Canada is about to make historic investments to reorient the economy. The scale and focus of these investments should serve as a wakeup call to anyone working in Canadian postsecondary education or relevant provincial ministries—signaling both opportunity and necessity for change.

The upcoming federal budget is expected to allocate billions for nation-building initiatives like modernizing defence and space infrastructure, expanding computing capacity, and developing renewable energy. The potential rewards–sovereignty, growth and competitiveness–are great. As is the risk. We are hedging our bets on talent and innovation.

But as we laid out in our recent report, Testing Times, the postsecondary sector is facing a crisis. Just as Canada is ramping up, colleges and universities are scaling down–closing programs, departments and campuses. Postsecondary institutions across the country need to modernize and re-align their mandates for growth–as outlined in A Smarter Path—but they lack the financial footing, flexibility and connectivity with industry to do so. 

This was the context in which RBC Thought Leadership and our partners at the Business + Higher Education Roundtable convened a summit on Talent, Technology, and a New Economic Order. In September, about 60 industry and postsecondary leaders came together at RBC’s head offices with a shared interest: ensuring Canada’s historic investments yield historic rewards. We focused on three areas of national ambition that depend heavily on postsecondary for talent and innovation:

• Defence and space capabilities

• AI and digital technology

• Major energy projects

The following summarizes the imperatives, opportunities and bold ideas that were discussed.

Defence and Space Capabilities

Today’s threats to sovereignty and security are not the ones that Hollywood war films call to mind. They are increasingly complex and defending against them requires economic and digital strength—and not just on earth. National security and prosperity are increasingly dependent on space infrastructure like satellites, which Canadians use for everything from surveillance and environmental monitoring (some key climate change variables are only measurable from space¹) to daily communication and navigation.

But Canada’s capabilities in space, and in defence more broadly, are falling behind global competitors. Government procurement contracts—critical for maintaining and advancing capability and innovation—take significantly more time than comparable procurements in other jurisdictions. Our commercialization of space products and services trails other countries. And years of underspending has hurt Canadian defence capacity, with acute personnel shortages spanning the armed forces; trades and technician roles are particularly understaffed, as are engineers, including specialists in naval combat and aerospace.²

Spending commitments for defence and space provide a historic opportunity.

• Canada is spending $9 billion on defence in 2025–2026, including $2.6 billion for recruitment and retention, and has pledged to raise defence spending to 5% of GDP annually by 2035.

  • In addition to building conventional defence capabilities, this is an opportunity for Canada to innovate and advance new technologies for purposes like surveillance and forecasting.

  • We can also lean into existing strengths. For example, Canada is already ahead in developing wildfire monitoring capability (microsatellites) that can be used to track fire activity and inform management efforts at home and internationally.³ In addition to threatening lives and livelihoods, wildfires can destroy critical infrastructure like communication systems and energy grids and cause political instability — our ability to respond quickly is an important part of a national defence strategy. 

• The federal commitment to establish a Bureau of Research Engineering and Advanced Leadership in Innovation and Science (BOREALIS) is an opportunity to invite industry and postsecondary partners to quickly advance dual-use technology (defence and other civilian applications).

Three ideas from the summit that would give Canada an edge in defence and space:

• Position Canada as NATO’s firefighting nation

  • Use a portion of new defence spending to grow earth observation capabilities, AI-enabled disaster response and drone technologies for wildfire management.

• Build BOREALIS to match models like DARPA and ARIA

  • Both the Advance Research and Invention Agency (ARIA) in the U.K. and the Defence Advanced Research Projects Agency (DARPA) in the U.S. fund high-risk, high-reward projects, free from political constraints and academic processes.

• Retrain automotive workers for shipbuilding and space sectors

  • Design new competency-based postsecondary programs that let experienced workers with relevant skills move through programs quickly–saving time and money–on their way to an industry-recognized credential.

