Why the Toronto Region is Canada’s Innovation Leader · 2012-03-24 · Why the Toronto Region is Canada’s Innovation Leader 3 Well, in Toronto, I suspect someone in the same role

Why the Toronto Region is Canada’s Innovation Leader

An address by Professor David Naylor President of the University of Toronto

To the Toronto Board of Trade

Friday, March 23, 2012

Check against delivery


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Thank you, Mr. Irving, for that kind introduction... I am delighted to be here and to participate in the TELUS Courage to Innovate Series. I am also grateful to Carol Wilding and the Toronto Board of Trade for the invitation to join you this afternoon. Much of the Toronto region’s recent success – and our optimism for the future – can trace its source to individuals in this room. Let me start with a story. In another metropolitan region, the head of one of the local development agencies has a shtick with visiting politicians and dignitaries. He invites them to do a mini-interview. What visitor can say no? And then, once they're on camera or on the record, he asks: “Please tell us why our region is such an example to the rest of Canada?” As a public relations tactic, it's somewhere between brazen and bizarre. But no polite Canadian is going to walk away, or even just say, “Sorry, you have delusions of grandeur”. What gets said, of course, are very positive things. Once that effusive praise is on the record, it can be used by the region. Moreover, having said it on the record, the visitor more or less has to keep saying the same things in future.


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Well, in Toronto, I suspect someone in the same role would get a visitor on camera and ask them to expound on everything that's wrong with the region. And these days, with the blackly humorous dramas at City Hall, and the endless angst about how we're losing our mojo, Toronto sometimes feels like the Woody Allen of global alpha cities. It's time to get over ourselves. Yes, there are things to fix. But let us please make time to celebrate the hugely positive features of the remarkable municipalities that together make up the Toronto metropolitan region. Let me put up a couple of slides with various international and national rankings for the Toronto metropolitan region… I won’t read them to you. I’ll just leave them on screen as we keep going here…


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New Torontonians do notice our regional neurosis. Many here will recall that, two years ago, in an excellent speech to this Board, Frank McKenna observed that Toronto needed to get its swagger back. And Mr McKenna added: “It’s not enough to have the steak; you ` have to have the sizzle.” Today, let me continue and modify the cooking metaphor. What makes the Toronto metropolitan region so great is that we offer a multi-course, multi-cultural banquet with world-class cuisine. That is the sizzle. That’s the story of Toronto’s success. Somehow, we seem to be reluctant to sharpen that great storyline and to tell it. And much of what I’d like to do today is just that. Frame a provisional narrative for the Toronto region. Now… According to common political lore, Toronto is a financial and health services hub. Yep. That much is true. Toronto is the third largest financial centre and the fourth largest health sciences community in North America. We also have the third largest biotechnology cluster in North America, and more than half of Canada's pharmaceutical companies and biomedical-related industries. However, this is only part of a much larger and more complex story. And that’s a challenge for us because the media and politicians like simple stories. It’s actually a paradoxical challenge because the Toronto metropolitan region’s outsized clout reflects tremendous multi-sectoral strength. If you will permit a short pointy-headed aside, this strength doesn’t simply add up – it’s multiplicative. More and more innovation worldwide is driven by cross-sectoral convergence. And that means we have positive feedback loops, a snowballing effect. That’s how convergence works in all the key urban regions that are so prominent on the world stage.


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Let me give you three examples... The Toronto metropolitan region’s Food and Beverage sector is the largest in Canada, with the second largest food production and processing centre in North America behind Los Angeles. The unassuming Ontario Food Terminal you pass on the Gardiner or the Queensway is the largest wholesale fruit, vegetable, and flower market in Canada and one of the five biggest produce markets in North America. Nearly 60,000 people work in over 1500 distinct businesses in the sector. It is the perfect example of multiplicative convergence. The food and beverage industry depends for its success upon strength in a host of other sectors, and in turn generates growth in them as well. It relies on and contributes to strengths in nutritional science, biotechnology, manufacturing, materials, packaging, design, storage and logistics – all areas in which Toronto is Canada’s leader. Consider Toronto’s design sector... Nearly a third of Canada’s design workforce – more than 28,000 designers – hails from the Toronto metropolitan region. Together they comprise the third largest design sector


