:
I call to order meeting number 5 of the Standing Committee on Finance. Pursuant to Standing Order 83.1, we are continuing our pre-budget consultations 2013.
Colleagues, we have six organizations as witnesses for this first panel, and we will have two panels today as well.
First of all we have the Aerospace Industries Association of Canada, and then the Canada Foundation for Innovation, the Forest Products Association of Canada, the Greater Kitchener Waterloo Chamber of Commerce, and the Sunnybrook Health Sciences Centre. All are with us here in Ottawa, and by video conference from Toronto we have Polytechnics Canada.
Ms. Robinson, can you hear me okay in Toronto?
The recommendation from AIAC today is partnered with one from the Canadian Manufacturers & Exporters: we both made the same recommendation. The purpose of the recommendation is to mobilize and get some more leverage from the money that has already been allocated to the scientific research and experimental development program.
As you know, companies that do not qualify as CCPCs—effectively small Canadian companies—take their SR and ED credits not as refundable tax credits but as non-refundable credits. The net result is that some of them are not in a tax position to claim all or even any of the credits they have actually earned and had approved, and so the money probably sits on their balance sheets as a deferred reduction of taxes in future years until they are in a position to claim it.
Of course, when they do claim it, there is nothing that guarantees that this money will be used to further R and D objectives, because it will simply be a reduction of their taxes and can be used for any purpose they decide.
What we are proposing is that the government offer a targeted program that would allow companies to exchange these earned tax credits for cash contributions to R and D capital projects, in effect offering companies a quid pro quo whereby they could monetize those credits now in exchange for the government having a role in deciding how that money should be spent—in effect, in support of R and D capital projects. Essentially this money would be spent on improving R and D infrastructure.
As you can see in our submission, we believe it is possible to arrange such a program such that is both manageable and fiscally neutral. We think the effect of this will be to make the government's money work three times. Firstly, it will work through the credits that have already been earned—credits that the companies have actually earned by doing R and D. Secondly, it will go towards improving R and D infrastructure, because those credits will then be directed towards R and D infrastructure projects. And thirdly, when that infrastructure has been built, the money will then be facilitating future R and D within the country.
We believe that this is basically giving the government an opportunity to use its money three times to improve the R and D climate in Canada and improve the amount of business R and D done in the country.
Thank you.
First, please allow me to thank you, as well as all of the members of the House of Commons Standing Committee on Finance, for your kind invitation.
[English]
Today I'll be speaking directly to the topic of federal support for research and innovation. In fact, I'd like to start by offering two recommendations.
Number one is that the Government of Canada enhance its support for world-class research and technology development through the federal granting councils. The second, because research infrastructure is a cornerstone of world-class research, is that the Government of Canada provide the Canada Foundation for Innovation with stable, annual, and predictable funding that will ensure that Canada maintains and enhances its hard-won competitive advantage in higher education research and technology development.
[Translation]
Since 1997, the government of Canada has invested some $6 billion in state-of-the-art research facilities through the Canada Foundation for Innovation. Moreover, through its unique funding model, these investments have leveraged close to $8 billion from its funding partners—provinces, the teaching and research institutions and the private sector. This means that some $14 billion were invested in cutting-edge research facilities put at the disposal of our most brilliant researchers.
[English]
The Government of Canada's investments in the CFI and in the federal granting agencies are generating the scientific excellence crucial for producing highly qualified people trained at the leading edge of science and technology development who are capable of driving the innovation capacity of Canadian organizations in all sectors. For example, I could talk of Saskatoon's state-of-the-art Canadian Light Source, or CLS, synchrotron. There are also Canada's world-leading research activities in Arctic and marine research, or in the exceptional photonics research centre in Quebec City, and in many other Canadian colleges and universities.
Today the results of this funding speak for themselves. While Canadians make up only 0.5% of the world's population, we are producing almost 5% of the world's most highly cited papers. In fact, in a recent assessment by the Council of Canadian Academies, Canadian research is now ranked sixth in the world for the overall impact of its scholarly activities.
The state-of-the-art research facilities funded by the CFI not only are hotbeds of discovery research but also are open for business. In fact almost 300 research facilities and laboratories in all sectors of research, from social sciences to health research, are set to be part of a new online directory called the CFI Research Facilities Navigator, which will help businesses locate and connect with experts and facilities at universities and colleges across the country.
In these research facilities, companies are finding new ideas to help them develop better technologies and processes to enhance business performance. They also have access to state-of-the-art equipment they would not otherwise be able to afford, and they work with exceptional students and researchers who can apply their skills to real-world settings.
[Translation]
The central challenge for Canada today is how to maintain our competitive advantage in science and technology and continue to perform at world-class levels. The fact is that 21st century researchers simply cannot be globally competitive without appropriate research funding and without access to leading-edge research equipment and facilities. And while we have made impressive gains, as a nation, we cannot afford to be complacent.
[English]
The central challenge for Canada today is maintaining our competitive advantage in science and technology and continuing to perform at world-class levels. The fact is that 21st-century researchers simply cannot be globally competitive without appropriate research funding and without access to leading-edge research equipment and facilities. While we've made impressive gains as a nation, we cannot afford to be complacent. Therefore, we recommend that the Government of Canada enhance its investments in the federal granting councils, and at the same time that it adopt in Budget 2014 a sustainable, annual, and predictable funding model for the CFI with investments that are in line with historical investments made by the government over the past 15 years.
Thank you.
:
Thank you very much, Mr. Chair.
FPAC has made an official submission, so I'll keep my comments brief.
I'll just remind you that the forest industry in Canada is an extremely important part of our rural economy. We are a global player that exports to over 187 nations, but we are also the economic engine of 200 rural communities across the country. In most cases, these communities are almost entirely solely dependent on the forest industry for their livelihoods.
We employ 236,000 Canadians, and we are a manufacturing industry, so it's worth noting that those are jobs that are consistent, well-paid, and not seasonal.
The forest industry has faced significant challenges. We have had the opportunity to describe those to you in the past. As well, though, to respond to those challenges, we've launched a very exciting transformational agenda that is literally underpinned by the adoption of innovation.
Last year, to help understand where this gets us, FPAC launched something that we call “Vision 2020”. By the year 2020, we hope to generate an additional $20 billion of economic activity, hire an additional 60,000 new hires, and further improve our impressive environmental track record by an additional 35%.
The government and all of our partners have been instrumental in supporting this aggressive pathway of change, including support from our embassies, our trade staff, and the pulp and paper green transformation program, and the collective support we've had in funding FPInnovations, which is a world-leading innovation agency based right here in Canada.
However, today we want to highlight a small but effective program that the government established four years ago. The program is called investments in forest industry transformation. We call it IFIT for short. It has a very unique role in ensuring the delivery of all of the innovation systems to the market. It specifically supports the first commercial-level demonstration of these new technologies, so that's at a commercial scale. The risks of trying to do this on your own as a company ensure that these technologies do not actually get adopted.
Our proposal is that this is an area that is critical for government support in order to ensure that we get through this critical stage of innovation adoption. But let me be clear: once the commercial demonstration is proven, the industry is not looking for any further governmental support. This is just so we get to deliver the technology and the innovation for the first time ever to demonstrate it in a commercial setting.
