Dissenting Opinion of the Bloc Québécois
Industry Committee's Interim Report
Examination of science and technology and
the «innovation deficit»
What empty words. . .
Introduction
The Standing Committee on Industry has decided to table an interim report following the consultations that it held regarding the examination of science and technology. The Committee members wanted to present recommendations to the Minister of Finance in this interim report, before the tabling of his next budget. The report's meagre and timid recommendations clearly show the Liberal majority's lack of enthusiasm to rejuvenate science and technology development in Canada and Québec.The majority report contains a long list of quotes taken from the consultations on various subjects brought up by the witnesses. No direction, no solid observations, no invigorating or innovative recommendations. The Liberal majority gives us four meagre recommendations, the majority of which are already found in a Finance Committee report. The Liberals couldn't do better in terms of a waste of time and money. Their flashy report will be as useful to the Finance Minister as a snowmobile in Mexico.
Consultations are not held in order to appease the conscience or to attempt to show interest in science and technology. Concrete proposals, firm leadership, clear direction and innovative recommendations must come from consultations as important and fundamental to the economic development of Canada and Québec.
In anticipation of the budget, in this dissenting opinion the Bloc Québécois is recommending, on one hand, a certain direction which the government should take in science and technology and, on the other hand, concrete and new proposals to encourage the development of science and technology in Canada and Québec.
1. - Commercialisation and basic research: Balance must be kept
In their report, the Liberal majority MPs seem inclined towards commercialisation of basic research carried out by universities and the federal government. The Bloc is for the principle of commercialisation of basic research when the circumstances are right. All the same, the Bloc Québécois must warn the Liberal majority against such a unilateral direction. The opinions vary on this question, particularly the risks that this approach raises in possibly placing basic research in danger over the long term for more promising short term results.The research done by these public agencies enables more long term objectives to be set compared with those of businesses seeking a more immediate profit. A balance must be maintained between commercialisation of governmental research and more long term research for the general betterment of society.
2. - Universities and training: The usual interference
The committee seems to want to involve itself once again in the running of universities and in training. We must again remind the Liberal MPs that education belongs to the provinces in virtue of Section 31 of the Canadian Constitution, despite federal intervention by way of grants councils.Yes, the grants councils fund university research. No, the federal government should not interfere with universities' choices, as much with the level of research done as the level of commercialisation of this research.
However, to raise the matter of training when the federal and Québec governments are attempting to negotiate an agreement on federal withdrawal from this provincial jurisdiction denotes a misreading of such a sensitive issue where all Québec players have reached a consensus.
3. - Future directions: «Coast to coast to coast»
In this field, the Liberal majority also seems to want to go « coast to coast to coast ». Certainly, the idea of targeting specific fields where the government should concentrate its energies is interesting for the field of science and technology. All the same, the major structural differences between the different Canadian regions' economies would make the federal government's established targets completely inappropriate. In effect, the federal government tends to align itself with the Ontario economy which has a very different industrial structure than those of Canada's other regions.The nuclear fusion and fission example is convincing. The federal government chose to encourage only the development of nuclear fission with the Candu technology, technology mostly concentrated in Ontario, to the detriment of nuclear fusion and the Tokamak project located in Québec.
The government's choice of target fields should be left to the provinces, which have a much more extensive knowledge of their industrial structure and of their regions' economic development needs.
4. - Precise and concrete recommendations to the Finance Minister
For his next budget, we recommend the following measures to the Minister of Finance, with the aim of improving the development of science and technology in Canada and Québec, notably in the field of research and development.
a) Budgetary measures: Return the priority to science and technology
Infrastructure programFrom the beginning of the parliamentary session last September, the Bloc Québécois has requested that the Prime Minister follow-up on his proposal to set up a second infrastructure program. As part of the conditions for a new program, in particular the Bloc has proposed a high-tech component. Consequently, we agree with the majority report's recommendations in this issue, if everything is done with the provinces' collaboration.
Grants Councils
After having made draconian cuts to the grants councils' funding, lowering their budgets from $958 million in 1994-95 to $867 million in 1997-98, the Liberal majority have awakened and are begging the Finance Minister to make it a "priority" to increase the funding for grants councils.
Too little, too late. These counter-productive measures have already had their disastrous effect on the funding for university research and, contrary to the Bloc Québécois, the Liberal MPs maintained a complicity of silence when the Minister of Finance announced his budget cuts in science and technology. It is very hypocritical to timidly ask the Finance Minister for a simple "priority" when the announced cuts will stretch until 1997.
These reductions, vigorously denounced by the Bloc Québécois, can be labelled as irresponsible and counter-productive in the medium and long term. For example, the Medical Research Council's drop in funding has already had repercussions on the country's medical research. Many researchers complain of a lack of funding in such a crucial field. Since 1990, Canada is the only G7 country to have decreased funding to highly competitive biomedical research field.
