Empire Club of Canada

Speech

Speaking Points

The Honourable Navdeep Bains, PC, MP
Minister of Innovation, Science and Economic Development

Toronto, Ontario

April 29, 2016

Check Against Delivery

Introduction

Good afternoon, thank you for that warm welcome and for taking time out of your busy schedules to be here today.

What a great turnout – I think this whole "innovation" thing may be catching on.

It is a great honour to be here.

It is an honour to be here at the Empire Club, an organization with a history as long as it is impressive with speakers from Winston Churchill and Indira Gandhi to every Canadian PM since Borden.

It has hosted more than 3,500 speakers, and shaped public discourse in this country for more than a century.

Minister Moridi, my colleague Member of Parliament Bryan May, ladies and gentlemen.

I'm here today to talk about why innovation matters. Why it's important now. Where we're strong and where we have work to do in the Canadian innovation landscape. And to give you a sense of the bold action I intend to take as your Minister of Innovation. 

Current global forces

Ladies and gentlemen, we meet today at a historic and transformative time for this country and indeed, for the world.

There are major global forces at play that require us all to embrace a new way of doing things.

First, there is international impetus to act on climate change and accelerate the transition to a low-carbon future.

A consensus is emerging that we need to ensure that all growth is clean growth through the adoption of cleantech across all sectors of the economy.  

Second, the world economy is uncertain, with tepid demand, particularly in established economies like ours, and weakness in commodity prices.

Many feel that we are entering a new era of slower economic growth. 

Third, the world has entered a new industrial age. Technology is changing all aspects of our lives, including how we live and how we do business.

I'm talking about the Internet of Things, autonomous vehicles, quantum computing, additive manufacturing, cleantech. These developments are transforming traditional sectors and also creating sectors we couldn't even have imagined just a few short years ago.

Fourth, these economic and technological changes come with important social changes. There are mounting concerns about rising inequality, within and across nations. About how we'll deal with the challenges of an aging population. And how we address the needs of those who don't yet have the new skills to succeed in a changing economy.

The power of innovation

Given this confluence of global trends, it is, frankly, our duty to act, and act now. The countries that will succeed in this new environment are those understand and embrace these forces and choose a new path.

The new path is one that recognizes that innovation is essential, whether in developing new technologies, new processes, or new business models.

My father came to Canada in the early seventies with maybe five bucks in his pocket. People said, "really, with five bucks, you're going to go to another country and succeed?" 

But he was ambitious. He was a risk-taker and he believed in himself.

And he knew that Canada was a country where if you worked hard, your children would have better opportunities than you did.

That was the idea of Canada that motivated him and so many others. And the result is that I've been blessed by opportunities he couldn't even have imagined when he first came to this country.

I am the father of two young girls, aged eight and five. And when I get up every day I am driven, as my father was, to do everything I can to give them the best opportunities possible.   

But if Canada is going to be that place where our children can all have opportunities that we don't have, then it is our responsibility to make a bold bet on innovation – on doing things differently.

Because at the end of the day, innovation isn't an end in itself. It's the path to growth…the path that leads to a stronger middle class and higher quality jobs for all Canadians. That's what innovation is about.

An international race

If we had any doubt that we need to act, we need only look at how other countries around the world are dealing with the global changes we talked about. We are in an innovation race, and the stakes are high.

China and the US are the two most powerful competitors, investing billions of dollars trying to stay at the top of the leader board on almost all technological advancement.

Germany, the largest economy in the EU, is an innovation superpower. It's built one of the most effective innovation ecosystems in the world using their Fraunhofer Institutes to translate ideas into value-creation.

Smaller countries are also moving the yardsticks by being very strategic in their investments. Israel, well known as a hotbed of innovation, targets promising start-ups and makes bets on them, and those bets are paying off.

Sweden, despite its small population, is consistently able to drive high rates of R&D spending both by government and private enterprise.

Never has it been more important for Canada to have a clearly articulated innovation strategy – one that demonstrates that our intention, without question, is to become a world leader.

