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 Improvement (ISED), employees rapidly realized they may use the relationships with the enterprise sector that they had constructed over time, in industries corresponding to aerospace, manufacturing, and automotive, to assist resolve this drawback. 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 effectively 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 practically 5 years, led Well being Canada, the place he managed the federal government’s response to the opioid disaster. In September 2019, just a few months earlier than the pandemic took maintain, he transitioned to his present function. Apart from boosting Canada’s PPE manufacturing, Kennedy’s ministry has supported companies below 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 long run, main initiatives that may gasoline Canada’s restoration by constructing an inclusive digital economic system and embracing decarbonization. It’s a imaginative and prescient that will likely be enabled by daring innovation. As Kennedy defined to technique+enterprise in a current video interview, authorities can play an lively function in creating the surroundings 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 fast 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 below management.

A associated and demanding concern is to help the enterprise sector and staff. This disaster has affected all sectors of the economic system, however some have been hit tougher than others, corresponding to tourism, hospitality, and air transport and aerospace. Small companies’ wants have diverged from these of enormous corporations. Canada’s a giant nation, and our regional economies have been affected otherwise. One of many issues that we’ve been making an attempt to do over the past 9 months is to make it possible for, to the extent potential, the financial results of the pandemic are blunted and the danger of everlasting scarring is diminished — in order that when the pandemic begins to recede, we will come roaring again as rapidly as potential.

Within the medium time period, and as we glance to the long run, lots of the challenges we confronted pre-pandemic are the identical sort of challenges we’re going to face post-pandemic. And in some methods, the pandemic has actually put a purple line below them — it has highlighted these challenges as being much more vital to handle than maybe we had thought beforehand.

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

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

KENNEDY:
My group performs an vital function in bringing to bear all the varied instruments we’ve to help a dynamic and progressive economic system. We try this in help of 4 ministers with wide-ranging mandates, corresponding 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 non-public enterprise — and the federal government’s job is to not substitute for the function of the enterprise sector. However my group is liable for setting the foundations of the sport. From the formation of a enterprise to the dissolution of a enterprise and every thing in between, we’re liable for the associated legal guidelines and insurance policies, corresponding to for agency incorporation and for chapter and insolvency.

We additionally ship main programming, and we help analysis. If you happen to 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 components of that worth chain. And our aim is to make it possible for we don’t have weak hyperlinks — that the varied interventions we’re making are mutually reinforcing, for the good thing about a powerful enterprise sector and economic system.

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

KENNEDY:
Authorities generally is a convener and a facilitator. For instance, there’s a whole lot of analysis on how innovation clusters kind and why they work. In a cluster, you’re in an surroundings during which it’s extra seemingly that the collisions will occur that allow you to take your concept from idea all the way in which to a useful enterprise. Furthermore, when clusters get going, they develop into magnets that appeal to others.

The federal government’s Supercluster program goals to assist foster that sort of surroundings, in high-potential sectors which will presently lack scale or which might be lacking substances, and the place state help may help take it excessive. This system brings collectively totally different actors that will not 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 trade board. The everyday Supercluster has quite a lot of anchor corporations, but in addition startups and small and medium-sized enterprises, in addition to tutorial, not-for-profit, and authorities members.

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

KENNEDY:
Canada has an unlimited 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 it’s important 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 in addition 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 vital agricultural exports. However a lot of the processing and value-added exercise was being performed 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 progressive 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 approach 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. Members have had to determine who to companion with, after which how you can companion with each other. Nevertheless it’s taken off, and early outcomes counsel this system is getting traction.

Underneath the unique marketing strategy, what we had envisioned was a one-to-one match. The concept was that authorities places a greenback in, and trade places a greenback in. The outcomes have been higher than we had hoped for. The Superclusters have permitted lots of of initiatives value greater than CAD$1 billion [US$793 million], with trade 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 corporations to help 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 is likely to be an vital public payoff. Or areas the place ultimately the societal acquire, and albeit, possibly even the acquire to the enterprise, may justify the funding — however the danger or the uncertainty makes it tough. In conditions like these, authorities can companion instantly 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 progressive know-how improvement and new companies. One of many areas of focus is decarbonization and inexperienced know-how. Everyone knows that at a macro stage, clear tech is a promising sector with rising demand. As a society, we’ve an curiosity within the emergence and deployment of unpolluted applied sciences and the achievement of net-zero emissions.

