An Agenda for an Inclusive and Innovative Canada - Part 3
The final post in the series
Today’s post is the last in this little series, setting out a bit of a policy agenda for building a more inclusive and innovative Canada. Part 1 covered three foundations: 1) building an economy that works for people, 2) unleashing innovation for good, and 3) unlocking the potential of place. Then, in Part 2, I looked at three policy areas that need more attention: rebuilding state capacity, the role of industrial policy and economic security (including the role of the care economy), and then building the physical infrastructure we need to thrive as a society and an economy. You can check those two posts out here:
An Agenda for an Inclusive and Innovative Canada - Part 1
Today, I will cover the last four policy domains that I think are core parts of this agenda. As mentioned before, these different areas will be big themes of the newsletter going forward, and I plan to flesh them out further over time.
I hope you’ve found some value in these posts. If you have any feedback or would like to chat about them in more detail, please let me know! You can reply to this if you’re reading it in your email, or you can get in touch with me at tom@orbitpolicy.com.
Embracing Canada’s Global Role - At Home and Abroad
Canada is a global country. We are one of the most diverse countries in the world, with over 450 different ethnic or cultural origins reported in the 2021 census. We are a founding member of the United Nations, NATO, and the International Court of Justice. We are a global trading nation with a trade-to-GDP ratio of 67.2%. As the federal government likes to point out, we are the only G7 economy with free trade agreements with all other G7 states and the European Union.
Yet Canada does not lean into its global role, either at home or abroad. At home, international talent and experience are dramatically underutilized. As of 2021, the overeducation rate for recent immigrants was more than double that of young Canadian-born workers. Even if this trend has improved slightly in recent years, it is still larger than 20 years ago.
However, even that only measures whether your qualifications match your role. If you drill down further, I would wager that most people with international experience find that they are undervalued and underutilized by their organizations, even if they are in a role that matches their qualifications. Canadian businesses and organizations are not making the most of the global talent at their disposal.
Abroad, it is a grimmer picture. When it comes to human rights, Canada has stood by in the face of genocide, undermining international law and Canada’s moral leadership in the process. On climate, research from the UN has found Canada has the widest gap between rhetoric and action of any country. Much has been written about Canada’s longstanding failure to meet NATO targets on defence expenditure. In a more hostile and violent world, where more conflicts are raging than at any time since the Second World War, there is a clear need to get serious about Canadian defence. All of these undermine Canada’s standing in the world.
For trade, despite all of Canada’s trade agreements, our economy remains dependent on the US - with 77% of our trade with the US alone. In light of the recent tariff threats - this relationship is a clear challenge to Canada’s economic security. When it comes to innovative trade agreements and international partnerships, Canada is absent. Pioneering countries such as New Zealand, Singapore, and perhaps our nearest comparator country, Australia, are pushing boundaries, such as with bilateral digital trade agreements, plurilateral digital deals, and climate and sustainability-focused trade deals.
The rhetoric about Canada’s global role is often there, but the reality leaves much to be desired. In light of a challenging world where global partnerships are more needed than ever, Canada must bring more to the table than just words. We must ensure that the global is embedded in Canadian policymaking and in Canadian businesses at home.
Furthering Intentional Innovation
Part 1 explored the foundational importance of unleashing the power of innovation for good. This is not only a cross-cutting lens that needs to figure across multiple domains (such as regulatory policy, tax policy, and international policy) but also requires specific interventions in the innovation policy space.
Currently, our innovation policy toolkit is heavily weighted toward the supply side. The government's role has been framed as ensuring the raw materials of innovation are provided for (talent, research funding, R&D tax credits, etc.) and then being hands-off for the rest of the process with the assumption that the positive yields from innovation will inevitably follow. This, of course, has not been the case. Instead, we have faced the oft-cited innovation paradox, where our outcomes have not equalled the sum of the inputs.
While providing the raw materials of innovation is still necessary, it is clearly not sufficient, and this is where a more intentional innovation policy needs to come into play. Canada has gradually been moving in this direction. The Strategic Innovation Fund is the most notable program. While its mandate is fairly wide-ranging, in reality, most projects have been targeted towards climate-related goals, with the biggest funding stream by far being the Net Zero Accelerator.
We still need to do better, though. Even with SIF, Canada remains one of the countries most dependent on indirect tax credits for R&D. OECD research, which I highlighted in my very first deep dives post, argues that tax credits are “more effective at boosting investment towards incremental development than more transformational, higher spillover-potential knowledge).” In addition, while they are meant to be neutral instruments, they “are not free from bias, favouring incumbents and the status quo, e.g. driving incremental improvements in polluting technologies as opposed to radical advances in green technologies.”