The program has been a great success so far. It was $100 million in its first instance, and the industry proposed projects worth an impressive $2.2 billion. From this significant oversubscription, 15 highly transformative projects have now been supported across this country. For every dollar of IFIT spent, approximately two dollars were leveraged. Of the $100 million, $40 million will be returned back in the form tax revenues. Also, 1,800 jobs have been secured through this program.
These are just some of the metrics of success that IFIT has enjoyed. It is absolutely delivering to the marketplace new products that have never been done anywhere in the world. A few examples are: a bio-based methanol, which is a foundation chemical made from a renewable resource; cross-laminated timber, a phenomenally new building material; nanocrystalline cellulose; and cellulose-based carbon fibres. They are really leveraging the renewal of the resource.
Given that this program is about to sunset, we are asking for a renewal over a longer period of time and for significantly more dollars: $500 million over six years. It's a big ask and we understand that. We have an escalation path that we recommend.
I will close by saying that we have two additional recommendations in our document.
One is to continue the innovation support. It has been tremendously important to us. We have 120 university professors and 400 post-grads supporting our transformation. This is critical.
We ask and urge the government to look at the SDTC next generation biofuels fund. It's been around for six years. It's $500 million. It continues to be unspent. As you can tell from our ask, we have a tremendous need for support for those first commercial demonstrations. It feels unpalatable to have a fund sitting there not being spent. We urge that it be reviewed.
Thank you very much for your time. Working together, we look forward to accomplishing Vision 2020.
:
Thank you very much, Mr. Chair. Thank you to the committee for the invitation to appear again this year.
Our submission this year is not so much focused on recommendations but more on an approach of stay the course. There have been a number of significant developments over the last year that we are quite supportive of.
First and foremost, as a business community our success depends on being able to open up new markets and sell products, whether they be services, wireless communications, or manufacturing technology. So within that perspective, certainly the recent announcement of the new trade agreement with the European Union is a very significant advancement for the Canadian economy, particularly for us in the Waterloo region.
I'd like to quote a letter from an organization that Mr. Christie mentioned, the Canadian Manufacturers & Exporters. The Canadian Manufacturers & Exporters wrote a letter to the premiers recently and the president and CEO of the CME, Jayson Myers, pointed out that this is a particularly important deal for Canada because it provides a market for Canada's advanced manufacturing products. It creates new markets and allows small and medium-sized businesses to develop new partnerships overseas and to help them commercialize new technologies and enter new markets.
That pretty well summarizes the position of our community and, I think, the business community across Canada. We'd like to congratulate Minister and his staff for being able to finalize this agreement.
Second, as the Canadian Chamber of Commerce has pointed out in some recent correspondence and media releases, this is probably a significant development in terms of future agreements, primarily with Pacific Rim partners, Korea and Japan as well. Again, it's important to keep that momentum going.
When we were here a year ago we recommended the extension of the FedDev Ontario agency, the Federal Economic Development Agency for Southern Ontario. Again, we were quite pleased by Minister budget last March that extended that program for an additional five years, until 2019.
In particular, we are quite supportive of the $200 million that has been specifically allocated to advanced manufacturing. I know Minister and his staff have been meeting with a number of manufacturers across southern Ontario this summer, gaining some consultations and feedback on how that program should operate. We look forward to that starting in April 2014. Again, we would like to commend Minister and the government for recognizing the importance of the southwestern Ontario economy and particularly advanced manufacturing.
The third point I would like to briefly mention, which is what I focused on over the summer and in my brief submitted last August, is the area of workforce development and training, particularly for the manufacturing sector. If we're moving toward advanced manufacturing, where essentially we're looking at robotics machinery or highly advanced equipment to do the work that assembly lines used to do, these use advanced materials and are advanced products, and a specialized skill set is required for maintaining these operations.
Of course, we have seen reports from economists on Bay Street and the academic community who talk about productivity and efficiency. From the perspective of the manufacturing sector and a lot of businesses in our community, if the machinery is not working at an optimum level then we're not meeting our productivity and efficiency levels. Again, there is a requirement for having personnel trained to maintain and operate the equipment in advanced manufacturing.
We are supportive of the Canada job grant program to the extent that it identifies certain areas where there are significant job shortages and it will provide the assistance to people who want to move into those fields.
Thank you.
:
Thank you very much, colleagues. On behalf of Sunnybrook Health Sciences Centre, I bring greetings and thank you for the opportunity to present before the committee.
Sunnybrook is one of Canada’s largest and most critical care facilities that are research intensive—and in fact we're dedicated to inventing the future of health care. The concept in the brief I presented to this committee focuses on health care, and actually positions health care as one of the largest expense items that we as a nation are involved in. It's in excess of a $200 billion a year business in terms of taxpayers' dollars.
The focus of the brief is on how can we better capitalize on the largest business that this country is in? How can we better monetize the investments made thus far? The concept presented is that of discovery to clinical impact through the medical marketplace.
Just to skip to the bottom line, research is in fact not an expenditure. It truly is an investment. The research and the innovation it drives is fundamental to solutions for our increasing national health care expenditures: bending the cost curve; increasing cost avoidance; and supporting a material economic upside with private sector partnerships, company creation, and job creation.
The role of technology development commercialization is fundamental to getting our discoveries to our patients. It's high risk and high cost. The need for private sector partnership is absolutely essential, and this mutually beneficial initiative is a rate-limiting step.
Health research is uniquely positioned to lay the foundation for a more innovative and productive society with very clear deliverables. We're not there, but we're getting closer: improving health training for the next generation of health researchers and practitioners; building an evidence-based sustainable system that delivers state-of-the-art health care; and of course driving the development of new products, services, and attracting investments and creating jobs.
To achieve the full gambit we must integrate these activities and resource all stakeholders along the continuum from discovery to clinical impact through the medical marketplace. We're not doing that now. Our investments are currently profoundly imbalanced.
The three recommendations highlighted are not intended to solve world hunger; they're intended actually to make a very positive step forward in rebalancing public investment in this continuum. It focuses on where the gaps are and how they may be better addressed towards doing this business better.
The first one relates to fueling the discovery engine, and I will be very brief on this as my colleague, Gilles Patry, has already highlighted the need for the infrastructure. But we need fuel to fund this engine.
We applaud the Government of Canada for initiating and for its ongoing and continuous support of sustainable funding for the Canada Foundation for Innovation. That gives us place.
We congratulate the government for the Canada research chair program and its ongoing support. That gives us people.
So we have wonderful infrastructure, we have some of the best minds in the world, and when we drive up to the gas station, there's no gas.
Funding to the Tri-Council has not kept pace with the growth in other dimensions, and our first recommendation is to increase that budget. I have to tell you that this is a modest request of $300 million over the next three years to benefit our investments already made in other arenas.
The second recommendation deals with research as well. In order to spend a dollar that any one of us gets from the Tri-Council, it costs another 45¢. Everybody around this table agrees that the full cost of research needs to be funded and once we've achieved that unanimity, eventually everybody leaves the table.
Right now we've made a good start in the indirect cost program. The challenge is how those dollars are deployed. The recommendation is rather than making this a capacity-building program, send the money directly at a flat rate to where the research is happening.
The final recommendation also relates to FedDev. Here, congratulations to the government. Our recommendation is that given the size of the business of health care and medical research, a greater proportion of that FedDev envelope should be applied to medical research.
