Thank you. We appreciate the opportunity to present our views to the committee as it prepares its recommendations to the Minister of Finance in the context of pre-budget consultations.
We're an organization established by a bilateral treaty between Canada and Israel aimed at promoting mutually reinforcing company-to-company collaboration in R and D. Our presentation relates to what Canada can learn from the success of Israel in nurturing the growth of one of the world's most robust economies on a platform of technological innovation.
Time limits don't allow for discussion of the fast and constant pace of change characterizing the digital economy and the enormous challenge that all governments face in designing the right innovation support programs relevant to the challenges faced by companies today, in reading changes as they occur, and in adjusting quickly and effectively so that they remain relevant to the challenges faced by companies tomorrow.
By all measures, the State of Israel has had tremendous success in this arena. How can we learn from it? We suggest not to pick and choose one or more of its many successful programs and test the programs' applicability to Canada, but rather to look at the essence of the Israeli approach to the challenge.
About 40 years ago the Government of Israel came to the realization that its main natural resource was the talent pool of its youth, and especially the particular talent that emerged from the specialized training that the brightest of them received in the course of their national service, this being complemented by its research-based universities, already judged to be world-class. That time also coincided with the early beginnings of the growing power of information and communications technology and the eventual major transformation it would bring to the global economy.
The result of that realization was the establishment of the Office of the Chief Scientist, now called the Israel Innovation Authority, a unique instrument dedicated to translating the technological brainpower of Israel into commercial strengths. Its uniqueness is attributable to the following.
Mr. Chairman, I'm going to use the word “serious” a lot, for reasons that I hope will be self-explanatory.
First, it was given serious funding. For example, over the last 10 years the annual budget has hovered around 2 billion Israeli shekels. Converting to Canadian dollars and multiplying by five to adjust on the basis of relative GDP, it would signify a Canadian equivalent of almost $3 billion annually.
By the way, I'm not recommending this for Canada; I'm just giving you a sense of the seriousness.
Second, it was given a serious mandate, in the sense that its core programs were enshrined in the law of the Knesset, the parliament of Israel.
Third, it was given serious flexibility, in the sense that it could, within its overall budget and adherence to the R and D law, reallocate and redesign its support for industrial R and D according to the changing scene.
Fourth, it ensured the recruitment of serious management at both the executive level and, just as important, at the level of technological and business assessment.
Finally, it benefited from constant political support over the long haul and across a very wide political spectrum. In Israel, innovation is not a sideshow, nor is it an occasional feature of a particular budget.
Through this office, Israel also addressed a major weakness. Recognizing that still today most trade is very regional, and also recognizing the reality of Israeli regional isolation, through this office Israel began to build a network of global alliances with the key economies of the world, alliances based on industrial R and D co-operation.
Because Israel has consistently been a world leader in key enabling technologies, co-operation with it was not a hard sell, with the result that Israel now has serious alliances flourishing with 30 to 40 countries. Of note is the surge in technological and resulting economic co-operation between Israel and China, South Korea, India, Japan, and Singapore, joining the already partnered European Union and the United States in this now truly global network.
No other country in the world has established such important and vital connections, and Canada, through our organization, is part of this program. Our record of resulting value to the Canadian economy is reflected in the brief we tabled before this committee.
The Israeli approach has thus delivered impressive results, including early support of their start-ups and mid-sized technology-based companies in conducting high-risk research, connecting them to partners in markets around the world. As a result, this has branded Israel as having a wealth of talent, attracting a glittering array of multinationals to establish important development centres. These include Intel, Microsoft, Google, Takeda, Mitsubishi, Dell, Deutsche Telekom, Apple, and scores more.
Despite Israel's being known as the “start-up nation”, these multinationals now account for 50% of the tech-based employment in Israel. This is reflected in the highest R and D per GDP globally. Through sound and serious innovation strategy, Israel has turned adversity into resilience and strength.
The lesson for Canada is to treat these matters with its own serious commitments that support dedicated instruments having secure finances and the organizational flexibility to manage and respond to the changing scene. The establishment of Innovation Canada is a very good start and augurs well for our country's ability to learn from Israel's successful experience.
Finally, given the enormity of the challenge and the value of the Israeli experience, we recommend that this committee recommend to the Minister of Finance that he support and encourage Innovation Canada to enter into a strategic partnership with the Israel Innovation Authority by building on the current bilateral co-operation platform. It would be a hugely cost-effective way to provide first-hand knowledge, insight, and invaluable experience for the design of Canada's future domestic and international innovation programs.
In the end, it will be Canadian tech-based companies that will benefit, as will our brand globally, not to mention our important bilateral relations.
Thank you very much.