“You don’t create a culture of innovation overnight,” Navdeep Bains told The Logic on Monday. One of the few cabinet ministers to retain his portfolio after the Liberals’ October re-election, the innovation minister believes his continuity in the job is an advantage for the “multi-year effort” of implementing the Liberals’ technology, skills and data plans.
In an extended interview Monday at his Mississauga constituency office, Bains laid out what businesses can expect from Ottawa on data and privacy regulation and predicted Ottawa’s early cleantech funding challenges will abate, among other insights into his second-term agenda.
In an interview with The Logic, Innovation Minister Navdeep Bains detailed his priorities for the Liberals’ second term, explained what he’s doing this time around to achieve his goal of 20 Shopifys and predicted Ottawa’s early cleantech funding challenges will abate. The government is seeking cooperation from other parties and major private-sector players for some of its most ambitious plans, like new data and privacy regulations and lowering cellphone bills.
This interview has been edited for length and clarity.
On his first day on the job last week, Bell’s new CEO, Mirko Bibic, seemed to be trying to pick a fight with you. On BNN, he said “a race for cheapness” in wireless prices would be “really bad public policy.” You’re mandated to reduce cell phone bills by 25 per cent. The telecoms say they’ve already gone down. There’s been reporting that the companies are getting ready to lobby to try and stop your plan. What levers do you have to actually make them cooperate?
We’re really promoting competition, either through spectrum allocation in the past, [or] competition through potentially MVNOs [mobile virtual network operators] as a model. All this will lead to more innovation, and this is good for the Canadian telecommunications sector, and also good for the Canadian consumer.
The telecoms don’t seem ready to cooperate.
I have one simple goal: how do we deal with the affordability issue? Access to the internet [and] affordable pricing for wireless is no longer a luxury, it’s a necessity. Take, for instance, rural connectivity and the work we’ve done with the telecommunications sector. We’ve actually had a very good working relationship. We work together on the Connect to Innovate program, [which] helped invest in over 900 communities, [including 190] Indigenous communities, to provide high-speed internet fibre backbone infrastructure. So we actually have demonstrated that we can—and I’m confident that we’ll continue to—work together to benefit Canadians.
If MVNOs are such a good idea, why wait two years to see if the incumbents drop prices?
I think the bottom line is that we have a clear goal of seeing Canadians receive good quality services at affordable prices. Remember, we pay much higher than our American counterparts and one of the highest amongst the G7. The policy directive [to the Canadian Radio-television and Telecommunications Commission to consider affordability and consumer interests in its decisions], MVNOs, spectrum—these are all tools that we have. We’re starting to see a downward trend. We saw unlimited plans unveiled before the campaign, which was a reflection of our previous policy work.
We also worked with [telecoms] when we engaged them in a lot of urban communities, where many families that are receiving the Canada Child Benefit maximum allowable amount received a $10 per month internet plan. We’ve worked with them to deal with the socioeconomic issues, the affordability issue [and the] access issue.
Your mandate letter includes a point about ‘creating regulations for large digital companies to … encourage greater competition in the digital marketplace.” What specific regulations for large digital companies will encourage competition?
All this is really anchored in our digital charter, [which] was a reflection of really meaningful engagement with Canadians, with experts, with businesses both small and large [and] with the academia community to really understand, “How do we move forward in this data and digital economy?” Of course you want to deal with issues around privacy and make sure that Canadians have more trust as they move forward. What’s the point of having all these new technologies if Canadians can’t use them safely? But at the same time, we want to create predictability within the regulation so businesses can compete and grow and innovate.
One area where we can stimulate competition [and] create opportunities for Canadian companies to grow is levelling the playing field and looking at non-pricing monopolies. We’ve already given direction to the Competition Bureau to look into it. The idea is to look at data monopolies and the impact that has on the marketplace—what does that mean for competition and consumers?
What does that look like in practice? In Europe, there have been very large fines for companies like Amazon and Google that have been accused of abusing their market position in things like search and product discovery.
We want to make sure that companies that don’t respect privacy laws [face] clear enforcement mechanisms, that there are significant fines for non-compliance. With respect to the levelling of the playing field, we’re still working through what that would look like in terms of any potential changes to the Competition Act.
Fundamentally, it’s about making sure people have trust in the data and digital economy. If we do [that] in a successful way, then Canada can be that go-to jurisdiction when it comes to data [and] privacy. To your point about what the Europeans are doing [or] what we see in California, for example, in privacy law, we want to make sure that we have interoperability, to help our businesses to succeed in [those] jurisdictions and avoid a patchwork. Especially for newer companies, we don’t want to create an undue burden.
The digital charter’s principles [apply to] consumers and business. You’ve said you’re aiming to create predictability and certainty.
What we’re doing is actually creating conditions for businesses to succeed by dealing with the core issue of lack of trust. If it’s data control, data portability, there’s a clear understanding of what that looks like. If there’s issues around transparency and accountability, what’s the language that people look at with regards to the privacy agreement—is it plain and simple language?
Is the government planning to roll out anything around helping businesses monetize data or take advantage of this opportunity?
Digital skills have been the fundamental issue in terms of our ability to succeed. You’ve got to invest in retraining, reskilling and upskilling. If companies are able to succeed and transform their operations and become more digital, they need to invest not only in technology, but in people. So we put a suite of measures forward, from coding initiatives to work-integrated learning. The Canada Training Benefit’s another example, as well.
