Liberals nearing decision on how to spend $800M earmarked for innovation

An $800-million commitment central to the Trudeau government's economic growth strategy is expected to be divvied up within the next few months among groups and companies that can persuade Ottawa they're best positioned to help young, high-potential firms flourish.

The government earmarked the cash in last year's budget to support "innovation networks and clusters" as part of federal plans to help budding companies scale up significantly. Ottawa hopes these firms will evolve into strong job creators and give Canada an economic boost. The first withdrawal from the four-year program is scheduled to happen in 2017-18.

But even with this month's release of a budget billed as a plan deep in innovation, specifics on the $800-million program will likely have to wait a little longer. Several non-government stakeholders engaged with Ottawa say the feds appear to be finalizing the strategy of how and where the funding will ultimately be allocated.

The $800-million envelope is important for the Liberal government, which is hoping the investment will help raise the country's long-term growth trajectory.

The Liberals have valued this approach since their days in opposition. Their 2015 election platform pledged $900 million over three years to support accelerators, incubators and clusters as a way to help innovative entrepreneurs grow their firms into global players.

Groups like the Council of Canadian Innovators, which has been actively engaged with the feds, expects the government to settle in April or May on how it would like to proceed with the $800-million plan.

Council executive director Ben Bergen, who represents tech-sector CEOs, said one challenge is that there are many ways to define a "cluster." It can range from a university with connected companies to a string of tech firms in a given region, he said.

As an example, he pointed to the cluster of companies that formed a couple of decades ago in the region around Kitchener-Waterloo, Ont. Among them was BlackBerry-maker Research In Motion.

Bergen said his council would like to see the $800-million investment used to support clusters centred around high-growth Canadian companies, rather than ones that revolve around universities and incubators.

He argued that in the past, the institution-centred approach has not produced the outcomes governments have been looking for.

"By really focusing it on the firm rather than on...institutions or on incubators you actually give them the jet fuel that they need to go and compete globally," Bergen said. "There's real economic opportunities for revenue and growth — and it's through that commercialization that wealth is generated. That's how you turn the $800 million into $8 billion."

Bergen added that he thinks the federal plan should emphasize accountability and transparency when it comes to how the clusters are formed. He also recommended metrics be attached to monitor their progress.

The chair of one organization hoping to attract some of that funding said his partners have also been pitching a business-led approach to Ottawa.

Ray Bouchard said the Manitoba-based Enterprise Machine Intelligence and Learning Initiative aims to help firms quickly commercialize in the fields of deep learning and artificial intelligence. In particular, it would focus on the technologies' applications in the agriculture sector. Bouchard said the group's other goal is to help train and retrain enough workers in the skills needed for these emerging areas, such as collecting, managing and understanding data.

The initiative's board not only includes people from Manitoba-based businesses, but also from institutions like the University of Winnipeg and Red River College.

The group has had several meetings in recent months with senior government officials, including Economic Development Minister Navdeep Bains, according to lobbying records.

"What Ottawa is saying is they're intrigued by it, they like this approach and it could be very complementary to a number of different other approaches they may be taking," Bouchard said.

The key, he added, is keeping promising firms and the associated job opportunities in Canada.

"The last thing we want to do as Canadians is spend $800 million ... on innovation and have all of that leave the country. This is about making sure that we can leverage it in Canada and create more wealth within Canada," said Bouchard, who operates nine John Deere dealerships that employ 370 employees.

He said he has seen lots of technological changes in the agriculture sector over the last few years. He pointed to firms that have turned more and more to data-driven technology to optimize their performances, such as learning how to apply the precise amounts of herbicides, seed and fertilizer.

It remains to be seen how many groups will receive funding from Ottawa's plan and whether the money will be sprinkled across the country. The government could also choose to allocate the funds into different areas of expertise, such as artificial intelligence or health technology.

Last month, a report by the federal government's influential economic advisory council recommended Ottawa assemble "innovation marketplaces" that unite entrepreneurs and researchers with public and private customers.

It said they should be centres of technology and industrial activity that are driven by the private sector. The report also suggested Ottawa take on early roles such as encouraging private-sector groups to come forward and to solicit bids.