Federal innovation support programs focus of ground breaking Treasury Board inventory

Treasury Board Secretariat (TBS) has completed a comprehensive inventory of federal programs aimed at supporting business innovation and clean technology. The inventory captured 20 organizations and 92 program streams (business-facing programs), with the top five (see chart) accounting for more than two-thirds of the $2.383 billion total.

Rich in detail and cross linked with Statistics Canada data, the horizontal review and inventory includes deep data sets and accompanying analysis that will be of immense help to policy makers charged with developing a new suite of programs that are responsive to the wide range of characteristics displayed by tech firms of all ages, sizes, sectors and growth trajectories.

The review found that a full 80% of expenditures originated from the department of Innovation, Science and Economic Development (ISED) and its affiliated regional development agencies. However, only 45% of total spending goes directly to firms, with another 30% going to academic institutions and researchers engaged in industry collaboration.

Fifth ranked Global Affairs Canada supported the largest number of firms (11,318) through its Trade Commissioner Service while the third ranked NRC Industrial Research Assistance Program (IRAP) deployed its network of industry technology advisors to reach 4,650 firms and interacted with the greatest number of firms – more than 20,000 – over a 10-year period. The review also found that the focus of federal support was “overwhelmingly on developing new products, with relatively little on adoption for productivity gains.”[rs_quote source="Budget 2017"]“The Government will initiate a horizontal review of all federal innovation and clean technology programs across all departments, as federal innovation programs are disbursed. Consistent with the principles of Canada’s new Innovation and Skills Plan … the horizontal review will look to simplify programming and better align resources to improve the effectiveness of innovation programs.” -- Budget Directive for TBS Review [/rs_quote]

The key audience for the initiative - intended to make federal programs simpler to access and more client-centric – is the Finance minister and will lead into the next federal Budget, although it’s expected to be disseminated widely for use by academics and departmental planners. It marks the first time TBS has conducted such a survey and the first since a similar initiative was undertaken by the Independent Panel on Federal Support to Research and Development led by Tom Jenkins.

“We want to be transparent (and) release it to a wider audience for greater discourse,” says Neil Bouwer, assistant secretary at TBS and formerly assistant DM, science and policy integration, with Natural Resources Canada (NRCan). “We were surprised by the quality and existence of these data. We’re very happy.”

Bouwer says TBS employed several unique approaches to the inventory, including the identification of program streams within programs and a client-centric analysis versus the traditional program activity architecture typically used by departments and agencies.

Preliminary results from the inventory were published last fall but a much more comprehensive analysis was recently released at a presentation to academics in Toronto last month. To date, seven clean tech-focused recommendations have been released, but Bouwer says they’re part of a larger package of 68 recommendations that could feed into the current Budget cycle “if the government chooses to act”.

Using nearest neighbour analysis, the TBS team led by Bouwer examined 10 years’ worth of data. It also interviewed program managers to get a more granular perspective on how their respective funds responded to the needs of business and how quickly they were able to provide assistance to successful applicants.

It found that the number of firms interacting with federal programs increased four-fold over the 10-year period, with particularly large increases beginning in 2013 and continuing up to 2017. It also notes that the value of innovation support doubled over the same period.

Bouwer says IRAP was “notable for being quick in its application decision making” and its track record on reaching high-growth tech companies with a combination of services and cash grants – an approach he says is “best practice”. Bouwer also cited Sustainable Development Technology Canada as being very effective for tech companies, despite the complex nature of the transactions it enabled among a diverse range of participating players.

The cross-linking of data obtained from federal departments and agencies with Statistics Canada tax data and the use of regression analysis also produced a rich vein of information on the kinds of companies that received federal assistance and what impact it had on its operations and growth. Bouwer said the analysis was conducted to a 96% accuracy rate.

Academic contributions to inventory

As part of the initiative, TBS contracted four academics to write papers on various aspects of the research literature underpinning the inventory – clusters, clean tech, program design and evaluation and benchmarking. Dr Margaret Dalziel, an associate professor with the Univ of Waterloo’s Conrad Business, Entrepreneurship and Technology Centre, wrote the paper on evaluation and benchmarking. She says the TBS exercise is extremely important for future federal business innovation support, but cautioned that TBS’s work is not yet complete.

“It’s great that they’ve done this, it’s a fantastic start. It provides something to build on,” says Dalziel. “But they haven’t finished the job of figuring out and evaluating the impact of the programs … A little information can be a dangerous thing.”

Dalziel says that the inventory is a critical first step in “the important work of designing and improving programs … The evaluation component is still required … We need to know about the nature of the firms (receiving support)”.

Clean Tech

The TBS review’s mandate included a major component of clean tech to assist the government in making its innovation agenda more inclusive, by aligning with the government’s Clean Growth and Climate Change Agenda and its recently established Clean Growth Hub within ISED. It found that “76 % of programs indicated that they provide some support to clean technology innovation” with clean tech eligible in 45 program streams and specifically targeted by 32 program streams.

However, TBS acknowledges that more work is required to better understand innovation support for the sector, due in part to Statistics Canada’s current inability to identify clean tech companies in its data on firms.

“Statistics Canada is working on this,” says Bouwer, adding that TBS focused on clean tech as a distinct subset of innovation support.

In addition to the Clean Tech Hub, which is designed to provide greater coherency to the government programming and direction, TBS is recommending a greater focus on energy within the clean tech sector through the creation of a Clean Tech Breakthrough Office. Modelled on a National Research Council (NRC) platform with horizontal governance from NRCan and Environment and Climate Change Canada, it would be designed to support highly promising energy technology.

The NRC platform, in turn, is modelled on the US Advanced Research Projects Agency-Energy (ARPA-E) program which features a flexible human resources structure to accommodate breakthrough innovation.

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