Canada & its Future Economy Knowledge-based Economy Presented to IITAC By

1. Canada & its Future Economy Knowledge-based Economy Presented to IITAC By Dr. Harinder Ahluwalia February 7, 2016

2. some thoughts “You must be the change you want to see in the world. ...” Gandhi “Do not take status quo as granted always think of change for the better” ….Harinder “No mission is impossible if a dedicated unwavering person or group is prepared to work hard for it” Harinder

3. Project Experience Technically Complex Projects • Development of INSAT-2E Meteorological Data Processing System (IMDPS) for IMD in India for India’s geostationary remote sensing satellite • CSA projects for Water Management: • Determining the surface area of water bodies using Radarsat-2 data for NRCan Mapping Application • Water Resource Management using Remotely sensed data as well as in-situ data for Morocco • AWS systems with a large set of sensors to be installed in Himalayas for Avalanche Forecasting and Antarctica for Meteorological Studies for India. 13

4. Project Experience …cont’d Logistically Complex Projects • Flood Forecasting System for two large River Basins – Chambal and Mahanadi – for CWC in India – 55 Transmit AWS’s and 2 Receive Stations • Polar Epsilon Project of DND – MODIS Receive systems on two coasts • MSC: Provision of 12 Satellite Reception Ground Stations/ Processing Systems (GVAR replacement). • MWR Network for Indian Air Force (IAF) • Development and Integration of Weather Forecasting System for BMS • Resurrected Projects: • MSC: Assistance in the implementation of high profile Systems, such as SATNET (METSIS), NCCS & ICCS 14

5. Why My Mission To StrengthenHi-tech SMEs And KBE • Started a company in 1981 in Montreal Canada followed by a company in India in 1995 – office in New Delhi • We deal with Atmospheric/Environmental Sciences (Meteorology, Green House Gases Monitoring), Hydrology (water management), Disaster Management, Remote Sensing • Looking at the unique technologies (which are in vogue) we deal with and successful projects we have done, we should be growing exponentially; however, just because we are in Canada & not in the USA it has not been possible. • Seen many companies disappear and many very capable individuals changing careers or moving away to other countries. • I decided to explore the reasons for this state of affairs. • That is what I will be talking about.

6. Challenges Facing countries In the upcoming decade, advanced economies will have to: • Wrestle with the legacy of large budgetary deficits from the current economic crisis, • Adjust to new innovations, mitigate the impact of climate change, and • Face strong competition from emerging economies. As Canada’s population ages and declines relative to worldwide population growth. • Productivity growth will require new policy solutions. • That is why policy analysis on maximizing Canada’s engagement in the global knowledge-based economy is a must. Extracted from: Maximizing Canada’s Engagement in the Global Knowledge-Based Economy: 2017 and Beyond

7. Canada’s Advantage Canada could become a “Northern Tiger” in terms of productivity and innovation if, on top of Resource-Based Economy, it takes advantage of: • Its open economy, • A diverse and innovative society, • A strong regulatory framework, • Its capacity for research and development, • We can rethink and revitalize our policies to develop hi-tech SMEs and • Can get strongly into KBE.

8. What is Knowledge Economy? “We define the knowledge economy as production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance, as well as rapid obsolescence. The key component of a knowledge economy is a greater reliance on intellectual capabilities than on physical inputs or natural resources.” Annual Review of Sociology. 2004. 30:199–220; Walter W. Powell and KaisaSnellman

9. Knowledge-based Economy (KBE) • Knowledge is recognized as the driver of productivity and economic growth, leading to a new focus on the role of information, technology, and learning in economic performance. • Economies are Increasingly dependent on knowledge, information, and highly-skilled workers to improve productivity and standard of living.

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11. Relative Level Of Labour Productivity In The Business Sector, 1947–2009(Canada As A Percentage Of The USA) 11

12. Provincial BERD Intensities in Canada, 2008(business expenditure on R&D as a percentage of provincial GDP) Organisation for Economic Co-operation and Development (OECD) Grossdomestic expenditure on R&D (GERD) Business Expenditure on R&D (BERD) 12

13. Canada’s GDP Growth 13

14. Three dimensions of the social system with theirthree interaction terms

15. The first-order interactions generate a knowledge-based economy as a next-order system

16. Ingredients of kbE Very Strong Hi-Tech SMEs Support for R&D & Commercialization Improved Education System Knowledge Based Economy Leveraging Regulatory Framework Qualified Immigration Venture Capital Availability Added Value to Our Resources

17. My Journey in the KBE & Hi-tech SME Development • Have been meeting Liberals and Conservatives for the past over 10 years to Hi-Tech SMEs promote this matter. • Met/communicated with many Conservative Ministers like Tony Clement Gary Goodyear, etc. and even ex-PM Harper • Lot of encouragement and appointment of Jenkin’s Commission steps in the right direction. • Jenkin’s commission did make some good recommendations but missed some most fundamental ones or did not make them strongly enough to have the desired effect. • I believe that with lifetime experience in hi-tech, I could have made a big contribution to that Commission and was known to the relevant Ministers but was ignored because they knew I was a big supporter of the Liberal Party. Unfortunately, that is how things seem to work in the political arena

