Thursday, February 22, 2018

Supercluster Funding Won't Work, According to CD Howe Based Academic

         By Chuck Black

According to Alex Usher, the president of the Toronto, ON based Higher Education Strategy Associates and a fellow-in-residence at the CD Howe Institute, "Government funding for clusters is highly unlikely to be able to deliver the enticing possibility of “Made-in-Canada Silicon Valleys.”

Innovation Minister Bains checking out the superclusters and their stars. As outlined in the February 16th, 2018 post, "Ottawa Announces Winners of $950Mln 'Supercluster' Competition," the announcement "closed out a nine-month contest central to the Liberals' so-called innovation agenda. The project was designed to encourage academia and businesses to work together on strategies to boost fast-growing sectors." Less noticeably perhaps, the announcement also reflects a policy change away from funding innovation through educational grants mostly administered through Federal departments like the National Research Council (NRC) and the Canadian Space Agency (CSA), in favor of more direct grants to industry led associations and consortium's similar to those competing for the supercluster funding. Photo c/o CP/Graham Hughes.

Usher made those comments in a nationally distributed editorial, just days after Innovation Minister Navdeep Bains announced the five Canadian, industry-led consortia who will each receive a piece of the $950Mln Federal government “superclusters” funding.

As outlined in the February 22nd, 2018 Macleans post, "The Liberals’ supercluster plan is an economic fantasy," Usher believes the problem with the concept of "superclusters" is that:
...there are almost no good examples anywhere of clusters being purposefully built through government programs.  
To the extent that anyone can work out what makes a successful cluster, it’s the presence of one or two industry-leading companies plus one heck of a lot of spin-offs related by disgruntled former employees who want to do their own thing. 
Unfortunately, data from the OECD (the Paris, France based Organisation for Economic Co-operation and Development, an intergovernmental economic organisation with 35 member countries, founded in 1961 to stimulate economic progress and world trade) suggests that new firm formation is an area in which Canadian clusters perform quite badly relative to others internationally. 
And while public policy can play a role in this, it’s mostly through law and regulation limiting or abolishing non-compete agreements rather than by signing big cheques.

Usher also has problems with the mostly undefined criteria used to select the five winners:
By some extraordinary coincidence, this rigorous, merit-based process yielded one winner in each of the country’s five regions, each of which now stands to receive between $150 and $250Mln CDN in funding over the next five years. 
The Atlantic and the Prairies each got cluster funding based on a traditional natural resource (oceans, food), while Ontario and Quebec each won in the two industries with whose companies’ CEOs the Minister most enjoys having his picture taken (advanced manufacturing, artificial intelligence) and B.C. landed funding for “digital technology” which somehow straddles computing, telecoms, natural resources and healthcare. 
In essence, Usher finds it difficult to believe the Fed's claim that "the direct economic impact of the five consortia will be $53.5Bln over the next ten years, and that they will create 50,500 jobs over the same period."

According to Usher:
If you’re doing the math here, this implies that the government can create permanent full-time jobs in high-tech industries with an investment equal to a mere $1,800 per year, and that every dollar invested will be repaid 56-fold. This is of course utter fantasy
Another of Ushers concerns. The February 22nd, 2018 Higher Education Strategy Associates post, "Code Red on the Naylor Report," has reported substantial academic concern over the 2017 Canada's Fundamental Science Review, also known as the Naylor Report, and how (or even if) the Trudeau government intends to respond to the recommendations contained within the report on February 27th, when the 2018 Federal budget is announced. According to the post, "The Liberals are deliberately choosing not to leak anything that suggests they’re about to implement Naylor," although some new investments in science are anticipated. Graphic c/o HESA.

Of course, this latest editorial most likely reflects the growing awareness that the Justin Trudeau Liberal government, elected to so much public adoration with the help of the "Sunny Ways" philosophies cribbed from an earlier Liberal leader, Sir Wilfrid Laurier, isn't really all that different from the Stephen Harper government it replaced.

As noted in the February 21st, 2018 Globe and Mail post, "Survey reveals federal departments still blocking access to scientists," even one of the early successes of the Liberal government, the right of Federal scientists to freely share and discuss their scientific findings, hasn't worked out quite as well as was initially planned.

A lot of Liberal support is riding on the next Liberal budget, currently scheduled to come down on Tuesday, February 27, 2018.

Good luck with that, Mr. Prime Minister.
Chuck Black.

Chuck Black is the editor of the Commercial Space blog.

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