Policy & Positions Manual
Provincial Issues - Jobs, Tourism And Innnovation
Economic Recovery Through Developing Effective Processes for the Innovation and Technology Sectors to Reach Local and Global Markets (2009)
In Industry Canada’s2007 document Mobilizing Science and Technology to Canada's Advantage it states that, “talented, skilled and creative people are the most critical element of a successful national economy over the long term.” In addition, supporting our talented, skilled and creative people to successfully market their abilities locally and globally is an important factor in a successful economy.
Innovation and technology in Canada and British Columbia
It is important to gauge Canada’s progress when looking at BC because universities are aiming to build knowledge infrastructure for innovation and technology that spans across the country, and much of the available funding to BC comes from both governments.
Canada has a higher percentage of talented people in the innovation and technology sectors than most other G7 countries. BC too has a strong innovation and technology sector and is a world leader in environmental technologies with approximately 1,300 companies active across the province. These companies generate revenues of $1.9 billion and employ about 18,000 people. In addition to BC’s corporate activity, the province has significant capacity for research and innovation and is home to 15 research centres of excellence and other clean technology research institutes.
In Mobilizing Science and Technology to Canada's Advantage it states that, “despite these achievements, we face very real economic and environmental challenges that require a new level of effort and success. Canada's productivity gap relative to our largest trading partner, the United States, is widening. For Canadians to continue to enjoy a high quality of life and standard of living, we must improve our productivity and competitiveness through innovation. At the same time, our economic activity must be sustainable over the long term.”
Some of these comparisons between Canada and the United States have changed since the latest global economic developments, but the Canadian productivity gap is still lagging behind its international counterparts.
The Conference Board of Canada suggests that, “innovation is the ability to turn knowledge into new and improved goods and services.” It further states that, “Canada’s performance on innovation over the past three decades rates a consistent ‘D’. Canada is above the 17-country average on only two indicators: scientific articles published and the export market share of the aerospace industry. The indicators selected measure a country’s capacity to innovate by assessing the stages of knowledge production, how that knowledge is transformed, and market shares of knowledge-based industries.”
How are companies doing globally?
At the Canadian Chamber Annual General Meeting in October 2008, James Milway stated that Canada is lagging behind in productivity compared to other G7 countries. Milway also spoke about the importance of Canadian companies going global to succeed, and with the following graph emphasized that Canadian companies have been taken over by global interests that had much less global presence to begin with.
Graph created by Competitiveness & Prosperity
Milway suggested as part of a prosperity and productivity agenda Canada needs to:
- Focus venture capital efforts on quality, not quantity;
- Continue to expand innovation policy to include building management capabilities; and
- Pursue the reduction of barriers to investment and trade.
At the 2009 BC Economic Summit in Vancouver February 3-4th, United States speakers spoke of US - Canadian collaborations. The US hosts an awards event for the best US - Canadian collaborations and mentioned that most typically the, “innovation and brilliance component of the collaboration comes from Canada and the marketing and business end from the United States.” Through this program the Canadian start-up company is supported in finding venture capital and obtaining US bank financing. “Plug Power”, using the Ballard Fuel Cells from BC, was one of the successful collaborations mentioned. One way British Columbia could bridge the production gap could be to similarly assist its innovation and technology sectors to collaborate with its marketing and business sectors.
The biotechnology example
BIOTECanada states, “an increasingly large gap has emerged in Canada between funds needed to commercialize products and the actual investment provided. This is especially true for small and medium sized biotechnology companies (SMEs) in Canada, three quarters of which have fewer than 50 employees.”
The recently released BIOTECanada–PricewaterhouseCoopers Canadian Life Sciences Industry Forecast 2007highlights that more than 40% of these companies are looking to secure more than $20 million in their next round of financing. Unfortunately, Canada’s capital market is too small and too risk adverse to provide this assistance directly; thus, the SR&ED program needs to be an effective tool to prevent the hollowing out of the emerging technology sector in Canada. If Canada does not act, we not only risk losing the biotechnology industry to competing jurisdictions, we also risk not getting the return on investment back from research in the emerging technology sector in Canada. This sector provides a forum for employment for many of our advanced science graduates from universities in Canada whom taxpayers have subsidized throughout their education. If we have no jobs for these graduates and lose them to foreign employers, we will also lose this return on our investment.