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in North America behind New York and Boston. Nearly three quarters of Ontario's architects, landscape architects, industrial, graphic and interior designers are located right here in the Toronto metropolitan region. Again, the success of the sector is a testament to convergence. The design sector depends on strengths in information and communications technology (ICT), marketing and advertising, product development, the creative and cultural industries, active product development, and sophisticated talent. And of course, a great design sector also drives success in these areas. Again, it is a flywheel. A third and final example: Toronto in general is Canada’s high-tech hub. Aerospace, pharma, advanced materials, ICT – it’s all here. But digital media is particularly strong. Why? Well, 30% of Canada’s ICT firms – and 40% of the Top 250 ICT companies – are headquartered in the Toronto metropolitan region. Mix in the region’s strength as Canada’s leading creative and cultural hub, and you can see why we are widely ranked 3rd in digital media for North America. There’s another great effect of convergence. It explains why Toronto is Canada’s startup and entrepreneurial capital, something few people realize. As of February 2012, 36% of Canada’s top 100 startups have their homes in the Toronto metropolitan region. On top of that, the OECD has concluded that Toronto has the fourth highest rate of entrepreneurship of any region in the OECD. No other Canadian region is close. And, yes, let’s acknowledge that our risk capital system is broken and that venture capital is too thin on the ground across Canada. Nevertheless, in the decade between 1999 and 2009, more venture capital was invested in the Toronto metropolitan region than in Montreal and Vancouver combined. What’s driving this? Convergence is very important, but institutions are also helping. I will single one out briefly, and yes, I do have a spousal conflict of interest! The MaRS Discovery District is playing a vital role facilitating this buzzing startup and entrepreneurial activity – in part because its founders, not least the wise and wonderful John Evans, envisaged it from the beginning as a convergence factory. Further to that


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over-simplified view of Toronto I sketched at the start, I used to hear MaRS described as a real estate play focused on life sciences. Not any more. MaRS has helped over 2,000 startups since it opened its doors in 2005. On the order of 850 firms are on the MaRS active roster now. Only about 20% are from the life sciences and healthcare sectors. The majority are ICT, cleantech, social purpose, and materials and advanced manufacturing. MaRS is by any measure the largest, most diverse, and influential business incubator in Canada and is respected worldwide. In fact, the Toronto metropolitan region is home to a host of incubators and accelerators, including: the world’s first Fashion Incubator, the Food Business Incubator, the Centre for Social Innovation, The Mississauga Technology Business Accelerator, VentureLab and the Markham Convergence Centre, and the Digital Media Zone at Ryerson. At the University of Toronto and our partner hospitals, the entrepreneurial activity has ramped up to the point that we’ve recently repurposed most of the Banting and Best buildings on College Street as incubation space. We haven’t even had time to advertise it. But I suppose it’s fitting, somehow, since Banting and Best were integral to one of Canada’s greatest innovations. As I said, startups and great ideas are blooming across the region because convergence is the lifeblood of innovation and entrepreneurship. Expertise in physics, computer science and electrical engineering together drive quantum computing. Optics, advanced manufacturing, chemistry, and nanotechnology drive solar and clean tech ventures. The conjunction of finance and ICT yields e-commerce initiatives. Genetics, bioengineering, and the health sciences come together in personalized medicine. There are dozens of examples of this type of convergent creativity in the Toronto metropolitan region. It’s all here if we would only take the time to notice and celebrate it. In fact, “It’s all here” might be an apt if cheeky slogan for the region. Put simply, we are good at everything because we are good at everything. It all comes together. Such broad, multi-sectoral strengths and the associated synergy and energy are what ultimately distinguish New York and London and Mumbai and Beijing and, yes, Toronto from many excellent smaller centres and clusters.


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Now, let’s pause for a second to consider New York. New York is the quintessential alpha region – the big dog. Financial services, healthcare, creative industries, manufacturing, you name it; they excel at it. But Mayor Michael Bloomberg saw a gap in their convergence portfolio – a shortfall in applied science and engineering. He acted on it with his Applied Science NYC initiative. Most here will have heard that Cornell University and the Technion, Israel’s Institute of Technology, have just won the right to build an applied science and engineering campus on Roosevelt Island in New York. The city is donating the land and $100M in capital to help build a facility that will bring together graduate students in applied sciences, entrepreneurs in residence, business incubators, venture capitalists, and other services for early stage enterprises. Audacious! They forecast $23B in economic activity over the next 30 years and some 600 spin-off companies. And that’s just the first phase of Applied Science NYC. I am delighted that President Jerry Hultin of New York Poly, affiliated with New York University is here because there is another consortium of universities led by NYU discussing a second phase with the City – a new Center for Urban Science and Progress that will focus information technology and engineering fire-power on the unique challenges of big cities. I’m a huge fan of Mayor Bloomberg and his vision, but in one respect, Toronto is already better positioned than New York. We’ve got applied science pretty well covered, as you can see at a glance from these peer review rankings, worldwide.