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

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

KENNEDY:
Final fall, the federal government introduced, with Ford Motor Firm, a major funding to rework 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 car assemblers over time to transition to zero-emission automobiles and to low-emission applied sciences.

The federal government can be taking a look at supporting battery manufacturing. Canada has all of the substances needed for the electrical car battery provide chain: the minerals, the experience in manufacturing, and so forth. And it has the trade demand, corresponding to automotive, heavy automobiles, and buses, that might be a marketplace for these batteries.

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

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

I feel generally 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 concerning the economic system writ giant — 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 concerning the economic system writ giant — and supporting the Canadian economic system in its low-carbon evolution.”

Now, the useful resource sector arguably has been a much bigger focus within the media and in public debate round issues like carbon discount. However all industries are going to have to scale back their carbon output. Buyers 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 putting to see the altering composition of the inventory market when it comes to tangibles versus intangibles. In 1975, solely 17 p.c of the overall market cap of the S&P 500 was made up of intangible belongings. Immediately, it’s one thing like 90 p.c that’s comprised of intangible belongings. A lot of the worth is within the concepts. Are you higher capable of perceive the client and serve their wants? Can you progress quicker than the others? Are you able to make the most of the assets that you’ve extra effectively? And a whole lot of that relies on knowledge and know-how.

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

KENNEDY:
A part of constructing an progressive digital economic system is ensuring that you’ve trendy authorized frameworks and legal guidelines which might be match for goal for a contemporary economic system. The principles of the street matter; you possibly can have nice programming, however with out the appropriate guidelines, enterprise exercise may 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 foundations will likely be handled appropriately.

Laws presently making its approach via the Home of Commons is designed to be a major overhaul of the foundations round digital and knowledge. It’s going to modernize the foundations round consent and facilitate knowledge portability. Proper now, the shortage of knowledge portability arguably impedes the emergence of sure enterprise fashions. When you have a greater mousetrap, however your mousetrap depends on the information that the client’s been gathering with one other firm, it’s fairly onerous proper now for that buyer to say, “I need 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 vital 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 house. The statistics present that Canadian small and medium-sized enterprises usually have been slower to undertake digital applied sciences than, say, their American counterparts.

Nonetheless, in March of 2020, 4.7 million Canadians shifted to earn a living from home, and lots of of hundreds of companies rapidly tailored their service providing to go surfing. My division works with the telecommunications corporations and with the web service suppliers; we regulate these organizations, and we companion 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 liable for connectedness and that embraces know-how, we determined final spring we wanted to purpose for a roughly fourfold improve in our broadband capability, if we have been to proceed offering a full service providing successfully. And we’re taking a look at additional upgrades over time.

While 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 girls. Normally, we’ve teams in society that aren’t included, and though we’ve made good progress on connectivity, we nonetheless have a method 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 extra funding. That’s a 75 p.c improve from its authentic plan. The federal government’s complete funding in broadband previously 5 years or so is now approaching about 10 occasions the overall funding on this space traditionally. The formal goal is to attach 98 p.c 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 corresponding to bio manufacturing the place we didn’t have as a lot capability and resiliency as we’d need. Now we have quite a lot of huge corporations 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, corresponding to pandemic influenza, diphtheria, polio, tetanus, and so forth. Rebuilding our bio manufacturing capability is a high 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 help for Black and girls 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’ve some method to go earlier than we will declare to be a really various division. However that’s the place we have to go. The analysis is evident that various organizations are simpler and resilient.

We have to be fascinated by what the idea of resiliency may imply for the long run, 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 need to be resilient to shocks, too.

That stated, I feel that there have been some ways during which Canada was resilient. Now we have many strengths as a rustic: Now we have a major 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 determine the place the alternatives have been, and to work with trade to get issues performed.

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. Companies that usually make flight simulators or vehicle components have been making ventilators. Distilleries have been pumping out hand sanitizer. This represented a major 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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