bridging the research and business communities in general.

The switch went unexplained, but it’s easy to imagine it had to do with the avalanche of criticism CARPA came in for, even before it became a vague campaign promise.

“There’s often a temptation in our economy to look for magic solutions,” said David Crane, a business and economics journalist who has written about CARPA recently in The Hill Times. “Twenty years ago, we needed to have Silicon Valleys all over the country. Now, if we only create a Canadian version of DARPA, we’ll invent the next Internet. I think there’s an element of grasping at straws.”

Dan Breznitz, co–director of the University of Toronto’s Innovation Policy Lab and a professor at the Munk School of Global Affairs and Public Policy, concurs. CARPA, he said, “ is a wonderful solution to a problem we don’t have.” Canada’s inability to scale up innovative companies, he added, has  more to do with deficits in the private sector than what happens on our campuses. He cited Canada’s low level of business enterprise R&D spending (BERD) as evidence of this point:  As of 2020, the OECD ranked Canada 20th out of 36 countries for gross domestic spending on R&D, well behind Israel, the United States and the average spend among EU nations.

“Our business sector has access to a wonderful public subsidy, in the form of a highly educated workforce, but has not been able to utilize that innovation and creativity, nor the innovations it produces,” he said. “If you inject into that system even more high-level invention, it is not clear why those businesses would suddenly say, ‘Wow, this is great, let’s pursue this.’”

As Finance Minister Chrystia Freeland put it in her April budget speech, “Our scientists win Nobel prizes, and our cities are outshining Silicon Valley in creating high-paying technology jobs… but we are falling behind when it comes to economic productivity.”

A work in progress

So what will this new agency look like, and what will it mean for Canadian researchers?

Details are scant so far. “No one really seems to be able to say anything,” said Catherine Beaudry, Canada Research Chair in Management and the Innovation Economy at Polytechnique Montréal. In May, she co-organized an innovation-themed conference in Ottawa where researchers from across Canada gathered to hash out some of the same questions the new agency will seek to answer. “I quizzed a lot of people there,” she said, and “some people are obviously involved, but can’t seem to speak to it yet.”

The government pledges more data in the government’s fall fiscal update, after consultation with “Canadian and global experts in finalizing the design and mandate of the new agency.”

We do know that the federal government plans to bankroll it with $1 billion over five years, beginning in 2022. The budget also name-dropped Finland’s TEKES agency and the Israel Innovation Authority as inspirations. Both are primarily focused on funding and shepherding projects with commercial potential, as well as building relationships between innovators – academic and otherwise – and business. As Alex Usher of Higher Education Strategy Associates’ put it recently, they are “part angel investor, part Tinder for scientific expertise.”

Dr. Beaudry hopes it will help centralize and standardize the data collection undertaken by Canada’s patchwork of innovation organizations. “The National Research Council, the Business Development Bank of Canada, Export Development Canada, all collect information about the firms they support, yet we already have a fantastic repository of data called Statistics Canada,” she said. “If there is something this agency could do, it would be to simplify data collection and extend Statistics Canada’s rigour to this question.”

Focus on green tech?

As far as Dr. Breznitz is concerned, the primary issue that Canada’s version needs to address is the aforementioned failure of business to capitalize on the innovation emerging from our universities. But Elicia Maine, a professor of innovation and entrepreneurship at Simon Fraser University, has a different point of view. She believes that part of our innovation challenge is that the research incentives and funding opportunities available to academic researchers are poorly aligned with industry needs. “We don’t fund enough translational and IP-protecting research, after Tri-Council research and before seed capital,” she said. “That zone for science-based ventures is very underfunded.”

That’s a problem other efforts have already sought to address. For example, the San Francisco Declaration on Research Assessment, which all three Tri-Council agencies signed onto in 2019, seeks to change how research funding is allocated, looking less at publications and journal impact and more at researchers’ “knowledge translation” – i.e., turning research into tangible outcomes.

Drs. Maine and Breznitz find common ground elsewhere, however. Both feel that the clean-energy transition should be a primary focus of the new agency – not just accelerating green technologies developed in Canada, but turning those into world-leading businesses.

TEKES is an instructive model here. Like Canada, Finland has traditionally been a heavily resource-dependent economy, particularly focused on forestry and pulp and paper. When TEKES was founded in 1983, Finland was in the position Canada is today – low in the global BERD rankings. But for nearly two decades, TEKES has been investing in cleantech research and has generated new forest products that have helped to shrink the industry’s environmental footprint. Today, Finland is the tenth–ranked country in the OECD for BERD (Israel is first). Dr. Breznitz chalks this up substantially to TEKES.

Drs. Breznitz, Maine, Beaudry and Crane are united in the belief that the agency must operate at arm’s length from government and political actors, ensuring spending priorities aren’t dictated by political whims and allowing funded efforts the freedom to fail.

Dr. Breznitz also raises one final point of caution. “We don’t want to end up where our research is judged solely on commercial and economic impact,” he noted. “We don’t want to judge research based only on the IP spinoffs, which calls into question the basic purpose of universities. Instead, our universities need to figure out how to push private business, so it’s business that’s responsible for taking our innovations and doing something with those new ideas.”

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  1. Brian Fisher / June 1, 2022 at 15:41

    I think we need to get away from the “waterfall” model of innovation, where basic science and early-stage technology magically happen in universities and are then commercialized by companies. Cutting-edge scientific research questions often emerge from observations made by commercial R&D staff and technology end-users. These can be explored by university labs alone or in partnership with companies. We also need to consider Gibbons et al “Mode 2” university service– the ability of a university to provide interdisciplinary consultation to private and public sector organizations.