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It's actually a pleasure to be able to come here the second time, because the first time we were at the other building, and for us it's always fun to be in one of these rooms, which really is something.
[Translation]
Good morning, Mr. Chair and members of the committee. Thank you for your invitation.
[English]
Thank you very much for the introductions.
We have prepared a deck, which I hope you all have. I'll just give you indications as to which slide I'm speaking to.
There are a lot of different ways to approach the subject of disruptive technology. As you begin on your study, I think it's probably useful for us to try to give you context on how we at Industry Canada approach the issue and look at the topic. My presentation will try to cover three main points.
First, new and disruptive technologies obviously create new challenges and opportunities for firms and for industries. Second, the pace of technological change is something that is increasing. It's driven by the pervasive penetration of information and communications technologies. Finally, in the industry portfolio as well as throughout the government, we have a lot of roles that are aimed at spurring technological growth and supporting the competitiveness of Canadian business.
For a staring point, we care about disruptive technologies because they transforms markets. They transform business models and change supply chains and entire industries. But what are disruptive technologies? There is really no single definition. We look sometimes to four key traits. They have speed. We're talking about rapid technological change. They have global reach. They have economic impacts that are significant and unexpected, and they have societal impacts that are often significant and unexpected.
Within these broad parameters, different analysts take very different views as to which technologies should be focused on. They all disagree, but what they don't disagree on is that disruptive technologies have huge economic impact. McKinsey and Company estimates that by 2025, the economic impact of the “Internet of Things” will be between $1.4 trillion and $6.2 trillion. That's a wide range, but both numbers are huge.
On slide three you'll see a selection of technologies as laid out by McKinsey, the World Economic Forum, MIT, and Gartner. The diversity of these things—additive manufacturing, brain mapping, advanced robotics, and agricultural drones—can really be difficult to structure one's thinking around.
Slide four gives you a sense of the lens we use at Industry Canada to try to do that. We find it useful to break disruptive technologies into three groups: platforms, processes, and products. I'll talk about each of these in the next couple of slides.
But first, around the outside of the frame you'll see references to a number of areas of government support and policy that are really important to the development and adoption of technologies. In the centre, we try to emphasize the importance of technological convergence, how technologies are interdependent. They bleed into one another and across traditional scientific disciplines and across different business applications.
Looking at slide five, I'll talk briefly about platform technologies.
[Translation]
Platform technologies, like nanotechnology, for example, are foundations for the development of commercial products and processes. These technologies are often very closely tied to, and supported by, major R and D investments in infrastructure.
[English]
Turning to slide 6, we have process technologies.
[Translation]
Process technologies, like additive manufacturing, which is essentially industrial 3-D printing, use technologies in new ways to change how a product is made.
[English]
On slide 7 is product technologies. Disruptive product technologies are things like the driverless car, which can redefine the customer experience and create entirely new markets. Disruptive products can quickly create new industry leaders and put others, including well-established incumbents, out of business.
I wanted to make the point that it's really the pervasive impact of information and communications technologies that's at the heart of technological convergence and this rapid pace of technological development that we're seeing today. A great example can be seen in the life sciences area. Bioinformatics is the use of computers to digitally process massive amounts of biological data to better understand biological systems. Bioinformatic modelling can produce insights that can lead to the development of new drugs, vaccines, and diagnostics. All of this in a computer.
It almost goes without saying that technologies have implications for competitiveness, but I said it anyway. Canada is considered an advanced economy in part on the basis of its capabilities in research and development and its successful track record of commercialization in many industries.
At the firm level, companies that thrive get ahead of trends and move away from incumbent technologies before they're overtaken. Kodak is probably the most commonly cited example of a company that didn't do this. It didn't see the advent of digital imaging and the decline of chemical- based photography. Its market cap in 1997 was $30 billion U.S., and it was completely wiped out by 2012.
