With new $7.5 billion SQRI2 strategy, Minister Pierre Fitzgibbon aims to close the productivity gap with Ontario.
Québec’s Minister of Economy and Innovation is troubled by the province’s productivity performance.
Minister Pierre Fitzgibbon said that while Québec is recognized as a leader in fundamental research compared to other countries, he isn’t pleased with how Québec stacks up in terms of transferring that research into the business world.
“Where I’m not happy is on the startup [side], and how [research] gets migrated to enterprises.”
-Minister Fitzgibbon
“Where I’m not happy is on the startup [side], and how [research] gets migrated to enterprises,” said Fitzgibbon. “We have no leading position. We’re in the lower category. That was a concern to me because startup and technology innovation, largely defined, is going to be the driver of an increase in productivity in terms of labour, and also providing wealth to the community.”
In an exclusive interview with BetaKit, Fitzgibbon laid out the provincial government’s five-year plan to incentivize research and development (R&D) and spur more commercialization of public research through a variety of initiatives, from targeted tax credits to investments.
With Québec’s new, $7.5 billion CAD research and innovation strategy, first unveiled in mid-May, Fitzgibbon and his Coalition Avenir Québec party aim to cut the labour productivity gap between Québec and Ontario in half by 2027.
The Québec Research and Investment in Innovation Strategy (SQRI2) builds on the province’s previous research and innovation plan, the $5.4 billion Québec Research and Innovation Strategy (QRIS), which expired at the end of March. QRIS, which Fitzgibbon said focused more on the research side of the equation, saw the rollout of the province’s first two innovation zones, Sherbrooke Quantum and Bromont’s Technum Quebec.
“We are focusing on the middle ground, which is innovation,” said Fitzgibbon, who returned as Québec’s economy minister following a summer 2021 dalliance with the ethics commissioner. “We’re strong in fundamental research, strong in helping enterprises through Investissement Québec … The additional amount of money … is pretty much all focused on applying the innovation to enterprise.”
Whether Fitzgibbon is able to accomplish these plans depends upon whether his party is re-elected this fall. In response to a question about the role the looming Québec election played in these plans, Fitzgibbon said SQRI2 is part of his broader economic vision for the province. “My vision for Québec is armed by two pillars … how we use energy to decarbonize and grow the economy and how we embed and breed innovation.”
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This $7.5 billion total for SQRI2 includes about $3 billion in innovation tax credits, and nearly $2 billion in new commitments. The latter amount consists of $1.3 billion from Québec’s latest, R&D-heavy budget, $600 million in investment capital, and $75 million in investments in the Québec Infrastructure Plan.
Fitzgibbon’s strategy has five axes. The largest financial commitment—$1.43 billion—is aimed at the first, which is focused on building on the province’s strength in fundamental research, supporting work done by the Québec Research Fund, and connecting the province’s research ecosystem.
Two others focus on supporting intellectual property and tech transfer ($275 million), and tech entrepreneurship and stimulating commercialization ($908 million).
Québec took steps last year towards the former with the launch of Axelys, a new tech transfer institution. Fitzgibbon described this Axelys as an “engine to do that knowledge transfer from academia to incubation, so to speak.”
This time around, Fitzgibbon said the province added “investment” to the strategy’s name because Québec also needs to do a better job on this front. Fitzgibbon hopes to accomplish this by allocating $110 million towards incubators, accelerators, and pre-commercialization startups, and $600 million for a fund-of-funds that will provide capital to other VC funds across the financing chain, with an eye toward early-stage firms.
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“We’ve had some VCs, but frankly, they are not covering the whole spectrum,” said Fitzgibbon, referencing verticals and stages. “We basically are putting incentives [in place] to fuel the support of these pre-commercial, going to commercial [companies].”
These initiatives will be complemented by the $100 million seed stage-focused Eurêka Investment Fund the province launched in February, and the $121.7 million three-year Entrepreneurship Plan the province rolled out last month.
From a sector standpoint, Fitzgibbon plans to concentrate on segments where Québec is already “very strong,” including cleantech, battery, aluminum, aerospace, life sciences, artificial intelligence, and energy. “We’ll focus on where we are good,” he said.
“We’ve had some VCs, but frankly, they are not covering the whole spectrum.”
-Minister Fitzgibbon
“At the end of the day, we need to decide where we as a government would be involved,” said Fitzgibbon. “I don’t believe, in a place like Québec, we can spread the money around because then we will be average everywhere. I’d like to be a champion in some segments.”
On the talent front, where the province has previously faced criticism, the Government of Québec plans to focus on increasing the percentage of graduates in science, technology, engineering, math, and computer science, and boosting business employment in R&D roles, with an eye towards the segments Fitzgibbon highlighted.
In reference to why Québec has compared itself to Ontario, Fitzgibbon said, “I like to target the winners.”
“Ontario has had, over the years, large [labour] productivity improvement,” said Fitzgibbon. “The gap has enlarged until about 2019. Now the gap is reversing.”
Given that the two provinces are different from an economic diversification standpoint, Fitzgibbon hopes SQRI2 will help Québec continue to move “in the right direction.”
Feature image of Minister Pierre Fitzgibbon, courtesy the Government of Québec.
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