Sunnybrook is capitalized, it's expressed in the brief, it is an economic driver.
Thank you very much.
Thank you very much, Mr. Chair, for permitting me to join you by video link from Toronto, and for the invitation to present our ideas for the next federal budget on behalf of Polytechnics Canada.
I hope you've noted our August submission to your committee. While I am pleased to discuss our ongoing ideas about improving Canada's prosperity and productivity through support for research and innovation, that is, the theme you have invited us to address today, I will also say a few words at the end about the other critical thing we have presented recommendations for: maximizing employment opportunities for Canadians.
Since we met last year, I am pleased to report that our association has now grown to 11 research intensive colleges and polytechnics, with new members from Saskatchewan and Manitoba. These leading institutions of training and industry innovation are addressing Canada's skills gaps and lags in innovation performance. We are very proud to report to you that our 11 members alone counted over 11,100 students involved in industry-driven R and D projects last year, up from 9,500 students the year before. This represents a growing cohort of students armed with vital innovation skills for the benefit of our industry partners in all sectors. This is the best outcome of the modest funding for federal college research.
Our members are heartened that the 2013 federal budget recognized our recommendations, particularly those relating to college research and apprenticeship. Inclusion in federal programs and equitable treatment of colleges in the research spectrum are two principles that members of this committee have endorsed, and for that we are most grateful. As you have seen in our submission, though financially modest, our ideas for the next budget are practical and actionable because we understand that the fiscal cloth is limited.
We propose two specific research and innovation related recommendations.
First, my colleague made mention of the indirect costs program. Polytechnics Canada was invited to participate in the review of this program, as announced in Budget 2013. Yet a quick analysis shows that the very same college research program I mentioned above, the college and community innovation program—the program that enables us to do industry driven R and D—is not eligible for the indirect costs program. We can find no policy rationale for this. The decade-long exclusion leaves the misplaced impression that college and polytechnic applied research does not meet the standard of excellence that the indirect costs program is designed to foster. We are not advocating an increase in the size of the existing $332 million program, but we hope the committee will support the principle that all those post-secondary institutions that are conducting R and D activity are treated fairly under the program.
Second, for too long we have focused on the technological and manufacturing sectors as the priority for R and D, when Canada’s GDP relies heavily on the service sector as well. More specifically, we believe the time has come to focus on the social sector in terms of lagging innovation. The committee should urge the Social Sciences and Humanities Research Council to harness the diverse and deep strength of colleges and polytechnics in social sector innovation, something the current college program is not geared to do. Whether on matters such as early childhood education, nursing practices, or aboriginal community development, we see evidence of colleges collaborating with social organizations to put innovative practices into operation, leading to improved outcomes for all. Yet these kinds of activities are not considered high research. A small pot of competitive funding for colleges to address this demand would benefit many communities.
As I mentioned, Polytechnics Canada also has budget recommendations on your employment theme. We applaud your committee’s decision to undertake a study of youth unemployment and underemployment. Our relevant recommendations in this area relate to labour market information and to modernizing Canada’s rusted-out apprenticeship system, with as easy an opening of a program like Canada's student loans program to mature Red Seal apprentices. Without a sense of jobs in demand, without restoring dignity to vocational training, employment opportunities are being lost for Canada’s youth.
You know that research and innovation lead to highly qualified skilled workers. The time has come to link government support for R and D to government support for learners and workers. No sector can be left out of the innovation game.
Thank you.
Welcome to all of the witnesses.
Thank you for the good work all of you are doing.
I'd like to ask three questions.
My first, for whomever would like to comment, is on the Conference Board of Canada's latest report on innovation performance. Their report card gave Canada a “D” in innovation. That's our topic today: research and innovation. The Conference Board explained the grade as follows:
...Canada remains near the bottom of its peer group on innovation, ranking 13th among 16 peer countries...It performed poorly on most of the 21 indicators.
I won't go on, but I'm sure you're all familiar with the Conference Board's report.
Would anyone like to comment on why Canada is doing so poorly when there are so many initiatives in place already?
Mr. Patry, would you like to tackle that?
:
It's a very complex issue.
If I had the answer to that question, we would all be looking at implementing the elements of the solution.
In many ways, it's related to the lack of innovation and productivity that might be taking place within the private sector. A report called Paradox Lost was released two weeks ago by the Council of Canadian Academies. Co-authored by Peter Nicholson and Marcel Côté, formerly of SECOR, it essentially tries to identify the reasons why some in the Canadian business sector may not have been as innovative as they should have. In essence, one of their conclusions is that our greatest trading partner, the U.S., has been a privileged trading partner for us, in the resource industry in particular. Also, Canadian businesses—and my colleagues from the Canadian business sector can talk about that more precisely—
Thanks to our witnesses for being here today.
My first questions will be for Catherine Cobden from the Forest Products Association of Canada.
As a member of Parliament from British Columbia, you can imagine how important the forest industry is to me and to my constituents. I just want to mention to you a question that I am frequently asked, namely why are we still exporting so many raw logs? Why have we not gone up to the higher value-added exports?
So I want to ask you, what is industry doing to raise the value of our exports? And are government programs such as IFIT and FIBRE helping in this regard?
:
Listen, this is a tremendous area of effort, and we are so grateful. What we've managed to accomplish together in partnership is that basically the forest industry is now Canada's largest exporter to China. Our competitive jurisdictions are looking at the successes that we've blazed together and are asking themselves how we have managed to penetrate a rather difficult market.
And by the way, in terms of those efforts, with the return of the U.S. housing market, there is no sense whatsoever of abandoning the China market. This is absolutely the future direction of the industry and we need to keep going.
As well, with regard to the work on India, by the way, we're further behind in terms of the timeline, but I think we're at the stage we were ten years ago on China. We need to continue to pursue it.
Thank you very much for that question.
:
Yes, sorry about the acronym.
FIBRE is a collective of university professors from across the country. Essentially they are using NSERC funding—actually it's multi-council funding—to support the industry's transformation agenda through the pure R and D phase.
If you look it as a funnel, we have a lot of idea generation, which we critically need. We need to outpace our competitors on new ways to use trees, just to touch on your earlier point about value added. That's what the university network is doing for us. I can't tell you the significant number of innovations that have come out of this—I have a long, long, long list—but I'd be happy to provide the backup material for this.
I was at a meeting yesterday with about ten of those professors, who are just so committed to this; it's truly remarkable.
My second question is for Monsieur Patry.
I've seen the CFI ads at the bus stops around the Hill, and I have two questions related to that.
One question is whether you think that extra money should be given to researchers, especially basic researchers, to engage in public outreach. For example, I believe the budget for the Perimeter Institute has a piece for public outreach.
The second question, and I don't mean to embarrass you, but I kind of scratched my head when I saw these advertisements because I know that the CFI is funded by the federal government. I was a little bit surprised that you'd be advertising on Parliament Hill. There's something funny about that. I wonder if you can address that.
:
It depends on which side of the business you represent, large or small, whether or not you're in favour of extending the CCPC refundable tax credit model to large business. Large business obviously would like to see that.
Since the AIAC represents a collection of both small and large businesses, we don't have a strong opinion either way. It would certainly mobilize that money more effectively, obviously, if it were refundable, but I understand the government's reasons for the current model.
