Canada Doesn’t Have an Innovation System: It Has 134 Programs

Canada’s innovation system has a structural problem. And it needs a structural solution: an institution designed to make the system deliver, not just add to it.

More than 50 countries have built dedicated innovation agencies to convert research into economic strength. Canada has not. Instead, we have 134 federal innovation programs. Each is layered on the last to patch failures without addressing the system’s design flaws.

What Canada needs is a new federal institution that makes the system more than the sum of its parts: a Canadian Innovation and Industrial Transformation Agency. It would act as mission control for innovation by coordinating strategy across departments, linking support from research to commercialization, and building the industrial capabilities Canada needs to compete on more than just natural resources.

This isn’t a new realization. The 2011 Jenkins Panel recommended the establishment of a Canadian Industrial Research and Innovation Council to rationalize and deliver federal business innovation programs. We’re overdue to finish the job, but this time with a mandate and machinery built for today’s geopolitical and economic realities.

The case for institutional reform is in the data. Canada’s R&D intensity and comparative advanced industry output have lagged for years. We consistently struggle to move technologies from lab to market at scale.

One root cause is an outdated policy architecture: a linear model that funds university research and then calls it a day, assuming innovation will magically emerge fully formed at the end. But real innovation systems don’t move in straight lines. They loop, link, and compound. Without institutions to manage that feedback and carry technologies through deployment, progress stalls.

For decades, we’ve treated innovation as a policy file, not a system. We’ve staffed it with generalists and managed it through siloed programs and compliance. The result isn’t progress, it’s paperwork. No agency is mandated to steer strategy across departments, sequence support, or commercialize. Programs operate in isolation. Firms graduate from the National Research Council’s Industrial Research Assistance Program (IRAP) with nowhere to go. The Strategic Innovation Fund (SIF) moves slowly and isn’t built to coordinate across sectors. The Scientific Research and Experimental Development (SR&ED) tax incentive acts more like a grant than a credit, rewarding firms for staying in their lane and punishing them if they scale.

These programs matter, but they operate in isolation—stranding firms, fragmenting funding, and stalling technological advancements. The system is built to avoid picking winners and, therefore, cannot build them.

If any department were meant to coordinate the system, it would be Innovation, Science and Economic Development Canada (ISED). But ISED governs programs, not systems. Like all departments, it was built for policy, not delivery. That’s not a failure of leadership. It’s a failure of design.

Departments can’t coordinate what they don’t control. What’s missing isn’t intent. It’s institutional machinery. Canada needs a system operator: an agency with the authority, mandate, and talent to move technologies from research to deployment at scale.

Faced with this gap, recent debates floated two institutional fixes: a DARPA-style tech funder (CARPA) and the Canadian Innovation Corporation (CIC). CARPA would place high-risk bets on early-stage technologies with missions. CIC would streamline program delivery and improve client service. Unfortunately, both were shelved. What’s needed is a combination of the two proposals—an institution that takes responsibility for the system itself. That’s why we need a Canadian Innovation and Industrial Transformation Agency with the authority to coordinate strategy, steer delivery, and close the structural gaps that hold back deployment.

The institution wouldn’t run every program, but it would govern the pipeline, link disconnected efforts, and ensure innovation support moves with speed, sequence, and sector focus by:

1. Running strategic intelligence for the system: Build a live picture of Canada’s industrial position by tracking where capacity exists, where scale-up stalls, and where rivals are advancing. Produce sector roadmaps that identify technological choke points, regulatory bottlenecks, and policy tools pulling in opposite directions. Use this intelligence to steer action across government, anchor decisions in real-world trajectories, and provide a shared baseline.
2. Coordinating delivery across the pipeline: Structure innovation support as a true pipeline, not a program catalogue. Align mandates, budget cycles, and delivery timelines across departments to ensure that public research, commercialization funding, permitting, and procurement reinforce one another. Identify duplicated effort and gaps. Rewire the system to move in sequence, not in parallel.
3. Operating at market speed, with technical depth: Build a delivery team of engineers, scientists, commercialization veterans, and procurement professionals, not just policy generalists. Run competitive calls, manage contracting, and make deployment decisions on commercial timelines rather than quarterly planning cycles. Use a separate pay band and flexible hiring authority to attract and retain staff with sector fluency and operational credibility.
4. Building commercialization muscle where it’s missing: Invest in testbeds, demonstration sites, and early procurement pathways to de-risk adoption of emerging technologies. Prioritize sectors where private capital is scarce or timelines are long, such as biomanufacturing, agri-tech, and quantum. Close the capital gap by giving technologies a place to prove and scale.
5. Laying the foundation for navigable service delivery: Create a single point of entry and a structured path through R&D, demonstration, and scale-up support so firms don’t have to start from scratch with every application or interpret siloed eligibility criteria. This agency wouldn’t replace all programs, but it would serve as the coordinating centre of gravity so firms can access the right support at the right time, without hiring consultants to decode the system.

