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Jennifer Wells: Will Ottawa’s billion-dollar supercluster gamble pay off?

Jennifer Wells: Will Ottawa’s billion-dollar  supercluster  gamble pay off?
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Two years after the federal government first pledged its commitment to the creation of “clusters” — now “superclusters” — as a way to catalyze innovation across collaborative networks, the winning five teams have been named.

No one would have been surprised to learn that the chosen five are judiciously spread, east coast to west (though not the north). So Atlantic Canada gets the ocean supercluster, Quebec gets artificial intelligence (AI) and Ontario gets advanced manufacturing. “Protein industries” are sprinkled across the Prairie provinces, and B.C. wins digital technology, with a focus on healthcare, forestry and manufacturing.

So imagine five Silicon Valleys popping up coast to coast to . . . Well, coast to coast.

The government investment is capped at $950 million, assuming a dollar-for-dollar match by the private sector, which the private sector has already exceeded. The projected payback: a $50-billion boost to the economy across the next decade. The final five were culled from 50 proposals, which doesn’t sound like a great number until you consider that 1,000 businesses large and small were enveloped in those pitches.

End goal: the creation of more than 50,000 middle-class jobs. And, of course, our enhanced stature on the world stage.

The superclusters form the centrepiece of the government’s innovation and skills plan. “We’re in a global innovation race,” Innovation, Science and Economic Development Minister Navdeep Bains said, not for the first time, at Thursday’s launch.

True, the global innovation race is on. The skeptical question asked in this column previously is whether financial injections from the government can guide a winning industrial strategy. And whether governments can create clusters, or whether clusters will flourish only when they are organically seeded.

Way back in 1998, Michael Porter, who claimed the coining of the cluster terminology, determined that most clusters form independently of government intervention, “and sometimes in spite of it.” In order to justify government-driven cluster development efforts, he wrote in the Harvard Business Review, “some seeds of a cluster should have already passed a market test.”

Fast forward 30 years. In January, the tech research firm IDC Canada released its second dive into the Liberals’ initiative, concluding broadly that it’s a crucial time to build technically based global centres of expertise. According to the paper’s authors, superclusters “are critical to building Canada’s brand in the global economy,” while fostering a more innovative culture among the business community, universities and governments.

But here are the caveats. One: money. In this, the government isn’t all in. That $950 million is spread across five years and multiple clusters. “It sounds like a lot of money, but when you break the funding down, it calculates to $190 million per year.” (The precise sums paid to each group will vary.)

Here’s another: politics. IDC’s paper was written at a time when the finalists had been winnowed to nine. But what was apparent then is apparent now. In pursuing a strategy of more or less equal regional distribution, the government has created “spreading the wealth” conditions “where each supercluster has an equal chance of failure, not success.” Doubling down on regions with the deepest abilities to compete globally would have been the shrewder strategy, the IDC argues.

On that note, in amending the initial list of potential sectors in the fall, clean-tech was dropped, as was health/bio-tech. Was this because they were less worthy? Or because they introduced a regional overlap?

So as much as the government doesn’t want to be seen as attempting to pick winners, it’s attempting to pick winners.

How will we gauge success?

We can look to the mission statement of one supercluster — Protein Industries Canada. (I know, dreadful moniker.) The Prairie group states that plant-based protein is a $13-billion market worldwide and its objective is to position Canada as the global lead. Think soy, lentils, hemp, pea proteins, even canola protein. Think of sustainability. Think of the planet. Think of Saskatchewan being the largest producer of lentils in the world.

Export growth, new patents, value-added processing, employment growth, new businesses created — those are some of the hoped for outcomes for the impressively broad Prairie consortium of universities, research and businesses large and small that will, ideally, inter-relate in a co-ordinated, flexible fashion.

In order to be deemed a success, these superclusters will have to gain a high country-branded profile in the global community.

What taxpayers will want to see is value for money. What the government has been less clear on is how transparent that will be. An independent oversight body should be put in place to monitor progress, reporting on step goals, employment growth, etc. It should be up to that independent body to confirm, or not, that the gamble has paid off.
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