The Short Report: February 14, 2024

GOVERNMENT FUNDING

Next Generation Manufacturing Canada (NGen), a federally funded global innovation cluster in Ontario, announced more than $32.3 million for 15 new advanced manufacturing projects. With industry contributions of $54.4 million, the 15 projects are valued at a total $86.7 million. The announcement was made during NGen’s inaugural N³ Summit, a new showcase and strategy event to promote Canadian leadership in advanced manufacturing. The new projects involve 42 companies from Ontario, Quebec, Manitoba, Alberta, B.C., Nova Scotia and Prince Edward Island. The technologies encompass cement-free concrete, magnesium cement boards, “superplastics,” food manufacturing, biomanufacturing, advanced production scheduling, discrete manufacturing assembly, micro-factories, robotics, recycling and production of rare-earth oxides, cartilage implants, biomedical lattice, recombinant collagen fibres, navigation sensors, and hydrogen fuel cell components. NGen said that between 2019 and 2023, the cluster completed 165 projects resulting in $7 billion in new sales – a 32-fold return on NGen’s investment – and 55 new companies created. NGen

The Government of Canada and the Government of Ontario are together investing more than $13 million through the Sustainable Canadian Agricultural Partnership, to help free-standing meat processors and abattoirs in the province upgrade meat-handling and processing equipment, technologies and practices. The aim is to increase productivity and efficiency and maintain Ontario’s high food safety standards. The cost-shared funding will support 151 projects, including training and engineering costs associated with completing the projects. Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada announced up to $11 million for Winnipeg-based Pulse Canada for research to address challenges in production of pulses, which including dry peas, lentils, beans and chickpeas. Canada is the largest exporter of pulses in the world, to more than 120 countries. This funding is provided through the AgriScience Program - Clusters, an initiative under the Sustainable Canadian Agricultural Partnership. The research is aimed at reducing nitrogen fertilizer consumption across crop rotations, lowering greenhouse gas emissions, increasing carbon sequestration, lowering disease risks, and increasing profits for farmers. Agriculture and Agri-Food Canada

The Government of British Columbia has invested up to $7.1 million to establish and launch the Environmental, Social and Governance (ESG) Centre of Excellence. The new virtual ESG Centre will provide concierge-type services to businesses, at no cost, to help them navigate their ESG journey. Client advisers will provide one-on-one support and a suite of tools and resources to help businesses understand the fundamentals of ESG and why it can be important to their growth. A trial cohort of businesses will provide feedback to enhance the user experience. Centre staff will continue to solicit feedback to streamline and improve the available tools and resources as part of a commitment to continuous improvement. A new ESG advisory council, comprised of seven B.C.-based ESG leaders and experts, will act as a consultative body to advise and inform about the implementation and ongoing operations of the centre.  Govt. of B.C.

Federal Economic Development Agency for Northern Ontario (FedNor) is investing $5 million in Toronto-based Electra Battery Materials Corporation’s cobalt refinery. The funding, provided through FedNor’s Regional Economic Growth through Innovation program, will enable Electra to continue the recommissioning and expansion of its hydrometallurgical cobalt refinery in North Cobalt, Ontario. The facility will be the first facility of its kind in North America. Once complete, the refinery will be capable of producing cobalt for up to 1.5 million electric vehicles annually. The investment builds on the federal government’s initial investment of $5 million, announced in 2020. FedNor

Infrastructure Canada announced $4.3 million for Choices for Youth Inc. to open a new Social Enterprise and Innovation Hub in St. John’s, Newfoundland. An existing building will be renovated to create spaces for social impact, innovation and economic development programs. The renovation will reduce energy consumption by an estimated 84 per cent and greenhouse gas emissions by 3.8 tonnes annually. The project will create an energy-efficient space where up to 100 youth per year will develop lifelong career skills. Choices for Youth is a non-profit, charitable organization committed to supporting youth and young families in accessing stable housing and employment while working toward family stability and better health, through innovative programming and social enterprises. Infrastructure Canada

Protein Industries Canada, the Prairies-based global innovation cluster, is investing up to $2.3 million in a $5.1-million project to bring new and improved plant-based products to the marketplace. Industry partners are providing the remainder of the funding. The project, with Vancouver-based Koncious Foods, Avena Foods in Regina, and Canadian Pacifico Seaweeds in Surrey, B.C., is aimed at increasing the nutritional content of Koncious Foods’ existing line of plant-based seafoods and helping the company bring new innovative products to market. Koncious Foods’ 34,000-sq.-ft. facility in Richmond, B.C. will use pulse ingredients sourced from Avena and Canadian Pacifico Seaweeds’ locally and sustainably sourced seaweed. Protein Industries Canada

Canada Economic Development for Quebec Regions (CED) announced a repayable contribution of $1 million for Quebec City-based BOSK Bioproducts Inc. to enable the business to increase its production capacity by establishing a manufacturing unit for compostable bioplastics. The funding will be used to acquire the equipment and to install, test and commission the unit. BOSK Bioproducts is an innovative SME based on the model of a circular economy: to collect industrial waste, such as bio-sludge from paper manufacturing, and convert it into compostable bioplastics. With its new manufacturing unit, the company will be able to produce polyhydroxyalkanoate, a key component of REGEN™, a bio-based, 100-per-cent compostable bioplastic the firm has developed. CED