What our recommendation was speaking to was the fact that there is this storehouse of credits that have in fact been earned. They are owed. They could be collected at any time, the timing of which is not dependent on any government policy. It's simply dependent on accounting.
The government has an opportunity to leverage that storehouse of earned but unclaimed credits to its own ends, in a sense, by deciding that increasing our R and D infrastructure is something it would like to support. The government has a tool available, which is fiscally neutral, to effectively encourage that.
:
I meant refundable tax credits for SMEs and not for all Canadian businesses. Thank you very much.
Ms. Cobden, we have worked together in the past, before I was an MP. So I am somewhat familiar with the forestry area, just as you are.
The years 2007, 2008 and 2009 were extremely difficult for the forestry sector. However, that sector of the industry really benefited from several opportunities that cropped up. It transformed the crisis into opportunity. In fact you talked about the transition fund, which was extremely profitable. There are several areas where Canada is no longer competitive, for instance pulp and paper and newsprint, in relation to its foreign competitors.
Could you give us two or three concrete examples of what the industry did to make that transition? The situation is really critical. Canada has to develop new market niches where it can be in the forefront so that it can maximize the power of the industry.
:
Thank you very much for the question. I do appreciate that you have a wealth of knowledge regarding our sector.
For sure we are thrilled by the progress we have made to date. The innovation we have done, by the way, isn't just in the new products, which IFIT is a fantastic tool for, but also in every element of our business. We have literally been innovating our business models.
If you're looking at productivity, here's a concrete example. We are the lead sector in productivity in Canada. The productivity story is an amazing good news story. I've already talked about how we've innovated in marketplaces and about the work we're doing in China. It's truly the envy of the globe in our industry.
In the bioproduct area, the delivery of new, higher-value products is incredible. This is the journey we're on through IFIT: to create something out of trees—a very plentiful and renewable resource—that would traditionally have come from non-renewable sources, for example, carbon fibre.
I've been a member of Parliament since 2006. I was fortunate to sit with Mr. Rajotte on the industry committee, and as long as I can remember, in this committee and the last committee, we've heard the same thing, that we're spending the money but we're just not getting the results. We don't seem to have the answers to those things.
I'm going to tell you where I'm a little bit concerned. I pulled this up from the web. It's an article in Maclean's about pensions and how Canadian universities are just going wild in terms of their pension shortfalls. For instance, from 2008 to 2012 they've gone from a $680-million deficit to one that's over $3.2 billion.
I know you're not directly responsible for this, but is it possible that a lot of this money...? This is just an awful thing to say, but I'm going to say it anyway. Again, I'm not making this stuff up. I just found it. There's the case of a particular university president, and I'm sure Ms. Robinson will love to hear this too, that—
:
That's what I was going to say, Mr. Chair. I'll put on my former hat as a former university president.
First of all, we have to recognize that defined benefit plans across Canada are very, very challenging in a period where the inflation rate is extremely low and where the actuarial estimates also need to be adjusted, number one.
Number two, I would argue, and this was the case at my university, there was a rule of having a maximum 10% surplus in your pension plan, at which time you had to have a contribution holiday. Even then, many pension plans had to pay the surplus back to employees. I remember very well at the University of Ottawa, where I was the university president, having to take a pension holiday. We did not necessarily want everybody to take a pension holiday, the staff and/or the university. This I think is responsible for a large part of the problem that we have right now.
:
I think most Canadians, strangely enough, don't understand how apprenticeship works. It's a contract between an individual, a sponsoring company, governments that give support, and a master craftsperson or journeyperson who must teach the apprentice. That's what it is.
It is currently not part of post-secondary education. It is funded through EI. It is outside our normal community college vocational training for advanced technological credentials, and it's outside the universities.
One point of principle with which I would like to leave the committee is that it's time to treat an apprentice as a learner, not as an employee, and to stop supporting apprentices through the EI system.
Every time you sign up with a company you become indentured. You register as an apprentice at level one, and it goes up to level four. There are 400,000 registered apprentices in the country, yet we are saying we don't have skilled tradespeople. Something is going wrong. What we know, and what most studies—mostly by Canadian Apprenticeship Forum and other research bodies—will tell you is that there is a completion rate problem.
I'm happy to tell you more. We have lots more for you.
:
Thank you, Mr. Chair, and thank you to the witnesses who appeared today. I certainly have heard some interesting information.
I want to talk first of all about apprenticeship programs.
I'm not sure, Ms. Robinson, whether you are aware of the apprenticeship program in Alberta that has been operating for 20 years. I have three sons, aged 23, 24, and 28 now. They were all born in Fort McMurray. They have all had the opportunity, especially the two youngest ones, to be involved in the apprenticeship program in Alberta, which takes high school students in grades 10, 11, and 12 and integrates them into the workforce.
I see you nodding your head in agreement. It has been a very successful program there. Of course, it was brought in by a conservative government in Alberta. It has been very popular.
Would you like to comment briefly on that program?
:
Welcome. Good afternoon to all the witnesses. We'll reconvene our finance committee, and we have six more witnesses this afternoon.
They include Paul Davidson, president and CEO of the Association of Universities and Colleges of Canada. Welcome.
[Translation]
I also want to welcome Mr. Jean Lortie, from the Confédération des syndicats nationaux.
[English]
We have Andrew Van Iterson from the Green Budget Coalition. Welcome.
We also have Karna Gupta, president and CEO of the Information Technology Association of Canada.
We have Elizabeth Cannon, president and vice-chancellor, University of Calgary, and vice-chair of the U15 Group of Canadian Research Universities. Welcome.
By video conference we have Mr. Natan Aronshtam from Deloitte LLP. Welcome, Mr. Aronshtam.
Everyone has five minutes for a presentation. Then we'll begin questions.
:
Thank you, Madam Chair.
It's great to be back at this committee, and I really wish you well in your work.
This fall Canada's universities welcomed the class of 2017 onto their campuses. These students will be graduating in the spring of Canada's 150th anniversary. The skills, knowledge, and experience these students acquire will contribute directly to Canada's prosperity for decades to come.
In previous years at this committee I've spoken of how every major public policy goal Canada is pursuing passes through the doors of Canada's universities.
I'm here today to focus on university research enterprise and its direct link to Canada's prosperity—and it is a direct link. For example, we know, as the member for Chatham-Kent—Essex knows very well, the tremendous impact of research on agricultural productivity innovation, improving the livelihoods in farming communities across Canada, and feeding Canadians.
[Translation]
As the member for Rimouski knows very well, in small communities we can see the impacts and direct effects of cutting-edge research, for instance at the Institut des sciences de la mer of the Université du Québec in Rimouski, which I had the privilege of visiting last summer.
[English]
In April of this year I spent a day with 25 university presidents in the riding of Fort McMurray—Athabasca where we saw firsthand the role of research and innovation in the responsible development of the oil sands.
The member for Kings—Hants, not currently present, is very familiar with how Acadia University's Tidal Energy Institute is advancing the science of harnessing the tides for clean energy.
I will add that I don't need to elaborate for the member for Kingston and the Islands the tremendous impact of research being done in that constituency.
