The federal budget gave a big boost to science and tech. But what's our industrial policy?

Was the 2021 federal budget good for Canadian science and technology? If we’re counting the dollars spent, absolutely. The continuing battle against COVID-19—along with the prospect of an election this year—led to a budget slated to spend around $16.2 billion in departments that specialize in and support R&D, from biomanufacturing to artificial intelligence to clean technology.

The Strategic Innovation Fund was the biggest winner with $7.2 billion over the next seven years, while the domestic life sciences sector received $2.2 billion and National Research Council’s Industrial Research Assistance Program is scheduled to receive $500 million over the next five years. The budget also made promising moves to develop national strategies in quantum technology, artificial intelligence and genomics.

Senior correspondent Mark Henderson noted in his piece on the budget that the government has shifted to place research funding into “the context of industrial and social policy, including the rebuilding of infrastructure and economic output lost during the era of globalization and the ravages of Covid.” If anything, the federal government has not gone far enough in articulating its industrial policy. It is obviously embarking on a more interventionist route, with funding and tax incentives designed to push the development of clean technology and a more inclusive economy, but its larger strategy appears opaque and disjointed. If there is a clear-minded approach to science and technology at work, it’s not open to the public (the terms “industrial policy” and “industrial strategy” don’t appear once in the budget itself).

To outside observers, the funding looks more like a “grab-bag” of investments for individual programs rather than a cohesive plan, as Evidence for Democracy executive director Rachael Maxwell told me this week. And there are legitimate concerns that throwing money at companies and research organizations doesn’t always lead to long-term gain. Given that many SIF investments go to well-established industry sectors or foreign companies, it’s questionable whether the funding has improved Canada’s innovation performance so far, as Mark Lowey reported earlier this month.

It may be too much to ask for a budget to set out a national industrial strategy, especially because the pandemic is the most urgent concern. The budget did, however, lay out three priorities: conquering COVID-19, immediate economy recovery, and a “better, fairer, more prosperous, more innovative future.” If they’re serious about that future, it’ll require a change from the status quo — Canada currently lags far behind other countries in its innovation performance and productivity. To rectify the issue, we’ll need not only investment into R&D and innovation, but also a shrewd industrial policy to ensure that our money is being well spent.

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