Consequently, the Official Opposition recommends instead that the Finance Minister restore the funding to the grants councils to its 1993 level. To do otherwise would undermine the competitiveness of Canada and Québec in fields of the future which have major spin-offs for our economy's development.
Centres of Excellence
The Bloc Québécois supports the recommendations regarding the Centres for Excellence.
b) Tax measures: Job-creating measures
Federal tax credit for research and developmentTightening
Last November 1996, the Bloc Québécois presented a series of recommendations on corporate taxation, centred around job creation. In this document, entitled Corporate Taxation in Canada - Critical Analysis and Recommendations, the Bloc Québécois recommended the review of eligibility rules for R&D credits. The aid should be aimed at R&D salaries rather than the acquisition of capital, in order to support the creation of quality jobs, to increase the hiring of young, recently-trained researchers and to encourage the development of leading-edge technologies. As well, a mechanism inspired from the American system should also be studied by the government, in order to prevent the awarding of credits for R&D spending which a firm would have made regardless.
Fairness for Québec
In this same document, we also request that the federal government immediately stop reducing its research and development credit for Québec companies benefiting from an equivalent provincial credit, since it does not penalise the super-deduction which Ontario grants for the same type of spending. It is a flagrant injustice uniquely penalising businesses operating in Québec and harming research and development in key sectors of the Québec economy.
Risk capital
The Liberal report amply discusses the importance of risk capital for the science and technology field. What empty words, for nothing concrete is proposed.
In another document entitled Personal Taxation - Critical Analysis and Recommendations, presented in early February, the Bloc proposed measures favouring workers' funds, which are an important source of risk capital.
The Bloc therefore proposes that the maximum limit of investment allowed in a workers' fund be increased. The Liberals lowered this limit from $5,000 to $3,500 in the 1996 budget. These fund have undeniably beneficial effects on economic development and on job creation. We therefore recommend the increase of the annual maximum investment ceiling to $5,000.
c) Fair spending: a just re-establishment
Science and technology spendingThe Bloc Québécois has always denounced the flagrant unfairness in regards to the allocation of federal government spending in science and technology. Inequity which has persisted for years and which cost Québec dearly in quality jobs and in medium and long term economic development. The Liberal government has never wanted to attack this important structural problem, preferring to hide behind excuses which are unacceptable for Quebecers.
From 1986-87 to 1994-95, federal spending for science and technology rose to $30.94 billion. For 1994-95, the situation improved slightly compared to 1992-93, moving from 20.2% to 22.1%, but it is still $130 million in foregone revenue compared to Québec demographic weight for 1994-95. The government's argument on the Nation Capital Region does not hold up since in this region, the Québec part only received $215 million in 1994-95 our of $1.69 billion, being a mere 12.8% of total spending.
We therefore recommend that, within the next budget, the Minister of Finance elaborate a medium term strategy to re-establish the balance in science and technology spending by the federal government, in order to stop the unfairness towards Québec in the allocation of this spending.
Intramural spending in R&D
The same reasoning applies to intramural spending by the federal government in R&D. From 1986-87 to 1994-95, federal intramural spending for R&D increased to $12.53 billion. All the same, Québec only received a small part during these years, compared to its demographic weight, being 13.1%. $160 million in foregone revenue for 1994-95 and $1.51 billion between 1986-87 and 1994-95.
We therefore recommend that, within the next budget, the Minister of Finance elaborate a medium term strategy to re-establish the balance in intramural spending in R&D by the federal government, to stop the unfairness towards Québec in the allocation of this spending.
Conclusion
In 1994, one of the main recommendation of the Auditor General, in his report on science and technology, was that the Cabinet should show perseverance and leadership. Unfortunately, the Cabinet and its ministers would be hard pressed to count on the Liberal MPs to help them in this heavy task.Certainly, the Minister of Industry's efforts, with the tabling of the federal strategy in the field of science and technology in March 1996 can appear noble. All the same, as the Auditor General stipulated, it is the implementation of this strategy which will determine the true efficiency. A lot more is needed than a simple document entitled Science and Technology in the New Century. Concrete and efficient proposals are needed, not pious voices which the Liberal majority is offering us in its incomplete report.
Canada is seriously behind in R&D on its territory compared to its main competitors. Our efforts in R&D place us 15th out of the OECD countries, with a meagre 1.50% in R&D spending compared with our GDP. The U.S., our main competitor, consecrates 2.75% of its GDP to R&D. This lag continues to increase our innovation deficit and places Canada and Québec's long term economic development in peril.
The Liberal government's will in the field of science and technology will be able to be measure in the next budget. The Bloc Québécois proposes, as a first step, interesting avenues in this dissenting opinion. All the same, if the past is an indication of the future, we should not be too hopeful, since as the Auditor General emphasised in his 1994 report on federal strategies in this field, the efforts deployed in this field to this end over the last thirty years have failed.
Will the Liberal Cabinet do better than the Standing Committee on Industry's Liberal MPs? Let's hope so!