AI and Digital Technology

Companies and organizations around the world are adopting AI to achieve productivity gains and become more efficient. Canadians are moving slowly by comparison. Despite being home to a concentration of the world’s top AI researchers and foundational AI models, when it comes to AI maturity, about 70% of Canadian companies are “crawling” or “walking,” and few (7%) are “running” —less than half the proportion of runners globally (17%) .⁴

Our top talent tends to move abroad, as do their ideas (most AI patents developed in Canada are owned by foreign entities⁵). And Canadians are less confident leveraging AI tools to boost productivity at work than our global peers.⁶

Government commitments and initiatives are opportunities to drive progress.

• Defence funding could help drive postsecondary-industry collaboration on AI research and innovation (to commercialize dual-use AI, for example).

• In the days following the summit, the Minister of Artificial Intelligence and Digital Innovation Evan Solomon announced a new AI Strategy Task Force of Canadian researchers, entrepreneurs and industry partners charged with developing a federal AI Strategy. The strategy will include “actionable insights and recommendations” to drive leadership in areas including education and skills, as well as commercialization.⁷

Now is the time to invest in home-grown innovation and quickly scale up and retain AI skills to capitalize on our advantage. Here are three ideas from the summit:

• Buy Canadian technology first

  • Canadians–businesses, postsecondary, governments– should be the first customers for our own innovators, rather than wait for U.S. market validation.

• Allocate more corporate resources for staff training

  • Employer-sponsored training in Canada lags international peers⁸ –our top 100 companies, based on market cap, should increase corporate training budgets and partner with postsecondary providers to deliver AI upskilling that develops internal capacity for productivity and growth.

• Teach AI skills across postsecondary disciplines

  • Canadian colleges and universities should ensure students, no matter the program, develop AI literacy skills that they can leverage post-graduation.

Major Energy Projects

Canada faces unprecedented energy demand as we expand computing and space infrastructure and pursue industrial growth. Net-zero policies driving a clean-energy transition place additional pressure on electrification and create demand for critical minerals—key to batteries, solar panels, magnets and wind-turbine motors. And oil and gas will continue to be a critical part of the energy supply mix to help reduce costs for consumers and ensure reliability.

A new Major Projects Office plans to fast-track energy projects to meet rising demands but is up against widespread skills shortages. Older skilled-trades people, for example, are retiring at faster rate than they are being replaced,⁹ and engineering students are not pursuing mining pathways (mining represents just 1% of engineering enrollments¹⁰).

Skills gaps are also an issue. Massive infrastructure projects will only be successful with people who can collaborate and solve problems in real time.

Canada’s nation building agenda creates momentum that postsecondary, industry and governments can use to address skills challenges and meet energy demands:

• High-profile projects present an opportunity for postsecondary providers and industry to communicate career opportunities in energy sectors.

• Indigenous populations are growing faster¹¹ than the general population, and are often closer, geographically, to energy projects. Strong partnerships and education strategies that deliver community-based programming can empower community members to take on key roles and fill skills gaps.

• Canada has delivered on major energy projects before—nuclear refurbishments at the Bruce A Nuclear Generating Station in the early 2010s is a great example.

Three ideas from the summit to capitalize on Canada’s energy momentum:

• Backstop training for major projects

  • Provincial and federal governments should support human resource strategies and training initiatives, particularly for planned projects that are expected to stall due to a lack of talent.

• Build an energy skills strategy

  • Major players in the energy industry need to dedicate time and resources to inventorying and projecting skills needs, factoring in evolving technology. They should work with postsecondary providers to design training programs that prepare graduates to hit the ground running.

• Develop skills in partnership with Indigenous communities

  • Industry and postsecondary institutions should partner with Indigenous communities to design and offer training programs that prepare Indigenous talent for careers in the energy sector.

