Further details on feds new innovation agency to follow governance body, new legislation.
The federal government has revealed more details of its long-awaited, new innovation agency.
The newly-dubbed Canada Innovation Corporation (CIC) will be a Crown corporation led by the private sector. While the CIC will operate independently from the government it will report to the minister of innovation, science, and industry.
The CIC is being touted as “a new focused approach to Canada’s innovation ecosystem.”
As part of a technical briefing with reporters, government staff said the federal government is committed to getting the CIC up and running in 2023. However, doing that will require identifying both a board of directors and CEO, as well as introducing enabling legislation; staffers at the technical briefing provided no timeline for these key milestones.
CIC’s budget has more than doubled to $2.6 billion over four years since the creation of the agency was first announced in Budget 2022. A blueprint document provided to BetaKit today attributed the budget increase to the government’s plans to move the Industrial Research Assistance Program (IRAP) under the CIC umbrella. IRAP has traditionally been part of the National Research Council.
The combination with IRAP is meant “to establish a large-scale platform of business R&D support” and minimize duplication of federal programs, per the document.
The document also touted the CIC as “a new focused approach to Canada’s innovation ecosystem.”
While the document lays out some new details about the combination with IRAP and the amount of funding that might be available for projects, much of the contents regarding the CIC’s model had been publicly shared previously. And while the blueprint does reveal initial plans for the CIC’s governance and creation, it is light on when those things may occur.
What the document does explicitly state is that the CIC “will not be just another funding agency.” Rather, it says that the CIC will be “an outcome-driven organization” that not only focuses on high-tech companies but those in commodity-based and manufacturing industries.
The document also highlights a focus on programs for developing and protecting intellectual property, the global supply chain, and research and development (R&D)—all of which was expected or advocated for.
In a statement shared with BetaKit, Benjamin Bergen, president of tech advocacy group Council of Canadian Innovators (CCI), said he is pleased to see such focus on research commercialization and intellectual property.
“However, the real work will be in the details of this agency’s mandate,” he said, adding that “the leadership team will need to have a deep and sophisticated knowledge of freedom-to-operate issues, and how to successfully navigate IP issues within modern global value chains.”
Legislation will be required to officially establish the CIC, as well as its mandate and governance. The government stated that “enabling legislation … will be introduced in 2023.” It did not provide a detailed timeline for that introduction.
During the technical briefing, government staff stated that the legislation will be presented in the coming months. Work to transfer IRAP under the CIC, however, is targeted to occur within 18 to 24 months.
In terms of governance, the government has laid out a plan to includes the board of directors being appointed by Minister of Innovation, Science and Industry François-Philippe Champagne. The appointments will be done in consultation with the Minister of Finance Chrystia Freeland, and on the approval of the Governor in Council.
That board will then recommend a shortlist of candidates for the CEO role. That person will be decided and appointed by the ministers of innovation and finance.
As the CIC awaits its establishment legislation and governance, it is being established as a subsidiary of the Canada Development Investment Corporation, the Crown corporation responsible for managing investments and corporate interests held by the Government of Canada.
The government stated that “this approach will accelerate the launch of CIC programming.”
No timeline has been provided for when the board or CEO roles will be appointed. Though in the technical briefing, government staff said that work is already underway to identify board chair and CEO candidates. They described the ideal candidates as those that are familiar with both industry as well as how government operates.
“If the CEO and board members are pulled from the ecosystem of bloated innovation intermediaries, we fear that the CIC will ultimately fall back on the same failed approaches that have left Canada at the bottom of the OECD innovation ranks,” said Bergen. “This organization requires leadership with first-hand experience in the private sector to give this new agency the best possible shot at success.”
The creation of the CIC is meant to “complement” other federal innovation programs, according to the blueprint document. It called the spin out of IRAP into the new agency similar to the creation of other such departments and agencies that originated as activities within the National Research Council and were created as distinct organizations “to scale their impact.” Examples include the Canadian Space Agency and the Natural Sciences and Engineering Research Council.
The document added that “the evolution of IRAP is happening alongside a broader modernization of the National Research Council.”
Laying out its suite of programs and organizations that span financing, tech adoption, as well as facility and equipment access, the blueprint stated that the goal is for businesses that access funding and support through the CIC to benefit from National Research Council laboratories, equipment, and expertise.
Previously referred to as the Canadian Innovation and Investment Agency, the new agency was first announced during Budget 2022 in April of last year. At the time the Liberals pledged $1 billion over five years to the agency.
Details of the agency have now been revealed 10 months later. In that interim, innovation sector stakeholders lamented the amount of time it took for the federal government to announce its plans.
“The best time to establish an agency like this would have been seven years ago, but the second-best time is right now,” Bergen said in his statement following the blueprint’s release. “Canadian innovators are navigating a challenging economic environment, and a fully operational innovation partner empowered by the government to support domestic growth could be meaningful, if done properly.”
For its part, the government undertook consultations regarding the agency both in Canada and internationally. As of August, academic Dan Breznitz, who consulted on the agency, told BetaKit those consultations were still ongoing.
In its Fall Economic Statement in November, the government confirmed details on the agency that BetaKit first reported on in August. At the time, it stated that further details on the new agency would be released in a blueprint in the “coming weeks.” It took 15 weeks for that blueprint to be revealed.
The creation of the agency stems from a 2021 Liberal campaign promise to create a $2 billion Canadian equivalent to the Defense Advanced Research Projects Agency (DARPA) in the United States. At least one think tank, Ottawa’s Smart Prosperity, credits Breznitz with having swayed the government to abandon that plan in favour of the CIC model.
The need for the creation of the agency has been clear from the start. From Deputy Prime Minister Freeland on down, it’s clear that Canada lags behind the G7 countries, and many others, when it comes to innovation. In her 2022 budget address, Freeland (who is also the finance minister) talked about tackling the “achilles heel of the Canadian economy: productivity and innovation.”
Noting that Canada is falling behind in economic productivity, Freeland added the issue was a “well-known Canadian problem — and an insidious one.”
By and large, the response to the announcement of the innovation agency had been cautiously positive. CCI and Technation, the national group representing members of the ICT industry, have both applauded the efforts to launch the agency. Though such stakeholders have also been cautious about what that agency would look like.
Technation called for the design of the new agency to be collaboratively done with tech industries of all sizes. While CCI, which represents more than 150 tech CEOs, said: “We will be disappointed if it does not include a clear mandate which treats data and IP as valuable strategic assets, and supports Canadian companies’ freedom to operate as they compete globally.”
While the federal government has made good on its promise to create the CIC, there is still much work to be done before it is up and running. There also remains the fact that the Liberals have not revealed plans for other innovation promises, such as the review of the SR&ED credit.