Mandates vs. real outcomes

Across levels of government in Canada, the promotion of evidence-based policy is gaining steam. With it comes an increased focus on the evaluation of government funded programs and the achievement of mandated outcomes. Yet in so doing we must guard against a too strict definition of what constitutes success, and ensure that mandates don’t risks obscuring the more than adequate success of important public programs.

Case in point is the Federal governments’ decision to not renew funding for the Waterloo Crime Prevention Council’s inReach gang prevention program for its failure to reach its goal of treating 60 youths per year.

Over the course of inReach’s three year program history, the organization has treated 150 youths in its two program streams. What this means to our community, both locally and nationally, is extremely significant. For example, given that that over two-thirds of inReach participants have been involved with the criminal justice system, and forty percent involved with a gang, providing these 150 youths with counseling, treatment and employment support means both safer streets for our community and better futures for those involved.

Moreover, given a research consensus that links incarceration for non-violent crime with higher rates of repeat offenses, programs that keep youth out of jail all-together are the best investments we can make.

The Federal Governments’ decision to defund this organization, one that attempts to provide at-risk youth with alternative avenues for their lives, means that taxpayers will be left to pay more. And given that Correctional Services Canada estimates the annual costs of incarceration for a male inmate at over $110,000 and for a female inmate over $211,000, the costs of doing so will far outweigh the budgets allocated to groups such as inReach.

The Government’s decision, based theoretically on evidence and evaluation, does so in a selective manner that ignores the true impacts of the program. Like the decision to cut over $35 million from the Youth Justice Services program in Budget 2012, the Federal Government’s “tough on crime” agenda ignores the evidence we have about crime and how to prevent it. While the Region of Waterloo deserves our thanks for stepping up to ensure the program’s continuation in 2013, it’s a pity others have opted out of helping develop long-term solutions to crime prevention in our communities.

And at the risk of “committing sociology”, given the fact that the majority of those incarcerated in Canadian prisons suffer from chronic unemployment and low educational attainment, groups like inReach, that have shown an ability to address these issues, deserve more of our support.

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Canada’s place in a global innovation economy…

The 2013 Global Innovation Index, co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO), was released this week. And while Canada saw its overall ranking nudge up a spot from 12th to 11th, the report underlines some significant issues that continue to inhibit economic growth and innovation in the Canadian economy.

In particular, business research and development spending (BERD) remains significantly below pre-economic crisis levels. The same is true for gross spending on R&D (GERD) indicating that institutional and government spending isn’t picking up that slack. Business spending on R&D is found to be 12% lower than pre-crisis, while gross spending is down 7%.

Moreover, while Canada gets high marks for its institutional factors such as the ease of starting a business and the overall regulatory environment, as well as infrastructure and market sophistication, it does relatively poorly on human capital and research. In particular, Canada comes in 52nd (!) on total expenditure on education as a percentage of gross national income and 23rd on gross expenditure on research and development (GERD). To put this in context, Sweden, Norway, New Zealand and Ireland all spend between 6.2 and 7% of GNI on education, Canada in contrast spends 4.69%. Similarly, our spending on R&D is half that spent by the top five – Israel, Finland, Korea, Sweden and Japan – and significantly less than similar industrial economies such as Germany and the United States.

Given the integral role of both factors (education and research) in underpinning long-run innovation and competitiveness, these rankings highlight significant weaknesses in Canada’s economic fabric. Canada’s subsequently middling performance on measures of technology/knowledge outputs isn’t surprising. Here Canada ranks 27th in terms of high-tech manufactured goods as a percentage of total manufacturing, and 32nd in terms of high-tech exports as a share of total exports. Again, this represents a significant lag against similar jurisdictions, notably approximately 30% less high-tech intensity than Germany, Japan and Korea, and approximately 25% less than the US, China and Mexico.

Given the increasingly tech-intensive nature of contemporary, non-resource, economic growth , and given the links present between manufacturing and long-run innovation, Canada’s underperformance on these metrics indicate both present and future difficulties.

Addressing these issues requires significant policy attention. Business investment in research and development, and general spending on technology, must increase. Catalyzing this from a policy standpoint is, however, quite tricky. Business R&D in Canada already enjoys extremely generous tax treatment, and despite corporate bank accounts that are generally flush with cash, spending on research continues to lag. As Anthony and I argue in our latest report, facilitating better relationships between industry and academia, providing research financing for research for SMEs, and reforming tax incentives to focus on growth rather than company size are all part of the answer.

Ultimately, as the Global Innovation Index notes, across jurisdictions the question or challenge remains the same: “Where will future growth come from to drive the global economy? Where will future jobs come from? In this context, the importance of innovation cannot be emphasized enough. It is the policies fostering long-term output growth—especially policies that promote innovation—that can lay the foundation for future growth, improved productivity, and better jobs.”

And if Canada wants to come out as a winner in this global challenge, it’s going to need to change how it plays the game.

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Read more about Canada’s innovation ecosystem:

Employment, Innovation and Growth: Analyzing the Health of Canada’s Economic Ecosystem http://deepcentre.com/wordpress/wp-content/uploads/2013/04/DEEP-Centre-Employment-Innovation-Growth-April-2013.pdf

Driving Canadian Growth and Innovation: Five Challenges Holding Back Small and Medium-Sized Enterprises in Canada http://deepcentre.com/wordpress/wp-content/uploads/2013/03/DEEP-Centre-May-2013-Driving-Canadian-Growth-and-Innovation.pdf