Enabling Transformation: Bold ideas for change

The path forward will take an urgent and coordinated effort from governments, postsecondary institutions and industry. The world is not standing still. Competitor nations are racing ahead in space exploration and AI adoption, while also investing in skills and infrastructure. Canada has the tools to compete—and lead—but only if we align our systems to meet this moment with urgency and ambition. Summit participants surfaced the following recommendations for governments, postsecondary and industry to take immediate action on.

Federal Government

Leverage the AI strategy for skills: Canada’s new AI strategy should have guidance for postsecondary that supports their modernization, e.g., explicit advice that helps institutions efficiently and effectively develop necessary AI skills (including an understanding of risks and when not to leverage AI) among staff and students, across disciplines.

Build Defence and Energy Workforce Alliances: Canada plans to launch up to five Workforce Alliances “to tackle urgent labour market challenges, drive growth and advance industrial strategies.”¹² These should include alliances in defence and energy.

• Each alliance should bring major employers, unions and postsecondary leaders together to talk supply and demand.

• Alliances should inventory projects and programs already in place; detail current and projected skill gaps, regionally; consider how skills demands will evolve given new technology; identify and engage appropriate program providers to meet skill needs.

Capitalize on global strength in wildfire management: Use a portion of new defence spending to grow earth observation capabilities, AI-enabled disaster response and drone technologies for wildfire management.

Empower the Defence Investment Agency: This newly announced agency should have the mandate to streamline goals and operational requirements across the Department of National Defence, the Department of Public Works, Public Services and Procurement Canada and other departments, as applicable.

Modernize research and innovation funding: Funding criteria should focus more on outcomes and less on process.

• Consider a new research and innovation agency, like the Defence Investment Agency, to review and coordinate “tri-agency” funding and other relevant programs–ensuring a balance of funding directed to strategic priorities, and between inquiry–and mission-driven research. Such an agency could lead or support additional changes like:

  • Embracing a model like DARPA with BOREALIS: fund high-risk, high-reward projects, free from political constraints and academic processes. 

  • Reforming the Scientific Research & Experimental Development (SR&ED) tax credit (building on reforms made in 2024) to incentivize commercialization.

  • Revamping and expanding national sandboxes,¹³ creating more opportunities for collaborations between industry, military, universities and colleges, focused on rapid prototyping and testing new defence and space capabilities.

  • Ensuring any new funding commitments are leveraged strategically. For example, at the summit, the federal government shared plans to fund additional research chairs to attract top American academics to Canada. Funding should be tied to strategic priorities and focus on attracting talent with experience driving mission-driven research projects. New chairs should be expected to help build capacity and act as champions for change in Canadian universities.

Backstop training for major projects: Coordinate with industry and relevant provincial governments to provide immediate financial support for training required to advance major energy projects.

Incentivize talent recruitment and retention: Offer tax credits for global talent needed to fill urgent skill shortages (i.e. energy project managers), and to retain exceptional Canadian graduates (i.e. in technology fields). 

Stabilize annual international student caps: Outline realistic, stable international student targets that enable appropriate population inflows and longer-term institutional planning.

Prioritize Canadian technology: Commit to using Canadian technology, including AI and space-based technologies, unless no domestic supplier offers an appropriate product or service. Prioritize Canadian technology in all future procurements and seek to be an anchor customer for promising Canadian start-ups.

Provincial Governments

Protect postsecondary systems: Increase domestic per-student funding (potentially tied to performance criteria or outcomes) in line with inflation. And/or offer more flexibility for institutions to set tuition, ensuring access is protected with robust government student assistance systems and institutional set-aside programs (that reserve a portion of tuition revenue for financial aid).

Offer strategic direction: Outline modernized expectations for transferable skill development.¹⁴ Institutions should develop AI literacy skills and collaboration skills, for example, across disciplines.

Backstop training for major projects: Coordinate with industry and the federal government to provide immediate financial support for training required to advance major energy projects.

Facilitate work-integrated learning partnerships: Consider replicating the U.K.’s Knowledge Transfer Partnerships, a granting program co-funded by industry partners that pairs recent grads with business or community organizations to solve innovation challenges.

