Implementing Canada’s Innovation Strategy: Engaging Stakeholders in Policy Learning Process

1. Implementing Canada’s Innovation Strategy:Engaging Stakeholders in Policy Learning Process A. Duff Mitchell Manufacturing Competitiveness Directorate Industry Canada Six Countries Programme, Stockholm, Sweden May 23, 2006

2. Canada: Who we are & public policy challenges

3. Canada is a prosperous & successful country large, resource rich country … relatively small, high income, bilingual & multicultural population … federal political system & situated next to U.S. • Canada ranks high as place to live & do business: • United Nations Human Development Index – 5th among 177 countries in 2005 • World Economic Forum’s international competitiveness ranking – 13th in 2005 • OECD’s measure of living standards – real GDP per capita was 2nd highest in G7, 9th in the OECD in 2004

4. Focused on three policy challenges & innovation • Increasing productivity growth on sustained basis(objective: closing productivity gap vis-à-vis U.S.) • Improving human capital through education & training(objective: one of best educated society/economy in world) • Enhancing global economic reach (objective: more global FDI, deeper trade links in key markets, creating stronger “Canada brand”) Canada’s Innovation Goal: To be recognized as one of the most innovative countries in the world

5. Through “policy learning” success factors identified • Maintaining comparative advantage in competitive & rapidly changing global marketplace requires: • quality of policies & institutions (& quality of human resources & national endowments) • flexibility, adaptability & speed in policy formation & delivery • continued alignment of government policies & business strategies Source: “Canada’s Success is No Accident”, Kevin Lynch, Policy Options, April-May 2006

6. Why an Innovation Strategy?

7. Canadian economy performance is mixed GDP* per Person ($US) for the G7 Countries • 2nd in G7 re GDP • 2nd re GDP growth from 1991 to 2003 • But productivity growth has lagged U.S. … & created income gap * Real GDP, 2000 constant PPP Source: OECD Economic Outlook

8. … and productivity challenges are mounting Productivity growth also lags main trading competitors Private sector R&D investment performance low M&E investment as % of GDP lowest in G7 Source: “Canada’s Success is No Accident”, Kevin Lynch, Policy Options, April-May 2006

9. Canadian industries also facing increasing pressures • Higher Energy Prices • price of oil & natural gas rose by 200% & 455%, respectively from 2001 to 2005 • Appreciated Canadian Dollar • Canadian $ increased by more than 30% against US $ since 2003 • Emerging Countries • China is now Canada’s 3rd largest trading partner (total trade increased 555% between 1992 & 2004) • Increased competitiveness for value-added products Canada’s Merchandise Trade With China ($Cdn billion) Source: Trade Data Online.

10. Our traditional competitors rank higher than Canada in many areas • Canada needs to rank near top to compete successfully • But Canada’s innovation performance ranks near bottom in G7 – e.g., R&D, continuing education, regulatory environment & FDI *These 11 countries are Australia, Canada, Finland, France, Germany, Italy, Japan, Spain, Sweden, United Kingdom, and United States Source: Conference Board, Exploring Canada’s Innovation Character, June 2004

11. Canada recognizes innovation challenge • Key innovation challenge areas: • knowledge performance challenge (R&D) – promote creation, adoption, & commercialization of knowledge (productivity growth) • skills challenge – ensure an adequate supply of people who create & use knowledge (human capital) • innovation environment challenge – ensure that Canada’s stewardship regimes & marketplace framework policies are world-class (global economic reach)

12. The Federal Government Innovation Strategy Initiative

13. National Innovation Strategy involved multi-pronged engagement process • National Engagement Process launched 2002: • February: released Innovation Strategy Papers – set directions for 2010 • May – October: asked Canadians for views on targets, priority actions, recommendations • November – National Innovation Summit • Two overarching objectives: • mobilize Canadians to make commitments – and turn them into action – so that Canada becomes one of most innovative countries in world • examine Government’s Strategy to accomplish this goal – then tell us if we’ve got it right http://www.innovationstrategy.gc.ca

14. Engagement process resulted in extensive outreach Source: Public Policy Forum, “Engaging Leaders: Lessons from the Innovation and Learning Strategy”

15. Innovation initiative heard from all Canadians • Innovation Secretariat established • 10,000+ Canadians participated in: • 33 regional events • 80 sectoral group meetings • 40 expert, best-practice, and interest group roundtables • multiple streams, e.g. sectors, regions, youth, provinces • 600+ online responses from individuals & SMEs • 250+ formal submissions received from organizations representing hundreds of thousands of Canadians (posted on line) • key federal government departments involved Knowledge Matters: Skills & Learning for Canadians Achieving Excellence: Investing in People, Knowledge & Opportunities

