Constructing Canada’s digital, low-carbon economic system

Within the early days of the COVID-19 pandemic, shortages of crucial medical provides and private protecting gear (PPE) have been commonplace. At Canada’s Ministry of Innovation, Science, and Financial Growth (ISED), workers rapidly realized they might use the relationships with the enterprise sector that they had constructed over time, in industries similar to aerospace, manufacturing, and automotive, to assist remedy this downside. Initiatives and incentives have been pulled collectively, and shortly textile producers that usually made snow jackets have been mass-producing medical robes.

The ISED ministry’s chief, Simon Kennedy, was properly positioned to orchestrate this pivot. Throughout his three many years in public service, Kennedy has supplied policymaking steering to the central authorities; served because the prime minister’s private consultant on the G20; and, for almost 5 years, led Well being Canada, the place he managed the federal government’s response to the opioid disaster. In September 2019, only some months earlier than the pandemic took maintain, he transitioned to his present position. In addition to boosting Canada’s PPE manufacturing, Kennedy’s ministry has supported companies beneath excessive stress and accelerated a program to roll out broadband entry amid an unprecedented surge in demand.

Kennedy and his group are additionally trying to the longer term, main initiatives that can gasoline Canada’s restoration by constructing an inclusive digital economic system and embracing decarbonization. It’s a imaginative and prescient that shall be enabled by daring innovation. As Kennedy defined to technique+enterprise in a current video interview, authorities can play an lively position in creating the setting and facilitating the collaboration wanted for innovation to flourish.

S+B: What are among the crucial challenges for Canada’s post-pandemic restoration?

KENNEDY:
The instant focus of the federal government and of my ministry has been to guard folks’s well being and security. On the finish of the day, good financial coverage can be good well being coverage. There’s no sense in advancing an formidable restoration technique solely to have a 3rd wave or to not have the pandemic beneath management.

A associated and significant concern is to assist the enterprise sector and staff. This disaster has affected all sectors of the economic system, however some have been hit more durable than others, similar to tourism, hospitality, and air transport and aerospace. Small companies’ wants have diverged from these of enormous companies. Canada’s an enormous nation, and our regional economies have been affected otherwise. One of many issues that we have now been attempting to do during the last 9 months is to ensure that, to the extent doable, the financial results of the pandemic are blunted and the chance of everlasting scarring is decreased — in order that when the pandemic begins to recede, we are able to come roaring again as rapidly as doable.

Within the medium time period, and as we glance to the longer term, lots of the challenges we confronted pre-pandemic are the identical type of challenges we’re going to face post-pandemic. And in some methods, the pandemic has actually put a crimson line beneath them — it has highlighted these challenges as being much more essential to deal with than maybe we had thought beforehand.

For instance, we have been dealing with the challenges of local weather change pre-pandemic. That hasn’t gone away, and, in reality, the pandemic has illuminated for a lot of how Mom Nature can throw a disruptive curve ball at society and the way essential it’s to cope with systemic dangers. The emergence of the digital economic system was additionally a serious precedence previous to the pandemic. Properly earlier than it hit, the federal government introduced a digital constitution of 10 ideas that might information its improvement of latest guidelines for the digital economic system. And as we’ve seen through the pandemic with distant work and companies transferring on-line, this constitution is simply as essential as we speak, if no more essential.

S+B: What’s the position of your division in confronting these challenges?

KENNEDY:
My group performs an essential position in bringing to bear all the varied instruments we have now to assist a dynamic and revolutionary economic system. We do this in assist of 4 ministers with wide-ranging mandates, similar to innovation, tourism, small enterprise, and rural financial improvement. And naturally, we’re one division working with a bigger federal group.

I’m a civil servant — I don’t run a personal enterprise — and the federal government’s job is to not substitute for the position of the enterprise sector. However my group is chargeable for setting the principles of the sport. From the formation of a enterprise to the dissolution of a enterprise and every little thing in between, we’re chargeable for the associated legal guidelines and insurance policies, similar to for agency incorporation and for chapter and insolvency.