RESEARCH, TECH NEWS & COLLABORATIONS

Mitacs and the Regina-based Petroleum Technology Research Centre (PTRC) announced a new four-year collaborative funding program to develop and retain highly qualified personnel in cleantech R&D at the University of Regina and other universities. PTRC will contribute $2.72 million to universities between 2024 and 2028, which will be matched with an additional $3.33 million by Mitacs, to fund graduate and post-graduate internships over four years in areas of sustainable energy. Total new funds directed to university-based research will be just over $6 million. The collaborative program will include projects in geothermal energy, blue hydrogen, CO₂ capture and storage, integrated power systems incorporating the use of artificial intelligence, and the reduction of environmental impacts in hydrocarbon production. Approved projects within the overall program were submitted by researchers from the universities of Regina, Saskatchewan, Alberta, Calgary, and St. Francis Xavier, with most of the research projects happening at Saskatchewan’s two main universities. Mitacs

Research Manitoba invested more than $1.96 million in provincial matching funds for nine projects supported through the Canada Foundation for Innovation’s. John R. Evans Fund. The investment supports the development of projects at the University of Manitoba and the University of Winnipeg in the fields of agrifood, autism, green energy, arthritis, genomics, biomachines, plant-based proteins, tissue imaging, and neuroscience. Research Manitoba has also invested nearly $550,000 in five separate UManitoba research projects to support proof-of- concept projects in the areas of: bioscience, infrastructure, transportation and technologies; and advanced manufacturing over the next two years. Research Manitoba, University of Manitoba

The Alberta Cancer Foundation announced the inaugural winners of its first $5-million Game Changer Fund. Supported by donors and philanthropy, the fund is the first annual initiative aimed at accelerating cancer research by fostering collaboration between researchers and frontline clinicians, bridging the gap between the “bench” and the “bedside.” To create the Game Changer Fund, the Alberta Cancer Foundation collaborated with Cancer Care Alberta, the Cancer Research Institute of Northern Alberta, and the University of Alberta. Four Edmonton-based research teams and projects will share a total of $5 million, with each team granted up to $1.25 million for its project. Leaders of each team, who are all at the University of Alberta, are Dr. Vickie Baracos, Dr. Ing Swie Goping, Dr. Roseline Godbout and Dr. Kristi Baker. Twenty-two submissions were received, and the fund recipients were selected by a national panel of researchers and patients. Alberta Cancer Foundation

Ottawa-based Relogix, a provider of workplace occupancy sensors and analytics solutions, was acquired by Massachusetts-based HubStar, whose AI-powered software helps companies optimize the use of hybrid work spaces. Financial terms of the deal weren’t disclosed. Hubstar said the acquisition combines its patented analytics capabilities, deep learning technology and commitment to R&D investment with Relogix’s workplace analytics platform, Conexus. The mass adoption of hybrid work – and rising awareness of under-utilization of space – is accelerating the demand for secure, unified technology solutions that collect, connect and analyze data to inform and guide strategic workplace decisions, HubStar said. HubStar

Calgary-based SumoQuote, which offers sales software for contractors, was acquired by JobNimbus, a roofing software company based in Lehi, Utah. Terms of the acquisition weren’t disclosed. JobNimbus offers project management and customer relationship management software for roofers with 200 employees. SumoQuote has contract-proposal software purpose-built for exterior contractors with 35 employees. Bringing together the two companies solves the biggest issue for sales professionals in the roofing industry, to be able to provide an estimate that gives homeowners lots of different choices, and then converts into an invoice, said Jared Olsen, vice-president of people experience at JobNimbus. JobNimbus plans to leave the SumoQuote team intact in Calgary which will be JobNimbus' first satellite office. The company plans to expand its footprint both in Lehi and Calgary. TechBuzz News

Montreal-headquartered cleantech startup Solfium plans to bring solar power to Latin America, one of the planet’s most climate-vulnerable regions and with some of the lowest levels of solar power in the world. Solfium, which has developed a supply chain ecosystem for solar panels aimed at reducing friction for consumers, installers and component manufacturers, is now working with large corporations, like Scotiabank, Pepsi, and Japan-based Suzuki, to decarbonize their value chains. Solfium developed the ability to tag individual solar projects to a corporate dashboard, allowing corporations to complete and track thousands of micro-solar projects, each individually executed through Solfium’s app. Last year, Solfium and ÉXICO2 Plataforma Mexicana de Carbono teamed up to enhance the adoption of solar energy solutions in the Mexican carbon market, including development of a voluntary carbon market in Mexico. Solfium was founded in 2020 by: CEO Andres Friedman, a supply chain expert who previously worked at Bombardier; Calgary-based chief financial officer Zacharie Magnan, a former finance leader in the oil and gas sector; and Juan Osuna, a solar industry veteran. BetaKit, Mexico Business News

SVG Ventures| THRIVE, a global venture and innovation platform, and Alberta Innovates partnered to launch the Climate Challenge, aimed at accelerating innovation at the intersection of agriculture and energy to combat climate change. The Climate Challenge is an international quest for innovators developing technology-enabled solutions at the agriculture-energy nexus, playing a vital role in securing a sustainable future for our global community. Open to innovators worldwide, the Climate Challenge will culminate at Inventures, Alberta’s flagship tech conference, on May 30, 2024. This event, hosted annually by Alberta Innovates, provides a platform for startups to showcase their ideas, connect with industry leaders, and capitalize on Alberta’s innovation advantage. The Climate Challenge focuses on three core themes identified as high-potential areas for innovation: advancing the biofuels value chain; on-farm energy; and water stewardship. Ten global finalists will have the opportunity to pitch their innovations live, gaining global recognition and access to significant prizes and growth opportunities. SVG Ventures| THRIVE