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And furthermore, U of T is delighted to be exporting some of that expertise to New York as a partner with President Hultin and others – including Carnegie Mellon University, the University of Warwick, and IIT Bombay – in the Centre for Urban Science and Progress in the Big Apple. That’s a good segue for me to comment very briefly on post-secondary education in the region. We are so fortunate to have ten universities and community colleges, many on multiple sites throughout the region, that help move the talent agenda forward. York University to the north and on its southern Glendon campus. Ryerson and OCAD right here in the Toronto city centre. The University of Ontario Institute of Technology in Durham is growing. And, spread through the entire metropolitan region, the five best colleges in Canada... Centennial, George Brown, Seneca, Humber, and Sheridan. Convergence again; this time in a set of extremely strong educational institutions with distinctive and highly complementary strengths… As I said, it’s all here. Let’s shift gears, now, and spend just a few minutes offering some ideas about how we might amplify the Toronto narrative and build on our success.


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First of four points: Let’s do some geography. What region, exactly, are we talking about? Well, here’s the map.

In everything I have said so far, including all those regional performance statistics, I have been referring to the Toronto Census Metropolitan Area. Just as convergence amplifies the multi-sectoral strength of the region, each municipality in the region brings unique assets to the table. The happy reality of this region is that it is not a continuous conurbation, an endless urban sprawl. There’s breathing room – a remarkable mix of densities and geographies. The green space is a huge asset – whether it’s the rolling hills of Caledon, or the Headwaters region or 220 kilometers of managed trails on acres of protected green space in Uxbridge… We’ve also got a wonderful range of urban settings – be it Brampton and Oakville to the west, Richmond Hill and Newmarket to the north or Pickering to the east. The region includes the Holland Marsh, Canada's very own ‘salad bowl’… And after you’ve had your salad course, you can enjoy the strengths and the attractions of downtown Toronto – you can go to one of the world’s great opera houses… Or perhaps, like me tonight, you


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can go cheer for the Raptors. Or, if you prefer, go out tomorrow night and pray for the Maple Leafs!

In short, the diversity of communities and places is astonishing. Just imagine how much better it would be if we had a transit system that allowed us to get from one part to the other and enjoy it… We’re also blessed with some very strong and unique municipal leaders. Mayor McCallion in Mississauga and Mayor Scarpitti in Markham, for example – two stellar individuals who are very different in many ways but are both effective champions for their cities, and both driving an active innovation agenda. In that regard, yes, there are municipal rivalries. But like it or not, the diverse municipalities in this region, including the great City of Toronto, are co-dependent. And like or not, in the boardrooms of China, India, Brazil, and dozens of other countries, Markham and Mississauga shine not just on their own, but because they are unique destinations in the Toronto region. Let me suggest therefore, that we abandon vague references to the GTA. Instead, let us use the Census Metropolitan Area and talk about the Toronto Metropolitan Region. Let me also suggest that we stop overstretching that Region to include adjacent Metropolitan Areas. Of course there’s lots of traffic and collaboration with the Hamilton and Waterloo regions. Yes, lots of people stream out of Metro Toronto to Muskoka or the Kawarthas. All these boundaries are completely porous and necessarily arbitrary. But without some boundaries and some effort to create a common narrative inside those boundaries, there’s not even a team of friendly rivals. There’s just incoherence. Second of four points: Let us dedicate ourselves to international partnerships – academic, business, civil, political – especially in East and South Asia. This is part of a modern Copernican revolution: away from the zero sum game of Brain Drain versus Brain Gain, and into the new world of Brain Chains – interlocking jurisdictions that are stronger together. Yes, we hear that more immigrants are going west these days. Well, given the current


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transit situation, and given the talent still pouring into the Toronto metropolitan region, I’m not losing sleep about that shift. The Toronto metropolitan region is still the nation’s immigration gateway and magnet with well over 40% of all new Canadian immigrants settling here. More importantly, as you can see on any university or college campus, we have an amazing cultural kaleidoscope. We have the largest foreign-born population of any region in the world. Ours is a region where East meets West – and where bridges to the Global South can be readily built. We could not be better positioned to prosper from a globalizing economy. It’s multiplicative convergence again: this time in terms of populations, cultures, and perspectives. Third: If we can agree on boundaries and a narrative, perhaps we can get our fair share of tax dollars back into the region. I grew up in Woodstock, when it was called the Dairy Capital of Canada. You know, it’s a central principle of animal husbandry that you don’t starve your cash cow, especially in tough times. Every time I hear someone talking about “Ontario the Profligate”, where our province stands in for Greece and the City of Toronto takes the place of Athens, I have to contain an irate rejoinder. The facts, once again, are much different than the sound bite: Ontario spends less per person than any other province – $2,000-odd dollars less per person than the average of the other nine provinces. Meanwhile, as the Drummond Report clearly showed, Ontario continues to subsidize many other parts of Canada: to the tune of about $12.3B, net, per annum. And yes, that’s net of so-called equalization payments that we receive – and after the current government in Ottawa has taken some very commendable steps to improve things. Almost $6B of that $12.3B comes from the Toronto region. Can you imagine how different this region would be if we got even half of those tax dollars back into play each year? And while I’m at it, someone should do the same math for Queen’s Park. Credit where it