We additionally ship main programming, and we assist analysis. In the event you consider the legal guidelines, rules, and programming for the enterprise sector on this nation as a public coverage worth chain, we’re lively alongside all elements of that worth chain. And our aim is to ensure that we don’t have weak hyperlinks — that the varied interventions we’re making are mutually reinforcing, for the advantage of a powerful enterprise sector and economic system.

S+B: What’s an instance of an intervention the federal government has made to assist a extra revolutionary economic system?

KENNEDY:
Authorities could be a convener and a facilitator. For instance, there’s quite a lot of analysis on how innovation clusters type and why they work. In a cluster, you’re in an setting by which it’s extra possible that the collisions will occur that allow you to take your concept from idea all the best way to a useful enterprise. Furthermore, when clusters get going, they turn into magnets that appeal to others.

The federal government’s Supercluster program goals to assist foster that type of setting, in high-potential sectors which will presently lack scale or which can be lacking components, and the place state assist may also help take it excessive. This system brings collectively completely different actors that won’t essentially run into each other and incentivizes collaboration and collective motion — facilitating these collisions and that dynamism.

These applications are business-led; they’re self-governed by an business board. The everyday Supercluster has plenty of anchor companies, but additionally startups and small and medium-sized enterprises, in addition to educational, not-for-profit, and authorities members.

S+B: Are you able to give an instance?

KENNEDY:
Canada has an infinite agriculture sector and is a world chief within the manufacturing of plant protein. And there’s thrilling innovation occurring within the plant protein sector: All you need to do is go into your native specialty grocery retailer and take a look at lots of the meals on the shelf.

The Protein Industries Supercluster brings collectively the farm sector and the processors, but additionally the technologists and the innovators. Take canola, for instance. That crop was invented in Canada within the Nineteen Seventies and for many years has been one in all our most essential agricultural exports. However many of the processing and value-added exercise was being executed overseas. Certainly one of our most well-known agricultural improvements wasn’t getting used to its fullest potential in Canada. The Supercluster is altering that, catalyzing partnerships to develop new breeds of high-protein canola and roll out revolutionary applied sciences to switch the crop into new meals and feed merchandise.

S+B: What have been the outcomes of the Supercluster program up to now?

KENNEDY:
It’s a brand new means of working, and it brings folks collectively who you wouldn’t essentially suppose can be actively collaborating, so it took a little bit of time to get off the bottom. Contributors have had to determine who to accomplice with, after which methods to accomplice with each other. However it’s taken off, and early outcomes counsel this system is getting traction.

Below the unique marketing strategy, what we had envisioned was a one-to-one match. The concept was that authorities places a greenback in, and business places a greenback in. The outcomes have been higher than we had hoped for. The Superclusters have permitted a whole bunch of initiatives price greater than CAD$1 billion [US$793 million], with business exceeding its anticipated monetary match. This system is now closing in on alliances involving one thing like 900 companions, and greater than half of them are small and medium-sized companies.

S+B: How else do you’re employed with firms to assist innovation, for instance, by offering direct funding?

KENNEDY:
There are areas the place it might not, for good enterprise causes, be rational for a enterprise to make an funding — even when there could be an essential public payoff. Or areas the place ultimately the societal achieve, and albeit, possibly even the achieve to the enterprise, may justify the funding — however the danger or the uncertainty makes it troublesome. In conditions like these, authorities can accomplice straight with the enterprise sector to value share or to share within the danger.

For instance, my group runs a program known as the Strategic Innovation Fund, which is a large-scale fund that helps revolutionary know-how improvement and new companies. One of many areas of focus is decarbonization and inexperienced know-how. Everyone knows that at a macro degree, clear tech is a promising sector with rising demand. As a society, we have now an curiosity within the emergence and deployment of unpolluted applied sciences and the achievement of net-zero emissions.

