Canadian Government Executive - Volume 27 - Issue 02

INNOVATION March/April 2021 // Canadian Government Executive / 15 sults suggest the program is getting traction. Under the original business plan, what we had envisioned was a one-to-one match. The idea was that government puts a dol- lar in, and industry puts a dollar in. The results were better than we had hoped for. The Superclusters have approved hundreds of projects worth more than CAD$1 billion [US$793 million], with industry exceeding its expected financial match. The program is now closing in on alliances involving some- thing like 900 partners, and more than half of them are small and medium-sized busi- nesses. Q: How else do you work with com- panies to support innovation, for example, by providing direct investment? There are areas where it may not, for good business reasons, be rational for a business to make an investment — even when there might be an important public payoff. Or ar- eas where in the end the societal gain, and frankly, maybe even the gain to the business, might justify the investment — but the risk or the uncertainty makes it difficult. In situ- ations like these, government can partner di- rectly with the business sector to cost share or to share in the risk. For example, my team runs a program called the Strategic Innovation Fund, which is a large-scale fund that supports innovative technology development and new business- es. One of the areas of focus is decarboniza- tion and green technology. We all know that at a macro level, cleantech is a promising sector with growing demand. As a society, we have an interest in the emergence and deployment of clean technologies and the achievement of net-zero emissions. But some clean technologies — such as new ways to capture and use carbon — are high-risk investments, and the payoff might be longer term. In late 2020, the government announced CAD$3 billion [US$2.4 billion] in new funding, to be delivered through the Strategic Innovation Fund, focused on car- bon reduction and supporting industries in achieving net-zero. Q: How have some of these funds been used? Last fall, the government announced, with Ford Motor Company, a significant invest- ment to transform Ford’s Oakville, Ontario, automotive manufacturing assembly facil- ity to manufacture electric vehicles. This involved a CAD$295 million [US$234 mil- lion] investment from the Strategic Innova- tion Fund into the CAD$1.8 billion [US$1.4 billion] project. There are significant oppor- tunities for the government to work with the other vehicle assemblers over time to tran- sition to zero-emission vehicles and to low- emission technologies. The government is also looking at sup- porting battery production. Canada has all the ingredients necessary for the electric ve- hicle battery supply chain: the minerals, the expertise in manufacturing, and so on. And it has the industry demand, such as automo- tive, heavy vehicles, and buses, that could be a market for those batteries. Canada has all the ingredients necessary for the electric vehicle battery supply chain: the minerals, the expertise in manufactur- ing, and so on. And it has the industry de- mand, such as automotive, heavy vehicles, and buses, that could be a market for those batteries. Q: What kind of impact can these types of programs have on traditional resource industries? Canada’s resource sectors — energy, mining, forestry, and so on — are important compo- nents of our economy; they are a significant share of our exports, our employment, and our country’s natural endowment. The gov- ernment’s objective is to support these indus- tries in remaining competitive and sustain- able. In fact, many resource companies have already announced their intention to go to net zero. And increasingly, the international investment community is demanding this of industries as a condition of investment. I think sometimes people tend to talk about these things in opposition: that there’s a modern economy, and then there’s this other economy. But when we talk about our commitment to innovation, it’s an equal- opportunity commitment, not future indus- tries versus so-called traditional industries. Innovation is about the economy writ large — and supporting the Canadian economy in its low-carbon evolution. Now, the resource sector arguably has been a bigger focus in the media and in pub- lic debate around things like carbon reduc- tion. But all industries are going to have to reduce their carbon output. Investors expect it. Citizens expect it. Governments expect it. We also have to look at all industries as digital and in need of transformation. For example, it’s striking to see the changing composition of the stock market in terms of tangibles versus intangibles. In 1975, only 17 percent of the total market cap of the S&P 500 was made up of intangible assets. Today, it is something like 90 percent that is com- prised of intangible assets. Most of the value is in the ideas. Are you better able to under- stand the customer and serve their needs? Can you move faster than the others? Can you take advantage of the resources that you have more efficiently? And a lot of that de- pends on data and technology. Q: How is Canada’s government regulating companies as part of its digital transformation, for example, to protect data and privacy? Part of building an innovative digital econ- omy is making sure that you have modern legal frameworks and laws that are fit for the purpose of a modern economy. The rules of the road matter; you could have great pro- gramming, but without the right rules, busi- ness activity can be stifled. People need to trust the platforms they’re using. They need to trust that their data is going to be used ap- propriately, that their privacy’s going to be respected, and that people who violate the rules will be dealt with appropriately. Legislation currently making its way through the House of Commons is designed to be a significant overhaul of the rules around digital and data. It will modernize the rules around consent and facilitate data portability. Right now, the lack of data por- tability arguably impedes the emergence of certain business models. If you have a better