More recently, the federal government has indicated some further moves towards a more intentional approach to innovation. This has been in the form of a mandate for mission-oriented research for the proposed federal research funding capstone organization. As I have written about before with Sandra Lapointe, this is very welcome but can’t be limited just to supporting mission-oriented research. It is only innovation when it is actually implemented and used - otherwise, it is just invention - and too much of Canada’s research never reaches that stage of genuine innovation. Mission-oriented approaches can have a large role to play, but only when they provide that connective tissue that translates ideas into action.
Our innovation system needs to continue evolving towards intentionality, better providing support for transformational innovation and providing the connective tissue to ensure that it is used and deployed.
A Climate-Ready Canada and Human-Centric Tech Adoption
These final two policy domains flow neatly from intentional innovation. The first, building a climate-ready Canada, encapsulates most clearly why we need it. A rapidly changing climate is Canada’s biggest threat and threat multiplier. Whether droughts, floods, wildfires, or hurricanes - no part of Canada is immune from the direct impacts of climate change. Likewise, almost every other challenge Canada faces is exacerbated by it. Geopolitical threats in the Arctic, the housing crisis and homelessness, food security, vulnerable supply chains, future pandemic risks - all and more are made worse by climate change.
There is an urgent need to make Canada climate-ready. This includes accelerating the deployment of solutions to reach Net Zero and introducing mitigations. While research remains important and beneficial, the biggest barriers to reaching Net Zero aren’t scientific or technical. We know what the solutions are to get us. The barriers are political, social, and economic. Again, it is only innovation if it is actually being implemented and used. We need to actually deploy and scale the climate innovations at pace. That, along with the rapid deployment of climate mitigations, requires some of that connective tissue I spoke of before. There is a need for intermediaries who are able to span the boundaries between academic research, cutting-edge technology, and the end users - whether those are communities, governments, homeowners, or businesses.
Many of the technologies needed in a clean growth future already exist at some level of technological development. The challenge is to accelerate adoption - Canadian Climate Institute
As the Canadian Climate Institute has argued, getting climate-ready is a technology adoption problem in many ways. But even beyond climate, whether an inclusive and innovative Canada is possible is also a technology adoption problem.
Canada’s poor technology adoption track record is well established and is an important part of our lagging productivity. Accelerating and incentivizing tech adoption is needed to help address this. However, AI offers both new challenges and opportunities. Amid the push to utilize AI to unlock economic and productivity growth, we must not lose sight of the fact that “growth has a rate but also a direction,” as Mariana Mazzucato has put it. The growth that comes on the back of AI adoption that automates jobs out of existence, that is based on AI models with huge environmental impacts, and is based on business models that see the financial gains from that automation accumulate to an ever smaller pool of the super-rich is certainly not a recipe for an inclusive and innovative society and economy.
As I wrote about a few weeks ago, we need to encourage and incentivize AI adoption that is human- and worker-centric. AI adoption that augments workers—empowering them to be more productive—is preferable to AI that automates their work and leaves what is left a smaller and meaner place. This is where policy needs to come in - both through using more intentional innovation to help incentivize different types of innovation and through policies that encourage adoption in an empowering rather than disempowering way.
Technology in general, and AI in particular, will transform our economy and society over the coming years. Whether that is for the better or for the worse is entirely in our hands. There is nothing inevitable about either path. However, creating more equitable and inclusive outcomes that lead to a flourishing Canada will require real intentionality about how we develop and adopt new technologies.
Wrapping Up
If you’ve read to the end, thank you for sticking with me for over 5,000 words of my somewhat rambling thoughts. Despite what I said in the first post about the need for more detail, I feel I have barely scratched the surface of any of the things I talked about. However, I’ll try to use these posts as a framework to dive into more detail in the future and to direct some of my wider work and research.
Despite all that is broken and scary in the world right now, I really want to believe that a better and brighter future is possible. That we can actually build an inclusive, innovative, and thriving Canada and world. And on that note, I’ll end this with a poem by the Irish Nobel prize-winning poet Seamus Heaney:
From The Cure at Troy
Human beings suffer.
They torture one another.
They get hurt and get hard.
No poem or play or song
Can fully right a wrong
Inflicted and endured.
History says, Don't hope
On this side of the grave,
But then, once in a lifetime
The longed-for tidal wave
Of justice can rise up,
And hope and history rhyme.
So hope for a great sea-change
On the far side of revenge.
Believe that a farther shore
Is reachable from here.
Believe in miracles
And cures and healing wells.
Call miracle self-healing,
The utter self-revealing
Double-take of feeling.
If there's fire on the mountain
And lightning and storm
And a god speaks from the sky
That means someone is hearing
The outcry and the birth-cry
Of new life at its term.
It means once in a lifetime
That justice can rise up
And hope and history rhyme.