Canada – you beauty - The Good Oil by Rod Brown

Canada’s socioeconomic set-up is very close to ours – Westminster system, European roots, middle-sized economy, abundant minerals and energy, the tyranny of distance and an industry policy trying to come to grips with strong competition from Asian and other low cost nations.

So it was extraordinary to learn that Canada has recently established the Innovation Superclusters Initiative (ISI) with $C950 million funding over five years – yes, you heard right! (Canadian dollar is about the same as ours).

The ISI aims to strengthen Canada’s most promising clusters and accelerate economic growth in highly innovative industries, while positioning its firms for global leadership.

The ISI is inviting industry-led consortia to lead and to invest in bold and ambitious proposals that will supercharge their regional innovation ecosystems. By pulling in large firms, innovative small and medium-sized enterprises (SMEs) and industry-relevant research institutions, business leaders will come together – with partners and in new ways – to build business-led innovation superclusters at a large scale. Their plans must build on shared private sector commitment, demonstrated through matched industry funding.
The initiative will be paying particular attention to building a shared competitive advantage for the various clusters, by attracting cutting-edge research, investment and talent by addressing gaps, aligning strengths, enhancing attributes, and positioning the clusters as world-leading innovation hotbeds. This in turn will generate new companies, and commercialise new products, processes and services that position firms to scale, integrate them into global value chains, and transition them to high-value activities.

What I find fascinating is that Canada is unashamedly using public funds on a huge scale to grow clusters.

Why hasn’t Australia embraced clusters?
Here in Australia the Federal Government has consciously avoided the cluster word, lest folk conclude that it’s picking winners. The problem is exacerbated by most departmental heads coming from a Treasury/Finance background these days.

The second possible reason is that clusters are seen as management mumbo-jumbo. But there are supporters. Professor Michael Porter (the Harvard cluster guru) attracted 1000 people at $1000/head to hear him in Sydney a few years back. And the OECD, World Bank and UN agencies are active in the cluster space.

The third reason is that folk don’t understand collaboration. This is probably the main reason. For example, an Ausindustry bloke in Darwin stiffly remarked to me that ‘clusters are a load of bullshit because companies aren’t interested in collaborating.’ (Well, may he gravitate to a back-office job).

But as the cluster experience shows, collaboration between companies, and between the research and business sectors, can happen when there is ‘enlightened self-interest’ – in other words, when the parties realise that acting collectively can get results not possible by acting alone.

A fourth reason is that federal and state governments in Australia haven’t fully understood that that smart specialisation is critical in the 21st Century, and that governments have a crucial role in bringing the partiers together. To be fair, Australia is dipping its toe in the water with its Growth Sectors program (food, advanced manufacturing, medical technology, mining equipment/services, oil/gas and now cyber security) but with the exception of food, clusters are rarely mentioned.

Role for local government
While the Canadian cluster program is shaped around companies, the fact remains that successful clusters are inherently localised. Why? Because it’s the contacts and collaboration between companies that chase new business opportunities and drive their growth. Local councils are thus beautifully placed to assist these processes if they choose to do so.

Indeed, certain local councils have a good track record in the cluster game e.g. City of Playford (SA), Cairns City Council, Newcastle City Council (Hunternet, etc.), Geelong City Council and those in the south-east of Queensland. The opportunity is for other councils to note their accomplishments and learn from them.

A further role is for councils to not only build specialisation and cluster principles into their economic development strategies, but to walk the talk. I see lots of ED (economic development) strategies with the right jargon, but little evidence of doing anything about it. If you want to engage expertise to this end, I can point you to local and international experts.

Yet another role for councils is to hammer specialisation and cluster themes when interacting with, or lobbying the federal government. The reason is that the federal Minister Sinodinis (and his shadow Senator Carr) are both well across clusters and both would be interested to know that your council is demonstrably on the same page. And it will be ministers, and not bureaucrats, who will decide whether to follow the Canadian cluster program.

Energy: the big issue
Meanwhile, hats off to the PM Turnbull for his leadership on the energy debate. Some commentators say he’s on a hiding to nothing, but he’s having a go at correcting the mess. And it was interesting to see Senator John ‘Whacka’ Williams drag the Parliamentary Library into the debate by quoting its findings of the big number of coal-fired electricity plants still in the pipeline i.e. China 299, India 132, Indonesia 32. The Library must be totally objective, so a smart move by Whacka.

Rod Brown is a Canberra-based consultant and lobbyist specialising in industry/regional development, investment attraction and clusters, and accessing federal grants. He also runs the Cockatoo Network.
Phone: (02) 6231 7261 or 0412 922 559
Email: [email protected]
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