Fund innovative pilot projects: Help institutions break the mold and develop competency-based education programs divorced from seat-time, for example, and ensure policy and qualifications frameworks are set up to scale successes.

Prioritize Canadian technology: Commit to using Canadian technology, including AI, unless no domestic supplier offers an appropriate product or service. And prioritize Canadian technology in all future procurements.

Postsecondary Institutions

Meaningfully engage employers: Explore new models for industry involvement. Build on successes engaging industry, for example, through university continuing education departments and colleges’ program advisory committees (which involve industry and community partners in curricula development).

Ensure all students graduate with transferable skills: Develop work-ready skills like AI literacy, adaptability, entrepreneurship, communication and collaboration in courses, assignments and work-integrated learning experiences.

Expand access to work-integrated learning: Including but not limited to internships and co-ops; practical programs with applied learning opportunities or immersive field trips, like visiting mining sites with industry partners are also great examples of work-integrated learning.

• Create opportunities for students to work together across disciplines–like they will in the workforce–to solve problems.

• Explore opportunities for technology to build experience (i.e. simulators).

Facilitate greater career mobility: Enable workers to navigate a dynamic economy. Consider:

• Multi-disciplinary programs like the University of Calgary’s new energy science program, which covers a range of in-demand energy fields.

• Incremental credentialling, for students in programs with low completion rates, like apprenticeships, so they receive recognition for skills gained.

• Competency-based education programs that allow adults with relevant skills and experience to earn credentials quickly, learning at their own pace.

• Skills-based transcripts that position graduates to articulate their competencies and succeed as employers shift toward skills-based hiring.

Develop community-based programming: Work closely with Indigenous communities and industry to develop tailored training programs. Consider using mobile training units, and remote or hybrid learning formats (where internet connectivity allows).

Offer upskilling and reskilling programs: This should include programs aligned with opportunities in defence and energy sectors, and to support an AI-literate workforce. Programs must meet the needs of learners with competing responsibilities, embracing formats like remote/hybrid, intensive learning, and competency-based education.

Prioritize Canadian technology: All colleges and universities should commit to using Canadian technology, including AI, unless no domestic supplier offers an appropriate product or service.

Industry

Send executives to participate in federal Workforce Alliances: They should come prepared with long-term project plans and skills projections.

Allocate staff resources to inform program development: Industry representatives with insight into day-to-day and forecasted long-term skill needs should be involved in designing postsecondary programs and work-integrated learning experiences. They should commit to hiring students who complete those programs.

Allocate more corporate resources for staff training: Canada’s top 100 companies, by market cap, should commit to a minimum annual training budget of $500 per employee – roughly double the current estimated industry average.

Innovate with postsecondary partners: Contract researchers at Canadian universities and colleges to overcome issues or improve productivity with new processes and tools. Consider a “relay race” partnership approach, e.g., university ideation, college or polytechnic application, industry deployment.

Reach students in high-schools, colleges and universities: Shareinformation about rewarding careers in sectors in need of talent, like energy. Host secondary and postsecondary student field trips that provide sightlines into specific industries.

Leverage AI for productivity gains: Integrate AI into core operations, not simply pilot projects and provide access to AI upskilling that develops internal capacity for productivity and growth.

Build mutually beneficial Indigenous partnerships: Engage communities surrounding major project sites to lay the foundation for meaningful employment and community benefits, including working with postsecondary to design and offer tailored training programs.

Hire for skills: move from hiring candidates who have held the same or similar job title previously, toward hiring candidates with skills and experience that align with expectations (or skill families), supporting a more mobile workforce and sending clear signals to training providers about which skills are needed.

Prioritize Canadian technology: Canada’s top 100 companies, by market cap, should commit to using Canadian technology including AI and space-based technologies, unless no domestic supplier offers an appropriate product or service.

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Canada is embarking on a major economic pivot and the country’s colleges and universities need to be a key driver in that transformation.