VC & PRIVATE INVESTMENT

Toronto-based Northleaf Capital Partners, a global private markets investment firm, announced the final closing of $285 million for its Northleaf Growth Fund, its first direct growth equity fund. Northleaf didn’t disclose participating limited partners in its announcement. The Northleaf Growth Fund provides investors with access to a diversified portfolio of direct investments in high-potential innovative companies across the technology and health care sectors. Over the past 15 years, Northleaf has supported several innovative, high-growth companies such as BlueCat Networks, eSentire, Verafin and Zymeworks. Northleaf also runs a fund of funds, and was selected by the federal government to provide a second round of capital from the Venture Capital Catalyst Initiative in 2022, alongside HarbourVest Partners, Teralys Capital, and Kensington Capital Partners. Northleaf Capital Partners

Toronto-based fintech startup Wealthsimple has raised more than $200 million collectively across its funds, which span venture capital, private capital, and private equity. All the funding has come from retail investors. Founded in 2014 as an investment platform, Wealthsimple has since added spending and savings accounts, cryptocurrency trading, tax filing, and peer-to-peer payments offerings. Following the rise of retail investing during the pandemic, Weathsimple launched a “super app” with all of its offerings under one roof in the summer of 2022. According to Wealthsimple, investors interested in its alternative investing options must have at least $100,000 in assets with Wealthsimple and meet its suitability screening. BetaKit

Kitchener-Waterloo-based startup Code Inc. raised US$6.5 million in seed funding to grow its new global micropayments platform. The round was led by M13 and Union Square Ventures, with participation from Balaji Srinivasan, Roham Gharegozlou, Anatoly Yakovenko, Raj Gokal, Mert Mumtaz, and others. Funding will be used to accelerate the growth of Code’s global payments platform. Code’s open source platform, which runs on blockchain technology, enables anyone anywhere in the world to spend online or send money to a friend. Code was founded by Ted Livingston, founder and former CEO of Canadian unicorn Kik Messenger, one of the most popular chat apps in the world with more than 100 million users. Private Capital Journal

Calgary-based OpenHouse.ai announced it closed a $1.5-million seed funding round led by Trico Ventures Corp., with participation from leading home builders from across the U.S. and Canada. The new funding will enable OpenHouse.ai to deploy its product offerings to more home builders across North America and help address the housing supply gap. OpenHouse.ai’s OpenPredict platform helps builders understand buyers’ needs through AI-driven personalization. The platform helps builders understand where the market is heading with foresight into market demand and shifting buyer behaviour. OpenHouse.ai said OpenPredict brings everything together to identify bottlenecks and prioritize actions to optimize construction operations, reduce construction cycle time, and minimize waste. OpenHouse.ai

New York City-based Dexa, which is led by Calgary native Riley Tomasek as CEO and founder, announced it closed a $6-million seed financing round. The round was led by San Francisco-based venture capital firm Maple VC, with participation by The General Partnership, and Abstract Ventures, with additional funds coming from Vercel founder Guillermo Rauch, as well as investors Terrence Rohan and Casey Caruso. The funding will be used for further investment in product development and building out Dexa’s engineering team. Dexa offers an artificial intelligence-powered search engine for podcast listeners. Prior to launching Dexa last year, Tomasek previously founded Vancouver-based resume builder Standard Resume, as well as digital organization tool Flight, which waslater acquired by Figma. Techcouver

REPORTS & POLICIES

Fallout continues from federal cap on international students and Quebec’s hike of international students’ tuition

Here’s a summary of the most recent developments following the federal government’s cap on international students at Canada’s post-secondary institutions, and the Quebec government’s tuition increase for international students.

• Conestoga College Institute of Technology and Advanced Learning in Kitchener, Ontario, has been “unfairly grouped” with what the federal government and other critics refer to as “bad actors in the sector,” said John Tibbits, president of Conestoga. The government’s decision should have been phased in over time and done in consultation, he wrote in a blog on the college’s website. “Instead, Canada’s reputation as a destination for post-secondary education is threatened. The recent changes are not helpful for students trying to apply to Canada and contribute to our economy, and there will be an impact on employers attempting to hire qualified personnel.” Domestic tuition was cut by 10 per cent four years ago and has been frozen ever since, Tibbets noted. “Ontario’s tuition is now among the lowest in Canada and infrastructure funding has not been available. It would be nearly impossible to manage the college effectively on domestic tuition and grants to meet the needs of employers for a skilled workforce, especially in a region that is growing economically.” Conestoga invests approximately $50 million annually on domestic and international student support services that include health and wellness programs, food security and nutrition programs, and housing and employment supports, Tibbits said. Conestoga

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• At least 10 Ontario universities are facing sizable operating deficits, totalling $175 million this year and growing to $273 million next year, said Steve Orsini, president and CEO of the Council of Ontario Universities. Bonnie Lysyk, Ontario’s auditor general, reported in 2021 that between 2012/13 and 2020/21, public colleges in Ontario saw a 150-per-cent decline in domestic student enrolments, but a 342-per-cent growth in international students. In addition to bringing international students to their own campuses, some Ontario colleges – including Algonquin College in Ottawa, Fanshawe College in London, Mohawk College in Hamilton, and Sault College in Sault Ste. Marie – started partnerships with private colleges where the college’s curriculum was taught at private colleges with a licensing fee in place. Students would attend the private colleges but receive a diploma from the public college if they graduated. National Post

