The cabinet ministers who matter to the innovation economy – The Logic
Prime Minister Justin Trudeau gave Canadians the first glimpse of their new government Wednesday, announcing a larger 36-person cabinet that keeps most key economic ministers from the last Parliament in place.
Nonetheless, there are some important changes to the ministries that have the most impact on the country’s innovation economy. The Logic breaks down who the key players are, and the files to which they’ll be paying the most attention in the coming weeks and months.
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Talking Point
Justin Trudeau kept Innovation Minister Navdeep Bains in place in his new, expanded cabinet, but Mélanie Joly takes over the politically vital economic development agencies, returning to a key role after her handling of the government’s Netflix deal saw her shuffled out of the heritage department 16 months ago. Meanwhile, former cleantech executive Jonathan Wilkinson takes on the environment job as the sector looks for regulatory and funding changes. Amid the familiar faces, the new government will face challenges implementing its big promises on lower cellphone bills and increased exports.
The minister: Navdeep Bains, Innovation, Science and Industry
His inbox: Three major items from Bains’s first stint in the role will continue to consume his attention, according to a senior source familiar with the government’s agenda: telecom pricing and affordability; rural internet access; and the digital charter and changes to the country’s privacy rules.
During the federal election campaign, the Liberals promised to lower cellphone bills by 25 per cent by working with carriers and encouraging competition via the Canadian Radio-television and Telecommunications Commission’s regulatory powers. In January 2020, Bains will also receive a final report from a government-appointed panel reviewing Canada’s broadcasting and telecommunications laws; affordability is one of the factors the group is supposed to consider, according to its terms of reference.
The government announced a new Universal Broadband Fund in the 2019 federal budget, promising $1.7 billion over 13 years to hit a target internet speed of 50/10 Mbps across the country by 2030. It’s already begun spending some of the money, signing a $600-million agreement for access to Ottawa-based Telesat’s low-orbit satellite network. The file will be shared with the newly appointed minister of rural economic development, Maryam Monsef.
In May, Bains unveiled the digital charter, a set of 10 high-level principles including personal control over data, competition and online security. In April, he told The Logic the plan would “require another mandate to execute,” adding that the government was working on a timeline for the required legislative changes. Said the source, who was granted anonymity because they were not authorized to speak, “You can look for a comprehensive approach to data privacy.”
His challenge: Though Bains remains in place, the department has a new deputy minister. In September, Simon Kennedy, previously the health department’s top civil servant, took over from John Knubley, who had been in the role since 2012. Several large divisions within the department have also seen leadership changes this year. Knubley is “a mover and a shaker in Ottawa and around the country when it comes to implementation and execution,” said the source. “And the team that he surrounded himself with is exceptional.” The source said it “presents real execution challenges” when such changes are made at a senior departmental level, though they also praised Kennedy’s track record.
The new deputy minister is not entirely new to the department—he previously served as a senior associate deputy minister, where he oversaw the foreign investment review process. Consulting with industry will be an important part of his job.
The ministers: Jonathan Wilkinson, Environment and Climate Change; Seamus O’Regan, Natural Resources
Their inboxes: Clean technology is a major part of the Liberals’ climate change strategy; in addition to Bains, Wilkinson and O’Regan are in charge of ministries that control significant funds and programs targeted at the sector. Wilkinson in particular knows the industry well—he was previously CEO of B.C.-based Bioteq Environmental Technologies, which makes water-treatment systems for mines, and of QuestAir Technologies, a gas-purification technology developer.
The three ministers can draw on the recommendations of the Clean Technology Economic Strategy Table, one of six sector-specific groups of executives set up to advise the government. In September 2018, the cleantech table called for the government to reduce the regulatory burden on the sector, to buy more from the industry to encourage the adoption of its technologies, and to introduce measures to close the “gaps in scale-up finance.”
“We really haven’t seen progress on the recommendations,” said Mike Andrade, CEO of Morgan Solar, and a member of the table. “But I’m not sure that we were supposed to by this stage.” He noted that the report came out just before an election year, and said the government plans to reconvene the tables with a new focus on implementation.
The finance minister’s November 2018 economic update did address some of those recommendations. It set up a Centre for Regulatory Innovation to establish sandboxes where companies can run pilot projects while being exempt from some rules. And it let firms write off the cost of clean technology against their tax bills sooner than previously, potentially encouraging businesses to buy more from the sector.
Their challenge: Some cleantech executives are concerned about how the government has allocated funding over the last four years. “We’re doling out taxpayer dollars to a whole bunch of companies that aren’t going to make it,” said Audrey Mascarenhas, CEO of Questor Technology, a Calgary-based firm that makes systems to safely burn off waste gas. In October, The Logic reported on internal documents from the Business Development Bank of Canada (BDC), showing its $600-million cleantech program had funded firms that were riskier investments on average than the rest of its portfolio.
