Industry Committee on Feb. 13th, 2023

[Viviane LaPointe, Liberal, Sudbury, ON]

This committee has done some work around cybersecurity and IP theft. I would like to know what the government is doing to ensure that Canadians are adequately protected against these cybersecurity threats, foreign interference and IP theft.

[Simon Kennedy]

We're doing a number of things in this space. I could perhaps cite a couple, but it's certainly an area that we take very seriously. The first is that, in our major funding programs, this is a discussion we have with companies that wish to receive support from the government. For example, on the strategic innovation fund, when we're working with a Canadian or corporate entity that's looking for support to invest in its innovation, we want to make sure that they actually have appropriate safeguards and controls around cybersecurity. I would note that was a particular issue at the height of the pandemic, when we were working pretty closely with a range of life science companies. It was a well-known fact that these were particularly ripe targets for exploitation by malign actors looking to get information about what companies were doing in the vaccine and therapeutic space. We do that through our programming.

The government has announced its intent to ban a number of actors from Canada's 5G networks as a way to enhance the security of Canada's telecommunications infrastructure, so those would be two examples I could cite of where we as a ministry are actively involved in trying to tighten up security.

Thank you.

[Viviane LaPointe, Liberal, Sudbury, ON]

The minister said in his remarks earlier that he'd heard someone say that the research of today is the economy of tomorrow.

I would be interested in learning how the new Canadian innovation and investment agency will help improve private sector investments in research and development in Canada.

[Simon Kennedy]

There was some good discussion of this in the context of the last budget, but maybe to paraphrase a little bit on the rationale, the evidence is pretty clear that Canada does a really good job of generating ideas, but there have been difficulties in translating really good ideas and intellectual property into the Canadian business sector. There have been some interesting examples internationally, such as in Israel. Scandinavian companies have been successful at this, at having state-supported enterprises that work with businesses to support them in adopting technology and integrating new ideas and intellectual property into their businesses.

The thinking is to draw from these examples internationally and in the unique Canadian context. That's the genesis of the innovation and investment agency.

My understanding is that more information will be made public shortly. We've been working very closely with the Department of Finance on the design of this new organization, and we're very hopeful that we will be able to talk in more detail about that shortly, once the government makes known the details of its plans on the next steps.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

Another study we did at this committee involved quantum computing. I would like to know what you and your department are doing to support the quantum sector in Canada.

The second part of that question has to do with what we heard from some of the witnesses, which was that we have a lot of talent around that, but we were losing it. What are we doing not only to attract but also to retain some of the talent we have in the quantum sector here in Canada?

[Simon Kennedy]

In this space, the member may know that the government announced a new quantum strategy. There was a lot of work with various actors in the quantum sector in Canada in the lead-up to announcing the intent to develop a strategy. There has been a whole series of consultations since then to define the strategy in more detail. The announcement of the strategy was backed up with new investments to support its execution.

I'd be happy to come back to the committee, if it's of interest, with a one- or two-pager to describe the current state of affairs, but that particular strategy is being rolled out now. We're at the stage now of having completed the consultations and we're moving ahead on next steps.

[Francis Bilodeau, Associate Deputy Minister, Department of Industry]

Maybe just building on items that Simon mentioned.... The strategy was formally announced this January, so it's brand new and actually backed by real funding. It's about $360 million over seven years, and it's focused around three missions: computing hardware, communications and sensors. Therefore, the intent is really to build up capacity in that space, both on the research side and on the commercialization side, to build an ecosystem where we can develop top talent and then link it, eventually, to our industry where we can benefit from the important advances in quantum for Canada.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Bilodeau.

Mr. Lemire, the floor is yours.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for being here.

I would like you to talk to us about the mining industry.

Much has been said about the energy transition. In fact, I have heard several speeches that Mr. Champagne has given on this subject internationally. Obviously, if we want to sell strategic critical minerals, the mining industry has to be involved. Consequently, if we want to be greener, once the ore is extracted, we make sure the product will be as green as possible. Mr. Champagne talked about the various components. There are factors that are fundamental.

How do you see innovation in the mining industry, knowing that Abitibi-Témiscamingue already has the infrastructure needed for success? We have very productive universities that we urge you to support more. We have businesses that rely on innovation. Here, I am thinking of mine builders like Blais Industries and Moreau. We also have mining companies that operate in the area and rely on innovation, such as Agnico Eagle, and companies that do innovation, such as Technosub and Adria Power Systems.

How do you think we can support these companies and thus make sure that we are creating a true green mine?

Ultimately, I think that international procurement is increasingly going to be based on the carbon footprint. If we want to make sure we don't miss the boat, we are going to have to invest in our mines and offer tangible support for mining innovation.

[Simon Kennedy]

As you know, the government has adopted the Canadian critical minerals strategy. A number of departments are involved in that strategy, including Natural Resources and Industry.