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• Public colleges and universities accounted for 46 per cent and 30 per cent of the roughly 575,000 study permits issued in 2023 that could be sorted to either a public or private institution, according to Immigration, Refugees and Citizenship Canada data. Only about 57,000 permits, or about 10 per cent, were for students at private career colleges. Figures compiled by the National Association of Career Colleges put the number at their member institutions even lower – at about five per cent. Ontario’s public colleges account for a huge portion of the international study category, having increased their numbers from 35,000 new study permits in 2016 to more than 140,000 in 2022. As a result, 23 of the province’s 24 colleges recorded surpluses last year despite low levels of government funding. In comparison, Ontario universities during the same period increased their international study permits from 20,000 to 40,000. The Globe and Mail

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• Universities Canada and Colleges and Institutes Canada are urging the federal government to delay imposing its “attestation” requirement until at least March 31, or until the provinces establish an effective process. In implementing the cap on international students, Ottawa is requiring every study permit application submitted to Immigration, Refugees and Citizenship Canada to have an attestation letter. The federal cap, with a moratorium on processing new international student study permits while provinces establish attestation systems, is already impacting enrollments, the two organizations – which represent 234 post-secondary institutions – said in an open letter to Marc Miller, minister of Immigration, Refugees and Citizenship Canada. “Faced with uncertainty, these students are likely to choose alternative destinations, posing a significant risk to Canada’s post-secondary sector and hindering our efforts to attract global talent for years to come.” The cap will have far-reaching effects on Canadian communities, given that international students play a pivotal role in bolstering the economy by contributing over $22 billion a year to our country, the two organizations say. “Their [international students] contributions are vital in sustaining local labour markets, increasing diversity and meeting the demands of high-growth sectors.” Universities Canada

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• Ontario universities had little choice but to aggressively recruit international students, after the Doug Ford government cut tuition fees by 10 per cent in 2019 and has frozen them since but not replaced the lost tuition revenue with an increase in government grants, says George Fallis, professor emeritus of economics and urban studies at York University. “At some universities, international fees now approach half of total tuition revenue,” he wrote in a commentary in The Globe and Mail. Cost-cutting measures, such as increasing class size and substituting part-timers for full-time faculty, has reduced academic quality, Fallis said. “During the 20^th century Canada built a first-rate university system, but we have been letting it slip away through inattention and poor policy.” The Globe and Mail

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• Selina Robinson, minister of British Columbia’s Ministry of Post-Secondary Education, announced that more stringent measures are coming to rein in so-called diploma mills taking advantage of international students with higher and hidden fees and not delivering the quality of education promised. There will be more frequent inspections, higher standards, demands for greater transparency in tuition fees, a requirement for proof of labour-market demand for any new programs, and proof of appropriate resources and supports for students, Robinson said. She cited private institutions with classroom space for 50 students accepting 800, forcing the rest to learn online. There will also be a two-year freeze on any new private post-secondary institutions that want to receive international students. Two such institutions on Vancouver Island have applied. B.C. has the second-highest number of international students in the country after Ontario, so the federal cap could reduce international students in B.C. by as much as 50 per cent. Times Colonist

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• The University of Victoria is cutting its operating budget by four per cent, or $13 million, to address declining revenue as international enrollment continues to drop. UVic does not plan to raise tuition to offset its revenue shortfall. International undergraduate enrolment is the lowest it has been in more than 10 years, comprising just 11 per cent of overall enrolment, UVic said in a statement to faculty, librarians and other staff. The university previously said it’s forecasting 1,587 international undergraduate students for the 2023-24 school year, down from 2,573 in 2019-2020. International tuition isn’t subsidized by the provincial government, as domestic tuition is. Times Colonist

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• The Government of Nova Scotia is capping tuition increases for Nova Scotia students at the province’s 10 universities at two per cent – down from three per cent – but expects universities to increase international student tuition rates by at least nine per cent. The exceptions on the international tuition hikes will be Dalhousie University and University of King’s College, which raised their rates last year. Small to medium-sized universities will see a two-per-cent operating grant increase in 2024-25. Inflation in Nova Scotia last year was four per cent. Dalhousie University’s grant is expected to remain the same as this year until the university presents a plan on how it will contribute to provincial priorities. Some universities could have 10 per cent of their funding withheld until they can show plans to add additional housing. The Council of Nova Scotia University Presidents said in a statement that the province’s announcement is the second “serious blow” to the sector in two weeks – coming on the heels of the federal cap on international students – and was done without any consultation with universities. CBC News

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• The Toronto Star has reportedly received a copy of a “recognized institution” framework that the Government of Canada will use to determine which postsecondary institutions set a higher standard for international students. According to the Star, this framework could be used to determine the allocation of international student study permits for select universities and colleges. The Star reported that the leaked draft identifies factors such as international student revenues, timely graduation, and funding devoted to international student housing and mental health supports. The federal government declined to say whether this draft framework has been updated. Toronto Star