The postsecondary system has long been an important part of the Canadian identity. It has driven discoveries, delivered accessible, quality education and provided economic anchor institutions in communities across the country, underpinning progress and prosperity.

But the sector is not as strong as it once was, and its role in building Canada’s future is under threat. Many colleges and universities are financially unstable, and the sector is often perceived as unresponsive to economic needs; these issues are mutually reinforcing. Postsecondary institutions across Canada are closing programs and campuses and reducing staff to bring temporary budgetary relief. But broader policy and funding changes are needed to ensure the sector’s sustainability.

Like the country’s economy, postsecondary needs to pivot.

Earlier this year, we released a report as part of our Growth Project: A Smarter Path. We offered recommendations to improve the sector’s relevance, including integrating work and real-world experiences into programs and enabling private-sector investment in research and development. Over the summer, RBC Thought Leadership and partners dug deeper, engaging leaders to delve into higher education’s role in addressing Canada’s economic growth challenges.¹ The message was clear: the sector is facing a crisis. 

Moved by this urgency, we identified five requirements that are critical to reforming the postsecondary sector and ensuring its relevance to Canada’s new economic strategy.

1. A new financial arrangement

• A strong postsecondary sector requires sufficient, stable financing.

• Public spending on Canadian colleges and universities has been steadily decreasing.

  • Once a global leader in both funding and attainment rates², public spending on postsecondary institutions in Canada has fallen from 1.47% of GDP at its height in 2011, to the current OECD average of 1.1%.³ Canada is not the only country to reduce spending but “few countries have seen declines as sustained and as wide-ranging as we have ,”⁴ according to a report.

  • As a percentage of GDP growth, public spending is $13 billion short of where it was 15 years ago.⁵

• Domestic tuition has not helped make up for the growing shortfall.

  • Provincial governments essentially set tuition levels for most programs by placing caps on what providers can charge; under the current caps, most undergraduates are paying roughly what they would have paid 10 years ago for the same program.⁶

  • Partly as a result, Canadian students often encounter very large classes which help to subsidize more expensive programs–like medicine.

• Unregulated international student tuition has been a lifeline for some institutions and subsidized domestic student programming

  • Between 2010 and 2023, international student tuition was responsible for 100% of new operating revenue in the sector.⁷

• But in 2024, the federal government capped intake on permit applications and restricted post-graduate work permit eligibility—a major draw for many international students—to college programs linked to national labour shortages.⁸

  • Ontario has been hit particularly hard: six institutions are reporting more than $140 million in financial damage—losses, cuts and deficits—since 2024.⁹

  • By one count, there have been more than 850 program suspensions or closures at institutions since the caps were introduced, and 35 institutions reporting 100 or more job impacts.¹⁰

  • The federal list of programs eligible for post-graduate work permits has changed multiple times in the span of a year¹¹ making it difficult for institutions to plan.

• Without a new financial arrangement, institutions are forced to make decisions with their viability in mind, rather than the country’s prosperity. These decisions will have important implications for education quality and access, especially in rural communities where workforce shortages are already acute, as well as the country’s ability to retain top talent.

We see a few options to bring stability to the sector:

• Increase public spending on postsecondary. That could include more provincial spending, more federal spending, or both.

  • Government funding could be tied to specific criteria or outcomes.

  • One idea raised in our cross-country conversations was to explore a new funding arrangement between the federal government and Canada’s U15–our leading research universities. Participants considered whether Canada could issue special funding to advance research in areas of national interest, potentially freeing up more provincial funding for redistribution.

  • But given Canada’s aging population and competing calls for funding in priority areas like health care, the level of investment needed is unlikely to come from government alone.

• Another option is to create a larger role for student fees. Offering institutions more flexibility when it comes to tuition could bring a needed influx of funding that stabilizes budgets and encourages a new level of responsiveness to evolving student learning preferences and labour market needs.