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is due: the current Ontario Government has done some great things for the Toronto metropolitan region. Nevertheless, I have a suspicion that, even as successive Ontario governments have complained about redistribution by Ottawa, they have been doing a good job redistributing tax dollars from Toronto to other regions in this province. Let me add three important caveats. We can’t prosper long-term only by repatriating more of our existing tax dollars. We can’t get wealthy by counting other people’s money. And we should be net contributors to this great province and great nation, given all the advantages this region has. But we make it far too easy for Ottawa and Queen’s Park to starve their cash cow by not presenting a coherent narrative that underscores the economic importance of our region. On that point, ladies and gentlemen, Toronto’s Gross Metropolitan Product [GMP] represents 45% of Ontario’s GDP and 20% of Canada’s GDP. Estimates vary but even at the conservative end the Toronto metropolitan region contributes more to Canada’s GDP than New York, Chicago, and Boston contribute to the United States’ GDP. Combined! According to less conservative estimates, you could throw Los Angeles in, too, to match what we do for Canada. And if the Toronto metropolitan region were a country, it would have a larger GDP than Finland or Denmark or Hungary or Israel. Make no mistake: as the Toronto metropolitan region goes, so goes Canada. Fourth, let me say it again. Can we get on with fixing our transportation challenges? I’ll bet that even those who disagree with yesterday’s vote by Toronto City Council are half-way relieved that we are now less likely to leave $8B on the table. But, as we know, the current plan is simply one step to addressing a much bigger set of regional issues. About 70% of the Toronto region’s population depends upon cars for commuting. The resulting congestion – as the Toronto Board of Trade has reminded us compellingly in report after report – takes a huge toll. Annual costs for commuters have been estimated at $3.3B with an annual economic drag on the region of $2.7B. Those estimates are from 2006 – which seems like the good old days on the highways now. Average round-trip


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commuting time in Toronto is 80 minutes, the worst of all the cities surveyed in the Toronto Board of Trade’s annual scorecard. Imagine if we had Taiwan’s High Speed Rail line. It shuttles people at 300 km/h, covering the length of the island, from Taipei to Kaohsiung in 96 minutes. That’s the distance from Niagara Falls to Kingston. Try covering that in 96 minutes on a Friday afternoon! Knitting the Toronto region together effectively and efficiently with better transportation will change the dynamic among municipalities, promote synergy, distribute expertise and talent, advance innovation, and greatly improve the quality of life for the region’s population. Nothing – and I mean nothing – will improve the economic prospects for Ontario like investing in transportation in the Toronto metropolitan region. Let me close where I started. Somehow, we seem to be reluctant in this region to sharpen our great storyline and to tell it. Maybe we are like Woody Allen’s movie persona – too neurotically self-critical. In fact, in planning this speech, Carol Wilding’s terrific team was back and forth with my office and me, with everyone looking at how I might diagnose more problems and offer more prescriptions. Well, I’m a professor of medicine, but I’ll offer a psychiatric diagnosis – and make it a self-diagnosis, too. How about chronic hypochondriasis? A fixation on illness. Sure, there are things to treat. But on balance, the Toronto metropolitan region could scarcely be in a more brilliant position to thrive for decades. With that diagnosis, ladies and gentlemen, perhaps we can think of today as group therapy. Perhaps we can agree on our narrative and start sharing it relentlessly. We need to do that because it will help us continue to excel. And we should do it, not just for ourselves, but because the story of the Toronto metropolitan region is Canada's most important success story. Long after we’ve stopped profiting from selling potash and petrochemicals…


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And long after the current austerity measures, political squabbles, and global economic upheavals… …the dynamic diversity of the people and places of the Toronto metropolitan region, our convergent innovation across economic sectors within and beyond the region, and the entrepreneurial energy unlocked by our creative confluence of cultures, will continue to be Canada’s single greatest asset. Thank you very much.

Why the Toronto Region is Canada’s Innovation Leader · 2012-03-24 · Why the Toronto Region is Canada’s Innovation Leader 3 Well, in Toronto, I suspect someone in the same role

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