Canada's universities conduct over 38 per cent of all research done in Canada. It's vital for Canada's future that the right policies and programs be in place to drive research and innovation, and the global competition for research and talent is unrelenting. The parliamentary secretary and I had the chance to see just how intense that global competition is as part of the Governor General's mission to Singapore in 2011 where, during the course of the mission, members of our delegation were being actively recruited by Singaporean research institutes.
Canada has done well, but we can do better. Canada, at this moment, has a unique opportunity to scale up innovation, to advance our competitive position in the global marketplace, and to equip a new generation of young people to achieve their potential.
We must view this objective with a sense of urgency to seize the moment. More than half of all faculty members in Canada have been hired in the last decade. They are a generation of top researchers in full flight. They are at their most productive and innovative with the greatest potential in their careers. Let's not miss out on that potential and tell them they need to wait another half decade.
Graduate student enrolment, which is low compared to U.S. and European competitors, has grown by 80 per cent in this decade. There are now 150,000 graduate students in Canada, with the fastest areas of growth being in the STEM disciplines. More than two-thirds of these graduate students will ultimately work outside universities, mainly in the private sector. We want to ensure they develop the research, innovation, and entrepreneurial skills to drive Canada's competitive advantage.
As I mentioned, AUCC's pre-budget recommendations focus on research. The first recommendation is for the government to commit to the principle of sustainable, predictable funding for the federal research granting councils, investments that lead the rate of growth in the economy. The research the councils support is foundational to all other aspects of Canada's research enterprise.
[Translation]
The AUCC also recognizes the importance of investments in infrastructure and joins with the Canada Foundation for Innovation to demand a multi-year reinvestment strategy.
[English]
AUCC was pleased to see a review of the indirect costs research program announced in Budget 2013. We believe that the indirect costs program is essential to Canada's universities. The program is effective, but has been chronically underfunded since its creation in 2003.
In our submission, we indicated that addressing the ICP is a priority. We have also advanced an innovative new proposal to meet public policy objectives and link to Canada's competitiveness strategy. Canada's universities support the creation of a new research excellence fund that would be complementary to, not a replacement of, the indirect costs program. This fund must be open, competitive, flexible, and based on peer review.
Dr. Elizabeth Cannon, president of the University of Calgary, is here today as well, and she will elaborate in a few moments on the merits of a new research excellence fund.
Madam Chair, like all members of this committee, Canada's universities share ambitious world-leading aspirations for our country. As we welcome the class of 2017, investments in Canada's universities will help young Canadians fuel innovation and strengthen economic prosperity in communities right across the country.
Merci.
:
I would like to make three remarks concerning these pre-budget consultations.
Regarding innovation and research, there is a tool in Quebec that is known as the workers' funds. There are two. These workers' funds generate hundreds of thousands of jobs, particularly in venture capital sectors where there is a need for innovation, and where there is innovation thanks to this available venture capital.
Over the next few years, the federal government intends to gradually reduce the 15% tax credit that is granted to these workers' funds. This will cause considerable damage to venture capital generally, in Quebec in particular, because these two workers' funds invest and are on the front line where venture capital is most needed, that is to say in innovation in green technologies, and in information technology.
The fact is that the government thinks it will be recovering millions of dollars, but it will not be doing so. Indeed, for each tax dollar that is spent, it recovers $1.09 in direct or indirect jobs. There is thus a net gain for the federal state when it provides this 15% tax credit to Canadian and Quebec workers who invest in these workers' funds, either those of the CSN or the FTQ.
I want to take advantage of my opportunity to speak to the parliamentary committee to underline that fact. If we are to have research and innovation, there has to be a favourable environment for it. The Conservative government will certainly not be improving conditions for people by adopting anti-labour laws. These laws are going to affect 4.3 million unionized Canadian men and women, who make up the middle class in Canada. The Conservative government's plans will make these people vulnerable in the years to come. We are particularity concerned because the economic climate in Canada is going to deteriorate considerably and this will affect millions of consumers.
To continue on the topic of innovation and technology, the next federal budget includes large funding cuts for CBC/Radio-Canada. We consider that our public broadcaster has to be funded in order to be considered a national public network and not a private enterprise.
The Confédération des syndicats nationaux is particularly concerned; we represent more than 300,000 working men and women throughout Canada, among these, federal corrections workers, and the employees of CBC/Radio-Canada in Quebec and Atlantic Canada.
We wish to take advantage of this forum to reiterate that these workers' capital funds are essential to Canada's economic development, to research and innovation, as well as to support small and medium enterprises that are capital-poor. Bay Street does not lend to Main Street; that is the role of workers' funds. We want the federal government to reinstate the 15% tax credit for these workers' funds so that they can play their role fully, which is that of a fundamental agent of economic development.
:
Honourable committee members, thank you very much for inviting the Green Budget Coalition to speak to you today.
The Green Budget Coalition, as many of you would know, is a unique initiative that brings together 14 of Canada's leading environmental and conservation groups representing over 600,000 Canadians, ranging from Ducks Unlimited, the Nature Conservancy of Canada, to Nature Canada, and the crazy radicals at Greenpeace.
We exist to present an analysis of the most pressing issues regarding environmental sustainability in Canada and to make a consolidated annual set of recommendations to the federal government regarding strategic fiscal and budgetary opportunities.
Please note that we sent you a more detailed set of our recommendations back on October 8, 2013, and later this month we will send you a final set of recommendations.
We want to thank the government for its environmental progress in Budget 2013 and subsequent announcements, including reductions in subsidies to the mining industry, funding for nature conservation, the major infrastructure investments, and for committing a couple of times to enshrine the polluter-pay principle in legislation.
To build on this progress for Budget 2014 we have identified and developed three feature recommendations as well as 10 complementary recommendations.
Firstly, to build further on the government's progress in increasing tax neutrality and phasing out inefficient fossil fuel subsidies, the coalition recommends two targeted measures: enabling the Canadian exploration expense only for unsuccessful exploration, which is only about 10% of the wells that are drilled, and not renewing the mineral exploration tax credit for flowthrough shares.
These were both identified as subsidies for potential reform by the Deputy Minister of Finance in a March 2010 memorandum to the finance minister and could save the government about $340 million, helping to reduce the deficit further.
Secondly, we were pleased to see the government's throne speech recommit to implementing the national conservation plan, a unique opportunity to accelerate Canada's conservation achievements by our 150th anniversary in 2017. To be effective, Canada's national conservation plan should focus on completing the terrestrial and marine protected areas networks, ensuring sustainable management of working land and seascapes, maintaining or restoring healthy populations of species of wild plants and animals, and building a conservation ethic in Canada by better connecting Canadians with nature.
Thirdly, Canada's fresh waters are of national and regional importance and contribute extensively to the social, ecological, and economic wellbeing of our country. The Green Budget Coalition recommends the government set up a five-year Canadian water fund to build on past and current progress to address some of the gaps in these efforts by focusing on alleviating land-based runoff of pollutants and nutrients in areas specific to federal jurisdiction as well as actions specific to the Great Lakes and invasive species.
We also have further complementary recommendations in our document that were not in the brief addressing energy sustainability, climate action, and green infrastructure. I'd like to focus on three of those opportunities that relate specifically to today's theme.
Regarding energy storage and electricity storage, the coalition recommends amending classes 43.1 and 43.2 of the Income Tax Act to specify that capital cost allowances also apply to expenditures on tangible, stand-alone energy storage investments, and to create a 30% investment tax credit for emerging energy storage technologies. Both of these would help to drive renewable energy growth and help to make our energy systems more efficient across the country.