On the other hand, IBM is probably the most frequently cited example of a company that's the model of reinvention. It sold off its PC and server hardware divisions to put its sole focus on cloud computing and big data analytics.
Reinvention happens at the firm level, but it also happens beyond the individual company. One thing about disruptive technology is that it has serious implications for the nature of work. Increasingly the pace of new technologies coming onto the market really does put the premium on flexibility as a core workforce competency, and it creates an advantage for workers who have a solid footing in the kinds of emerging skill sets that are required.
Finally at the broad social level, changing technology can also give rise to questions of social acceptance. These in turn can give governments reason to re-examine frameworks including norms, standards, and regulations.
What I find interesting is that when we think about the reach of disruptive technologies in the Canadian economy we're really talking about something that has the potential to touch communities and businesses across the country in very tangible ways. Disruptive technologies aren't just about the high-tech sectors like aerospace, ICT, or life sciences. They have the ability to transform business in any sector.
I'll use nanotechnology to illustrate the point.
Nanotechnology in Vancouver is helping reduce the amount of costly platinum that goes into making fuel cell stacks. Getting the cost down is one of the key measures along with infrastructure to deploying this kind of technology on a large scale. In Quebec, nanotechnology is helping develop new lightweight, stronger materials, going into things like spacesuits and making them flexible, more resistant to damage, and embedding them with sensors. Food processing, which people sometimes don't think about as advanced manufacturing, has a footprint across the country and nanotechnology is active there in areas like developing food packaging to kill bacteria and extend product life.
[Translation]
Industry Canada and our federal partners help disruptive technologies move to market through a variety of mechanisms, including scientific research; research labs and infrastructure; direct and indirect support to industry for R and D, commercialization and innovation; and specific partnerships targeting cutting-edge areas such as communication technologies and genomics. We engage with industry and other stakeholders on an ongoing basis across regions and sectors.
[English]
Finally, I thought it might be useful to give you a sense of the questions I think would be interesting to pose to witnesses and to consider in your study.
First, how do Canadian companies see disruptive technologies coming down the pike and impacting their business? Second, how have industry, governments, and academia been successfully partnering to advance innovation in disruptive technology? Third, where are Canada's technology development hotbeds? Fourth, what impacts will disruptive technologies have on jobs and work? Last, how do Canada's disruptive technology strengths line up against global trends and future commercialization opportunities?
With that, I'll end my remarks. Thank you very much.
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Perhaps I'll start and then maybe I'll turn to my colleagues to supplement.
It's a tough one because I can name a few things that are really impressive to me across the country, and I'll be forgetting people, but I'll still give you a sense of some of the areas I think are really neat.
One of them is out west. In Alberta, there are some incredible things going on with oil sands research, and groups like COSIA are leading that with the oil sands players. Vancouver is pretty much the world centre for fuel cell technology development, as evidenced by companies like Daimler, Ford, and others who are located there.
Everyone always mentions Waterloo because Waterloo is an incredible place—and Krista may want to jump in on that—in terms of an ICT hub that overlaps with some really interesting things going on in the life sciences, for example, in the Mississauga and related area. It's just a very dynamic and compelling place.
Montreal and Toronto have substantial world-class aerospace sectors. Aerospace is an area where disruptive technology tends to get adopted at a stately pace because of the need to make sure everything has flight heritage and is safe. But it's also a leading innovative sector.
Life sciences is an area where we have incredible capacity in Vancouver, in Montreal, in Quebec City, and in Toronto. There are also pockets of excellent capabilities elsewhere, such as Prince Edward Island, which has a fantastic bio cluster.
I left out a bunch of people, but those are some really interesting areas.
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If I could just add to that, maybe a very literal answer to how some of these things are connected. If you think about something like big data, which is a really new and innovative disruptive way that businesses can be evaluating massive amounts of information, they're using it in ways, for example, to customize the services that you get. So when you go to Amazon or Google and do your search, there's a computer system behind that to help customize it, based on what your past preferences have been. Big data analytics is really becoming one of the fields in Canada where we have strength.