During their campaign, the Liberals promised to “cut taxes in half for companies that produce zero emissions technologies.” But Andrade said most firms in Canada’s cleantech sector “don’t have meaningful amounts of profit that would benefit from that policy.” That could mean that companies in existing carbon-intensive industries using technology to reduce emissions “get most of the benefits,” instead of firms creating new products in the space. “The cleantech nomenclature is sufficiently broad-based that a lot of things can qualify,” he said, claiming there’s been a similar pattern among the government’s existing funding programs.
“We’re busy chasing and subsidizing big companies who actually don’t really need this,” said Mascarenhas, the chair of the cleantech table. “Alcan did not need money from the Strategic Innovation Fund.” In May 2018, Ottawa’s flagship investment program awarded $60 million to Alcoa and Alcan’s parent company Rio Tinto to develop a new aluminium-smelting process that the companies say creates no emissions.
The minister: Mélanie Joly, Economic Development
Her inbox: Joly’s new title moves her from the relative purgatory of Tourism, Official Languages and la Francophonie into a file that many see as key to the survival of the Liberal minority government. (She retains Official Languages.)
First appointed minister of Canadian heritage in 2015, Joly was the point person on the government’s entente with Netflix, in which the company promised $500 million to produce original content north of the border. The apparent good-news announcement drew criticism across the country—particularly in Joly’s native Quebec, where she was pilloried for letting the California streaming giant dodge the sales tax its homegrown competitors pay.
Her new portfolio gives her control over the country’s six regional economic development agencies, which have a collective yearly budget of over $1 billion. As such, these agencies serve as crucial connection points between voters and the government—“retail storefronts for the government,” as one Liberal source put it. Translation: economic development is an ideal way to sell the party message with the non-partisan gravitas of the federal government.
Her challenge: Joly’s job is especially important in a minority government, as it allows the minister to track the economic needs and fortunes of disparate parts of the country. Western Economic Diversification Canada in particular will be key to measuring the political and economic pulse of Saskatchewan and Alberta, where economic hardship has fuelled resentment against the Liberals. The party’s small cadre of MPs from those provinces were wiped out in the October election.
The other notable names:
Small Business Minister Mary Ng adds international trade to her responsibilities. Her portfolio includes oversight of BDC as well as the Venture Capital Catalyst Initiative (VCCI), which has awarded $450 million to 15 funds-of-funds, which in turn invest in VC firms. Given responsibility for export promotion in July 2018, she said it was the role of the international trade minister to “open the door” for Canadian companies abroad, and hers to “help our companies, our SMEs, walk through that door.” She will now do both jobs, but will not be responsible for the implementation of Canada’s most important trade deal. Deputy Prime Minister Chrystia Freeland—previously international trade minister and global affairs minister—will remain in charge of U.S.-Canada relations, including the USMCA.
Joyce Murray returns as minister of digital government. Canada remains one of the few countries in the Digital 9—an international cooperation group that also includes New Zealand, the U.K. and Estonia—with a cabinet member devoted to the government’s use of technology. One early task is finding a new chief information officer after Alex Benay departed in August.
Murray will work with new Procurement Minister Anita Anand, whose department is partly responsible for the over $6 billion the government spends on technology annually. In January, Public Services and Procurement Canada released a list of 74 companies cleared to bid on artificial intelligence projects, and it’s already managed one such process: a tool that will find regulations to cut or change.
What it all means: Trudeau has chosen to maintain continuity in the key economic cabinet seats, including returning Finance Minister Bill Morneau, Revenue Minister Diane Lebouthillier and Bains; though he will no longer oversee the regional development agencies, Bains is one of just a handful of ministers who remain in charge of the department they were appointed to lead when the Liberals formed government in 2015.
In The Logic’s profile of Bains last year, tech executives praised him for taking industry input seriously in policy and program decisions. “The innovation sector’s pretty happy with him,” John Ruffolo, vice-chair of the Council of Canadian Innovators, said in December 2018. “And I hope to hell he doesn’t change a file, because getting somebody up to speed would be brutal.” His fans in the sector needn’t worry about that for now.
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Under Bains, the regional development agencies were asked to “place greater emphasis in helping firms scale up, develop new markets and expand, as well as assist with the adoption of new technologies and processes.” The new approach coupled with the superclusters initiative—five groups of large corporations, startups and research institutions focused on sectors like digital technology and agrifood—represent “a more modern approach of providing regional economic development,” Greg Fergus, Bains’s former parliamentary secretary, told The Logic in December 2018.
That’s unlikely to change under Joly—the innovation department will support her in her duties as economic development minister, and the 2018 federal budget included $400 million over five years to support the government’s overall innovation strategy.
Though cabinet work will begin immediately, MPs won’t officially return to Ottawa until the start of next month, when a throne speech is expected to kick off the new Parliament. And since the House of Commons typically sits for just one or two weeks in December, new legislation will most likely have to wait until the new year.