Further, to reduce diesel fuel dependency in northern and remote communities, we are recommending a strategic $10 million to $15 million fund be set up to provide feasibility staged funding in the range of half a million to $2.5 million per project—which is not easily available right now—to catalyze renewable energy, transmission interconnection, large-scale improvements in community energy demand, and major enhancements to promote enhanced home and building facility energy efficiency for off-grid communities.
These measures together would help make Canada achieve transformative progress towards environmental sustainability as well as creating numerous jobs across Canada in time for our 150th anniversary in 2017.
Thank you very much.
Thank you to the panellists for inviting us.
ITAC represents the ICT sector. In our case we represent over 325 companies across Canada, and 80% of our members are what you call small and medium-sized businesses.
With respect to the jobs, growth, and innovation, just to make a point we represent about one million jobs, direct and indirect, in the ICT sector. The growth in revenue was about $155 billion, growing at a 5% rate and outpacing the overall economy.
On innovation, I would underscore that the total private sector spending is about $4.8 billion and it is about five times the second-largest, which is the pharmaceutical.
I am very pleased to be here because the main priorities of ITAC are very much in line with this topic. One of them is driving the adoption of technology and productivity in the country. The second is driving innovation and competitiveness in the technology sector.
We did submit a pre-budget submission. We had several recommendations, but given today's discussion, I'll focus on the three that capture the area of tax, R and D, and finance.
The very first one is the venture capital action plan. ITAC was extremely pleased with the announcement that was made by the government on this area: leveraging a $400-million allocation and turning it to $1 billion by leveraging the private sector. However, the process of getting it in play has been very, very long, and companies in our sector are struggling.
The start-ups are in micro-electronics. These complex software areas are particularly challenged by this delay when you have other issues, like the removal of SR and ED. Our recommendation to the government on the venture capital action plan was that we needed to get this moving and engage the sector recipients in this case to not only design but also implement how it needs to be allocated across various sectors. So we are looking forward to further action in this area.
The second area I want to cover concerns indirect tax measures to support innovation. In the budgets of 2012 and 2013 the government began to remove the indirect tax credit, which was known as SR and ED, from research and development and made some announcements on direct measures.
Consultation is under way on the direct funding initiatives, and we expect these will be rolled out later in 2014. This delay is hurting the industry quite a bit, particularly on advanced manufacturing, where funding is required now.
We continue to believe that indirect measures like SR and ED are one of the best ways to continue to support the Canadian ICT sector, in large part due to the small businesses. This is a predictable source of funding to drive the innovation.
One thing I would note is that the ICT sector jobs are highly migratory. If we do not have the proper instruments in place, these high-paying jobs and the innovation we're seeing in the country may not be here for long.
So our recommendations, as submitted in the budget document, state that we do need to revisit the SR and ED, and in the meantime the government should continue to track the changes and what the impact has been. Our recommendation was to take the qualified pool balances from 15% to 17% or return capital expenditures for R and D.
Finally, we need to have the tools that clearly measure the impact of these programs to support the research and development.
The last item I will cover today is the adoption of innovative technology. One of the key ways to make Canada promote the innovation is to support the adoption and use of technology in business. This is fundamental to improve productivity. The Canadian companies continue to under-invest in technology. Canada's current rate for ICT investment per worker is only at 53% of the United States.
To address this, the Canadian government needs to be the champion in promoting the benefits of adopting technology.
There are also some specific initiatives to consider here. It can be difficult for small and medium-sized businesses to get started on technology projects when their main priority is just making a go of it.
There was a government program called DTAPP, a digital technology adoption pilot program, which is winding down. I believe we should reinstate that program in some fashion and call it the generation two of the program and engage the industry to not only design but also to implement that program in the field.
The adoption of innovative technologies is key to Canada's ability to grow and prosper, and we need to take some action now.
In closing, research and innovation is fundamental not only to the ICT companies' growth, but also for all sectors of the Canadian economy to fully benefit from the adoption of new technologies.
Thank you, and I look forward to your questions during the Q and A session.
As president of the University of Calgary and vice-chair of the U15 Group of Canadian Research Universities, I'd like to thank the committee for its invitation to participate in its pre-budget hearings.
The U15 is an association of 15 of Canada's top research-intensive universities, focused on advancing research and innovation at Canadian universities. From Dalhousie to UBC, we include institutions from coast to coast. U15 universities conduct $5.3 billion worth of research each year, $1.5 billion of which is privately funded. They account for 87% of all contracted private sector research in Canada and hold 80% of Canadian university patents and start-ups. They are home to 47% of Canadian university students and 71% of full-time doctoral students.
The talented and creative people who teach, learn, and conduct research at our universities are the foundation of our nation's research and development capacity. They inspire the innovations that offer enterprises crucial advantages, create new businesses, strengthen health outcomes, enhance security, and ultimately drive the social, economic, and cultural development of our country. The federal government understands and supports this, as demonstrated in the vision articulated in its white paper, Mobilizing Science and Technology to Canada's Advantage, and its commitment in last month's throne speech to “continue making targeted investments in science and innovation”, as well as the ones in 2011 and before.
Even with the recent economic downturn, the government has worked to preserve the research base that is so integral to Canada's innovation ecosystem, continuing to make targeted investments in key programs. Yet despite these investments, Canada faces growing challenges as our international competitors, both advanced and emerging economies alike, seek to secure advantage by focusing resources and introducing programs that enhance the ability of their universities to compete among the global best for the most talented faculty and students, for the most important research projects, and the most prized and profitable partnerships. It is in this context of heightened international competition that we are proposing the Advantage Canada Research Excellence—or ACRE—fund.
ACRE will add to the strong foundation for research already established in Canada. It is based on measurable excellence as judged by rigorous peer review through the Tri-Councils. It builds strategically on existing programming, supporting the best of Canada's research talent, scholarship, and innovation.
The ACRE fund will support the global positioning of Canadian universities as preferred partners for the best international research universities. It will improve partnerships with industry to create research industry clusters, attract and retain the best talent from around the world, stimulate the rate of ground-breaking discoveries, and enhance our international competitiveness. The government has stated that its support of research excellence and innovation is a means of advancing our social and economic goals, domestically and abroad. We firmly agree.
Central to the ACRE proposal are the established principles of excellence and inclusion. All Canadian universities that meet this standard based on measurable excellence, as judged by independent peer review, and are currently employed as a hallmark approach that is the Tri-Council programs, will be eligible to be benefiting from the fund.
Success under the ACRE fund will also be measured on excellence. This includes universities' abilities to attract research funding from international public and private sources; increases in a number of international research partnerships; improvements in Canada's international standings; the attraction of new, highly qualified people; and improved knowledge translation and commercialization. Each university will be accountable through straightforward framework agreements with the government.
We propose that the government implement ACRE over multi-year timeframes, starting with an initial investment of $100 million of new money, gradually increasing over four years to $400 million annually, as fiscal capacity allows. Through previous investments, Canada has established a strong research foundation on which to build. We believe ACRE will be a game-changer for the country, and we fully support its focus on excellence.
Thank you for your time. I'd be happy to answer any questions.