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• The federal government’s cap on international students is biased in favour of universities and against polytechnics and colleges, said Sarah Watts-Rynard, chief executive of Polytechnics Canada. Ottawa’s cap made exemptions for master’s and PhD students because “these are the highly skilled people Canada needs,” according to the government. Another exemption was made for those who complete short-term graduate programs, who are now eligible for three-year postgraduate work permits as long as their credentials are earned at one of Canada’s universities. Yet polytechnics and colleges contributed more than 282,000 work-ready graduates to Canada’s labour market in 2021, Watts-Rynard wrote in a commentary in The Globe and Mail. Industry partners inform program design at polytechnics and colleges, instructors are drawn from industry, work-integrated programs are increasingly offered, and business and non-profits come to polytechnics and colleges to engage in applied research activity, she said. “So, it’s infuriating to hear a federal official suggest that colleges are rooms over massage parlours offering bogus credits to uninformed international students.” While federal officials often emerge from the university system, Watts-Rynard wrote, “it is contingent on our leaders and bureaucrats to ensure policies are not biased toward one academic pathway over another.” The Globe and Mail

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• Applications to Quebec’s two largest universities – McGill University and Concordia University – from out-of-province domestic students dropped substantially after the provincial government announced a near doubling of university tuition fees for out-of-province anglophone students. New figures released after McGill University’s February 1 deadline show that applications from Canadian students outside Quebec were down by 22 per cent compared with a year ago. Concordia University’s deadline is in March, but it has so far seen a 27-per-cent drop in applications from students in other provinces. The Quebec government also announced minimum tuition fees of $20,000 for international students. Concordia also has seen a significant drop in the number of international graduate applicants, down 46 per cent compared with a year ago, as well as international undergraduate applicants, which are down 10 per cent. The Globe and Mail

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Federal government agencies failed to follow good management practices with ArriveCAN app: Auditor General of Canada

The Canada Border Services Agency, the Public Health Agency of Canada, and Public Services and Procurement Canada failed to follow good management practices in the contracting, development and implementation of the ArriveCAN application, says a report by Canada’s Auditor General Karen Hogan. The application was created to digitally collect traveler contact and health information when they entered Canada during the COVID‑19 pandemic.

The Auditor General’s audit estimated that the ArriveCAN application cost approximately $59.5 million, but emphasized that the exact cost was impossible to calculate because of the Canada Border Services Agency’s poor financial record keeping. The agency’s decision to continue relying on external resources throughout the application’s development, launch and updates – beyond the initial pandemic crisis – increased costs and brings into question the value achieved for money spent, according to her report. “As a result of the many gaps and weaknesses we found in the project’s design, oversight, and accountability, it did not deliver the best value for taxpayer dollars spent.” The audit estimated that the average per diem cost for the ArriveCAN external resources amounted to $1,090, whereas the average daily cost for equivalent IT positions in the federal government was $675. 

There was no formal agreement between the Public Health Agency of Canada and the Canada Border Services Agency, from April 2020 to July 2021, to clarify roles and responsibilities, the audit found. “In the absence of a designated lead, good project management practices – such as developing project objectives and goals, budgets and cost estimates, and risk management activities – were not carried out.”

The lack of documentation and controls extended to contracting practices. The audit found that the Canada Border Services Agency’s “disregard for policies, controls and transparency in the contracting process limited opportunities for competition and undermined value for money.” There was little documentation to support how and why GC Strategies was awarded the initial ArriveCAN contract through a non‑competitive process. Evidence indicated that GC Strategies was involved in setting the requirements that the Canada Border Services Agency later used to tender a competitive contract.

The audit found that Canada Border Services Agency managed contracts poorly, again raising concerns about value for money. Essential information, such as clear deliverables and required qualifications, was missing from contracts. Canada Border Services Agency routinely approved and paid invoices that contained little or no details on the work completed. Between April 2020 and October 2022, Canada Border Services Agency released 177 versions of ArriveCAN with often little to no documentation of testing, the audit found. In one update, in June 2022, about 10,000 travellers were wrongly instructed to quarantine.

“Public servants must always be transparent and accountable to Canadians for their use of public funds,” Hogan said in a statement. “Many questions that Parliamentarians and Canadians are asking cannot be answered. The lack of information to support ArriveCAN spending and decisions has compromised accountability.”

The Auditor General recommended that:

• The Canada Border Services Agency should maintain accurate financial records by correctly allocating expenses to projects. To better support these actions, the agency should work with contractors to obtain invoices that accurately detail the work completed by each resource by project, contract and task authorization.
• The Canada Border Services Agency and the Public Health Agency of Canada should fully document interactions with potential contractors and the reasons for decisions made during non‑competitive procurement processes and should put in place a process to ensure compliance with the requirements of the contracting policies.
• The Canada Border Services Agency should ensure that potential bidders are not involved in developing or preparing any part of a request for proposal and should put in place controls that will prevent this from occurring.

The Government of Canada, in its response to the Auditor General’s report, said the report identified “unacceptable gaps in management processes, roles and controls, “ which the three federal agencies involved in the ArriveCAN app “take seriously.” Some recommendations in the report have already been implemented and the Canada Border Services Agency (CSBA) will take further action to ensure management practices are aligned with policies and processes to maintain the confidence of Canadians, Ottawa said.

Some of the actions taken and planned by the CBSA as part of its procurement improvement plan include:

• creating an Executive Procurement Review Committee to approve contracts and task authorizations, which is already providing additional oversight on all contracting activities, focusing on delivering value for money.
• requiring employees to disclose all interactions with potential vendors.
• increasing CBSA’s procurement group’s capacity to oversee all procurement activities and establish a centre of expertise to help employees fully understand their obligations and authorities.

