Finance Committee on April 27th, 2023

[The Chair, Liberal, Peter Fonseca]

You have 20 seconds.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Will the government deficit be higher because the Bank of Canada isn't remitting its profits as it normally has?

[Gloria Wong]

It will not, because only the net losses or income of the Bank of Canada is consolidated with the Government of Canada's budgetary balance.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

Now we'll go to MP Dzerowicz for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

Thanks to all of our witnesses for supporting us today.

I'm going to continue on the track of the Canadian innovation corporation. I do think there's a lot more we can do to support business investment, Canadian innovators, scaling up and commercialization a lot more, particularly in a world that has increasingly intangible assets versus tangible assets.

I know that the three core functions of the Canadian innovation corporation are foresight and experimentation, the provision of advisory services and the delivery of funding support programming. How is the agency differing from the supports that we have right now? What's the value-add that it's providing?

[Greg Reade]

Thanks very much for the question. Again, I'm Greg Reade, a director general in the Department of Finance.

You're quite right that a number of programs across the government work with businesses to promote, as you talked about, some of those features. What's new and different and will be built on in the Canada innovation corporation with respect to those three functions is that, for example, in allocating the financial support, a roster of technical experts will be built with regard to the different types of research and development. We learned from international examples, in particular in Israel, that allocation of funding based on this technical expertise is really valuable to understand. There's a good possibility that the outcomes of that research and development will appear in the economy. In other words, there will be marketable products and services both domestically and internationally. The corporation is going to really focus on that technical expertise.

In terms of advisory, for example, the industrial research assistance program and their technology advisers are the gold standard within Canada in terms of helping companies and providing this advice. We'll build on that advice more systematically.

You mentioned intellectual property. In the past couple of years across government, there have been a number of attempts to promote and raise awareness on the importance of the creation and then the retention of intellectual property in Canada. This will be a core function of the advisory services provided by the agency. That's in addition to supporting companies to develop their project proposals, refine their project proposals and carry out those proposals.

With regard to foresight and experimentation, this is something quite new, especially the experimentation. One of the reasons the corporation is structured that way is to provide the board of directors of the corporation the ability to quickly adapt and modify its programming and even its advisory offerings to businesses. With respect to the feedback they receive, not only from program evaluations and understanding the outcomes that businesses are achieving but also—this is the foresighting part—by building a strategy team that is expert in monitoring and understanding industrial and economic trends, both domestically and internationally, the corporation will understand where the puck's going and can help direct how they understand their funding applications and where it is best to allocate funding from the corporation.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'm glad that we're bringing in the expertise we need in each of these areas and building up the capacity we need. That is great.

We have the clean-tech patent collective, which basically does all of what you have...other than the foresight one. Is that going to come under the Canadian innovation corporation or is that separate? The clean-tech patent collective is basically helping smaller organizations to patent and to build up their own capacity as well in terms of the supply chain moving forward. Does it come under this?

[Greg Reade]

Nothing in the legislation prevents that from happening, but neither is there a plan currently for it to come under the Canada innovation corporation. It was acknowledged in the blueprint document, if you've had a chance to review it, that as the corporation learns and understands what it can best offer by way of support to companies in terms of IP retention and protection, that might be an activity where it may either partner with existing patent collectives or create its own at some point in the future.

[Julie Dzerowicz, Liberal, Davenport, ON]

How much funding is offered, and over how many years?

[Greg Reade]

Laid out in the legislation you'll see there is a path of funding. It gets up to $825 million, I believe, and then it levels off at $525 million.

[Julie Dzerowicz, Liberal, Davenport, ON]

I think part of what it's trying to do is solve the problem of low business investment, which is external. There are Canadian innovators, small and medium-sized companies, but there are also huge companies that actually don't invest in business or don't do enough business investment. Is there anything there that supports them?

[Greg Reade]

First, just for precision, it's business expenditures in research and development. It's very focused on research and development projects and not investment in capital. For example, it's not capital adoption but rather research and development, which can include technological adaptation. The corporation could support a known off-the-shelf technology to be applied in a new way, but it has to be creating new knowledge, new products, new processes and new services.

And then, you're right; currently, for example, the industrial research assistance program is an SME program. The CIC will not just focus on SMEs. In fact, one of the things we learned is that bridging between the large Canadian industrials and the SMEs can be a really powerful way in which we promote research and development and expenditures on that. There is no limitation to just supporting SMEs, but there's an understanding that there's value in bringing those two groups together, the small and the large corporations, especially with respect to procurement.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Reade, and thank you, MP Dzerowicz.

Members and witnesses, we are moving to the third round. We're starting this round with someone who had been a long-time member of this committee—MP Fast, who will have five minutes.

I also want to recognize MP Davidson, who is joining us.

Welcome to the committee, MP Davidson.

[Scot Davidson, Conservative, York—Simcoe, ON]

Thank you, Mr. Chair. The soup and salad bowl of Canada is on the scene.

[Voices]

Oh, oh!

[The Chair, Liberal, Peter Fonseca]

There you go.

MP Fast, you have five minutes, please.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you for that warm welcome, Mr. Chair.

I want to go back to a question that was broached by my colleague Mr. Chambers. It has to do with money laundering. You're all familiar with the Cullen commission and its some 100 recommendations. It recommended that the safe harbour provisions for information sharing be extended to include money laundering. That was echoed in an earlier report from this committee in a previous Parliament. Why has that not happened?

[Erin Hunt]

Thank you very much. I'm pleased to answer that question.

As we mentioned, there are several provisions in the bill that speak to information sharing, but those are focused within the government institutions. The safe harbour provision would apply to private-to-private information sharing.

The government announced in the budget the launch of the next parliamentary review, which should be launched this year. As part of that review, we're preparing a consultation document to look at many of the areas with respect to how we can make improvements to the regime. This is one of the areas in which we feel that consultation will be warranted and merited. We look forward to learning more about how we might be able to look at this issue in more depth.

[Ed Fast, Conservative, Abbotsford, BC]

Could I strongly recommend that you actually move forward with implementing that expansion of safe harbour provisions? This issue has been thoroughly canvassed under the Cullen commission. It was thoroughly canvassed by a committee of the previous Parliament.

There was a second part to that. Another recommendation from the Cullen commission was that the federal government implement a formal “keep open” regime for financial institutions in which they can, at the request of law enforcement, keep the account open for the purposes of enforcement investigation. Has that happened?

[Erin Hunt]

That has not happened, but that too is an issue that the government is looking at and is exploring as part of the parliamentary review. It should be part of the consultation document. The government in budget 2023 did commit to addressing all of the Cullen commission recommendations that pertain to the federal government and the federal regime. Obviously, the Cullen commission is not able to make direct recommendations to the federal government—

[Ed Fast, Conservative, Abbotsford, BC]

That's correct.

[Erin Hunt]

—because it is a provincial commission.

[Ed Fast, Conservative, Abbotsford, BC]

That's why I'm here.

[Voices]

Oh, oh!

[Erin Hunt]

We certainly have recognized those and are committed to addressing and looking at all of those issues.