Banking on research investment in today's economy

Q: In 2003 you gave a speech at the opening of MaRS where you pointed out how disappointing Canada's spending on R&D was and how we had to end the old pattern of "invent in Canada and produce elsewhere." Five years later how are we doing?

I think there's been an acceptance of the importance of these issues by everyone - government, academia and the business community. And this has made things better. For example, MaRS has turned into a wonderful strategic initiative for bringing people and ideas together. And we're making progress also in the venture capital area with new pockets of dollars like the Ontario Venture Capital Fund in which RBC is a partner. But I guess everything has to have a "but". There clearly is more work to be done.

I can't tell if part of the continuing funding problem for research translation is our cautious national psyche or if it is the fact that we have been able to make our money so easily from things like natural resources.

More the latter, I believe, although I think no one can deny that there is somewhat a more conservative nature at work when you compare Canadian investments to places like the United States. They just have more raw dollars available for investments, and that includes investments with risks. What we have in this country is a lot of investment dollars controlled by pension funds and big institutional investors who, by and large, don't include a large venture capital component in their business models.

So you think that pension funds need to have an increased sophistication when it comes to the worth of venture capital funds?

Yes. But let me add I also think that the smart money always seeks good commercialization opportunities. So if we are able to create the commercialization opportunities, ultimately venture capital dollars will find them.

Still, Canadians appear quite good at risking money in mining, which also seems like a risky business, but quite bad at taking risks when it comes to biotech or science discovery transfer. Why?

That seems right, but it is actually a poor analogy. The fact is when it comes to mining investment you know what you are talking about. Uranium is uranium. Gold is gold. Knowing the end product means we have developed mining companies of significant size and resources who are both able and used to taking risks. The same doesn't apply to commercializing university research. When it comes to financing this, nobody is quite sure exactly what you are going to come up with or the time frame in which your risk will play and pay itself out. That tends to make everyone cautious.

Is there a sense of urgency on your behalf as to what we must do in terms of becoming more of a knowledge economy?

Let me say "yes" and then add a contradictory caveat. It's hard to be truly urgent because research-based development requires such a long time to come to fruition. However, it also seems true to me that a change in this direction has already happened. I think the resilience of Ontario's economy, in the face of a strong dollar slowing manufacturing, is very impressive indeed. And I think part of that is because there has been a lot of growth and investment in newer and emerging parts of the economy. But - there always are "buts" - it's vital in terms of growing that prosperity that we as a province continue to push that agenda forward. That's my sense of urgency - we don't dare stop what we have started.