Finance Committee on Sept. 26th, 2006

[The Chair, Conservative, Brian Pallister]

We will continue with our pre-budget deliberations. I want to welcome our witnesses today. Thank you in advance for your presentations today and also for your briefs, which you have submitted previously.

You've already been instructed that you'll have five minutes to basically summarize your entire treatise, which is very challenging, we know, but we want to allow time for an exchange of questions and comments with committee members as well. I will give you a sign when you have a minute left and let you know that your time is running out, and I would appreciate it, of course, if you would bring a conclusion to your presentation at that juncture.

We're looking forward to your presentations, and I will begin today with a five-minute presentation by the representative from the Natural Sciences and Engineering Research Council of Canada. That would be Suzanne Fortier.

You have five minutes. Please proceed.

[Dr. Suzanne Fortier, President, Natural Sciences and Engineering Research Council of Canada]

Mr. Chair, members of the committee, thank you for giving me the opportunity to appear here today on behalf of NSERC, the Natural Sciences and Engineering Research Council of Canada, an organization I joined last January as its president. Our full name may be hard to remember, but our vision should not be.

NSERC's vision is to help make Canada a country of discoverers and innovators for the benefit of all Canadians. We all realize that in a knowledge-based society, access to expertise, information, and knowledge is crucial, but it is not sufficient. We need to use information with creativity, to discover new knowledge and apply it in novel ways. That is the springboard to our future prosperity as a country and as a people.

Let me quote from one of our great Canadian engineers and researchers, Dr. Indira Samarasekera, who's the president of the University of Alberta. She said, “Canada's competitive advantage rests neither in resources, nor knowledge, but in the ingenuity of people who will combine resources and knowledge in new ways.”

Other countries are recognizing the importance of investing in their people's talent--the U.S., India, Japan, Germany, Korea, China. The list is very long. For us in Canada it is doubly important because in terms of population we are a small country. We must ensure that our people have the opportunity to develop to their full potential and contribute to the building of a strong Canadian society and economy. We cannot afford to waste any human talent in this country.

What does NSERC do? The natural sciences and engineering go to the heart of Canada's competitiveness and productivity. NSERC is an essential part of Canada's research and innovation infrastructure. We are responsible for insuring that Canada has a solid knowledge and expertise base in science and engineering. We manage a well-balanced portfolio of investments in people, discovery and innovation with programs that support research and advanced training at Canadian universities and colleges.

We are a dynamic organization. Throughout our existence, we have adapted our programs to anticipate the needs of our community and to provide Canada with an environment that stimulates research and innovation. We are guided by four important values: excellence, relevance, impact and accountability.

It is extremely important to us to demonstrate to Canadians that we use the money for which they make us responsible to maximum impact and for the benefit of our country. We continually track our performance through numerical indicators and have thorough evaluations of our programs on a cyclical basis.

In our written presentation, we describe two major reinvestment thrusts that will enable us to maintain a solid foundation in science and engineering. They will also give us the capacity to take advantage of strategic opportunities. Our goal is to maximize impact and benefits to Canada.

Let me return to Dr. Samarasekera's quote: “Canada's competitive advantage rests neither in resources, nor knowledge, but in the ingenuity of people who will combine resources and knowledge in new ways.” She could be talking about Canada's competitive advantage in oil sands, where our ingenuity has led to economically viable processes for extraction, or about the BlackBerry, whose creation and development rests on both basic and applied research. The BlackBerry is not a low-hanging fruit. A lot of R and D and talented creative people have contributed to this great Canadian success.

Our vision at NSERC to help make Canada a country of discoverers and innovators sees a future with many more such great Canadian achievements.

Merci beaucoup.

[The Chair, Conservative, Brian Pallister]

Thank you.

We'll continue now with the Society of Obstetricians and Gynaecologists of Canada, Donald Davis.

Welcome, sir, and five minutes is yours.

[Dr. Donald Davis, President, Society of Obstetricians and Gynaecologists of Canada]

Merci. Good morning, honourable members.