18. Also met stalwarts of Liberal Party…… Among many other meetings with the stalwarts of the Liberal Party, I had a meeting with Dr. Marc Garneau (the current Transport Minister and past President of CSA) and Dr. Stephane Dion (the current Foreign Affairs Minister) about support for the development of SMEs and creating a solid knowledge-based economy. Their agreement with this idea was a high point in my mission. I told them that I am sure Liberals will come back to power and get an opportunity to change this country for the better

19. My Journey in the KBE & Hi-tech SME Development… cont’d • Phone call from Navdeep Bains. • As the Chair of the Science and Innovation Committee of the Geomatics Industry Association of Canada (GIAC), meetings with Justin Trudeau. • Dominic LeBlanc (the current House Leader of Liberals and link to the Senate) supported this idea strongly and asked me to come to Ottawa and discuss it with the Party.

20. My Journey in the KBE & Hi-tech SME Development … cont’d • In May 2014, Francis Scarpaleggia (the current Liberal Caucus Chair) organized a Luncheon and my Presentation in the Parliament to the prominent members of the Liberal Caucus (and many advisers to the MPs including the Policy Advisor of Justine Trudeau) • It was attended by many luminaries of the LPC including Scott Brison (new President of the Treasury Board), Marc Garneau, Francis Scarpaleggia, David McGuinty, Judy Sgro, Ted Hsu, etc.). • We had a very interesting discussion and strong agreement with the ideas I presented about promotion of hi-tech SMEs and Science to create a strong KBE in Canada.

21. My Journey in the KBE & Hi-tech SME Development … cont’d • Have reminded Marc Garneau Anju Dhillon and Marc Miller the two new MPs from Montreal Area who have supported the idea.Now that our dream of having a majority Liberal Government has been realized, we must pursue this matter vigorously to show that real change has come and we can create high quality well paying jobs by adding a new dimension to our economy – the Knowledge-Based Economy. • Navdeep Singh Bains as the new Minister of Innovation, Science and Economic Development can implement this mission and I can advise him about what needs to be done to start this great mission for the development of this great country which deserves better than it has today.

22. SLOW GROWTH OF SMEs • In Canada SMEs not growing as much as they should be in a rich country like Canada. • Canada has a relatively small market. In order to grow strongly, Canadian hi-tech companies must also depend upon exports. • In order to be successful in the export market, SMEs need to be strong in their home country. • Because of the nature of their business, many SME’s are dependent upon Government Contracts. • It has become quite difficult to receive contracts in Canada, which makes it even harder to sell internationally.

23. Why GOC Development Contracts are hard to get Many hi-tech departments of Government of Canada (GOC) have in-house development staff thus starving the industry. A body shopping culture has been instituted in Canada which generates no IP. Accountability Act has scared the GOC staff. It is hard for GOC employees to lose their empire.

24. PROBLEMS FACED BY HI-TECH SMEs GOC departments are ignorant of needs of SME’s Inadequate planning by the department means confused state within the department and starved SME’s. Departments keep promising that some projects are coming but they either never show-up or come up much later than expected. Government employees have little sensitivity to the requirements of Private Industry in general and SME’s in particular.

25. ADVANTAGES OF GOVERNMENT CONTRACTING OUT Private sector learns new technologies which it can sell to other clients nationally and internationally. Private sector companies are motivated and capable of applying these new technologies on other types of applications which could be quite different from the original application. Government Departments should be task oriented e.g. a meteorological service should be concentrating on how to provide the most accurate forecasts and not how to develop complex systems.

26. ADVANTAGES OF GOVERNMENT CONTRACTING OUT….cont’d SMEs develop state-of-the-art technologies and have highly skilled professional resources. The Federal Government is a large potential client for these products and services. It seems that the Government is risk-averse and tends to shy away from innovation. We believe that SMEs need to work with the Federal Government to facilitate Government Departments in embracing innovation and thus assist in the growth and development of SMEs.

27. ADVANTAGES OF GOVERNMENT CONTRACTING OUT….cont’d • Technology transfer (TT) is another important issue which needs to be further explored. • The Canadian Government seems to develop technology – only a small part ever gets commercialized. • TT would offer SMEs the opportunity to learn new technologies, market these technologies around the world, and assist in developing more advanced tools, products and services, which, in turn, could then be sold at home and internationally. • It would be safe to say that technology transfer would help in the growth and development of SMEs.

28. ADVANTAGES OF GOVERNMENT CONTRACTING OUT….cont’d • Even when the Government wishes to transfer technology, they do not find many companies capable of taking that technology, making a commercial product and then marketing it. • This would be facilitated if the hi-tech SME’s were involved at the earlier stages of technology development. • The technology transfer will not be at the end which makes it very expensive for a company to absorb and commercialize. • The above ideas would help the growth of industry.