  • Greater tuition flexibility would mean higher rates for those who can afford it. To maintain access for those who cannot, provinces together with the federal government should ensure robust financial assistance systems remain in place. Institutions could also be required to reserve a share of tuition revenue for means-tested student aid.

• If international student fee revenue is to continue playing a significant role in funding institutions (as it has for colleges), Canada will need to offer more stable targets that balance a national interest in aligning immigration with forecasted skills needs with an institution’s need for longer-term institutional planning.

2. Responsive mandates

• With greater financial footing, institutions can play a more strategic role in Canada’s economic pivot—advancing specific priorities. They will be better positioned to do that with mandates that respond to more distinct learner or industry needs. As we noted in A Smarter Path, “we neither need nor can we afford to have every institution offering the same menu.”

• From afar, Canada’s postsecondary system looks highly differentiated. It includes universities, colleges, institutes, polytechnics, trade unions and employers involved in apprenticeships, as well as additional and sub-categorizations of providers in some provinces.

• But the distinctions between some of these labels are murky. The system has long been accused of having an “academic drift” towards sameness, with the university model serving as the goal.¹² These pursuits have been at least partially motivated by a need to generate revenue within the confines described above.

  • The recent growth in college bachelor’s degrees, and the push for master’s-level offerings are examples.¹³

  • The style of applied, industry-driven learning that Canadian colleges are known for is expensive to deliver–often requiring technical equipment and small class sizes. With a new funding arrangement, colleges could provide more of this training for Canadians of all ages, including adult learners in need of skills upgrading and youth pursuing careers in the skilled trades where there are persistent labour shortages.¹⁴

• Within the broad categorizations of colleges and universities, institutions can lean into thematic strengths and develop unique reputations.

  • A couple of examples where this is happening to some degree: Lambton College’s collaboration with the local petrochemical industry, and Royal Roads University’s experimentation with flexible learning models.

• Responding quickly to industry and community training needs will continue to be an essential part of Canada’s economic transition and presents opportunities for institutions with aligned mandates.

  • Plans to fast track major energy projects, for instance, will need to overcome large, technical skill gaps in rural and northern parts of the country.

  • Canada’s armed forces are suffering severe skills shortages in aviation, search and rescue and technicians, to name a few.

  • Of more than 1,000 Canadian adults surveyed recently, less than half felt they could use AI tools effectively, and less than a quarter indicated having received AI training,¹⁵ pointing to opportunities for adult upskilling programs.

• Providing more control over tuition—and creating market competition—might naturally lead institutions toward greater differentiation and specialization.

• Better data to inform planning would also help illuminate opportunities to specialize and do so strategically.

  • Compared to other jurisdictions, Canada tracks little information about how our education has been functioning, let alone information that would enable foresight about where it needs to go.

  • With better data, institutions could examine, for example, whether certain demographics of students have more success with some program formats than others. And when it comes to lifelong learning, institutions could gain insight into how credentials complement one another or stack together to impact career advancement in specific industries.

We see opportunities for institutions to be more responsive, including: 

• Updating institutional mandates in ways that play to and develop their unique strengths and meet specific labour force needs (for example, by concentrating on industries or learner demographics).

  • The federal government plans to launch new Workforce Alliances of employers, unions and industry groups, focused on skill development in “sectors under pressure” like energy and advanced manufacturing.

  • Postsecondary providers with relevant mandates should be at these tables, and quick to respond with relevant programming.¹⁶

• For provincial governments: playing a coordination role, ensuring institutional mandates complement one another and align with social and economic needs, creating incentives for institutions to develop and lean into thematic strengths.

• For the federal government: engaging the provinces in developing regulations to standardize data collection and offering consistent, up-to-date, granular data that allows for program-level analysis and student-level outcomes tracking.

3. Modernized programs and services

• College and university programs and services need to be more aligned with the world of work and the opportunities available to graduates.