It is not time for modesty in our goals or hesitation in our actions. We must act, we must do it now, and we must do it with confidence.

Why now? The urgency of an Innovation Agenda

As you know, Prime Minister Trudeau has asked me to lead on the creation of an Innovation Agenda for Canada. I am humbled and honoured to take on this challenge.

To that end, I have spent the first six months of my mandate meeting with Canadians – academics, business and community leaders, entrepreneurs, researchers. I've spoken to literally hundreds of CEOs in Canada and abroad.

I wanted to gain a better understanding of the issues at play across every region of the country.

I wanted a sense of how these global forces impact local realities.

I wanted to take stock and understand where we are performing well in light of all these changes, and where we need to take some bold new steps.

Taking stock: canada's innovation landscape

What I've learned is that in each of the parts of our innovation landscape, we have successes to celebrate but also some opportunities we need to seize. 

Knowledge and technology

For example, I've been thinking about knowledge and technology.

In this area, Canada has important strengths: we have one of the most educated populations in the world and our researchers punch well above their weight in terms of academic publications and key discoveries.

This country does, however, have a persistent problem with businesses underinvesting in R&D. In fact, Canada ranks 22^nd in the OECD – that's 22 out of 34 – when it comes to business investment in R&D.

Talent

I have also been looking at talent, which is another major aspect of the innovation landscape.

Now, on one hand, we have a mobile, skilled workforce. We are first among OECD countries for percent of the population with a tertiary education.

Our society is also inclusive and multicultural and we all know that we do a good job of welcoming people from around the world.

On the other hand, however, our businesses aren't as globally-oriented as our people. Too many of them do not participate in global supply chains.

Infrastructure

I've also been thinking about our infrastructure in light of all this technological change. Are we doing what we need to make sure we have a strong digital backbone?   

Here too, the story is mixed. On the one hand, 94 percent of Canadians have access to one of the best digital networks in the world. 

On the other, there remains an important digital divide. In fact, there are really two divides. First, social factors still mean that in many of our largest urban centres, including Toronto, low-income people are left out of the digital economy.

In the North and in rural areas, there's a different digital divide because there simply isn't access. There are many communities in Canada that are big enough to have a school or a medical clinic, but apparently not big enough to have access to broadband internet. 

In 2016, that is a figure we should be ashamed of, and that's one of the reasons the Government committed $500 million in Budget 2016 to making the investments needed to make our digital economy more inclusive.

Regulations and standards

I've also been thinking about regulations and standards, as these are areas of course where the Government plays a key role.

We are one of the countries in the world where it's easiest to start a business – in fact, we start 11,000 net new businesses every year.

But I think we can do more. We need to make sure regulations don't work against us and against the creativity that is driving disruptive new ways of doing business. 

The same is true for international standards. We need to be leaders, not followers, and work internationally to shape the standards that will guide our products to market. 

Markets

Another element of Canada's innovation landscape that must be considered is market access.

Our strength here is that we have an enviable number of trade and investment agreements, paving the way to global market access for our firms.

And the weaknesses? Canadian businesses don't make the most of these agreements, missing opportunities created by access to those markets. 

As a country made up primarily of small businesses, I'd like to see more than 10 percent of them exporting, and to places other than the US.

The freer flow of goods and services within our own domestic borders is also really important. Here in Ontario, we've seen great leadership from Minister Brad Duguid as chair of the process to modernize the Agreement on Internal Trade.

I'm hopeful we'll get to a renewed agreement.

I also want to say that, as an individual I have gotten to know and respect, I wish him a speedy recovery from his recent health issues.

Capital

Another major aspect of the innovation landscape, one that I heard a lot of talk about in my conversations, is access to capital.

On the plus side, Canada is well known for our stable markets and low corporate tax rates.

And the availability of venture capital is going in the right direction  – last year VC investments totalled $2.3 billion, in fact.

But here's the rub: we still don't have the kind of patient risk capital that permits our companies to start here, grow here, and create jobs here over the long term. We need to ask why that is and we need to take steps to address it.