Public Services and Procurement Canada has already taken a number of steps, including implementing new measures to ensure that tasks and deliverables are clearly defined in professional services contracts, and updating the policy and guidance documentation used by procurement officials to ensure consistency, the government said. The Pubic Health Agency of Canada will also update its guidance for interactions with potential contractors and ensure that the reinforced documentation process is compliant with the Treasury Board Directive, said Ottawa, which also released its breakdown of costs “to enforce public health measures with ArriveCAN.” Office of the Auditor General of Canada, Canada Border Services Agency

See also: Why federal government IT projects are doomed to failure

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 Canada is “off the chart” – literally – on R&D spending

Canada doesn’t appear in the EU Industrial R&D Investment Scoreboard’s list of the 10 nations that spent the most on R&D as a percentage of GDP in 2022. The Scoreboard also includes a list of the top 2,500 firms globally that make up more than 75 per cent of the world’s private business R&D spending. Canada is missing from this list, too. According to an analysis of the Scoreboard, by Washington, D.C.-based Information Technology & Innovation Foundation (ITIF), of the top 10 R&D spending nations as a percentage of GDP, Switzerland ranked #1 (4.75 per cent of GDP). Switzerland was followed by Taiwan (3.51 per cent), Japan (3.12 per cent), Netherlands (3.03 per cent), Germany (2.88 per cent). U.S. (2.88 per cent), trailed by South Korea, China, U.K. and France at 2.5 per cent or less. Canada’s spending on R&D as a percentage of GDP was about 1.8 per cent in 2020, according to a report by Statistics Canada. This is below the Organisation for Economic Cooperation and Development’s average of 2.7 per cent and below the Group of Seven average of 2.6 per cent.

Canada has been very good for 25 years at growing its economy by adding workers, Bank of Canada governor Tiff Macklem, said in a February 6 speech to the Montreal Council on Foreign Relations. “But productivity growth, by which I mean more output for the same amount of work, has disappointed. This is a problem because higher productivity pays for higher wages and underpins a rising standard of living.” Over the past five years, productivity in Canada’s business sector has fallen 0.3 per cent, while it has grown 1.7 per cent in the U.S.

In the EU Industrial R&D Investment Scoreboard, of the top 10 nations with firms that spent the most on R&D in 2022, U.S. firms ranked #1 with spending of $655 billion – an increase from $399 billion in 2018. More than 90 per cent of the increase in U.S. firms’ R&D spending during this period came from four sectors: automobiles and parts (seven per cent); pharmaceuticals and biotechnology (22 per cent); software and computer services (44 per cent); and technology hardware equipment (18 per cent). This is partly because more U.S. firms in these sectors made it into the top 2,500 R&D spenders and/or the average firm spent more on R&D.

Despite ranking #6 among nations in R&D spending as a percentage of GDP, U.S. firms did increase their size-adjusted R&D spending the most during this period, rising 0.63 percentage points to 2.57 per cent from 2018 to 2022, according to the ITIF’s analysis. In comparison, the other nine nations’ firms saw an average increase of only 0.34 percentage points. “In other words, U.S. firms are catching up,” the ITIF said. “As such, if U.S. policymakers want the nation’s size-adjusted R&D spending to continue growing – leading to economic growth and boosting U.S. firms’ global competitiveness – they should pass the Tax Relief for Families and Workers Act to restore R&D expensing so that firms have an incentive to increase their investments in R&D. ITIF

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Canada’s private non-profit organizations hit new record for R&D spending

Private non-profit organizations in Canada spent a record $705 million in 2022 on outsourcing R&D to other organizations, such as universities, hospitals or businesses, according to a report by Statistics Canada. That compares with the previous high of $622 million in 2021. In 2022, $626 million, or 88.8 per cent, was directed to organizations within Canada. The remaining $79 million, or 11.2 per cent, was allocated to outsourced R&D outside Canada. Before 2021, foreign outsourcing had never accounted for more than four per cent of all outsourced expenditures, StatsCan noted.

As for in-house R&D, private non-profits spent $230 million in 2022, a 21.7-per-cent increase over 2021. “This marks the largest year-over-year percentage increase since 2005.” The increase was attributable to new organizations performing or funding R&D, as well as general increases in spending by existing organizations. There was also a corresponding increase in personnel, with full-time equivalents rising from 1,252 in 2021 to 1,523 in 2022.

Private non-profit organizations spent 45.7 per cent ($105 million) of their in-house spending on medical and health sciences in 2022, up $5 million from 2021. While this marks the largest amount spent in this field since 2015, its share of total spending declined compared with other fields. Spending increased in the natural and formal sciences (+$11 million to $54 million) and social sciences and humanities (+$13 million to $45 million), highlighting the growing diversification of R&D performed by non-profits.

Combined, these three fields  made up 88.7 per cent of all in-house R&D spending by private non-profit organizations in 2022, considerably more than the 20.2 per cent that for-profit businesses in Canada spent on this grouping in 2021 (the latest year for which data are available). The engineering, software-related and technology fields dominated the business sector, while those fields played a very small role in the private non-profit sector.