• Traditional education models make less sense in a context where AI and access to information is ubiquitous. We need to rethink what and how students learn and demonstrate learning; educators have traditionally focused on ensuring students can answer tough questions, we should be equally concerned with whether they can ask creative ones.

• Analytical thinking, flexibility and agility, are the most sought-after skills among employers and have been for some time.¹⁷

  • Industry leaders emphasized entrepreneurial thinking, communication, and a basic awareness of how businesses operate.

  • All programs should be helping students develop and hone these skills, which are best gained in dynamic learning contexts that weave in real-world scenarios, for example, through applied projects, co-ops or internships.¹⁸

• Demands for technological skills, including AI and big data, are fastest growing.¹⁹

  • Canada needs its postsecondary programs to produce graduates who are competent technology users; to know when and how to leverage AI to increase productivity, while being aware of its limitations and risks.

• Institutions need to reckon with technology and AI themselves.

  • Canadian organizations of all kinds, including government,²⁰ are using AI to find efficiencies and improve client experiences, motivated, in part, by the costs of inaction.²¹

  • Home to some the country’s top technology experts, postsecondary should be moving much faster, finding ways to integrate the latest technology in programs and supporting services to optimize student experiences, operational efficiency and program quality.

  • There are good examples in other jurisdictions: Arizona State University built proactive student support systems based on predictive analytics²² and is using AI to support student decision making with responsive career guidance.²³

• As economic volatility becomes our new normal, lifelong learning needs to as well.

  • This is a key priority for federal and provincial governments. For example, Canada is investing $450 million in reskilling,²⁴ and Alberta’s new job strategy targets adults changing careers.²⁵

• More program offerings should reflect and appeal to mid-career adults in need of skills upgrading or retraining.

  • When faced with job disruptions, Canadians have tended to pursue short, career-focused programs, if any.²⁶

  • Appealing to adults in these situations means being mindful that they will likely be keen to get back to work as quickly as possible, likely have prior learning and experience to bring to the table, as well as competing priorities (like bills to pay and children to care for). They may prefer to learn at their own pace and according to their own schedule.

  • Competency-based programs have taken off in the U.S. but are rare in Canada. These programs award credentials based on demonstrated mastery, not the amount of time enrolled in a program.²⁷

We see tremendous opportunity and imperative for modernization, including:

• Rethinking program content, delivery models, assessments, and instructor roles to optimize learning in a modern context.

• Ensuring every program offers applied learning opportunities that develop transferable skills like problem-solving, communication, technology literacy and entrepreneurial thinking.

• Leveraging technology and AI. For example:

  • Training faculty and staff to:

    • Effectively integrate AI as part of the student experience (pen and paper assessments to avoid “cheating” with AI are missing the point)

    • Identify places where AI can relieve their own workload.

  • Offering technology-enhanced learning opportunities (e.g., hybrid and distance learning, simulations) and support services.

• Serving the needs of lifelong learners by presenting all credentials as steppingstones rather than discrete offerings.

  • Expecting that students will return for education multiple times throughout their lives and making that process straightforward and rewarding—this could include experimenting with new models like competency-based education.

4. Updated governance structures

• Being more responsive and modern requires more institutional flexibility.

• Externally, regulatory bodies and policy frameworks can be overly restrictive and work against the changes described above. As an example, Ontario’s funding model discourages colleges from developing part-time programs that would appeal to adults in need of upskilling²⁸ and across Canada, qualifications and credentials frameworks centered on instructional hours discourage institutions from experimenting with individually-paced programs like competency-based education.

• Internally, risk-averse institutional cultures, fragmented governance environments and restrictive collective agreements often layered with tenure, can impede leaders’ ability to take decisive action.

  • The processes involved with developing programs, revamping them or shutting them down to evolve in step with the world outside institutional walls are all very much informed (and paced) according to the structures inside those walls.

A roundtable participant captured the situation well:

[Institutional leaders] are being asked to run institutions like businesses, but are still operating in a legal and regulatory structure designed for a public service model. It’s completely mismatched.