Areas for action

Summing up: Canada is uniquely placed to excel in the new global economy. We have enormous strengths in our people. Our academic leadership produces amazing discoveries, our citizens are diverse and open to the world, and our businesses enjoy low taxes and a strong regulatory environment.

And we don't need any more studies!  I spent my Christmas vacation reading the stack of important studies and reports that have been done – Wilson, Jenkins, the Council of Canadian Academies, the Science, Technology and Innovation Council. I could go on.

We understand the challenges. Now it's clear we need to take some bold steps. That's what the Prime Minister has challenged me to do. That's what I'm going to do. And I look to you in this room to come along with me.

Grow Companies and Accelerate Clean Growth

We must work on growing companies in all sectors here at home. 

We have world-leading start-ups but too few of them grow up here in Canada, and we need those jobs here at home. Scaling up is at the heart of the longer term economic strength Canada needs to remain competitive.

For this to happen, businesses, post-secondary institutions, governments and other innovation stakeholders need to work together more strategically. These connections are critical to transforming today's ideas into the products and services of tomorrow.

That's why you saw us investing $800 million in innovation networks and clusters in Budget 2016.

There is also a great opportunity right now for Canada to capitalize on the young but rapidly expanding global clean tech market by ensuring that our start-ups in this area continue to grow.

Budget 2016 contains some major down payments toward the goal of making Canada an international clean technology leader.

We are providing over $1 billion to encourage investments in clean tech. And, to bring new forms of these technologies to market faster, we are investing $50 million to support Sustainable Development Technology Canada.

Digital Competitiveness

We also need to be able to properly compete in today's digital world. We must advance our digital economy across all sectors and encourage digital adoption to improve competitiveness.

This is about infrastructure, and also education and skills development, and about ensuring that companies in traditional sectors are using new technologies to reach their full potential.

Only in this way will Canada fully access the unlimited potential of an interconnected global economy.

Entrepreneurial and Creative Society

Finally, there must be bold action to cultivate an entrepreneurial and creative society. Can we get to a place where "innovation" is thought of as a core Canadian value? I believe so, if we properly leverage our talent and our diversity.

Just earlier this week, I visited a school in Yellowknife where young kids – about the age of my girls – were being taught in fun and creative ways about the importance of computers and technology to their futures. 

Many of those children were from indigenous communities where their parents didn't have those opportunities.

For these kids, being Canadian is about being on the cutting-edge of technology and innovation.

That's the norm I want for all kids from all Indigenous communities, and from all communities across this country.

Measuring success

I should add that underscoring all our action will be a commitment to showing Canadians tangible progress on the creation of an innovation nation. 

You may have heard the Prime Minister talking about "deliverology".

It's a big word for a simple concept, which is that we'll be measuring and reporting our progress so people can see how we're doing on what we say we're going to do.

This approach dovetails perfectly with our stated commitment to evidence-based policy-making.

An all-of-society initiative

We want to take bold action to make Canada the most innovative country in the world. But no matter how bold we are, Government is but one voice in a national conversation.

We need to call everyone to action if this is going to be real.

We need firms to embrace investments in technology like never before.

We need our post-secondary institutions to continue their work in ‎basic research but also partner with industry like never before.

We need all levels of government to embrace this as a national priority.

Simply put, this will be a whole-of-society initiative, requiring a fundamental shift in thinking.

Conclusion

You heard me earlier talk about my two young girls. Ultimately, when we talk about why we need to take action on an Innovation Agenda, it's about our children. It's about strengthening the middle class, and those working to join it. And it's about a growing Canada with more and better quality jobs for all Canadians.

The Innovation Agenda – one that is for all Canadians – is about making sure that's the kind of Canada we have.

Ours is an ambitious set of goals. But I have every confidence in the capacity, ability and talent of Canadians to work together to achieve them.

Thank you.

Hon. Navdeep Singh Bains Innovation, Science and Economic Development Canada Economics and Industry