There are three types of in-house R&D: basic research (experimental or theoretical work without any particular application in mind); applied research (investigation directed towards a specific, practical objective); and experimental development (systematic work directed at producing or improving products or processes). While higher education institutions focus on basic research and the business sector performs mostly experimental development, the private non-profit sector spent 58.7 per cent of its in-house R&D funds on applied research in 2022, compared with 27 per cent on basic research and 14.8 per cent on experimental development. Statistics Canada

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Russia and China significantly stepping up cooperation in the Arctic

Russia and China are working hand-in-hand to establish security partnerships and expand infrastructure development and energy trade along the Northern Sea Route. This has “enormous implications” for Arctic nations – including Canada – and private-sector companies, according to a new report, “Shifting Ice,” by Strider Technologies Inc., a provider of strategic intelligence. The report details unprecedented levels of cooperation between the Russian Federation and the People’s Republic of China (PRC) in the Arctic region since Russia’s invasion of Ukraine in 2022.

The report shows how the war in Ukraine and continued geopolitical isolation are forcing Moscow to adjust its strategy to develop and control the Arctic. Specifically, the report highlights Moscow’s increased reliance on PRC-owned companies and private investment to help develop the Northern Sea Route and infrastructure for energy exploration, processing, and transportation. “While previous research has predominantly focused on Russia's military presence in the Arctic, our findings reveal a strategic pivot by Russia, marked by decreased government spending and a remarkable policy shift to include the People’s Republic of China and private sector investment to maintain its Arctic dominance,” Eric Levesque, chief operating officer and co-founder of Strider, said in a statement.

Strider found that during the 18 months from January 2022 to June 2023, 234 PRC-owned companies registered to operate in Russian-controlled Arctic territory, an 87-per-cent increase in registrations compared with the two full years prior from 2020-2021. The escalation in activity is a stark departure from Russia’s previous efforts to limit PRC involvement in the region.

As Western companies pulled out of projects following Russia’s invasion of Ukraine, PRC-owned companies stepped in to provide key technologies. Strider highlights a key example: the Arctic LNG 2 Project. When Western firms suspended participation in the project last year due to sanctions, companies like the China National Petroleum Corporation and China National Offshore Oil Corporation provided investment while other PRC entities supplied key technologies including gas turbines to keep the project alive. Today, as a result of PRC funding and technology, the Arctic LNG 2 project is still alive and could become one of Russia's primary LNG shipment locations, despite Western efforts to kill the project.

Strider analyzed spending by five major Russian defense bodies in the Arctic since 2015 and discovered that aggregate expenditures dropped sharply in the lead-in to the Ukraine invasion. From peak spending in 2019, the cumulative spending of the five organizations declined by approximately 90 per cent by 2021. By comparison, overall defense spending increased by four per cent in that period. As Russia’s spending at Arctic defense organizations plummeted, efforts to attract private investment increased sharply. The Kremlin’s budget for the Ministry for the Development of the Russian Far East and Arctic, the government body responsible for the socioeconomic development of the region, has increased almost 300 per cent since 2016, according to Strider’s data. Over that same period, private-sector company and individual entrepreneur participation in Kremlin-backed special economic zones in the region increased from approximately 230 in 2016 to more than 4,000 in 2023.

Russia-PRC trade via the Northern Sea Route is growing quickly. In 2023, at least 11 ships transported Russian crude oil to the PRC via this route. For comparison, only one “trial” voyage was made in 2022. In August 2023, Russian and Chinese ships participated in Naval exercises in the Bering Sea off the coast of Alaska. Strider

See also: Federal government needs to act now to ensure Canada’s Arctic security: Senate committee

 THE GRAPEVINE – News about people, institutions and communities

Toronto-based innovation hub OneEleven announced Chris Greenfield as its new managing director. Greenfield is the founder and CEO of TipTap, a touchless payment solution for charitable donations. He also was the head of Canadian Tire’s Innovation Discover Group and  worked in operations and finance at P&G and Unilever. The managing director position at OneEleven had been filled on an interim basis by Angelo Casanas until the end of last year following former managing director Matthew Lombardi’s decision to step down in May. Casanas has since become director of innovation at Rogers Cybersecure Catalyst, while Lombardi is now at TELUS Ventures. OneEleven

Tracey Black, who joined Payments Canada in 2018, has decided not to renew her term as president and CEO, the board of directors at Payments Canada announced. Payments Canada is a non-profit, public purpose organization that owns and operates Canada’s payment systems. Over the last five years, Black has led a series of major payment modernization initiatives, serving Canadians with secure, efficient and resilient payment systems, and laying the foundation for continued innovation, the board said. She oversaw the implementation of the Lynx system for large-value, time-sensitive payments, in a modernization effort. This modernization also includes implementing the long-awaited Real-Time Rail system, which will allow for payments to be sent and received within seconds. Black will complete her leadership term through the end of March 2024. Until a successor is named, the board has appointed Kristina Logue, chief financial officer, and Jude Pinto, chief delivery officer, as interim CEOs, effective April 1, 2024. Payments Canada

François-Philippe Champagne, minister of Innovation, Science and Industry, announced recent appointments to the Standards Council of Canada’s Governing Council. François Coallier, a full professor in the Department of Software and IT Engineering at the École de technologie supérieure, was appointed as chairperson. Dianne Salt, a retired communications executive, and Ahmed Shalabi, who is retired from his regulatory standards career in various fields of nuclear as well as information and communication technologies, were appointed as members. Also recently appointed as members were: Dennis Hogan, CEO of the St. John’s International Airport; Ralph Paroli, a director at Parnassa Building Envelope Standards and Technology Inc.; and Marc Tassé,  founder of Egregia Strategic Consulting Group Inc. and CEO of Sira International Risk Advisors. All these appointments are for four-year terms. Innovation, Science and Economic Development Canada

