Great defence industrial policy, Carney. But how do we know it’s working?

Open this photo in gallery:

Douglas Nevison is a former senior public servant, and author of A Model Evaluation Framework for Industrial Policy in Canada, published by the Institute for Research on Public Policy (irpp.org).

Steve Lafleur is a research director with IRPP, who oversees the institute’s industrial policy research.

Prime Minister Mark Carney’s February announcement of Canada’s new Defence Industrial Strategy was historic in its context and its scope: As the country continues to seek ways to retool the economy in the face of U.S. trade tensions, including unpredictable tariffs, the amount earmarked is equally staggering at more than half-a-trillion dollars.

The stakes are high, the timelines are tight and the margin for error is slim.

Effective industrial policy is built on the three-legged stool of sound strategy, good governance and rigorous evaluation. Take out one leg, and it falls apart. Having a strategy is important. But without strong institutions and a clear commitment to learning and accountability, ambitious programs are likely to fall short of their objectives.

Campbell Clark: Carney was finally in the House, but his opponents had already lost interest in the war

That is precisely why Canada needs a centralized, arm’s‑length evaluation unit at the heart of its industrial policy efforts. When governments take on multiple transformative projects simultaneously, rigorous and independent evaluation is not merely a bureaucratic formality, it is a core function of good governance and the sound stewardship of public resources.

Without a clear, consistent mechanism to assess what is working, what isn’t and where course corrections are needed, even the most ambitious strategies are prone to failure.

Yet, some of the challenges inherent in establishing better oversight are well-entrenched. A recent Organization for Economic Co-operation and Development report noted industrial policy is often hindered by a “lack of transparent, publicly available and easily accessible information.” That makes it difficult not only to monitor progress of continuing projects, but to learn from them. It’s hard to know whether to stay the course or change directions without timely, rigorous, independent analysis.

Politically, evaluation can be perceived as a nuisance.

After all, no one wants to admit to making the wrong decision, so it’s often more convenient to quietly slink away from failures rather than learning from them. This came up time and time again during the two years of consultations the Institute for Research on Public Policy conducted as part of its industrial policy research program: If we don’t learn from failure, we’re bound to repeat it.

Robyn Urback: Mark Carney can and should travel the world. But he must still be accountable to Canadians

Evaluation is particularly important when governments are undertaking many large initiatives at once, in a period of heightened uncertainty. That is happening right now, with the concurrent launch of new federal entities – including Build Canada Homes, the Defence Investment Agency and the Major Projects Office – to oversee significant investments. Moreover, multibillion-dollar, multiyear spending programs are also being channelled through existing entities such as the Canada Development Investment Corporation, the Canada Infrastructure Bank and the Canada Growth Fund.

To strengthen the role of evaluation in Canada’s industrial policy ecosystem, we can look to our allies in Australia, who established the Australian Centre for Evaluation within its treasury department. The centre works with evaluation units across government to help design policies and ensure that programs deliver value for money. Creating a similar agency in Canada would ensure greater accountability and promote a culture of learning from experiences – both good and bad. Evaluation can also be synced with the budgetary cycle to promote more timely and coherent fiscal decision-making.

Other countries with specialized government evaluation units include the Netherlands and Portugal. And Britain has an Evaluation Task Force, which is charged with “ensuring robust evidence on the effectiveness of policies and programmes.”

Opinion: Canada’s new defence policy must do away with the old orthodoxies

Canada’s new Defence Industrial Strategy is a necessary policy shift. It is also a risky one: Previous military procurements as well as recent public investments in other industrial policy areas, such as Northvolt batteries and Lion Electric buses, have demonstrated things can change dramatically once government support is already committed.

The establishment of a centralized evaluation unit could help ensure a credible evaluation plan for the Defence Industrial Strategy to keep objectives clear, track results, and learn what works and what doesn’t work to enable course corrections. Most importantly, such a mechanism should be published as soon as possible to start building trust with Canadians. Once in place, this unit could help other departments and agencies strengthen evaluation in important federal decision-making processes.

Funding should be over and above the budgets of existing departmental evaluation units. This may prove politically challenging as the creation of a new bureaucratic entity would surely face headwinds as existing departments face budget cuts. However, if this time really is going to be different, paying a few million dollars to avoid multibillion-dollar debacles in the future is worth it.