However some clear applied sciences — similar to new methods to seize and use carbon — are high-risk investments, and the payoff could be long run. In late 2020, the federal government introduced CAD$3 billion [US$2.4 billion] in new funding, to be delivered by the Strategic Innovation Fund, centered on carbon discount and supporting industries in reaching internet zero.

S+B: How have a few of these funds been used?

KENNEDY:
Final fall, the federal government introduced, with Ford Motor Firm, a big funding to remodel Ford’s Oakville, Ontario, automotive manufacturing meeting facility to fabricate electrical automobiles. This concerned a CAD$295 million [US$234 million] funding from the Strategic Innovation Fund into the CAD$1.8 billion [US$1.4 billion] challenge. There are important alternatives for the federal government to work with the opposite automobile assemblers over time to transition to zero-emission automobiles and to low-emission applied sciences.

The federal government can be supporting battery manufacturing. Canada has all of the components obligatory for the electrical automobile battery provide chain: the minerals, the experience in manufacturing, and so forth. And it has the business demand, similar to automotive, heavy automobiles, and buses, that might be a marketplace for these batteries.

S+B: What sort of influence can these kind of applications have on conventional useful resource industries?

KENNEDY:
Canada’s useful resource sectors — power, mining, forestry, and so forth — are essential elements of our economic system; they’re a big share of our exports, our employment, and our nation’s pure endowment. The federal government’s goal is to assist these industries in remaining aggressive and sustainable. Actually, many useful resource firms have already introduced their intention to go to internet zero. And more and more, the worldwide funding group is demanding this of industries as a situation of funding.

I feel typically folks have a tendency to speak about these items in opposition: that there’s a contemporary economic system, after which there’s this different economic system. However once we discuss our dedication to innovation, it’s an equal-opportunity dedication, not future industries versus so-called conventional industries. Innovation is in regards to the economic system writ massive — and supporting the Canadian economic system in its low-carbon evolution.

Once we discuss our dedication to innovation, it’s an equal-opportunity dedication. Innovation is in regards to the economic system writ massive — and supporting the Canadian economic system in its low-carbon evolution.”

Now, the useful resource sector arguably has been an even bigger focus within the media and in public debate round issues like carbon discount. However all industries are going to have to cut back their carbon output. Traders anticipate it. Residents anticipate it. Governments anticipate it.

We even have to take a look at all industries as digital and in want of transformation. For instance, it’s hanging to see the altering composition of the inventory market by way of tangibles versus intangibles. In 1975, solely 17 % of the full market cap of the S&P 500 was made up of intangible belongings. At this time, it’s one thing like 90 % that’s comprised of intangible belongings. Many of the worth is within the concepts. Are you higher capable of perceive the client and serve their wants? Can you progress sooner than the others? Are you able to make the most of the sources that you’ve got extra effectively? And quite a lot of that is dependent upon knowledge and know-how.

S+B: How is Canada’s authorities regulating firms as a part of its digital transformation, for instance, to guard knowledge and privateness?

KENNEDY:
A part of constructing an revolutionary digital economic system is ensuring that you’ve got trendy authorized frameworks and legal guidelines which can be match for function for a contemporary economic system. The principles of the street matter; you might have nice programming, however with out the suitable guidelines, enterprise exercise could be stifled. Individuals have to belief the platforms they’re utilizing. They should belief that their knowledge goes for use appropriately, that their privateness’s going to be revered, and that individuals who violate the principles shall be handled appropriately.

Laws presently making its means by the Home of Commons is designed to be a big overhaul of the principles round digital and knowledge. It’s going to modernize the principles round consent and facilitate knowledge portability. Proper now, the shortage of information portability arguably impedes the emergence of sure enterprise fashions. If in case you have a greater mousetrap, however your mousetrap depends on the info that the client’s been gathering with one other firm, it’s fairly laborious proper now for that buyer to say, “I wish to migrate my private knowledge to the brand new firm, as a result of it has a greater service providing.”

S+B: How is the federal government selling digital adoption and digital inclusion extra broadly?