Once we have these laws in place, the opportunity for data trusts to really leverage data, particularly in health care, is enormous. I was at Imagia [a Montreal-based firm using AI for disease diagnosis and treatment] last week, and this is an area where there’s enormous opportunity for data for good [and] AI for good. We can deal with an aging population, and at the same time, provide opportunities for better health outcomes and support the data in the AI ecosystem, as well. This will also help our ability to continue to be a world leader in artificial intelligence.
The election platform promised new support for startups—for example, the BDC pilot program [which will give a maximum of 2,000 new firms a year up to $50,000 in funding]. I didn’t see anything in there that was specifically targeted towards scale-ups.
What are the key areas to help companies scale and grow? If you asked any CEO, the number one issue that they raise first is around talent—attracting talent, retaining talent or empowering talent through reskilling and upskilling. One of the policies we get a lot of positive feedback [on] is the Global Skills Strategy. What’s interesting is [about] 25 per cent of the visas that we’ve issued are Americans wanting to come to Canada. Now we have the reverse brain drain, because we’ve got Lightspeed and Shopify and other companies that are scaling and growing here. So we’ve turned the corner on talent. Capital—that’s a big issue, as well. We’ve been focusing on investing in our startups, in our SMEs. But we’ve also seen record investments in venture capital. I believe the number of companies that had the potential to become unicorns was 14, and now it’s 28 [Ed. note: The University of Toronto’s Impact Centre counted 10 such firms in 2016, and 28 in 2018], and that number will continue to grow. So we’re turning the corner in terms of our ability to scale companies [and] financing, as well.
But we have more to do. One of the areas, which is a priority for me, is this transition to a low-carbon economy. And one of the key measures we introduced in the platform and in our mandate letters is a 50 per cent reduction in corporate taxes for companies that invest in clean technology solutions. If you look at our marginal tax rate, we’re at [13.7] per cent for new investments. That’s the lowest amongst the G7, and five [percentage points] better than the Americans. Add on top of that, this new tax incentive for clean technology solutions—we will be again the jurisdiction of choice for companies to invest and grow and scale, particularly in clean technology.
In the first mandate there were big investments in cleantech through BDC and Sustainable Development Technology Canada (SDTC).
The SR&ED changes we brought in the last budget were so significant. It’s such a generous program—over $3.5 billion that we invested to drive the ecosystem for R&D. And then, to your point, we invested an additional $400 million to [SDTC]. If you look at the Global Cleantech 100, 12 are Canadian; 10 were funded by SDTC.
We’re number one amongst the G20 when it comes to global cleantech innovation [according to the World Wildlife Fund Canada and Cleantech Group’s 2017 Global Cleantech Innovation Index], and that sets us up really well for the $2.2-trillion opportunity [per the University of Ottawa’s Smart Prosperity Institute] that exists in the cleantech sector globally by 2022. So not 15 [or] 20 years—I’m talking a few years around the corner. But it’s really looking at the financing opportunities. Early-stage commercialization, we invested significantly in [SDTC], and we supplemented that with programs like SR&ED and [the Industrial Research Assistance Program]; that also helped cleantech companies. We did the Venture Capital Catalyst Initiative—the fund-of-fund model was very helpful [and was expected to generate] $1.5 billion worth of investments in the VC community, but there was a carve-out for cleantech technology in that, as well. Then we look at BDC financing, the $700 million to help with long-term patient capital. The challenge with clean technology is it requires long-term, patient capital. And then on top of that we have the Strategic Innovation Fund—General Fusion; Elysis, the zero-carbon aluminum initiative and Carbon Engineering. We’ve been investing in companies like that, [which are] looking to scale and grow.
Yes, putting a price on pollution is important. But commercialization is going to be the key for our ability to hit the 2030 targets [of reducing emissions by 30 per cent below 2005 levels, under the Paris Agreement], the 2050 targets [of net-zero emissions].
The Logic reported that BDC was having difficulty finding cleantech companies to invest in, and that its cleantech investment portfolio had a degree of risk that was “near or outside [BDC’s] operating plan threshold.” How do you make sure bets in the sector pay off?
The mandate behind BDC is to make these types of bets—in women entrepreneurs, in new Indigenous businesses, in clean technology—these are areas that tend to get shortchanged in the past. Any time you venture into a new area, there’s going to be some challenges. I was speaking with [BDC CEO] Michael Denham literally a week ago about this, and he’s saying he’s starting to see more opportunities emerge in the past little while. As the ecosystem gets stronger, as the transition to the low-carbon economy occurs—I’ll give you an example: CAE. They’re going carbon neutral this summer. So you’re seeing companies transitioning.
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If you talk to board members at any major company, they talk about climate-change risk [and] how their companies [are] pivoting and transitioning to a low-carbon economy. So the opportunities are there. These investments that you talk about with regards to the challenges that we’ve seen at BDC, for instance, I’m confident. In the short term, there were going to be challenges; this was expected. But in the medium and long term, it’ll create opportunities for Canadian businesses.
BDC has long been the biggest tech venture investor in Canada. They’ve managed to have a track record of success, within a specific set of investing parameters and decisions. Why does cleantech have to fall outside of those for it to be successful?
It’s a priority for Canadians. It’s a priority for our government. And the private sector, in some cases, is playing catch-up, but is now starting to really pick up momentum. I’m confident that the risk profile will change very quickly because of the drastic change that’s occurring in the marketplace for clean technology solutions. These are capital-intensive [businesses]. They require long-term patient capital. So it’s not like your typical ICT companies. This is a very different set of asset base and risk thresholds, and we need to keep that in mind as well. But the market is there, $2.2 trillion. The world is headed in that direction. And what’s the point of having an economy that’s on fire if the planet’s on fire, right?
Continue the conversation on The Logic Council, our subscriber-only Slack channel.