There are very physical ways that some of that information is connected in terms of our digital research infrastructure and the actual pipes that we have in Canada to help move information from, say, a research institution to a business, or to enable a business to get access to the cloud so they're able to use some of these technologies. If you look at something like an organization called CANARIE, which is Canada's research infrastructure backbone, it's the actual physical pipes. That's really important to understand: where the strengths are from a networking infrastructure perspective.
If you think about the ecosystem broadly, and again I'll stay with big data, something that IBM is doing a considerable amount with, CANARIE itself is creating a test bed that allows small businesses—one or two people creating their software in their basement, which could be absolutely anywhere across the country—to go online and get access to the cloud at free or very reasonable resources. It creates a community of individuals who can be located anywhere across the country, who then have access to other researchers in similar areas such as big data.
The ecosystem to support also includes things like incubators and accelerators. Toronto has a very interesting accelerator that focuses specifically on big data, called OneEleven. As you think about what the supports are for these types of networks, those kinds of connections and specialization areas are really important to understand. They underpin some of the work that goes on in universities and colleges, which also helps to create some of these communities and networks so that individuals who are, say, working on something like software can understand and build off the work that others are doing.
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If I can add to that, the linkage that you highlighted is a key one in terms of translating investments in basic and applied research into the commercial world. Since 2006 the government provided more than $13 billion in new resources for basic and applied research across the spectrum, and for other key elements that are important in that translation, specifically talent development and research infrastructure questions such as the digital research infrastructure Krista highlighted.
On an annual basis, the spending is $10.9 billion, including research performed in-house and also $3.4 billion on foregone revenues in terms of the SR and ED tax credits.
To focus a little more on the roles of the granting agencies, for instance, in the area of disruptive technology, it is important to focus not only on basic research but also on applied research to increase the economic impact of the research they support, including for disruptive technologies. They've been increasingly putting an emphasis on partnerships and how they structure their granting programs between the post-secondary researchers and the companies. It is very important and they do continue the emphasis on basic research because that's an important source of future disruptive technologies. It is also an important area for training the next generation.
If I can do a parentheses in the recent announcement of the Thirty Meter Telescope, that's an area where one can classify it as basic research, but it's an important training ground for big data, which has an application way beyond astronomy to a number of disruptive technologies. That's an example of talent.
Touching a little on the question of connectedness, which has been raised now in a few areas, the granting councils also have a number of programs that focus on multidisciplinary and multisectoral partnerships. There's the business-led networks of centres of excellence program and the centres of excellence for commercialization and research program.
The other area I would touch upon is the National Research Council, which has a number of disruptive technology research programs and a strong emphasis on partnering with business. I can delve into that further if you'd like.
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Thank you very much, Mr. Chair, and to our witnesses, thank you very much for coming. As the chair said, unfortunately you sat here by yourselves last week. We're glad you came back.
That was a very interesting deck. It's quite exciting to see all of the opportunities that are in here. When Mr. Lake mentioned disruptive technologies, I think we all looked at him and said, “Disruptive technologies? Okay.” But it's an amazing deck, full of lots of the exciting opportunities that are out there.
In a recent tour that I had in Waterloo of one of the incubator sites, one of the frustrations they voiced was needing more money, of course, as many of these small projects need to try to get to commercialization, and so on. Industry Canada seems to do a very good job. Clearly, just through listening to the three of you, I can sense your excitement in what you're doing, and you probably want to do more.
How can you help them more to get to the commercialization market and on the issue of patenting and how to get through the patent process? There clearly were lots of success stories there, but the need for more assistance from Industry Canada was made quite clear as well.
I would be interested to hear from any of you what else we can be doing to make sure they have the kind of support that they need and that clearly you want to give.
:
Okay, there's a lot in there.