29. Industry Centric Model Government Departments Government R&D Labs Hi-Tech SME’s (Industry) International Market Universities (R&D)

30. RecommendationsOf jenkin’s panel • Createan Industrial Research and Innovation Council (IRIC), with a clear business innovation mandate (including delivery of business-facing innovation programs). • SR&ED Program. • Simplify the SR&ED program by basing the tax credit for small and medium-sized enterprises (SMEs) on labour-related costs. • Redeploy funds from the tax credit to a more complete set of direct support initiatives to help SMEs grow into larger, competitive firms.

31. Recommendations (cont’d) • Government Procurement • Make business innovation one of the core objectives of procurement, with the supporting initiatives to achieve this objective. • Make CICP permanent Program • NRC to be transformed as follows: • A constellation of large scale, sectoral collaborative R&D centres involving business, the university sector and the provinces, • Transfer NRC public policy-related research activity to the appropriate federal agencies.

32. Recommendations (cont’d) Help high-growth innovative firms access the risk capital they need through the establishment of new funds where gaps exist. Establish a clear federal voice for innovation, and engage in a dialogue with the provinces to improve coordination and impact.

33. Most major points jenkin’s panel missed Government should get out of development & body shopping business and get into procurement business Government should have staff for clear requirement definition, Project Management from their side and Acceptance Testing How to reform SRED Program.

34. HOW DO AMERICANSSUPPORT THEIR SMEs The US Government strongly promotes small business in that country, and a similar model should be investigated here in Canada. For example: • The US has a Small Business Administration (SBA) model for hi-tech industry which ensures that small businesses grow. • Every US Government Department has a Small Business Office, which looks after the needs of small business. • The US Government is very supportive of USA small businesses and takes many measures to ensure their growth. • It is a requirement for Government Procurement that at least 23-25% be set aside for small businesses. In addition, all large contractors must include at least 25% benefits for the small businesses.

35. HOW DO AMERICANSSUPPORT THEIR SMEs • Large companies are always looking for smaller firms to partner with them on larger projects in order to meet the mandatory small business requirement set by the US Government. • In the US, some RFP’s are often restricted to SME’s, in order to offer these small firms the opportunity to win contracts without having to compete against the larger companies. • In spite of NAFTA, the US Government has a strong “Buy American” philosophy. In our experience, we have not seen that the Canadian Government prefers to procure from local companies. In fact, we have seen the opposite occur in some of the projects.

36. HOW DO AMERICANSSUPPORT THEIR SMEs • They even have 8A clause to support SME’s owned by disadvantaged persons which includes: women, black, visible immigrants • In the US, many RFP’s are often restricted to small business, in order to offer these small firms the opportunity to win contracts without having to compete against the larger companies.

37. SBA (USA) Goaling • Formal goals are in place to ensure that small businesses get their fair share of work with the federal government? In fact, each federal agency must set an annual goal for participation in its contracts by various groups. • For example, here is a sampling of the statutory goals established by federal executive agencies: • 23 percent of prime contracts for small businesses; • 5 percent of prime and subcontracts for women-owned small businesses (WOSB); • 5 percent of prime contracts and subcontracts for Small Disadvantaged Businesses (SDB); • 3 percent of prime contracts and subcontracts for HUBZone small businesses; (HubZone) • 3 percent of prime and subcontracts for service-disabled veteran-owned small businesses. (SDVOSB)

38. Small business procurement 2015 goals 32

39. Small business procurement 2015 goals…cont’d 33

40. What We Need To Do To Support Our Hi-tech SMEs • Government of Canada (GOC) must recognize that one of the major engines of future growth of Canada must be hi-tech SME’s. • GOC must study how other countries are developing and supporting their SME’s and formulate a comprehensive policy for the growth of hi-tech SME’s in Canada • The GOC departments must be sensitized about the requirements of the industry which are: • Getting contract work on a regular basis • Knowledge of GOC plans so that SME’s can plan properly • Participation on R&D projects of GOC and Universities

41. What We Need To Do To Support Our Hi-tech SMEs …cont’d • GOC must contract out almost all of the development work. • The Contracting out Accountability must be realistic and not the way it is today. • Implement rationalized recommendation of Jenkin’s Panel. • Any assistance to industry must be well thought of and targeted with potential commercialization in mind. • Well planned Assistance in the development of Export markets including what is being done today (EDC, CCC, Trade Missions, etc.) • Current Government must appoint a Panel to relook into this issue from the angle discussed in this presentation.

42. Support the Mission • CATA is strongly supporting this Mission. • I was thoroughly impressed by the response of IITAC members when I sent some documents to many of its members. • Response from Liberal Party has been very strong – at least when they were in opposition. • Now is the time for the proof of their sincerity of their support. • I am trying to arrange meeting with Navdeep Bains

43. IITAC Support of the Mission • This is one mission for which we IITans are most suited. • We as IITans must make a big contribution to this country by promoting the importance of KBE. • I have been advised that we should write as many letter to Navdeep Bains as possible. • My plan is to convince the Government to appoint a Panel to study this issue and come up with a Plan and take action on that Plan. • We should plan a Conference on this topic for next year if required jointly with CATA and ITAC

44. some thoughts “You must be the change you want to see in the world. ...” Gandhi “Do not take status quo as granted always think of change for the better” ….Harinder “No mission is impossible if a dedicated unwavering person or group is prepared to work hard for it” Harinder