Let me begin by thanking you for the opportunity to speak on behalf of the Society of Obstetricians and Gynaecologists of Canada. I practise obstetrics and gynaecology in Medicine Hat, Alberta, and I'm the proud president of the society. I'm joined today by Dr. André Lalonde, who is the executive vice-president of our society.

Our mission is to promote excellence in the practice of obstetrics and gynaecology and to advance the health of women in Canada and around the world through leadership, advocacy, collaboration, outreach, and education. We represent over 3,000 obstetricians and gynaecologists, family physicians, midwives, nurses, and other health professionals from across Canada. I consider it a privilege to be here today to speak with you about an issue of tremendous importance to our membership and I believe to all Canadians: the issue of maternal and child health, and in particular the need for a birthing strategy for Canada.

Let me explain. I think it will surprise you to learn that the OECD statistics show that where Canada once ranked second in the world in maternal health, suggesting an extremely high quality of maternity care, we have now slipped to 11th. Our statistics on infant mortality are even more disturbing, with Canada falling from 6th to 21st place. More women and more babies are not surviving pregnancy and childbirth. We know that part of the reason is the decrease in human resources in the field of obstetrics, and here is a snapshot of the challenges on our horizon: there are diminishing numbers of obstetricians and gynaecologists in practice; there are fewer family physicians willing to deliver babies; and our hospitals, and indeed our health care system, are not equipped culturally or administratively to embrace a collaborative care model where all disciplines associated with pregnancy and childbirth work together on behalf of moms and babies.

SOGC believes part of the solution lies in identifying our strengths and weaknesses through accurate information so that we can develop effective response plans. We cannot tell you how many obstetricians and gynaecologists are currently in practice in Canada; we cannot tell you if they are full-time, part-time, doing research, or teaching. We could estimate, but estimating isn't good enough when assessing our capacity to care for mothers and babies now and especially in the decade ahead. We do know that in five years, 30% of obstetricians and gynaecologists in Canada will retire from full-time practice. Others will streamline their practice to include only gynaecology.

In a society where information technology routinely assists us in just about every aspect of our lives, we must develop tools to ensure that we know which hospitals in Canada are providing obstetrical services, if the level of care is meeting the expectations and needs of Canadian mothers and families, and who is available to provide the service. We can do this, but we need your help.

We also know that we are not meeting the needs of mothers and babies in rural and remote communities. These women are routinely evacuated from their homes, their families, their communities, and often their culture and support systems, so that they can be assured appropriate care during childbirth. Imagine being 35 or 36 weeks pregnant and having to leave all that you know and love behind and travel elsewhere for, arguably, the most important time and event of your life. Sometimes these separations are for as long as eight weeks. Why do we do this? Because right now we have to. There is a serious lack of services within rural and remote communities to care for women during childbirth. Smaller community hospitals are being closed and local options have not replaced them. We can fix this, but it needs political will and leadership.

Finally, let me talk about mothers around the world. Each year, 530,000 women die from complications related to pregnancy and childbirth, most often from well-known and easily treatable complications, in fact the kinds of complications that are routinely and successfully addressed here in Canada during the course of childbirth. Ninety-five percent of these maternal deaths occur in low-resource countries. The grim reality is that despite medical and technological advances, the global rate of maternal mortality has not improved in decades. Women do not die because of lack of knowledge about how to treat their complications, but there is a lack of political will to save them. At SOGC, we have in our mission as an organization a deep commitment to women's health everywhere. Canada is a nation well positioned to make a difference to help save the lives of thousands of women.

The SOGC has tabled a brief with this committee that includes a call to action. First and foremost, we wish to adopt and resource a birthing strategy for Canada; second, honour Canada's pledge of investing 0.7% of gross national income in official development assistance; and third, commit $30 million a year, as a Canadian-led safe motherhood and newborn health strategy, to help our world meet the millennium development goal on maternal health.

Thank you for your time and attention. Dr. Lalonde and I would be pleased to answer any questions.