The funds available to our department to invest in the projects total $1.5 billion. We want to move projects forward that are aligned with our supply chains and with new emerging industries in Canada, including batteries and electric vehicles.

We are interested in everything you described. We are working with businesses to open new mines, make them more green, reduce greenhouse gases, and implement new technologies. We are currently negotiating with several mines and a whole range of actors in this sector.

As well, it is sometimes necessary to connect the big corporations with the mines. That kind of comes down to the question of the chicken and the egg: if there are no mines, there are no companies, and if there are no companies, there are no mines. So we do a bit of matchmaking between the actors. Since we work closely with auto and plane manufacturers, among others, we are in a position to match them up like that. That is another of the roles we play.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

My speaking time is almost up, but I urge you to think about how we can support innovation. It could be through a tax credit for the ones that build the mines. Often, they are subcontractors, but often, they are the ones that take the financial risks. Their room to manoeuvre, their credibility, and their capacity to complete projects on time and on budget are the assets they bring to the table. If we want them to innovate, we should support them via an innovation tax credit.

Thank you for being here.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Mr. Masse, the floor is yours.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'm going to start with a quote here:

If Canada is to succeed in making the cars of the future, we must embrace greener, more sustainable technologies. These technologies will create the well-paying middle-class jobs of the future. Advanced research and development projects challenge today's autoworkers to enhance their skill set. By having a workforce with skills that are in demand and the technologies that will shape the future of the industry, Canada's auto sector can secure its place in the global supply chain of tomorrow.

That was Honourable Navdeep Bains, then minister of innovation, science and economic development.

The reason I raise that is that I'm still a little bit concerned about accountability. That was with regard to, in 2019, the $3 million that the federal government gave to Nemak. Nemak was a former supplier to General Motors in Canada. It's a Mexico-based company.

What happened there is what we're trying to solve or at least have some accountability around. That $3 million led to the innovation on the site, then supposedly 70 jobs, which later on led to Nemak taking that innovation and moving it to Mexico. We lost an additional 200 jobs. It was left to John D’Agnolo of Unifor Local 200 to take this to arbitration to protect the workers.

What have we learned in that scenario? When I look at Medicago and other places, I'm really concerned. I mean, we have to be in the game when it comes to automotive innovation, there's no doubt—especially when you look at what the United States is doing—but we essentially used $3 million of federal money to ship 200-plus local Unifor jobs to Mexico.

What have we learned from that lesson? That's not too far away.

[Simon Kennedy]

In response to the member's question, perhaps I could provide a measure of assurance, at any rate, that officials take these kinds of concerns very seriously. We want to make sure that, when the government, through a vehicle like the strategic innovation fund, for example, is putting resources into a company, Canadians' interests are protected. Frankly, we want that because that's the best outcome for Canada, but we also want that because we don't want to be in a situation where something untoward happens and we're not able to explain that we'd put protections in place.

I can say that when we are negotiating, for example, under the SIF or other instruments, as a kind of standard approach we try to ensure that there are really strong safeguards around protection of intellectual property and the ability to have remedies when companies don't do the things they promise they're going to do—to have very strong clauses that allow us to be in a position to take action.

[Brian Masse, NDP, Windsor West, ON]

Yes, but as a member of Parliament, we don't get those things.

The government hasn't released this contract. I had to go through freedom of information act to get some of the information. If it weren't for John D’Agnolo and Local 200 fighting it through arbitration, the government was never going to be found there.

I know that public servants don't look to try to fund the exportation of our jobs, but at the same time, we're going to be faced with a mountain of challenges with the U.S. innovation subsidies that are coming in. They have buy America, buy American. Biden is even.... There are actual percentages and so forth.

What is being done differently today from before about where we're looking to have auto investments on greener technology?

[Simon Kennedy]

Certainly officials at ISED and across the government are very seized with the implications of the Inflation Reduction Act. It is not just in the auto sector. It's in multiple sectors that span the whole economy across the country. We see the implications of the U.S. legislation even in our discussions with companies now. It's something that we're taking very seriously.

Maybe at this point, I would note for the member the comments that the government had in its fall economic statement. It kind of acknowledged that this was a very significant new development and that the government will be taking steps to.... I believe the language was ensure “a level playing field”. I know this is something that the finance minister is also looking at very carefully.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that, but I'm just not satisfied as to our accountability levels here. I want us to have a national auto strategy.

I'll leave that behind for now. I want to get to something else. I do appreciate.... I know that's not the intent of these things, but it's a clear example of how disastrous the policy can be if it's not wielded properly. It may sound like $3 million is not a lot of money, but it is. When we export these jobs, it's really poor.

I want to switch channels a little bit. What are you doing internally with regard to retention of staff? I know this is totally different from where we were, but we're looking at challenges in all of the sector.