Ottawa-based non-profit Evidence for Democracy has produced a free, publicly available annotated bibliography, created by Simarpreet Singh, Carolina Munõz Jasa and Farah Qaiser, for transparency in policy-making. The guide is designed to be a starting point for researchers exploring this research landscape, by offering a nuanced understanding of different perspectives on transparency in policy-making. The annotated bibliography includes:

• Academic articles, case studies and reports from various organizations.
• An exploration of the concepts of transparency and accountability and their connection to policy-making and good governance.
• A selection of studies to provide a historical overview, tracing the evolution of transparency and accountability over the years.
• A presentation of different interpretations of accessible information and evidence in decision-making across jurisdictions, as well as methodological frameworks for evaluating transparency across various policy niches.
• A focus on specific case studies and critiques of well-established concepts.

Click here for a video about the annotated bibliography. Evidence for Democracy

 Mount Royal University (MRU) in Calgary has launched the new Centre for Health and Innovation in Aging, with an interdisciplinary focus on innovation, research, education and community engagement informing novel approaches to health care delivery. The centre brings together aging adults, faculty, students, innovators, care providers and industry partners to address the unique challenges and opportunities associated with growing older. The centre will provide an opportunity for multiple disciplines to conduct rigorous research into healthy aging, provide accurate representation of the population, and promote standards that are inclusive to an often underrepresented group. Jocelyn Rempel, who is also Chair in Older Adult Health and an associate professor in nursing at MRU, is the centre’s director. Affiliate faculty involved in the Centre include: Gail Crockford, assistant professor in nursing and midwifery; Holly Johnson, assistant professor in nursing and midwifery; Jared Fletcher, associate professor in health and physical education; and Terry Clark, director of the Mount Royal Conservatory. Centre collaborators include: W21C from the University of Calgary; Silvera for Seniors; United Active Living; Verve Living for Seniors; Calgary Association of Lifelong Learners; Alberta Association of Gerontology; Alberta Gerontological Nursing Association; and SPARK Alberta. Mount Royal University

The University of Toronto is accelerating efforts to decarbonize its St. George campus through a $138-million infrastructure project, called Project Leap, that will cut greenhouse gas emissions in half within three years. Kick started last year with more than $50 million in Canada Infrastructure Bank financing, the public-private sustainability project is among the largest in the higher-education sector. Project Leap will begin phasing out natural gas in favour of electricity in the campus’s central steam plant and carry out deep energy retrofits to some of the most energy-intensive buildings. The effort includes connecting several buildings with the newly built geoexchange system beneath Front Campus, which is set to begin operations this spring. The system uses underground boreholes to store excess heat generated in the summer (thereby helping to cool spaces) for use in the colder months, utilizing heat pump technology. Project Leap also received grants from Environment and Climate Change Canada and Ontario’s Independent Electricity System Operator, as well as financing from the Royal Bank of Canada. Project Leap will make it possible to reduce the campus’s greenhouse gas emissions, calculated at 91,000 tonnes last year, by more than 50 per cent by the end of 2027 – the year of U of T’s bicentennial. U of T is the third-largest emitter of greenhouse gases in the broader public sector in Ontario, with the St. George campus accounting for more than 80 per cent of the university’s operational carbon footprint. University of Toronto

Quantum computing cannot be achieved without error correction, and even the smallest environmental interaction can create errors in the computation. Nord Quantique, a quantum computing startup based in Sherbrooke, Quebec, announced it is the first company in the world to demonstrate quantum error correction to improve qubit coherence lifetime at the individual qubit level. The company said it has demonstrated the ability to reduce errors on a single qubit (a quantum bit – the most basic unit of information in quantum computing) by 14 per cent, without relying on the usual method of using additional qubits to do so. Simulations run by the company show that these results can be reproduced with additional qubits, and there is likely to be to significant, further improvement in error correction as the number of qubits increases. The company said this indicates that Nord Quantique’s quantum computers will function and deliver useful results in a supercomputing system with far fewer resources dedicated to error correction, requiring only hundreds of qubits to deliver fault-tolerant quantum computing instead of millions of qubits. This makes the path to scaling hardware to levels useful for industrial partners, such as in the materials science and pharmaceutical industries, a much shorter one, Nord Quantique said. As a next step, the company plans to unveil results from a multi-qubit system later this year. Nord Quantique

H2nanO, a Kitchener-based startup spun out of research at the University of Waterloo, is working with Canada’s Oil Sands Innovation Alliance to address the need for new, sustainable water treatment solutions for the oilsands industry. The company’s CEO is UWaterloo alumnus (engineering) Zac Young. For every barrel of oil, it takes two to five barrels of water to extract crude bitumen from oilsands. Although oil producers recycle this water in their extraction processes, ponds of contaminated water eventually form that can’t be utilized or returned to the environment. H2nanO’s patented technology, SolarPass, harnesses sunlight to produce oxidants that degrade contaminants in process-affected water. This remediation can work within days to reduce aquatic toxicity, outperforming more energy-intensive and harsh chemical-dependent methods to improve water safety and reuse potential. University of Waterloo

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