We talk about the driverless car, the connecting car, and the autonomous vehicle. You'll hear people talk about how the next big auto companies could potentially be some combination of Apple, Google, and Microsoft and how the service of transportation provided by a car is essentially going to be increasingly defined by automated software.
And you see investments. You see the recent investment by GM. There was a bad disinvestment as well, but the recent investment by GM in its innovation centre in Oshawa for the connected car kind of shows how it values some of the expertise in Ontario for really developing some of that technology. We have QNX, and we have the whole Waterloo cluster, etc.
Clearly if a connected car talks to infrastructure, somebody's going to have to change that infrastructure so that it can talk to the car. A connected car talks to other cars. Well, what's the model going to be? Are they going to speak the same language? A connected car talks to the environment. Is it okay to trust the car's sensors to keep you away from a tree that fell on the road or to tell the difference between a dog and a baby? All these kinds of questions come up with a truly disruptive product like the driverless car.
In terms of the global leaders question, let's be clear. There are leading manufacturing nations. Germany has always been among them, as has the United States certainly. There are places that in a lot of ways define the standards and define the cutting edge almost across the board. In Canada we have the opportunity to figure out the areas in which we have interesting things to build on. It's unlikely that a country Canada's size is going to be a world beater everywhere, but we can absolutely be a world beater in certain niches.
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Culture and management capacity is an issue that comes up more and more. Numerous studies mention that aspect. The evidence is still anecdotal, but all the facts point to a cultural difference. The recent strategy addresses that, incorporating a new element aimed at improving that culture.
Of course, it's a long-term effort, given that an educational component beginning at childhood is necessary, since it involves a change in attitude. It's also crucial to address the issue at the post-secondary level, especially in business education.
The final component when it comes to the current management framework, the one that matters most from an adult standpoint, revolves around the tools that can be put in place, modified or enhanced to improve the situation.
I mentioned the Canada accelerator and incubator program, which focuses primarily on small and new businesses with plans for rapid growth. That kind of expertise and mentoring—mentoring is a large part of the services we provide to small businesses—can be made available to managers in any size business.
We also want to urge business schools to offer programs not just for university-age students, but also for managers and executives in the midst of their careers.
This is work that will span a generation, and we are just in the early stages. The role of the federal and provincial governments aren't entirely clear and have yet to be defined. I encourage the committee to examine that dimension.
Thank you, witnesses.
I want to change the focus on disruptive technologies a little bit to how they impact people, not businesses.
When I was growing up, I was reading cartoons about Dick Tracy and his special watch where he could talk back to head office. A lot of these technologies we dreamed or fantasized about are here today. There are the movies Back to the Future and Back to the Future Part II. I think the second one was about going to the year 2015, and here we are. Some of the stuff they got right, and a lot of it was still far-fetched. We have seen so many changes and so quickly.
You touched on Kodak. My dream location is Hawaii, and Kodak had this beautiful facility where you could watch the hula dancers and stuff. Well, they didn't see the clear signals, and you highlighted in your presentation that there were clear signals. They didn't see what was happening. They weren't flexible. They didn't change, and they are gone.
What are the clear signals that the government needs to identify and react to proactively? There is a change; it is happening. Traditionally, and not just in Canada, governments react instead of being proactive. How does this affect Canadians? How do we protect ourselves against identity theft? It is a growing problem. As technology changes, so does.... Thieves are out there and putting Canadians at risk.
Where are the disruptive technologies creating risks that the government needs to deal with? Some of the risks are just inconveniences. For example, when I was a boy we shot films on a little.... You would wind it up, and you would shoot films. Super 8 is what it was called. Then you would have those converted to a Beta or VHS. There were some companies that had copyright, even if they converted it over 20 years ago. I had all these old films put onto VHS. Now I want to be able to watch that. Because this is old technology, I can't have it put onto a DVD or a memory stick, because it is copyrighted by a company that is no longer in business, a long time gone.