Thank you to the committee for inviting me. I will try to say a little bit about the global competitive landscape of what's happening and then focus on three recommendations, with time permitting.
In general we see Canada continuing to do well relative to the rest of the world. At the same time we are constantly looking at Canadian productivity and are seeing tremendous challenges in our competitiveness. Our view is that innovation is the tool that will help Canada improve our productivity, and we truly think that is the essence of how Canada will become globally competitive.
When we look at the global landscape we see many countries very actively and thoughtfully approaching.... As Mr. Gupta said very well, global R and D today is very competitive, and we think it's time for Canada to really think through a number of issues: balance of direct and indirect support models for business, refundability of tax incentives, patent boxes, small versus big business strategies, capital expenditures and how they are treated, as well as the links between academia and industry.
Just to give some data points—and these are very real and very recent—governments at just the state and local level in the U.S. are spending $80 billion annually in business support. In the EU over the next seven years the European Parliament has allocated $500 billion euros in business support. In that, there's a $70 billion euro program just to promote innovation.
There's a new special economic zone in China just announced a couple of weeks ago, and similarly just a couple of weeks ago Spain announced that they were making their new tax credit—the classic R and D tax credit—fully refundable.
We've seen in the U.K. both an R and D tax credit and the patent box, and in general we see patent boxes appear all across Europe and, by the way, Asia as well.
Just to list some of the European countries: the U.K.; Netherlands; Belgium; China—not European; France; Hungary; Ireland; Liechtenstein; Luxembourg; Spain; and Switzerland. That's just to give you a flavour of how common these are becoming.
We have seen that incentives in Canada have achieved tremendous results. We can use Ontario as an example with our digital media credit here. It has demonstrated that a government policy and focused incentives can achieve tremendous results, and we're seeing that these are a great tool to attract foreign investment. But we're also seeing a lot more activity in the rest of the world, and we are concerned about Canada falling behind.
Let me focus on three specific recommendations that we've made to the committee. The first one is to encourage foreign investment through full refundability of R and D tax credits.
The second one is spurring the start-up economy with improved financing support and then considering the introduction of the patent box model as is being done in other countries.
Our view is that only full refundability of SR and ED tax credits can achieve the kind of financial result that modern businesses look for, and it is a trend around the world.
I think that we've studied the tax consequences, especially to the U.S. companies, of our current non-refundable SR and ED system and we think that a solution of making it refundable will come a long way.
We clearly think that the B.C. angel tax credit has been a good test and has shown that it's a good way to promote innovation and get companies launched and moving in the right direction. We think that more of that kind of angel tax credit modelled on the B.C. tax credit would be a very good way to get these companies ready for venture capital when it flows.
On the patent box I've listed the countries that have already done this. Patent boxes are not complicated, but it is a way to make companies hold their IP in Canada in return for preferential tax treatment. We think around that IP you will see more innovation and more jobs.
:
This has been a longstanding issue before this committee and before Industry Canada. For many years, the AUCC has been speaking of the importance of getting the indirect cost program up to globally competitive levels. Globally competitive levels are somewhere between 40% and 50% of the direct cost of research, and the present average is about 21.6%, so there is quite a gap to close. That's why I say that the primary challenge is a question of funding.
In recognizing the challenges facing the government, Canada's universities have been working at alternative ways of addressing the problem. That is why the new excellence fund may be a way that is more appealing and more able to achieve a variety of public policy goals. But as we see our global competitors being funded at substantially higher levels for the indirect costs of research. It is a challenge.
With regard to the impact on students, I think it is fair to say that many universities need to cross-subsidize their research programs by taking money raised from students and directing it towards the research programs to meet those costs.
What are those costs? They arise from such things as improved ethics compliance, improved guidelines for the use and the storage of hazardous materials, and improved care for animals. These are real costs, and they are growing.
Ms. Cannon, regarding the ACRE proposal, what fraction of the funds you are asking for might go towards pushing the results of research excellence out into the commercial world? For example, how much of it might you want to invest in technology transfer offices?
I'm not talking about industry-academic partnerships in which industry says, “ I have a problem. Can you please solve it?” I'm talking about something that happens, for example, in my own riding in a place called GreenCentre Canada, where there is a dedicated laboratory and scientists who actually look at research that comes out of universities and try to find a place for it in industy, taking advantage of industrial partners.
Is there a place for that in the ACRE proposal?
Mr. Gupta, I'm going to continue on the same topic of venture capital.
We are talking about $400 million. You are quite fortunate in that regard, since there are problems with venture capital in Canada, including in Ontario. However, the two workers' funds in Quebec, the Fondaction and the Fonds de solidarité, submitted a proposal to the Minister of Finance to attempt to convince him not to eliminate the tax credit for contributors. Indeed, venture capital derived from the general public is really rare.
The two workers' funds proposed that the number of shares issued be restricted so as to limit tax expenditures. In addition, $550 million would be invested in private funds in Quebec, and it would be possible to invest everywhere in Canada. In that way, $400 million from these two funds would be invested in private funds outside Quebec, including $120 million in the two national funds included in the Venture Capital Action Plan. Moreover, a sum of $1.05 billion would be invested directly in businesses, in addition to the money from those funds, over the 10 years of the federal action plan.
The Minister of Finance rejected the proposal. Canadian venture capital—we are about talking about Quebec, but also about other areas outside of Quebec as well—lost $200 million a year in investments. That represents $2 billion over a 10-year period.
Would you not have preferred to benefit from these $2 billion, rather than the $400 million proposed by the federal government?
:
You're saying there's no evidence to support that a 15% federal corporate tax rate has been successful. Is that what you're saying?
Mr. Natan Aronshtam: [Inaudible--Editor]
Mr. Mark Adler: That's interesting.
I have a couple of questions for Mr. Lortie.
The Conservative Party just had its convention last weekend in Calgary. I didn't see you; I hope you had a good time. You declared that the union's goal is to defeat the Conservative Party in 2015, and you denounced a number of resolutions passed, from defunding the CBC to public pension reforms and the perceived suppression of aboriginal and Quebec cultures.
Could we talk about some of the resolutions that have been passed at CSN conventions, such as supporting the boycott of, divestment from, and sanctions against Israel and about claiming that Israel is committing human rights violations and is an apartheid state? Could you tell me how that further advances the interests of workers as members of the CSN?
:
Thank you very much, Mr. Chair.
I would like to remind my colleague Mr. Adler that in the 1950s, President Eisenhower's Republican government was very proud to see the number of unionized workers increase by 2 million in the United States. However, as they say, things have changed a great deal since then.
We welcome a lot of very interesting witnesses. I am somewhat frustrated to have only five minutes to put questions to them. I am going to address my questions to Ms. Cannon and Mr. Davidson, and they will be on research in the academic sector.
I had the great privilege of meeting a person I consider a heroic figure in Canadian research, Mr. Louis Fortier, who founded ArcticNet. Mr. Fortier, it must be said, has no problem speaking his mind. He told me, as a point of interest, that the network of relationships in the university research environment, and even outside of it, is a great source of pride for Canada. It is one of the things that people sat up and took notice of throughout the world. However, when it comes to financial support, our performance is weak.
What do you think of what Mr. Fortier said to me?