It must be a Crown corporation. Not a secretariat or special office. Only a Crown can operate outside standard government HR, IT, and procurement constraints while maintaining strategic accountability to Ministers. That accountability can be enforced through mandate letters, corporate plans, and quarterly reporting. Anything less would leave the agency trapped inside a system built for policy, not delivery. Its internal structure would combine strategic intelligence, sector-specific delivery teams, a central coordination unit, and dedicated staff for demonstration, procurement, and regulation.

While civilian in focus, the agency would directly support Canada’s dual-use technology objectives across AI, biomanufacturing, and quantum. That makes it a natural contributor to Canada’s new 5 percent NATO commitments. The work must be structured to qualify under NATO’s R&D accounting rules, but the agency itself should remain outside the Department of National Defence to preserve a civilian industrial focus. This will require close coordination with Defence and co-reporting arrangements, ensuring accountability for national security priorities without importing military delivery culture.

The agency’s launch should include the full transfer of existing delivery tools: the National Research Council’s Industrial Research Assistance Program (IRAP) and its 350 staff; the Strategic Innovation Fund (SIF); Innovation Solutions Canada (ISC); the Department of National Defence’s Innovation for Defence Excellence and Security (IDEaS) program; and design and appeals functions related to the Scientific Research and Experimental Development (SR&ED) tax credit. Additional funding would be required for DARPA-style missions, technology demonstration programming, and agency operations. The $200 million annually earmarked in Budget 2022 for the Canadian Innovation Corporation (CIC) is a floor, not a ceiling.

This isn’t a new idea. Canada has launched strategic industrial tools before, including the Defence Industry Productivity Program (DIPP), Technology Partnerships Canada (TPC), the Strategic Aerospace and Defence Initiative (SADI), and IRAP itself, which is now 75 years old. The institutional memory exists. What’s missing is the machinery to coordinate, scale, and deliver across the system.

Other countries have figured this out. Finland’s Business Finland combines innovation funding with export promotion and investment targeting. The UK’s Innovate UK connects challenge-based R&D with industry-led development. Japan’s NEDO manages both early-stage tech bets and large-scale demonstrations.

It’s reasonable to ask: If countries like Finland or the UK succeed with agencies like Business Finland or Innovate UK, why does Canada need this mission control agency?

Because those agencies operate in stronger systems. Their success reflects not just internal design but the coherence of the surrounding policy environment—something Canada lacks. Here, departments operate in silos. Procurement doesn’t talk to permitting. Research funding isn’t sequenced with deployment or export strategy. It is a failure of coordination. And it is why, despite spending billions, we continue to underperform. A CIC-style agency would improve delivery, but it wouldn’t fix the fragmented architecture. This agency would.

It would take responsibility for the core system functions that currently fall through the cracks, such as publishing sector-level capacity maps, coordinating permitting timelines across jurisdictions, sequencing capital support through IRAP, SIF, regional development agencies, and more, and ensuring that technologies developed with public R&D dollars actually reach procurement and export markets.

This isn’t a call for endless new funding. It’s a call to rewire how we support innovation, and to back that system with a stable, long-term revenue base. One option: a grand bargain that accelerates permitting in exchange for a modest resource levy, using resource revenues to help build the institutions of Canada’s future.

Some will say this would step on the toes of departments. Yes, it would. That’s the point.

Departments control key innovation levers like procurement, training, regulation, and infrastructure, but they aren’t built to align them toward industrial goals. The result is policy beige. This national agency would be structured to advise, align, and coordinate—not override. But it would need clear authority to set direction, manage shared files, and publish performance data across the portfolio. It would be a delivery institution, not a policy shop. ISED would remain the federal government’s lead on innovation policy and economic development strategy, while this agency would focus on its role of execution and coordination.

This isn’t about replacing programs. It’s about governing them coherently, strategically, and at speed. Canada doesn’t need more pilots. It needs a national operator to move technologies from lab to market and transform innovation into industrial strength.

We’ve layered delivery band-aids on a system that never had a working circulatory system to begin with. It’s time to stop duct-taping holes and start building architecture.