Where are the risks we need to address, change, and adapt to? Where are the risks for identity theft, which is a huge problem? Could you touch on some of those issues?
I would like to propose the following motion to the Standing Committee on Industry, Science and Technology:
That the Standing Committee on Industry, science and technology undertake a study on the state of the tourism industry in Canada by June 2nd 2015 and report its findings to the House.
As you know, this is an important industry. Globally, the tourism industry represents $1 trillion, and its strong growth is expected to continue at a rate of between 3% and 4% annually until 2030. In Canada, the tourism industry generates nearly 10% of jobs, and 618,300 of those represent direct employment—more direct jobs than in the oil and gas industry.
Every year, tourism accounts for $16.4 billion in export earnings and represents nearly 2% as a share of GDP. In addition to creating a large number of jobs, the tourism industry stimulates trade and investment, which, in turn, contribute to a better quality of life for Canadians. That means more dollars being spent in communities.
For all these reasons and because it costs relatively little to stimulate the industry, many countries have made tourism one of their economic priorities. Ignoring the global trend, the Canadian government has cut the Canadian Tourism Commission's budget over a number of years. In 2014-15, the commission's budget was down to $57.9 million. In just 10 years, it has lost nearly half of its budget, or 41.5%. And during that same period, Canada was one of the only top 50 travel destinations to experience a drop in the number of visitors from other countries.
According to the World Tourism Organization, between 2002 and 2013, the number of international visitors to Canada dropped by 20%, causing Canada to fall from 7th to 17th in the rankings. Furthermore, according to Statistics Canada figures released in July 2014, the number of unemployed workers was on the rise, while the number of people receiving EI benefits was shrinking. Changes made by the Conservatives to the EI program have reduced Canadians' access to benefits. In fact, more than 6 out of 10 unemployed Canadians don't receive EI benefits. The situation is of particular concern to the tourism industry, which requires a skilled workforce available during high seasons.
In a 2013 report, the Conference Board of Canada recommended changes to the airline industry, whose high taxes and base fares unfortunately make Canada a very costly travel destination. What's more, Canada requires foreign nationals wanting to visit the country for leisure or business to obtain visas. They need them in order to enter the country.
Although visas deter undesirable visitors, they can also discourage travellers going on vacation. According to a TIAC survey, Canada's visa application process is considered burdensome, intrusive and lengthier than those of its main tourism rivals, thereby discouraging potential visitors.
Whether in the form of financial support or just—
:
I did agree before we had the meeting that we would allow this motion to be put forward. I didn't expect quite the extent of the language explaining it. I think it was kind of bordering on a speech, but I guess there is more concern with taking a look at this.
First of all, normally we would deal with committee business in camera. That's sort of the established routine over the 10 years that I've been here.
I will comment that a June 2 date to do a study.... We've just had our very first meeting on a study on disruptive technologies in Canada, one that it seemed as though everybody was on side with, and something that's probably important to folks in all of our ridings. We are limited in the time that we have left before we go for the summer and into an election, so—at least for myself, I can't speak for everybody on our side—while I certainly would be very willing to undertake a tourism study, unfortunately, we don't have the time. We just don't have the number of meetings scheduled that would allow us to do that. In fact, if we were to pass this motion, it would mean that, in order to have a report ready, we'd probably have all of three meetings before we'd go into reporting, the first of which would have to be scheduled for two days from now, and probably we wouldn't be able to find witnesses to appear in two days anyway.
Why would we give priority to a brand new study over the study that we're doing right now, which is very important? This highlights what is a very disorganized approach by the opposition parties to this kind of thing. I think that, as a committee, we have to conduct our business in an orderly fashion. We have a study before us that we all agreed to that has just started today, and we look forward to making sure that we hear from witnesses who have a lot to say on this issue.
Mr. Chair, in line with what is the established convention for dealing with committee business, I move that we go into camera.