Mr. Aronshtam, Mr. Albert de Luca, your colleague from Deloitte Canada—I know that it is a very big firm—made some comments on the government's plan to inject $400 million in venture capital to offset the decrease in the workers' fund tax credit. In fact, speaking about workers' funds, he said this: “We are told that these things are interrelated. But if I have to choose between a program that has proven its worth and another that has not, I will choose the former.”
The American venture capital expert, Stephen Hurwitz, underscored the fact that in the Canadian context, workers' funds are fundamental.
Do you have any comments to make on that?
:
Let me apologize. I'm really not an expert in labour sponsored funds.
I do a fair bit of work with venture investors all over the world. My experience in that area is that they are critical to a successful start-up economy, and I do think that historically in Canada we've always observed a significant shortage of venture funds.
My view, not backed up by research, but just looking at what's happening in the rest of the world, is that $400 million is not a lot. Even multiplying that to $1 billion is still not a lot for a country of our size.
I think it is important for the government to look at how we increase the amount of venture capital in Canada, but I can't really comment on labour sponsored funds. It's not something I practise.
:
I should have known how to pronounce it, then, I guess.
Voices: Oh, oh!
The Acting Chair (Mr. Dave Van Kesteren): I don't think there are too many people who would disagree with a greener world; I think we all want it.
You mentioned something about batteries. I'm going to tell you that this intrigues me. Where I live in southwestern Ontario, we don't have any trees, because it's great farmland and they cut them all down. But we have windmills—wind turbines, we like to call them. We have a forest of wind turbines, and they're all pushing....
The trouble is, as you probably know, that they turn when the wind is blowing, and oftentimes that's not when we need the power. As a matter of fact, we don't need the power, so we sell it more cheaply and we have to buy.... So there's a problem.
Batteries? Listen, I believe batteries represent an answer, but here's the problem that comes to mind. I know that when we got really excited about solar energy—I think we still look at the possibilities—we pumped billions of dollars into it. As a matter of fact, I think President Obama put a billion dollars into a company, and a year later they went broke. Why did they go broke? It's because the Chinese made them, and the Chinese make them a whole lot cheaper.
The same thing is true with wind turbines. I've been to those Chinese plants, and I've seen them crank those machines out. It's an awesome sight; it's a scary sight. We can't compete with them.
Let's say that we start to invest the money that you're suggesting we invest in batteries. Have you any idea of how we could keep the jobs here? Please don't tell me that it's because we have trade agreements. They can still bring them here, if they pay the tariffs. They do that and still clean our clocks.
How do we compete with the emerging economies in producing that stuff once we develop the technology?
:
I'm not saying this to be critical. I guess what I'm saying is that if you approach the government—and I think you guys do a wonderful job and have come up with some great ideas—it's always helpful to have something in place such that you say, “Here, if we do this....” And I don't think you have that yet. I suggest that maybe, if you went back to the drawing board....
This is something that I think we all struggle with, with governments.
I'm going to go to Mr. Lortie, because we left with such a sour note. I'm a bridge builder. I don't want the folks at home thinking that there's no love here at the table. But there has been a little bit of antagonism towards the Conservative government from your group.
This is a simple question. Our government has—Mr. Davidson will tell you this—spent an enormous amount of money on research. Let's face it: Quebec, as well as the rest of Canada.... I have 300,000 workers—whom you represent—in highly skilled professions, who benefit enormously from this. I'm thinking in terms not only of wages.
Do you support those actions? I'm trying to find some good common ground here so that we all come to the same table. Do you support those actions of the government?
:
Is it my turn? Thank you, Chair.
Welcome to all of our guests. I have a very short time and I want to start with Mr. Van Iterson of the Green Budget Coalition. First, I want to commend you and the 16 prominent environmental and conservation groups that you represent for a very constructive contribution to this process. Thank you.
I want to focus on a couple of your recommendations. The first involves reference to the natural areas conservation plan. You referred to it with respect to the Speech from the Throne. Yesterday—or the day before, I guess—the environment commissioner, an independent officer of Parliament, said that there was a serious problem with biodiversity and species at risk. He said, for example, that there's a more than ten-year backlog of species at risk recovery plans.
Now, you recommend a science-based framework for conservation action, and you say that “Federal investment in completing well-managed networks of marine and terrestrial parks and protected areas” and conservation of “working land and seascapes” is something you would get behind and promote.
What about the natural areas conservation program of the government? Is it working? What is your take on that program to date?
I want to apologize to our guests, as I had to get our budget approved for this current study at another committee. Thankfully it was approved, so we will actually be able to fund this.
Some hon. members: Oh, oh!
The Chair: I want to thank you very much for all of your presentations. I have a number of questions. I will try to get through them all.
Mr. Davidson, I've heard about indirect costs since being here in 2001, on the industry committee at the time. They have been a challenge.
Part of the reason they have been a challenge is that this is probably the least sexy part of research funding. You have the granting councils; you have the Canada research chairs, which fund people; you have CFI, which funds facilities; we had during the stimulus time the knowledge infrastructure program, which funds facilities.
It's very exciting to open a facility and very exciting to fund a researcher and talk about the work a researcher is doing. Indirect costs are the stuff that has to be funded, but even the phrase “indirect costs” is sometimes somewhat perplexing to people.
Can you speak to why it is so essential that we fund indirect costs at a level commensurate with funding people and facilities?
:
Thank you for the question.
Yes, we have been around the mulberry bush on this several times. I would agree that the name of the program and the description of the program are difficult to explain and articulate to parents and families across the country and say why it's important.
It is critically important because these are real costs that are large and growing. They're the unmet costs, the costs that aren't funded by the federal or provincial granting agencies, the tuition costs or other costs in the university budget. They're the real costs, such as caring for animals or making sure that research ethics are done, or driving the translation of knowledge into the commercial space and engaging in international research. These are real costs, which are large and growing. When we look at how other countries address those issues, we see that they choose to fund them at a substantially higher level.
So we welcome the reference in Budget 2013 to having a look at this question. We're looking carefully with the industry department and others to see whether that provides the best vehicle to move forward or whether an excellence fund might be a way of addressing public policy issues and contributing to Canada's competiveness.
:
Maybe I'll start with the second question, why 15. We are here as the U15 to talk about the ACRE fund as a new opportunity for Canada. But to be clear, this is fully supported by the AUCC, which is inclusive of the 97 universities in this country. So ACRE has the full support of the AUCC membership as well.
This program actually presents a tremendous opportunity for Canada. I think, as we have heard the say, this is Canada's moment. It's about shining on the international stage; it's about being bold and positioning ourselves as we head toward our sesquicentennial.
This program is about excellence—excellence in the way the funding is allocated—and it's inclusive. If you have Tri-Council funding, you are able to access the funds through the ACRE opportunity. It is also built on excellence in terms of deliverables. Understanding that as government you're looking for payback if you're investing money, what are you going to get? Three areas: global excellence, talent, and knowledge translation....
This program is very complementary to other programs that the government has launched. It provides institutional flexibility, because each institution can determine how they use the funds in those three areas. At the University of Calgary, we're very strong on unconventional oil and gas; we're looking at increasing research opportunities in that area. That would be a natural home for part of those funds from our side. In other parts of the country, other institutions would use those funds differently.
It's flexible, it's built on excellence, and it helps build Canada's brand internationally.