Conversations about innovation policy in Canada have heated up recently, partly in response to the US Inflation Reduction Act of 2022, which committed the $369 billion to new energy security and climate change investments, arguably "the single largest investment in climate and energy in American history."
In Canada, this has prompted debate about our need for more policy action. This is well and good, but we have noticed that the conversation has focused almost exclusively on the role of government in supporting mostly-local small and medium sized firms to undertake research, innovate and grow. While this is necessary for progress, it has almost completely ignored the post-secondary education system.
We believe it is impossible to discuss credibly our innovation future without some consideration of the role and activities of our post-secondary education system.
Universities and polytechs are vital parts of our national and regional innovation systems. These institutions anchor all of our provincial and regional economic clusters, offering critical research infrastructure and delivering a flow of educated and skilled workers. Moreover, these institutions and their leading scientists bring the world to Canada. Canada at best generates 3-5% of the ideas and technologies in any field of study, so it is vital we seek out and use the best ideas from elsewhere. Universities and polytechs link our local innovation nodes to global systems, helping to transfer, absorb and disseminate the latest scientific and technological knowledge from around the world. Universities also provide critical intellectual direction, hosting and resourcing creative and innovative leaders who enliven and drive local and national innovation efforts.
Specifically, these institutions educate and train almost all of our highly skilled workers that drive our economy and society. Canada has a higher proportion of its workforce with advanced education and training that almost all other counties; this is one of our key strengths. With more than 1.3 million post-secondary students studying each year, we generate about 340,000 graduates annually. The knowledge-based, technology-enhanced future requires this flow of educated, skilled and motivated graduates to advance.
The post-secondary sector is also heavily engaged in research. We have about 46,000 research-engaged faculty and more than 250,000 graduate students all applying their skills to research. In 2022, our post-secondary institutions in total undertook more than C$16 billion of research, equal to about 38% of all the research and development effort in Canada. This sector undertakes more than 5.5 times more research than all of the federal and provincial government labs combined, contracts to deliver about 7% of all the privately-funded research effort in Canada and takes on virtually all of the research funded by the private, not-for-profit sector, delivering key insights to improve our health outcomes, the environmental and social development.
Canada relies disproportionately on the post-secondary education system to do our research, with Canadian universities and polytechs undertaking research equal to about 0.7% of GDP. Canada’s does about 60% more of its research through the higher education sector than the average of the 37 OECD group of countries.
In spite of the higher education’s key contributions to the nation’s innovation system, we seem to be ignoring it in our policy conversations. That is undoubtedly partly because, according to the Association of University Technology Managers (AUTM), these institutions combined usually generate less than C$100 million of revenue annually from their commercialization efforts. This represents much less than 1% return on our total effort, which makes them seem insignificant.
Looked at another way, universities generate an immense return through their teaching, both via courses and through research supervision. Somewhat dated studies suggest degrees generate private returns of 5-10% personally and for their employers and another 10% socially. Without this return, we would be massively weaker.
Given the already tight labour markets and the pending retirement of many baby boomers, there is going to be a critical need for a sustained flow of new workers that are educated, skilled and motivated to advance our socio-economic prospects. The universities and polytechs will be the foundation for that effort.
Delivering what is needed at the right time will be the challenge. While taught courses are the bedrock to that effort, we also need to provide students and graduates with the capacity to apply their skills to real problems. To that end, we need to ensure that the academy is informed by the problems and opportunities in our larger economy and society.
For all these reasons, it is time to invite, dare we say challenge, the higher education community to join the dialogue and debate about the innovation policy we want and need to secure Canada’s future.