[The Chair, Conservative, Brian Pallister]

Thank you for your presentation.

We will continue with Diane Watts from REAL Women of Canada.

Welcome. You have five minutes, Diane.

[Diane Watts, Researcher, REAL Women of Canada]

Thank you very much.

REAL Women of Canada is a national organization of women from all walks of life. We are united by our concern for the family, the basic unit of society. The future prosperity of our country depends on the strength of our families. We believe the family, which is the foundation of a nation, should be central to the formation of all public policy. Government decisions, especially tax and social policy, must be fair and equally beneficial to all Canadians. Government policies should remain neutral on the issue of career choice for women, including the option to remain at home as full-time homemakers. Public policy should treat women at home and women in the workplace equally.

In order to develop an equitable tax system, we make the following recommendations.

(1) End tax discrimination against the single-income family. In 2005, an average single-income family earning $80,000 a year paid $2,445 more in federal income tax than a double-income family with the same household income. Revenue Canada allows tax breaks and deductions for double-income families that are not available to single-income families. This inequity between single- and dual-income families can be eliminated by allowing the single-income family to split the family income and file separate income tax returns or by allowing joint tax filing. The government already recognizes the family unit when paying out benefits such as the GST credit, Canada Pension Plan, and old age security. It is not a new concept. Recognizing the family unit rather than the individual for tax purposes is the fairest way to achieve equality for families.

(2) Convert the child care expense deduction to a refundable child tax credit for all children. The child care expense deduction program is only available to parents with children in substitute commercial day care. It is based on the false assumption that parent-based child care has no expenses. All forms of child care have associated expenses. Child care costs exist because children exist, not because parents work outside the home. A refundable child tax credit that is available to all families would recognize and equally compensate the contributions of all parents, whatever child care method they choose. Public policy should equally assist and not discriminate against parents if they choose to care for their own children in their own home environment. All children are of equal value and their care should be so treated in law.

(3) Make the spousal deduction equal to an increased personal exemption. The spousal deduction discriminates against the full-time homemaker as it is less than the basic personal exemption, which is one of the lowest in industrialized nations. In the interest of tax fairness, the spousal deduction should be equal to the basic personal exemption, and both should be substantially increased to reflect today's cost of living.

(4) Provide tax relief for families. Taxes are the largest expenditure in the family budget. Excessive government surpluses in recent years clearly indicate there is overtaxation. Government must stop exploiting families by taxing them so heavily that they have little discretionary income, thereby forcing both parents into the paid workforce. A comprehensive tax relief plan would benefit all Canadians. It would assist families to meet their financial needs, reduce poverty, and stimulate the economy. Leaving earned income in the hands of the taxpayer is genuine government investment in the economy and social infrastructure of the nation.

(5) Government funding of day care must go directly to parents, not to commercial day care facilities. Restricting government subsidies to regulated day care facilities denies parents a choice of child care alternatives, to the detriment of every other type of child care arrangement. The one-size-fits-all government day care scheme, estimated to cost $12 billion to $15 billion a year, would likely increase taxation that would result in more and more women having to enter the paid workforce for the family to survive financially. The present government's $1,200 annual universal child care benefit, by going directly to parents who know the needs of their families and children, offers flexibility and fairness. We commend the present government for its universal child care benefit program. We believe this is a step in the right direction.

(6) End funding for special interest groups. Each year, the federal government gives grants and contributions estimated at $17.5 billion annually to numerous special interest groups, including businesses; labour unions; sport lobby groups, such as the day care advocacy groups; and radical feminist organizations. For example, the federal Status of Women agency gave over $10 million in grants to feminist groups in the past year. Government funding to feminist groups is unacceptable. Women do not all think alike. We are individuals who are extremely different in our needs and interests.

No single group or ideology can represent the views of Canadian women just as no single group can represent the views of men. Yesterday's announcement of long-overdue elimination of inefficient government programs, including perhaps the Status of Women, is an excellent beginning in what we hope will be the eventual elimination of Status of Women.

