2022 Federal Budget: We don’t need another growth fund to address innovation and productivity | National Crowdfunding & Fintech Association of Canada
FP | Robert Asselin | Apr 13, 2022
Last week’s federal budget could be seen as a pivotal one, at least directionally for the emphasis it put on economic growth. “Now is the time to focus — with smart investments and a clarity of purpose — on growing the economy,” it boldly pronounced in the foreword. To the surprise of many, the words “productivity” and “innovation” even made their way into the budget plan several times. The first step to solve any problem is acknowledging one exists and, as such, the government deserves ample credit.
Where it disappointed was on the two flagship measures proclaimed as solutions to the problem: a $15-billion growth fund and a yet-to-be defined Innovation and Investment Agency that will provide “advice.” The issue with these instruments and structures is they already exist in various forms — or have been tried before — and for the most part, their track records on boosting innovation and productivity are very questionable.
How will these two flagship initiatives be different from the Strategic Innovation Fund and the Net-Zero Accelerator Fund that were presented in previous budgets as growth funds? And how will they accomplish anything different from the multiple layers of existing programs and funding at the National Research Council, the Canadian Infrastructure Bank, the Business Development Bank of Canada, Export Development Canada, Sustainable Development Technology Canada, the Venture Capital Catalyst Initiative, etc? Crowding out is an outdated — and wrong — way to think about industrial policy.
No matter what financial instrument is deployed, public “investments” won’t produce better outcomes if we don’t change the way we think, incentivize, and produce innovation. Being content with incremental innovation and technological adoption means Canada is leaving a considerable amount of economic wealth on the table to other countries.
Innovation economics is about amassing and leveraging intellectual capital into commercial assets. To only “adopt technology” means we will always be rentiers. This idea that Canada is great at invention but only needs reinforcement at the commercialization phase is false and misguided.
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