16. … and Canadians had a lot to say • Confirmed major directions set out in Innovation Strategy papers • Suggested modifications to certain targets & milestones • Move faster in key areas (e.g. regulatory reform) • Modify performance measures in key cases (e.g. R&D intensity) • Provide more clarity (e.g. cluster strategy) • Pointed out deficiencies (e.g. insufficient focus on commercialization efforts; skilled trades) • Recognized that many stakeholders must collaborate • Government cannot act alone; innovation is everybody’s business; role for all key stakeholders • Demonstrated sense of ‘readiness’ to move forward – Canadians mobilized; ready to commit; wanted ‘fast action’

17. Canadian views captured for policy analysis • Views summarized in Canadians Speak on Innovation and Learning • Analysis of key issues & recommendations by stream • 2000+ recommendations; 5 key horizontal issues with 93 recommendations for prioritization at National Summit (National SummitDiscussion Guide) http://www.innovation.gc.ca/gol/innovation/

18. Agreement reached on 18 priorities across 5 themes

19. …and Government commitments announced • accelerate timetable for regulatory reform • review of foreign ownership restrictions in telecom sector • benchmark Canada’s innovation performance • reconvene in 2 years to assess progress & determine next steps Results published in Summit Summary Report

20. Government followed up with timely actions • Budgets 2003, 2004 & 2005 delivered on most priority recommendations: • Increased funding for research (e.g., CFI, Granting Councils) • Expanded support for successful programs (e.g, IRAP) • Improved business environment (e.g., tax measures, risk capital) • Improved financial assistance for students, foreign credential recognition • Increased funding for RDAs, CFDCs, Atlantic tech clusters, social economy • External Advisory Committee on Smart Regulation provided recommendations in September 2004; Report on Actions & Plans tabled March 2005 • CBOC benchmarking report released in September 2004 • Auditor General audit of Innovation Strategy (November 2005)

21. Policy learning from engaging stakeholders in Innovation Strategy

22. Post-Summit review of engagement strategy mixed • Engagement process achieved “core” objectives: • consensus obtained on innovation challenge & need for action • government delivered on most commitments & responded to priority recommendations (e.g., Budgets 2003, 2004, & 2005) • themes identified at Summit continue to resonate in public policy discussions & program funding decisions • But … not all expectations realized … and many private sector stakeholders did not develop action plans

23. External assessment critical of process Public Policy Forum (PPF) observations based on interviews of only 23 Summit “leaders”: “…National Summit was not successful in achieving its goals of creating a national action plan or in securing commitment from all sectors to participate in its implementation because of flaws in the process, agenda, participants, timing and outcomes.” Source: Public Policy Forum, “Engaging Leaders: Lessons from the Innovation and Learning Strategy” (pg., 11)

24. PPF focused on “perception” of coordination issues • National Summit Process: • pre-set course of action • dominated by universities who monopolized debate • complicated by having two-leading departments (Industry Canada & HRSDC) • politicized by “politics of the day” • National Summit Agenda: • too large to be meaningful (500+ leaders over 2 days) • mix of priorities & ideas (& too many ideas) • some themes poorly defined (e.g., Strengthening Communities) • Insufficient time for full discussion of issues • not national enough in scope (especially re private sector) • Post-Summit: • little awareness of follow-up actions • “taking stock” Summit not held two years later • outcomes too high-level & too government-centric • focus more on National Summit event than continued stakeholder engagement

25. Overall conclusions from innovation strategy … importance of innovation was never in question government actions must correspond to advice received during engagement process communities & sectors were ready to move, but were waiting for government to act as well resources needed for follow-up work approach must be integrated partnerships must be established with enterprises & communities a Summit can gave credibility to Innovation Strategy, but just beginning of implementation process

26. … and lessons learned for future engagement • federal co-leads on horizontal files can result in increased workload for stakeholders, imposes coordination challenges for departments & can lead to an “accountability vacuum” • focus on a short list of national issues to produce viable plan. Develop jointly with private sector to ensure they share responsibility to implement • engage for implementation of action plans as well as development, using networks developed during consultation • better communication of follow-up actions required

27. Building on stakeholder engagement process

28. Industry launches national consultation on future • Canadian Manufacturers & Exporters’ (CME) Manufacturing 20/20: • challenges & changes affecting manufacturing • future of manufacturing in Canada? • 98 meetings held in 2004/05, involving 3,500+ manufacturers & stakeholders • input from 15 industry associations • survey of 942 manufacturers in 2005 • National Manufacturing Summit (February 2005) • Reports: innovation, workforce capabilities & international business • www.cme-mec.ca

29. Commercialization Expert Panel addresses key issue • People and Excellence: The Heart of Successful Commercialization (April 2006): • 11 recommendations • focus on development of business-led Commercialization Partnership Board (CPB) • would create new role for private sector as full partner in charting course for, & developing policy related to, commercialization www.strategis.ic.gc.ca/commercialization

30. Government to advance innovation in Budget 2006 “Over the coming year, the Minister of Industry will be developing a science and technology strategy, in collaboration with the Minister of Finance, that will encompass the broad range of government support for research, including knowledge infrastructure. The Government will also undertake a review of the accountability and value for money of the granting councils’ activities.”