The federal government should end all special interest funding in order to provide a level playing field for all groups, avoid government-initiated discrimination, and decrease unnecessary government spending.

In conclusion, we support the prosperity of the country by supporting the family.

Thank you very much.

[The Chair, Conservative, Brian Pallister]

Thank you for your presentation.

The representative for the Association of Canadian Community Colleges is Gerald Brown, president.

Welcome, Mr. Brown. Proceed.

[Gerald Brown, President, Association of Canadian Community Colleges]

Thank you, Mr. Chair.

Thank you for giving me this opportunity to appear before you this morning.

I suspect most of you probably had an opportunity to read The Globe and Mail this morning, especially when I look at the headlines that are here. When you do have a chance later on today, I'd ask you to go a little further, into the “Report on Business”, where you'll see a six-page spread the Globe has done on the role of community colleges and institutes as a response to the economic and social needs of the community.

If you have more time to read, I'd suggest you try to get Canadian Business today. This month's issue speaks, again, to the role of colleges. There's a whole supplement here--about eight pages--that speaks to the role of community colleges and institutes as they respond to the needs of their communities.

If you had the chance last week to read L'actualité,

which is the French counterpart to Maclean's,

you probably noticed that there were some articles on CEGEPs and community colleges in Canada.

How does that connect to my brief and the brief you have in front of you? Essentially, I'd like to draw your attention to three of our recommendations.

There is, as you can see from the Globe, from Canadian Business, from L'actualité, and from other articles, a growing sense in the community and in Canada about the crucial role that community colleges play in the economic and social development of the communities they serve.

I think in particular, though, there's a growing significance around the role of community-based applied education. I think those words are really important--“community-based applied education”. Our association represents 150 colleges and serves close to 1,000 communities, so I can say with 110% certitude that each of you has one of our colleges in one of your communities, and hopefully each one is serving your community as you would like it to serve.

How does that connect to our brief?

First, we have been on record for a number of years talking about--and we'll repeat it again--the importance of increased funding for post-secondary education and skills. I think as you go across the country over the next few weeks and you do your regional consultations you will hear this being repeated more and more by groups--not only educators, not only people from the community colleges, but people from business and industry as well. They will be talking about the important role we play in that area. We need to increase the area; we need to replenish the cutbacks of 1994 and 1995.

Secondly, our recommendation also speaks about the importance of investing money in colleges and institutes, in particular in the area of infrastructure and equipment.

Let me just draw you an image here. You all went through some sort of post-secondary education, I suspect. You've all been through economics classes. You've all been through humanity classes and you've all been through English classes. There are costs to each one of these institutions. In our institutions, though, since we train close to 1.5 million students across the country in skills, we have aircraft maintenance, dental hygiene, nursing, and I could go on and on. I think you can appreciate quickly that there's a huge cost involved in preparing the classrooms and the environments that we require for a nursing student or an aircraft maintenance technician. It requires a lot more in the area of didactic material.

Back in the early and mid-sixties, the federal government saw a critical role to play in providing the provinces with additional funds specifically designed for infrastructure and equipment. I would argue that 40 years later we have reached that important point again where we do need that extra funding from the government. I think the federal government has a role to play in that.

Last but not least, when you do read through those articles, and the briefs that we've given you today, you will be amazed to see a very significant increased role for colleges and institutes in...again, I use the words “applied education”, but in this case it's applied research. Because of the partnership we have with industry, you'll see increasingly across our institutions now a role that they play from the point of view of applied research, or what I would call the “D” part of the R and D equation--the development and the delivery of a research component.

Unfortunately, here in Ottawa, in this town, the only word that slips out of people's minds when they see the research is “university”. With all due respect...and I'm not complaining about the money; maybe I'm complaining a little bit about the money that the universities are receiving in all of this, but I recognize the role they play in there. I think it's time now for us to recognize that there is another partner in there, the other part of post-secondary education, which is, in fact, playing a very critical role in working closely with industry and bringing the research straight into the marketplace. I would encourage you to think about that and look at ways collaboratively, with us, to create a fund that would enable the colleges and the institutes--and their industry partners right now--to move forward.

