Superclusters: Success depends on far more than tech-focused innovation policy

The supercluster initiative marks a new and positive step in Canadian innovation policy. It is more than a research granting exercise. Instead, it is one that is designed to ensure a clear reaching out to all parts of the research ecosystem in industry, non-profit organizations, academia and government.

There is no question that digital industries (DI) are key to Canada’s future. Whether it is in agriculture, mining, forestry, health care, financial, or consumer products, all industries are being driven by digital platforms and devices. The Social Sciences and Humanities Research Council recognized this when it funded the multi-partner research network, Creating Digital Opportunity, in 2014 to look at Canada’s global competitiveness in DI.

One of the interim observations of this network has been that Canada’s global competitiveness in DI lies primarily in software (Canada is not a large player in hardware, with the exception of a few, but very competitive, niche markets.) These superclusters will undoubtedly generate additional activity in software in their respective areas of excellence.

What can be learned from this funding exercise? Was it truly based on excellence? The distribution of the awards across the country suggests that there were at least some political considerations in the awards. In a competition such as this, it is difficult, for example, to compare ocean technologies to advanced manufacturing. But it does show that building the organizations behind the bids does matter, and that, in Canada, research networks are the norm, not the exception. This competition can be seen as a logical follow on to the Networks of Centres of Excellence competitions, and surely should reinforce need for collaborative research in a country as big and diverse as Canada.

But this process also raises several innovation policy questions.

• Should governments - federal, provincial or municipal - pick winners? How does the principle of peer review square with the broader needs for the promotion of economic and social innovation in our society?
• Is $950 million, divided among five consortia, allocated over five years, albeit with matching funds from other agencies, going to be enough to generate the “buzz” that will be required to develop world class digital technologies? Conversely, will each of the consortia be able to raise the matching funds, which should total at least $950 million, to meet their obligations under the program?
• And what of the attraction and retention of the human capital necessary to make all of this happen? Canada has a good record in attracting human capital, but we fail badly in terms of salaries and benefits, compared to the US, while at the same time, we have world class housing prices (and shortages) in Vancouver and Toronto. Without policies that provide the social infrastructure for this human capital, the investments in the superclusters will be in vain.

But there are broader policy considerations.

Basically software is intellectual property (IP). Thus Canada, in order to maintain its competitiveness must have IP policies in place that protect our IP or ensure that it is traded on fair terms. Thus the Trans-Pacific Partnership, the EU trade pact and yes, NAFTA, must have provisions that allow Canadians to protect IP assets.

We should also look at the inward foreign investment in Canada in digital industries. Inward investment is not bad. But we need to ensure that it provides maximum benefits for Canada. These range through:

• Facilitating work visas and permits for DI workers from abroad. We have a competitive advantage in attracting human capital when compared to the US. Large multinationals see Canada as a safe haven in their quest to recruit world-class talent. This is to Canada’s advantage.
• Equally, DI workers see Canada as a safe haven. This is not a new role for Canada in terms of knowledge workers. We have had many successful recruitment campaigns since WW2 in recruiting knowledge workers (e.g. Hungarian forestry professionals).
• But not only large multinationals. In Vancouver, there is a thriving industry in software for Chinese users. Why? Because Vancouver is a nicer place to live than, say, Shanghai. Similarly, Montreal has a competitive advantage in providing software for European users.

But the largest policy issue is the question of employment, and “precarious” employment. The term “precariat” describes individuals, whether truck drivers or software professionals, who work on either  piece-work or on short-term basis. Many DI employees are employed on short-term contracts, without benefits. For a twenty-something, this may be acceptable. But when it comes to houses, children, and putting down roots, this is a problem. There has to be in place a solid means of supporting these precarious DI workers when they retire.

Similarly, we need to have a nationwide housing policy. The human capital that makes up our DI industries, in spite of their (seemingly) high salaries, have little chance of buying a house in any of the cities (particularly Toronto or Vancouver) that are DI centres.  Both Vancouver and Toronto are seeing leakages of DI professionals to the hinterlands. The work model for a software professional does not need a fixed office – these two regions must see the probability that DI professionals, and certainly IP professionals, will relocate to areas outside the costly city centres. This is a good example of where innovation policy can no longer be just a federal consideration, but rather a provincial or municipal issue, and not strictly speaking an “innovation” issue but also a zoning, transportation, real estate, and land speculation issue.

Will this gamble on superclusters pay off in the face of global competition?  We cannot be certain, but it is better that we tried, and perhaps achieve only mixed results, than not to have tried at all.

Adam Holbrook, P. Eng., is adjunct professor and associate director, Centre for Policy Research on Science and Technology, Simon Fraser Univ.