Three months after a scathing report found the federal government’s flagship supercluster innovation program was missing funding targets, three of the five clusters now say they’re on track to max out their budgets nearly two years ahead of schedule.
With a slate of new COVID-19-related projects, the federal government has accelerated spending after a sluggish start to the program. Now CEOs of three of the superclusters are lobbying the government for additional funding to carry them through the five-year project period—and beyond.
Three of the federal government’s flagship innovation programs are on track to spend their budgets nearly two years ahead of schedule, and CEOs of the organizations are now lobbying the government for more money. The request for additional funding follows a scathing report found the government was missing targets for allocating funds and creating jobs. Since then, the government has dramatically increased its spending on supercluster projects, thanks in large part to a slate of new COVID-19-related initiatives.
The B.C.-based Digital Technology Supercluster is less than two months away from exhausting its $153-million federal budget, which was meant to hold the organization through until the end of 2023. The organization is lobbying the federal government to increase its original commitment.
In Ontario, NGen, the advanced manufacturing cluster, has spent $148 million of its nearly $230-million federal budget and is seeking ongoing annual government funding to support it beyond the program’s initial five-year period.
The Saskatchewan-based Protein Supercluster is also on track to spend its entire budget by the end of March and said it is negotiating to renew its funding.
The Liberal government announced the superclusters program in the 2017 federal budget, committing $950 million over five years to five regional innovation streams—digital technology in B.C., advanced manufacturing in Ontario, proteins in the Prairies, AI in Quebec and oceans in Atlantic Canada. The organizations—non-profit consortia that bring together startups, big business, academia and government agencies in a bid to spur innovation—are responsible for selecting projects focused on research and commercializing products, and funding them with a mix of public and private money.
Leaders in the innovation space have criticized the program for its slow start—federal funding for the first projects wasn’t announced until March 2019—and for lacking a clear strategy for how to create jobs and boost the economy. An October 2020 report from the Office of the Parliamentary Budget Officer (PBO) found that the federal government was behind on its supercluster targets, including deploying funding and creating jobs and GDP growth through the program’s projects. As of March 6, 2020, the federal government had allocated just $30 million compared to the $104 million it had anticipated spending by then, according to the report. The PBO also estimated the program was about 23,000 jobs short of hitting the government’s target of 50,000 jobs created through its various projects.
Funding has picked up dramatically since then, according to the department of Innovation, Science and Economic Development (ISED). In an email to The Logic, ISED senior communications advisor John Power said the department has now invested $490 million across more than 265 projects, and that the private industry has spent another $700 million. “All five Superclusters are on track with their work, and the Digital Technology, Protein Industries and Next Generation Manufacturing Superclusters have indicated they are likely to fully commit their funding in the coming months,” Power confirmed.
Sue Paish, the CEO of the digital supercluster, registered to lobby the federal government in July 2020. She has met with federal representatives nine times in the past six months, according to lobbying records. In an interview with The Logic, Paish said the meetings have centred on the supercluster’s COVID-19 response and securing additional funding from ISED, beyond the department’s initial commitment.
“We’ve had zero issues with getting funding from the Government of Canada to support our commitments to projects from Day 1 on that front,” said Paish.
To date, Paish said the program has invested $200 million across 60 projects, with more than half of the funding coming from the private sector. Paish said the cluster had initially planned to spend $36 million in public funding in fiscal 2021–22, but is on track to deploy about three times as much for the period.
NGen spokesperson Robbie MacLeod told The Logic that the private sector has spent $1.42 for every dollar of federal funding, bringing the Ontario program’s total investment to $359 million across 62 projects. The organization is now asking Ottawa to commit $50 million every year on an ongoing basis.
Tiffany Stephenson, a spokesperson for the Protein Supercluster, said the organization also expects its federal funding to be fully committed by the end of March. “We feel that we have accomplished a lot in a short period of time, and that it would be beneficial to keep the momentum going,” said Stephenson. The organization has invested $115 million of its $153-million federal budget to date, plus another $214 million in private-sector funding.
The uptick in funding follows a rush of investments in COVID-19-specific projects. The superclusters have collectively launched 80 projects to help address issues related to the pandemic, to which the federal government has allocated more than $141 million, said Power.
Last week, NGen announced $27 million for projects that help improve the supply chain for COVID-19 relief products. Among the winners were two biotech startups—Toronto’s Providence Therapeutics and Calgary’s Northern RNA—working to expand domestic-manufacturing capacity for an mRNA COVID-19 vaccine.
B.C.’s COVID-19 projects include remodelling a handheld ultrasonic device used for pregnant women in remote communities to now examine the lungs of COVID-19 patients for respiratory damage. The supercluster has allocated $60 million for 16 COVID-19-related projects to date.
The Ocean Supercluster has spent $90 million of its total $153-million federal budget, spokesperson Nancy Andrews told The Logic. Julien Billot, CEO of the artificial intelligence supercluster, ScaleAI, said the Quebec-based organization does not anticipate needing additional federal funding beyond the budgeted $230 million. The non-profit has spent about half of that amount to date, plus another $1.80 from industry for every government dollar spent—exceeding the expectation of equal parts private and public spending on projects. Billot said he expects the organization will have used up its federal budget by the end of the project period in 2023, and hopes to see ISED extend the program further. “We are arguing the government should do it,” said Billot, “especially considering we never began our operation until May 2019 and then COVID hit It’s fair to say out of the five years, we’ll only really have two and a half to three years of operation.”
Benjamin Bergen, executive director of the Council of Canadian Innovators, cautioned against using funding commitments alone to gauge whether the superclusters program is meeting its goal to increase innovation and get new products to market. “Without a strong framework of policies to ensure that Canadians are the primary beneficiaries of the data and intellectual property generated by companies participating in the supercluster initiative, it is unlikely that these projects will drive meaningful economic development for domestic companies in the innovation economy,” said Bergen. “Last October, CCI called on the government to redirect the remaining funding from the supercluster program to the fastest-growing Canadian companies who are best positioned to scale their operations and drive economic prosperity and the post-pandemic economic recovery.”
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ISED did not say whether the government plans to top up its $950-million budget for the superclusters, but did not rule out the possibility. “Our government is tracking the Superclusters’ progress to ensure the effective use of public funds,” said Power. “The meaningful, long-term economic impacts and benefits will be measured over the next few years, including spin-off economic benefits, productivity gains and innovation outputs. Any decisions relating to future funding will be announced in due course.”
Editor’s note: This story has been updated to include news that the Protein Supercluster is seeking renewed federal funding.