A Mandate to Innovate: Strategy For a More Prosperous Canada

By Laurent Carbonneau,
CCI Director of Policy and Research 

Canada’s new government has a big job ahead of it.

We’re living in a new data-driven and increasingly AI-driven economic landscape that has little relation to the industrial economy of the 20^th century, and policy has not caught up.

The trade war with the United States represents the biggest economic and security crisis in living memory. And even before the tariffs were imposed, Canada was facing real threats from a hostile Russia, and stiff competition from a powerful and innovative China. Amid all of this, our economy is sputtering – labour productivity has not meaningfully grown since 2018 and big plans to reshape the economy have not borne fruit.

Reorienting Canada’s economy must be the top priority for our country right now, and A Mandate To Innovate is CCI’s contribution to that conversation.

This isn’t shocking to regular Mooseworks readers, but innovation is the foundation for security, prosperity and sovereignty in the 21^st century. Successful economies respond quickly to disruptions, they create and retain intangible assets, and they sell products and services in competitive markets all over the world.

The rate of return on intangible assets may be accelerating, and in the intangible economy, markets tend to be winner-take-most — driven by economies of scale, scope and network effects. So it has never been more important to be the home base for those winners. It means wealth reinvested, tax revenues collected, top talent cultivated, and big productivity gains.

But right now, Canada doesn’t have enough innovation winners. In 2017, the federal government committed to doubling the number of high-growth firms from 14,000 to 28,000 – unfortunately, that number has barely budged in the time since.

Innovation is the road to prosperity. And successful firms are the road to innovation. So what’s the road to successful firms? Policymakers need to be focused directly on their challenges – access to talent, capital, customers and marketplace and regulatory frameworks.

This doesn’t mean bigger or small government, necessarily. Canada should aim to be a leader in using its public money well in pursuing industrial policy of various kinds, as indeed all our competitors do. We’ve been running the traditional playbook for quite a while – broad-based tax credits, research funding, complex granting programs – and this approach does not have a lot of results to show for itself.

Canada’s new government has an opportunity to start to do things differently. A Mandate to Innovate has a lot of ideas – 34 detailed action items for 14 different ministers – but we can condense this down into the essentials.

First, we can’t keep doing what hasn’t worked. Concentrating responsibility for innovation and entrepreneurship policy into a core department like ISED simply can’t work. It’s a hard-working department, but doesn’t have the tools it needs to do the difficult job that is asked of it, and deals with internal bunfights with other departments and close political supervision. The new government should move responsibility for a lot of these policies out to arms-length from itself, into some sort of independent innovation agency.

Second, we need to compete for talent and investment with the United States. This is a contest that we simply cannot afford to lose. We cannot let the world – and Canadians! – think that our country is a second-best option for innovative investment. Even more importantly, we must do away with the idea that Canadian entrepreneurial ambition means seeking your fortune in the United States. As it is, we’re hard on investors in innovation compared to the United States and we’re the world’s third biggest exporter of inventors after China and India. Canada should be a place where ambitious people feel like they can build things.

Third, investments in defence (cyber and conventional), health, housing and climate will continue to be critical federal priorities. Innovation procurement will fill the dual role of helping the government achieve its aims and help build innovative companies in Canada. This has to be a bigger part of the policy suite going forward – there is no reason that the Government of Canada can’t be the world’s best customer for innovators.

Finally, we need to think beyond launching new, innovative sectors and industries like AI and quantum (though that is extremely important!). We should upgrade our traditional, export-oriented sectors with cutting-edge technology. Canada has everything it needs to be a world leader in ag-tech, and can build on our impressive technological foundations in mining and energy.

Our problems are urgent. The works starts now to turn around our lackluster performance as a country. The election is over. Canada’s new government now has A Mandate To Innovate.

We’re looking forward to publishing this on May 8. We hope you’ll join us for our launch event!

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Laurent Carbonneau is CCI's Director of Policy and Research. He can be reached at lcarbonneau@canadianinnovators.org. Mooseworks is the Council of Canadian Innovators' innovation policy newsletter. To get posts like this delivered to your inbox, sign up for CCI's newsletter here .