With every student and innovation lost to greener pastures Canada is giving out its tax dollars to benefit other countries.
BC Biotech is a private, not-for-profit industry association representing BC's growing biotechnology sector. It states that:
“BC's biotechnology sector is Canada's fastest growing biotech region, and the third fastest growing in North America. It is also Canada's third largest centre in terms of research and development, the number of organizations involved in biotechnology and the number of people employed. Ninety-one biotechnology firms reside in BC; 65 privately held and 26 publicly traded companies. Success of the biotech industry in BC is a result of well-trained and knowledgeable workforce, access to several large hospitals, medical schools and educational institutions, and the ability of biotechnology companies to commercialize their products.”
The Conference Board of Canada says that:
“Canada has some strong innovation initiatives. But, in the main, these programs create a supply of scientific discovery rather than go the extra step of fostering demand for innovative products. The result is good science faculties and lots of relatively small companies without much prospect of success on a globally efficient scale. The upshot is that Canada moves ahead far more slowly than other countries that enjoy greater innovation policy coherence.”
Credit Conditions
“The balance of opinion on credit conditions reached a record-high level in the winter survey, as nearly two-thirds of firms reported tighter credit conditions over the past three months relative to the previous three months. The majority of these firms characterized the change as being significant and felt that it was driven mainly by a market-wide adjustment in risk premiums. Most firms reported that the tightening came in the form of higher borrowing costs. The deterioration in credit conditions is widespread across sectors.”
These same restrictions, as discussed by the Bank of Canada above, could deter new ventures in the innovation and technology sectors from entering the market.
“The Business Outlook Survey summarizes interviews conducted by the Bank’s regional offices with the senior management of about 100 firms selected in accordance with the composition of Canada’s gross domestic product. The survey’s purpose is to gather the perspectives of these businesses on topics of interest to the Bank of Canada (such as demand and capacity pressures) and their forward-looking views on economic activity. The winter 2008–09 survey was conducted from 14 November to 12 December 2008.”
Bank of Canada Survey on Credit Conditions: Balance of Opinion*
Survey question: Over the past three months, how have the terms and conditions for obtaining financing changed (compared with the previous three months)?
- Tightened: 63%
- Not changed: 31%
- Eased: 6%
* Percentage of firms reporting tightened minus percentage reporting eased. For this question, the balance of opinion excludes firms that responded “not applicable.”
How can British Columbia become a global leader in innovation?
The Conference Board of Canada states it best: “Countries that regularly outperform others on innovation all have coherent strategies. These strategies differ from one country to the next but they all stimulate their country’s capacity to innovate—from the creation of ideas to the transformation of those ideas into new products and services for the domestic and world markets. Canada invests in university research and development but fails to support highly innovative companies to become successful on a global scale.”
Other steps could be: training a workforce in new innovations and technologies; more access to venture capital; affordable credit; start-up collaborations with the marketing and business sector; ease of regulatory burdens and a strong global presence.
THE CHAMBER RECOMMENDS
- with the Federal Government develop coherent strategies to bring the innovation and technology sector first to our local market then to the global market;
- with the Federal Government develop incentives for collaborations between the innovation and technology sectors and the marketing and business sectors;
- provide streamlined processes with the Federal Government for the innovation and technology sectors to access government funding and/or venture capital;
- work on behalf of the innovation and technology sectors to avail them access to affordable credit;
- work with the Federal Government to develop an infrastructure to bring the results of research and development in the innovation and technology sectors to the current market, and;
- provide solutions to retrain the existing workforce in the new technologies of future markets while retaining their jobs in the current market.