It's a difficult nut to crack. There is a strong lobby from the universities on this. They have a powerful position on it. The granting councils are basically controlled by the universities, so it's very difficult for us to have control of that.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

We'll continue now with our next witness, Linda Cook from the Canadian Library Association.

Welcome. You have five minutes.

[Linda Cook, President, Canadian Library Association]

Thanks very much, Mr. Chair.

I'm very pleased to be offered the opportunity to appear before the committee at this pre-budget hearing. I come from Edmonton, where I am the director of the Edmonton Public Library system.

My brief presentation this morning will focus on which program spending measures should be implemented to ensure that Canada is more competitive. But before I turn to this, I would just like to say a few words about the value and importance of libraries to Canadians.

There are actually more libraries in Canada than McDonald's and Tim Hortons combined. Over 21 million Canadians hold library cards. As a result, librarians, library trustees, and library workers have a huge opportunity to reach Canadians and to help them grow. At libraries Canadians find the opportunity to borrow library materials for pleasure and to help with homework, and to take part in programs where both adults and children can learn and improve skills. Libraries have also become places where people can access the Internet, check their emails, or search through job postings. The Internet has become an important tool for libraries; it certainly has not replaced them.

Libraries continue their 2,000-year-old history as places of community learning, serving not just individual needs but the needs of the larger group by adapting to changing times and technology. The ability to learn and to adapt to change is a central life skill.

This brings me back to the theme of competitiveness. Thanks in no small part to programs from the federal government, libraries have been contributing to learning and job training to ensure that they can best serve all aspects of the various and diverse communities they serve. The Canadian Library Association is very proud of the work that libraries do and wants to ensure that they continue that work.

To help Canadian society culturally, socially, and economically, libraries need as much help as they can get. There are two federal programs in particular that work toward meeting the goals similar to those of the Canadian Library Association--namely, the community access program, or CAP, and the library book rate.

As the role of the Internet has grown, so too has the role of Canada's libraries. No longer just places to borrow library materials, libraries have grown to become the most heavily used sites for public Internet access. This in large part is due to the community access program. CAP was created in 1995 to establish access sites in rural Canada, and it was expanded to include urban communities in 1998. Libraries, as centres of their communities, were an excellent fit to establish these sites, and they continue to be an excellent fit.

This program has been an enormous success, expanding not just access to the Internet but also the skills needed to use it properly. However, there is still a digital divide in this country, with both individuals and entire communities lacking sufficient access to technology. There is still much to be done to ensure that people have the skills needed to properly use this fundamental tool in today's society, and it is imperative that this program be continued.

Libraries today are hardly warehouses of content; instead, they are social assembly places, participating in their larger communities by building information commons. They are open and freely available to all, with trained staff able to answer questions and offer support as needed. Older adults can come to learn the finer points of using the Internet, and others can come to improve computer or job search skills.

At its heart, that is what the community access program is about, helping communities develop the technology skills needed in the modern world. There is still fragmentation between those who are connected and those who are unconnected, where connection literally stands for social inclusion in terms of access to life skills, opportunity, and the instruments of learning.

Please let me say once again how important and needed the community access program is. We respectfully request that you recommend its renewal to the minister.

The second program is the library book rate. We wanted to take this opportunity to congratulate the government on renewing the library book rate. It's now guaranteed until January 2008, meaning that for almost 70 years it will have helped Canada's libraries reach out to those unable to reach them.

Even more importantly, we congratulate the government for not increasing the cost. Libraries today still face numerous financial pressures, and nearly 94% of Canada's libraries of all types--public, academic, school, special--use this service, which allows them to send materials for less than one-tenth of the cost of using regular parcel post. This has direct implications on a number of groups, in particular those living in distant areas, especially in Canada's north, and those seeking materials in a language other than that of the nearby majority.

To sum up, I would like to say that libraries help develop skills and knowledge, both at an individual and a community level. The two programs I've talked about serve particular functions in enhancing this role.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We continue with Peter Brenders, president and CEO of BIOTECanada. Welcome.

