Industry Committee on May 8th, 2008

[Raymond Simard, Liberal, Saint Boniface, MB]

Can you identify an industry that is doing something right?

[Dr. Heather Munroe-Blum]

The industries that have been our successes are aerospace, biotech, and you might say, leading into the pharmaceutical area. I think an unsung area of strength in Canada has been materials research, which ties into the engineering field. We have a long-standing history of strength there, and I think Howard would add the chemical industry to that as well.

[Raymond Simard, Liberal, Saint Boniface, MB]

Do I still have time, Mr. Chair?

[James Rajotte, Conservative, Edmonton—Leduc, AB]

You have one minute.

[Raymond Simard, Liberal, Saint Boniface, MB]

Perfect.

I'd also like to know what your relationship is with granting councils, such as CIHR and CFI? They're going their way. They've identified their priorities. Are their priorities in sync with what you guys are talking about in terms of what you're recommending to the Minister of Industry?

[Dr. Howard Alper]

Not long ago we had a meeting of all the granting councils—CFI, the NRC—with Minister Prentice, me, and Rob Pritchard, who couldn't be here today. He simply couldn't make it. He's the vice-chair. We were dealing with exactly that issue and integrating priorities into the programs of the granting councils. My personal view is that in fact we are working extremely well together on this issue.

Also, we're working across departments. Last night I saw Tony Clement at a reception. We were talking about getting together to discuss the issue that you're now talking about.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

We will go to Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Welcome, both of you. It is an intriguing topic, as always.

Dr. Alper, picking up on some of the earlier comments concerning how you're engaged with the minister, we heard that the deputy ministers provide the ability to implement ideas and so on, but we also realize that ultimately government policy is going to be set by cabinet.

Could you give us an idea of how STIC can interface at that level? How can you influence policy at that level?

[Dr. Howard Alper]

Let me add one thing to your point, and then I'll certainly address it. That is that one other role the deputy ministers have is to link to other deputy ministers across government and sensitize them to the issues STIC is addressing as well as possible future issues, just as the minister is responsible at his level across government.

I did not mention that, for example, the international S and T request for advice came from Minister Emerson at International Trade, putting forth a request to STIC through Minister Prentice, since Minister Prentice is responsible for it.

In terms of working across issues relevant to cabinet, as STIC develops its programs and as more and more issues are brought to the fore, I anticipate that a number of ministers will ask the Minister of Industry for us to consider them.

For example, at the meeting I attended in Australia I didn't just give a presentation; I sat through their whole meeting, and eight new issues were brought from five departments. Again, just like here, it is centred in one department, with one minister being the clearing house or focal point, as well as himself or herself bringing issues. But they come from all across the Australian government.

In due course, our expectation, and I have discussed this with several colleagues, is that this will result here as well.

[Bruce Stanton, Conservative, Simcoe North, ON]

I have a second point with regard to the state of the nation report. When is the first one coming out? I do not know whether you may have mentioned that, actually.

[Dr. Heather Munroe-Blum]

We expect it to be at the end of this year.

[Bruce Stanton, Conservative, Simcoe North, ON]

How is it going to be organized? Are there a number of key subjects that we can see coming out of it?

[Dr. Heather Munroe-Blum]

Our little committee is just bringing them before the council today and tomorrow for the first time, but we have a number of fields broadly; for example, the climate of innovation, with indicators reflecting that; international S and T collaboration, with indicators reflecting that; universities and how we do as both R and D and innovation leaders; the private sector on R and D; then, looking at benchmarks, where data are available to allow us to compare with peer countries in the world on our progress over time, levels of investment in R and D, tax and regulatory environment, and the like. But these are for discussion.

[Bruce Stanton, Conservative, Simcoe North, ON]

Just to go back, one of the things Mr. Simard touched on—he's not here now—is the issue of productivity. You pointed out that there is still some room to go, but I am also thinking of the evolution of S and T strategy advancement in Canada. It is still a relatively new advancement. Thinking back, it is really in the last five to ten years, perhaps, that Canada has begun to come on strong.

Could you comment on that timeline? When can we start to see these critical investments in S and T begin to influence productivity and show up in some of the indicators? I guess the fundamental question is, is it still early to see those implications show up in the key economic and productivity indicators?

[Dr. Heather Munroe-Blum]

Let me say that we've been like a roller coaster in Canada. In the mid-1950s, Canada was extraordinarily strategic at the federal level in creating the granting councils, investing in them, and having a sense of the federation and how to optimize what we did.

Then we simply have not stayed the course. We see, both at the provincial level and the federal level, that every time you pull back you really suffer, because you lose ground, so you have to piggyback over what you lost and try to catch up with the competition.

We came back in the late nineties. I think we're certainly seeing the impact of the investments of the last 10 years on retaining and attracting talent. Let me just that say my own university alone attracted 800 new professors—predominantly, I'd say, because of the reputation of my university, but we could not have done it without the new federal programs—60% of them from outside of Canada.

So we're seeing those kinds of trends, but I think if you want to look at the broader commercial and industrial impacts, it will take longer to see them. I think we also have to optimize the provincial-federal policy to see the greatest impact.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Monsieur St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you, Mr. Chair.

Thank you for being here.

I sit on the committee today as an acting member. Unfortunately, this is not the committee that I normally sit on, but I am very pleased to be here. Before I was elected, I worked as an engineer, so I have always had a soft spot for investments in science and technology. I am familiar with the subject. I use the term "investment" in science and technology, because I really do see it as an investment rather than as an cost.

When the government invests in a significant way, whether in pure research or in research and development, it creates jobs for researchers and attracts companies, allowing them, as a result, to increase their productivity and hire more employees. The bottom line is that the government collects more taxes and reduces its costs, on things like employment insurance, for example. When investments are made in this area, the return is greater in the long term.

Do you more or less agree with that philosophy?

[Dr. Howard Alper]

Thanks for the question.

Research leading to creating new firms, for example, also results in tax being paid by the company to the government--provincial and federal governments. Therefore that's a benefit, a return.

Research and innovation or science and technology as documented, especially in the OECD, has provided enormous benefit. Several of you were asking about, or commented on, productivity. The OECD claims that if you increase research in industry by 1%, not only productivity, but personal income will increase by a factor of 12. Even if that is double what it really is, that's a big increase. That's why it is really important that we address the industry R and D issue.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

In your presentation, you say that the competitiveness of a country or a region will be better if significant investments are made. There will be less need for the government to provide assistance because the economy will be doing better. In broad terms, that is what I gather.

Is the opposite also true? If we do not make these investments in specific regions, is the economy going to do worse? Will the result be that there will be increased government involvement in things like equalization payments and employment insurance benefits, for example?

[Dr. Heather Munroe-Blum]

This will sound like a self-interested response, but if you look at the problems that regions are having across Canada, I think it's because of a lack of diversification of the economy. There is no greater way to predict success of the economy than to have a highly educated populace. In that respect education itself becomes a strong investment. And while the early levels of education are necessary to get to the later ones, you need an investment at the highest levels.

On your earlier point, if I understood it correctly, when jurisdictions are highly competitive, both with respect to productivity and the direct industrial sector successes that they have, you have a great alignment of a stable, predictable, effective level of government investment in research and higher education and you have a strong industrial investment in R and D at the same time. And they're done in a framed fashion.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

My questions are intended to highlight the fact that we are not investing equitably in all regions of Canada in science and technology or in research and development. For example, Ontario, where the federal government is located, receives a much more significant share of these investments, per capita, whereas Québec receives a smaller share.

[The Chair, Conservative, James Rajotte]

What is your question?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Do you feel this can have an impact on the relative prosperity of those provinces?