The minister has several fronts, Bill C-34, Bill C-27, a whole series of things. What are we doing internally to make sure that the public service has the skill sets necessary to help provide the proper information for the minister in the research? What are we doing for retention of individuals as we negotiate more new things than ever before?

I'll leave it there. That's my time. Thanks.

[Simon Kennedy]

Maybe, Mr. Chair, I will just say that I really appreciate the member's question. It's not the sort of thing that is discussed a lot at committee, but as a deputy minister, I would say that it's something I know my colleagues at the senior management table spend a lot of time worrying about and take very seriously. I'll be very brief because I know there are other members who want to talk.

We have spent a lot of time on the future of work and on how we migrate from where we were prepandemic. Then we had the pandemic, and now we're not exactly postpandemic, but we're all feeling our way with the new world of work. That's something the management team has spent a lot of time on.

We've also spent a lot of time on trying to build an organization that is, I guess I would call it, more welcoming and more diverse, where everybody feels included. We're working very hard at making sure we have a diverse management team that represents the country, so that people who come to work at ISED feel that it's a good representation of the look and feel of Canada.

I would also say we are trying to attract and build the competencies that will be needed, as the member said, in some of these new sectors. A really good example of this is biomanufacturing and life sciences, in which, when the pandemic hit, for a bunch of historical reasons we didn't have a lot of capacity. We've been working ever since to try to rebuild that skill set inside the ministry because we now have had a resurgence of the life sciences industry in Canada, and we need to have at least some capacity in the government to understand that industry, to work with it and so on. We have that in automotive, thankfully, but we need to rebuild it in some areas. That's a real focus too—getting some depth in some of these areas that are very important.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Kennedy.

Mr. Vis, go ahead for five minutes, please.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair.

Thank you to the witnesses here today.

I'm referring to supplementary estimates (B), page 2-69. It outlines that we voted an additional $2.8 million in funding for the small business entrepreneurship development program. I think that takes the total a couple of pages down on page 2-72 to something around $28 million. What has been the impact of this program with respect to jobs created and loan access or capital funding access for new businesses?

Are many of the businesses that use this development fund still in existence three years after they initially receive support from this program or through one of their local banks funded by ISED?

[Francis Bilodeau]

Maybe I can start and Simon may want to supplement.

The small business entrepreneurship development program, within the terms and conditions, is actually supporting a suite of programming. That includes programming targeted, for example, at women entrepreneurs or Black entrepreneurs. That funding has been rolling out, including to provide supports in some cases directly to businesses and in some cases to organizations that are supporting and building capacity.

I think we are trying to build an ecosystem through this program and through other programs, partly delivered through programming led by Minister Ng in some of these instances, to be able to create an environment that will allow our small and medium-sized companies to thrive and to have access to the capital, supports and capacity building they need. That will be the focus of the SBED program.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Okay. That's helpful.

I'm going to jump into another question as I have very limited time. There is mention, on page 2-69, of funding for the 50-30 challenge. There is approximately the same amount of money—close to $2.8 million. Do you believe that Industry Canada is reflective of the ideals it is trying to espouse in the private sector, namely to actually reflect multicultural Canada?

I quickly googled here that about 26% of Canada is visible minorities. Is the Department of Industry really in a place to be telling small businesses, and even large businesses, in Canada what their diversity makeup should be?

[Simon Kennedy]

The 50-30 challenge is just that. It's a challenge to the broader set of organizations, not just the business sector but also the not-for-profit and voluntary sectors, to take this on and to take it seriously.

We're doing the same thing in the ministry. I would agree that we need to go further in this space. We need to do more.

The funding that has been put out has actually gone largely to experts in this space. It's not ISED that has been developing the tools. It has been organizations out in the community generally that have deep expertise, organizations that are representative of Canada's diversity and that are developing the tool kits and so on that are meant to be available for organizations. If you're a business or you're a not-for-profit and you—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you. That's very helpful, Mr. Kennedy.

Would you be able to provide a one- or two-pager to the committee that further explains some of the actions under the 50-30 program? It caught my eye simply because it was under the item I want to discuss above, in the estimates.

Thirdly, with my remaining time—and I know I'm going quickly, here—PacifiCan is a new development organization specifically for British Columbia. I've asked before, in the House of Commons, why, on a per capita basis, it's receiving a bit less funding than some of the other economic development agencies across Canada.

What led to that, especially when the Government of Canada is seeking to set up new offices in, I believe, two or three locations throughout the province? Why do British Columbians get less for economic development than other regions in Canada?

[Simon Kennedy]

Thank you for the question, Mr. Chair.

I think that one would probably be best directed to the responsible minister. I say that because there was an occasion when the regional development agencies, from a kind of machinery point of view, reported in through ISED. That is no longer the case. They actually report to their own separate ministry.

They are good colleagues of ours, but we don't have any oversight of them, so I would be commenting on another department's mandate and budget. I think that would probably be best directed to the PacifiCan minister.