[Peter Brenders, President and Chief Executive Officer, BIOTECanada]

Thank you, Mr. Chairman and members of the committee.

We appreciate the opportunity to be here today, especially as today is the national biotechnology awareness day in Ottawa, where over 40 executives from our industry are in town meeting with public officials.

Joining me today in the audience are: Dr. Ali Tehrani, president and CEO of Zymeworks, an exciting, early-stage biotechnology company from Vancouver, and Dr. Paul Wotton, president and CEO of Topigen, a remarkable clinical-stage biotech company from Montreal, developing treatments for unmet needs.

In my remarks today I would like to focus on a number of key issues before touching on our industry's recommendations. The key points I'd like to leave with you at the end of my presentation are the following: 1) biotechnology is dramatically changing almost every aspect of our day-to-day life; 2) Canada is a world leader in this important field; 3) many Canadians already depend on the biotech sector for high-wage, high-skilled jobs.

The potential for future employment and economic activity is very great. Finally, as good as things are, we can't stop to pat ourselves on the back. International competition is ferocious, and if Canada doesn't adapt to new realities, we risk losing an industry as companies look elsewhere for growth.

Let me take those in order. First, there are few industries that touch so many facets of our lives, and if you think that's hyperbole, consider this: thanks to biotechnology, we have crops that grow without the use of pesticides, that can flourish in arid soil, and that can provide added nutrients to a global population. Over 90% of canola varieties planted in Canada, for example, are biotech varieties. Canadian farmers grow 14 million acres of biotech crops each year, the fourth largest amount in the world.

Fuels produced as a result of biotechnology research are helping to address the global climate change crisis by reducing greenhouse gas emissions and allowing us to tap renewable resources. Even our auto industry is benefiting from the use of biotech products as a source for materials.

Advances in biomedical research are contributing to the development of effective treatments for unmet medical needs or new vaccines to prevent diseases. Where there has been no hope, our industry is bringing care.

So considering the growing importance of the sector, it's fortunate for all Canadians that our country is a world leader. We have almost 500 companies spending around $2 billion annually in R and D. The sector generates $4 billion in annual revenue and involves over 200,000 high-quality jobs in every region of the country. While this is very promising, many Canadian firms face important challenges to continued growth at a time when we are about to capture the value of the early research investments.

Mr. Chairman, the problem is very serious. In the study conducted earlier this year with PricewaterhouseCoopers, it was revealed that almost half of the firms based in Canada were planning to move all or part of their businesses out of the country. The primary challenge to this science-based industry is attracting capital and growing in a market that supports the technology. Canadians are looking to the federal government for leadership here.

Earlier this month, Polaris surveyed 1,200 Canadians on their views on biotechnology, and 80% of those Canadians agreed that the federal government should find ways to help support the Canadian biotech companies develop new products. Remarkably or not, we agree, and we recommend the following.

With regard to the SR and ED tax credit program, a very competitive program for our country, our association is recommending that the government increase the annual R and D expenditure limit for refundable credits from $2 million to $10 million. This tax credit program was launched in 1985, and since that time there has been no change in the expenditure limit. The higher limit would help reflect the increases in research costs that have occurred in the last 21 years. We also recommend that the Canadian-controlled private corporation restriction on these refundable credits be removed for the emerging companies. These changes will provide much needed capital for companies to extend their development programs or even start new ones in Canada.

Last year, we asked this committee for our tax system to be changed to recognize the corporate entities known as limited liability corporations. We understand work has begun on this. The problem is, it hasn't been completed, and we would ask for work to be completed. This will open the door for millions of dollars in U.S. venture capital investments into Canadian companies. We would also welcome the government exploring the concept of extending flow-through shares for tax losses to our larger public companies conducting Canadian R and D, again to generate a new infusion of capital.