80% of revenue and 85% of expenses are controlled by someone else, two governing boards and four sets of stakeholders think they’re the majority shareholder—but none of them are. The institution is accountable to 200+ pieces of legislation. Meanwhile, industry is moving in weekly cycles. It’s no wonder industry is losing faith in us. We’re bordering on obsolescence—not because we aren’t capable, but because we’re structurally constrained.

We see a need to explore options to improve efficiency and flexibility

• Provincial governments could engage postsecondary leaders to understand and dismantle regulatory roadblocks, including exploring the ways in which professional regulatory bodies facilitate or inhibit responsiveness.

• Postsecondary leadership together with labour unions could review collective agreements and/or governance and human resource policies—striving for balance between job protection and institutional viability—drawing on union experience and expertise to outline new expectations like modernized job tasks and teaching methods.

5. Practical, mission-driven research

• Together, Canadian governments, postsecondary institutions and businesses need to do a better job of ensuring research advances national priorities, supporting Canadian communities and businesses with timely innovations.

• Compared to other advanced countries, including the U.S. and Japan, or the OECD average, Canada’s spending on research and innovation is persistently low.²⁹

  • A key reason for this is our business sector: largely made up of small- and medium-sized enterprises without research budgets³⁰ and branches of multi-national companies whose head offices in other jurisdictions are driving innovation.

• On the other hand, Canadian postsecondary spending on research is high compared to global peers.³¹ Essentially our postsecondary sector is carrying the weight here; and given the stakes, could be oriented more strategically.

• Traditionally, success in postsecondary research is measured in terms of publication output and citations;³² often, government grants unintentionally encourage similar ideas and incremental change.

• Research often ends at the ideation phase with little incentive to push toward patents or commercialization; promising innovations and innovators go elsewhere, like Silicon Valley.

• For many institutions (and departments within them) advancing innovations, and ensuring they go beyond the ideation phase, will require a reorientation—from exploring topics to advancing goals—and an openness to taking on research contracts with industry partners who have defined milestones and clear deliverables in mind.

• This is not to say there is no place for inquiry-driven research. Nobel Prize winning research by Geoffrey Hinton³³ or Arthur McDonald³⁴ might not have been possible without such freedom. But mission-driven research needs to take new precedence.

Opportunities to incentivize mission-driven Canadian postsecondary research include:

• Updating federal granting to incentivize research that produces intellectual property (IP) or advances national priorities.

• Focusing institutional research strategies (as part of updating mandates) to advance specific industries or public interests like health care, national defence, or food security.

• Rewarding innovation and community impact in tenure and promotion processes.

• Experimenting with new approaches and collaborations—Canada’s defence spending commitments, for instance, offer a prime opportunity. A new Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS) could draw on academia and industry strengths to drive innovation, much like the Advance Research and Invention Agency (ARIA) in the U.K. or Defence Advanced Research Projects Agency (DARPA) in the U.S.–both of which fund high-risk, high-reward projects, free from the typical political constraints and academic processes.  

• Industry coming to the table with more funding for research contracts.

Canada is relying on its postsecondary sector to supply the skills and innovation needed for an economic transformation. Ensuring, the sector is up to the task will hinge, crucially, on a new funding arrangement. And that, may hinge on public support. Modernizing as set out above will help the sector grow social license.

But this task should not fall entirely on postsecondary and policy makers.

Employers, expecting to benefit, need to be ready to engage and collaborate too: sharing information about job opportunities and skill expectations, shaping curricula and evaluating competencies, developing work-integrated learning opportunities, and funding research and innovation.

Educators in K-12 have a role to play as well. It is time guidance counsellors shed the outdated notion that skilled trades are less valuable than university degrees, and that degrees and diploma are the end point of education.

Upskilling is no longer optional. It must be seen and described—at levels of the education system and in the labour market—as the new baseline for success.

Downlod the report