It’s time for Canada to turn up the dial on its innovation agenda

By Dana O’Born, CCI’s Vice President, Strategy and Advocacy

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Last fall, once the dust settled after the federal election and Justin Trudeau selected his new cabinet, each minister received a mandate letter from the Prime Minister outlining his expectations for each of them in their unique roles. These letters helped translate electoral platform promises into government priorities, and they provided clarity to us in industry about who the point person in government is on certain important files, and which ministers are expected to collaborate to drive results.

At CCI, we read these letters with a fine-toothed comb — and re-read them often. Our advocacy positions are always driven by our CEOs, but when we see alignment between the priorities of our members and the priorities of the government, it helps to streamline our efforts. As we approach the upcoming federal budget, the first since the election and second since 2019, we’ll be looking to see which cabinet ministers have been more effective in securing resources for their mandate priorities, and which initiatives get no mention at all.

For Budget 2022, here are four things we are looking for movement from the federal government on:

Address Canada’s High-Skills Talent Crunch

Our members have told us that wage inflation for highly-skilled tech talent is 20 per cent compared to this time last year. In our end-of-year member survey, our members also said that on average they want to increase their workforce by more than 20% in 2022 to keep up with demand. Access to talent has always been a huge advocacy priority for CCI, but we’ve been hearing it more and more from our members during the pandemic.

The shift to remote work has meant that the labour market for skilled tech talent is increasingly global. Skilled workers can now work for global companies without needing to move cities or even leave their home office. We call this Brain Drain 2.0 and it is an enormous change to workforce economics.

But this isn’t a story of “Canadian companies not wanting to pay market rates.” Our companies all want to compete for top tech talent, and they are offering competitive compensation. The wage inflation speaks to a shortage of supply when demand for these skills is so high. Governments need to recognize that there’s a supply/demand mismatch, and the solution is boosting supply.

In his mandate letter, Immigration Minister Sean Fraser was tasked by the Prime Minister to work with Carla Qualtrough, the Minister of Employment, Workforce Development and Disability Inclusion, to, “establish a Trusted Employer system for Canadian companies hiring temporary foreign workers and, as part of improving the Global Talent Stream of the Temporary Foreign Worker Program, simplify permit renewals, uphold the two-week processing time and establish an employer hotline.”

Canada’s response will need to help companies become more competitive in the race for talent. Establishing reliable pathways to Permanent Residency (PR) for high-growth company recruitment, accelerating support for upskilling and re-skilling programs in Canada, and funding new programs to support micro-credentials will help meet the talent needs of our country’s fastest growing companies. To address Canada’s talent crunch, we need to increase the generation, attraction, and retention of skilled workers for Canada to be competitive in the global innovation economy.

Accelerate the Modernization of SR&ED

Since our inception as a national business association in 2015, CCI has consistently called on the federal government to modernize its research and development programs to support the needs of high-growth, innovative companies. As such, we were pleased to see in Deputy Prime Minister and Finance Minister Chrystia Freeland’s mandate letter that she was tasked with reforming the Scientific Research and Experimental Development Program (SR&ED) to, “reduce red tape, align eligible expenses with today’s innovation and R&D, and make the program more generous for companies that take the biggest risks.”

In this digital economy driven by intellectual property (IP) and data, the government should be bolstering IP generation by allowing IP-related costs to be recognized as eligible costs for the SR&ED program. The government should also stop giving SR&ED incentives to foreign companies who take their IP outside of Canada. SR&ED, and particularly its refundable portion, delivers material and long-term value to Canada only if the IP flowing from the investment stays here in Canada. With Minister Freeland at the helm of Finance Canada, we are hopeful we will see movement on modernizing SR&ED in this year’s budget.

Enhance Canada’s cyber readiness and digital resiliency

Canada has reached the critical halfway point in its five-year National Cyber Security Strategy introduced in 2018. This requires a review of the work to date and a forecast on the work yet to be done. For the digital post-pandemic era, the government needs to apply an economic lens to bolster growth and ensure resiliency for Canadian institutions and citizens.

In his mandate letter, Public Safety Minister Marco Mendicino is tasked to work closely with Defence Minister Anita Anand, Foreign Affairs Minister Melanie Joly, and Innovation Minister François-Philippe Champagne to develop and implement a, “renewed National Cyber Security Strategy, which will articulate Canada’s long-term strategy to protect our national security and economy, deter cyber threat actors, and promote norms-based international behavior in cyberspace.”

CCI specifically calls for Budget 2022 to dedicate funding to grow Canada’s cyber-talent pool — through immigration, post-secondary, and upskilling — for both technical and non-technical roles in cyber. The Budget should also support IP generation for companies who are committed to growing from Canada, and accelerated proof of concepts with government and the broader public sector.

Associate Minister of Finance Randy Boissonnault’s mandate letter also directs him to “launch a made-in-Canada model of open banking by early 2023.” We are now very close to the one-year anniversary of the federal government’s open banking report, dated April 2021. To date, Canada’s fintech industry has seen zero movement on the implementation of the advisory committee’s recommendations, including the appointment of an open banking lead. Innovators within Canada’s fintech sector will be looking for an update in Budget 2022 on the government’s open banking plans.

Measure innovation outputs and maximize innovation and R&D spending

We are very interested in what Budget 2022 has in store for spurring Canadian innovation and commercialization, and specifically, what details will be shared about the new Canadian Advanced Research Development Agency (CARPA) that Innovation Minister François-Philippe Champagne is tasked with developing. In his mandate letter, he was directed to develop a “new approach to support high-risk/high-reward transformative research and development to unleash bold new research ideas, drive technological breakthroughs, protect Canada’s competitive advantage and help Canadian companies grow and create highly skilled jobs.”

As CCI President Benjamin Bergen wrote in The Hill Times last month, “Canada will need more than a well-funded advanced research agency if we want its work to turn into innovation and sustainable economic growth.” Setting the right policies, strategies, and incentives can ensure that the Canadian economy is the primary beneficiary of publicly funded R&D. This means that as the federal government develops the governance and policy structures for how this new agency will function, it will be critical to ensure that outputs will deliver material, long-term value to Canada. For instance, the government must ensure that the IP flowing from these investments continues to reside in Canada and be commercialized for the benefit of Canadians. We are hopeful to see consultations launched on this new agency soon, and that CCI members are engaged in the development of the policy frameworks for this initiative.

These are just a few of the priorities of our members for this year’s federal budget. Our full submission is [available here.](https://www.dropbox.com/s/1wf605nkcw67rez/2021-08-06 - CCI 2022 Pre-Budget Submission FINA.pdf?dl=0&utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--BBRLliH0Ccvlp7r5gCh2UNTYZgYeml8UOuo-TnHc6h2XpXsaxpPv6ASyTBZwLqgJI43gA) From where I sit, Budget 2022 is a big opportunity for Minister Freeland and this government to show progress on the priorities outlined in the Prime Minister’s mandate letters, and turn up the dial on the government’s innovation agenda to bolster Canada’s post-pandemic economic rebound.

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For more information about CCI’s federal advocacy, contact Dana O’Born, CCI’s Vice President Strategy and Advocacy. She is reachable at doborn@canadianinnovators.org

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