KENNEDY:
We’ve seen simply how essential it’s each for the functioning of the economic system and for social interplay to have entry to broadband web. Everyone knows there’s been a rush to digital adoption, however pre-pandemic we have been nonetheless lagging our opponents on this area. The statistics present that Canadian small and medium-sized enterprises typically have been slower to undertake digital applied sciences than, say, their American counterparts.

Nonetheless, in March of 2020, 4.7 million Canadians shifted to work at home, and a whole bunch of 1000’s of companies rapidly tailored their service providing to go surfing. My division works with the telecommunications firms and with the web service suppliers; we regulate these organizations, and we accomplice with them on the growth of broadband. They have been working like mad to extend the capability of their networks and to deal with the extra calls for. In my very own ministry, which has prided itself on being the ministry that’s chargeable for connectedness and that embraces know-how, we determined final spring we would have liked to intention for a roughly fourfold improve in our broadband capability, if we have been to proceed offering a full service providing successfully. And we’re additional upgrades over time.

Whenever you discuss digital inclusion, although, too many households in our nation nonetheless lack entry to high-speed broadband. Pre-pandemic, the federal authorities introduced important investments on this space. However the pandemic has underlined the significance of bridging the digital divide. Not each Canadian was affected equally; the pandemic has disproportionately affected minority communities, indigenous peoples, and ladies. Basically, we have now teams in society that aren’t included, and though we have now made good progress on connectivity, we nonetheless have a solution to go.

The federal government introduced a brand new common broadband fund in late 2020, with CAD$1.75 billion [US$1.39 billion] in further funding. That’s a 75 % improve from its unique plan. The federal government’s whole funding in broadband up to now 5 years or so is now approaching about 10 occasions the full funding on this space traditionally. The formal goal is to attach 98 % of all Canadians to high-speed broadband web by 2026, and each Canadian by 2030.

S+B: Past the necessity to speed up digital adoption, what did the pandemic reveal about Canada’s resilience?

KENNEDY:
There are areas similar to bio manufacturing the place we didn’t have as a lot capability and resiliency as we’d need. We now have plenty of large firms in Canada that make vaccines and therapies, however we didn’t have the excess capability to make vaccines for COVID-19 at scale. The prevailing manufacturing capability is basically devoted to different priorities, similar to pandemic influenza, diphtheria, polio, tetanus, and so forth. Rebuilding our bio manufacturing capability is a prime precedence for my ministry and the federal government.

We’ve additionally seen how the pandemic has widened disparities in our society, and that has led to elevated authorities assist for Black and ladies entrepreneurs. We’re additionally working to drive higher variety on boards and administration groups. I’d embody my very own group on this effort — we have now some solution to go earlier than we are able to declare to be a really numerous division. However that’s the place we have to go. The analysis is obvious that numerous organizations are simpler and resilient.

We have to be fascinated with what the idea of resiliency may imply for the longer term, and whether or not some areas have to be recalibrated, as we’re doing with bio manufacturing. As a result of on the finish of the day, you need an environment friendly and well-functioning economic system, however you wish to be resilient to shocks, too.

That mentioned, I feel that there have been some ways by which Canada was resilient. We now have many strengths as a rustic: We now have a big useful resource endowment, a powerful industrial base, a well-functioning public administration, and a inhabitants that pulls collectively in a disaster. I feel we have been fortunate that we had a enterprise sector that had sure core competencies, in addition to manufacturing capability, that enabled us to adapt comparatively rapidly. And I feel we have been additionally fortunate to have some experience within the public sector to have the ability to establish the place the alternatives have been, and to work with business to get issues executed.

For instance, on the outset of the pandemic, we sourced virtually all our private protecting gear from overseas. Now, by greenback worth, virtually half of all PPE is made in Canada. We had textile producers who usually make underwear and ski jackets who transitioned to creating medical robes. Corporations that usually make flight simulators or vehicle elements have been making ventilators. Distilleries have been pumping out hand sanitizer. This represented a big pivot of a few of our industrial capability. And it was solely in an emergency that Canadians realized we may do it.

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