OTTAWA — The federal government’s new innovation agency will take over a decades-old industrial assistance program from the National Research Council, and the rest will be up to its yet-to-be-named private-sector leaders, according to a “blueprint” for the Canada Innovation Corporation (CIC) released Thursday.

The CIC is a marquee program for the Liberal government that Finance Minister Chrystia Freeland promised in the 2022 budget, alongside a $15-billion new subsidy fund. It’s meant to attack the problem of slow productivity growth by helping world-class Canadian researchers and thinkers turn their breakthroughs into world-beating products that make Canadians more prosperous, instead of selling them to foreign companies that are better at commercialization.

First proposed as the “Canadian Innovation and Investment Agency,” with a budget of $1 billion over five years, the organization was supposed to be given life in the fall fiscal update last November.

The new blueprint, which landed three months late, repeats much of the material that was in the budget, citing Israel’s Innovation Authority and Business Finland as inspirations. It comes, though, with a bigger budget than initially proposed—$2.6 billion over four years, much of that coming by absorbing the startup-oriented Industrial Research Assistance Program (IRAP) from the National Research Council.

The CIC will focus on six things:

• Excellence in its own operations, developing programs quickly and funding businesses “within weeks”
• Monitoring national and international trends
• Collecting data to evaluate programs, refining and building on successes
• Helping the government procure leading-edge products and services itself
• Connecting client businesses to research and development facilities, and to other federal supports
• Attracting private-sector technical and business experts to assist it

Creating the CIC as a new Crown corporation will require Parliament to pass legislation, but in the meantime it’s being set up as a subsidiary of the Canada Development Investment Corporation. The CIC is to get a board and senior executives this spring, and IRAP is to be carved out of the NRC in 18 to 24 months.

“It really looks like it’s going to be down to the people putting it into action that will matter,” said Benjamin Bergen, president of the Council of Canadian Innovators. “For me, as I turn my gaze to the future, what I think about is, ‘Who is the CEO, and who’s the board?’”

The CIC “will operate with more flexibility than the existing suite of programs, and with an ability to quickly adapt its programming to address emerging challenges and opportunities that are presented to Canadian businesses,” the blueprint says.

This is a good sign, said Bergen (who was once an aide to Freeland). “By building a nimble agent, which is properly targeting funding at catalyzing research, commercialization and protecting intellectual property—that will help.”

Robert Asselin, the senior vice-president of policy at the Business Council of Canada (and a former aide to then-finance minister Bill Morneau) has been on a wild ride watching the agency’s progress.

Starting in 2021, he argued for the federal government to create a Canadian version of the U.S. Defense Advanced Research Projects Agency (DARPA), funding basic research with industrial purposes. The Liberals adopted the idea for their election platform that year, and then the 2022 budget appeared to cast it aside by promising the innovation agency would take a different form.

On Wednesday, Asselin was feeling more hopeful than he expected to be.

“I’m encouraged by the focus on industrial research, applied research,” he told The Logic. “I think when they introduced this in the last budget, it wasn’t really apparent, that part. So this aspect is more DARPA-type, in my opinion, making this bridge on applied research between industry and academia, and I think that’s positive.”

He agreed with Bergen that the choice of leaders will be crucial. The blueprint “is quite general, but I don’t mind that, as long as [the government] eventually does the right thing and they put the right foundation in.”

Jim Balsillie, the ex-BlackBerry co-CEO, chair of the Council of Canadian Innovators, and investor who has harangued governments for years about innovation and economic policy, felt the opposite.

“I felt like pulling out one of my Talking Heads albums—David Byrne, ‘Same as it ever was,’” he said. Canadian companies are at a disadvantage because they lack the freedom to operate when they’re up against foreign actors’ intellectual property claims, Balsillie said, and the government doesn’t have the expertise needed to set up systems that help them.

“The whole world fights on these frameworks of legal permission. And we fight on spray-and-pray grants, and the rest of the world laughs because we spend the money, but they own the ideas,” he said. Right now, transferring intellectual property to foreign firms often makes more financial sense to Canadians than commercializing it domestically, said Balsillie, and a new agency won’t fix that.

Technation’s senior vice-president of government relations and policy, Michele Lajeunesse, was also critical, for similar reasons.

“Technation questions whether allocating over $1 billion over four years to yet another new agency or program will yield the desired outcomes,” she wrote in an email. “We are of the opinion that some of this money could be better spent, for example, putting broadband in the hands of every business, urban and rural, to drive innovation in this country.”

Concretely, the CIC will start by taking control of the National Research Council’s IRAP, to “provide a strong foundation upon which the CIC will be able to build an integrated platform and continuum of support, service and strategy across all technologies and industries.”

Innovation Minister François-Philippe Champagne—who will be the minister responsible for it—told The Logic earlier this month that the new agency is to slot in between IRAP and the Strategic Innovation Fund, which subsidizes big projects at big companies.

The 76-year-old IRAP, which is aimed at helping startups turn innovative ideas into early-stage commercial products, is a beloved program that’s been growing rapidly, from $277 million in 2017–18 to $686 million in 2021–22. That doesn’t include a special COVID-19 support program it administered, which added hundreds of millions more in temporary funding.

A 2022 evaluation reported that “clients and stakeholders perceive NRC IRAP as unique among government innovation support programs in the combination and quality of services that it offers to [small and medium enterprises] and government partners.” Ninety-one per cent of its client firms had positive sentiments about it, the evaluators found.

The program works so well partly because it assigns industry specialists with experience to the companies it serves, Bergen said, a practice he hopes the CIC will carry on.

“With some other organizations … you often aren’t dealing with experts who actually know specifically what you’re trying to do or trying to create,” he said.

IRAP is often a startup’s gateway to a wider array of government supports that are supposed to help it toward commercial success, and taking IRAP out of the National Research Council is a way to strengthen its impact, the blueprint says.

“Really, it will be up to whoever they bring in to signal whether or not it’s a success,” Bergen said. “My feelings on this might be very different six months from now, in a year from now, depending on who they have leading it.”

Balsillie doesn’t think his views will change. “I see nothing new here,” he said. “It’s just old-economy thinking.”

This story has been updated with comment on the announcement.