Finally, I want to stress the importance of the adoption of new biotech products by our Canadian health and agricultural systems. Recently, important new vaccines for diseases like cervical cancer, infant dysentery, and meningitis have been approved for sale in Canada but are not currently available through the public immunization programs. To bring the benefits of these ground-breaking treatments, we recommend the government continue its investment in its public immunization strategy and to increase that investment by $100 million a year.

Mr. Chairman, we have done very well, but we cannot build success with yesterday's tools. This concludes my remarks.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Brenders.

We will continue with the Partnership Group for Science and Engineering, Mr. Ian Rutherford, executive director.

Welcome, sir. You have five minutes.

[Ian Rutherford, Executive Director, Canadian Meteorological and Oceanographic Society, Partnership Group for Science and Engineering]

Thank you very much, Mr. Chairman and members.

The Partnership Group for Science and Engineering is an association of more than 25 professional and scientific organizations reflecting a diversity of science and technology interests in Canada. I represent one of those, the Canadian Meteorological and Oceanographic Society. I'm joined here today by Dr. Olson, who represents the Canadian Federation of Biological Societies.

PAGSE is perhaps best known for the Bacon & Eggheads breakfast lecture series on Parliament Hill. It is held every month during the parliamentary season. There is one this coming Thursday morning.

We're not a lobby group, and we try to work in partnership with government to advance research and innovation for the benefit of all Canadians. In our written brief to the committee we focus our recommendations on the following main areas of concern: Canada's declining overall capacity for science and technology, not in an absolute sense but in a relative sense to our competitors; the lack of a national science and technology framework; weak private sector participation in science and technology in Canada; declining federal capacity in research and development and long-term monitoring within the federal government itself; and impediments to Canadian participation in international science and technology collaboration. There's a lot of money out there that we're not able to take advantage of.

I'll deal with each of those in turn and then state our recommendations at the end.

Canada is falling behind other countries in stimulating innovation, translating it into production at home and marketing production internationally. As recently stated by Kevin Lynch, Clerk of the Privy Council, in order to compete globally, Canada must improve its productivity through the development and application of science and technology. Research and innovation capacity depends on factors that include a diverse pool of expertise, a propitious investment climate, and a capacity to turn innovation into economic outcomes within Canada. It's in these latter areas that we're having problems.

The balance between government, academic, and private sector efforts requires the setting and understanding of clear priorities. Canada must develop a coherent national science and technology framework that will enable it to augment its competitive capacity. The Government of Canada needs to clearly articulate an accountability framework and evaluate the return on its investment in science and technology in order to set new priorities for future investments.

Industry support for science and technology and research lags well behind that found in other nations, especially the United States, our main competitor and market. The Expert Panel on Commercialization has evaluated this shortfall and expressed concern that in expansion-stage financing, the average venture capital investment in a U.S. company is four times that invested in a Canadian company.

The panel has made a number of recommendations, including setting up a commercialization super-fund, a Canadian small and medium enterprises partnerships initiative, a small business innovation research program, and fiscal measures relating to angel investment and foreign venture capital.

The panel also recommends upgrading existing programs such as the industrial research assistance program, the ideas to innovation program, and the proof of principle program. Moreover, the Canadian Manufacturers and Exporters recently recommended the extension of the SR and ED tax credit program to cover the first stage of commercialization of new technologies. PAGSE supports all of these ideas.

The Council of Science and Technology Advisors recently found that support for government science has been static or declining over the last quarter century. The ability of federal science-based departments and agencies to address their mandates has been weakened. New state-of-the-art infrastructure across the full spectrum of government science and technology is required to restore that capacity. Achieving a coordinated government-wide balance between the priorities and competing demands of federal science-based departments and agencies will be a key challenge, which is another reason why a coherent national science and technology framework is badly needed.

Many fundamental aspects of science and technology are underpinned by stable medium to long-term programs of monitoring, data collection, and reliable data archiving and access. In addition, some fields, such as satellite-based remote sensing, are experiencing an unprecedented data flow that places enormous strains on archiving and access capacities.

These aspects of long-term monitoring capacity are beyond the mandate, capacity, and interest of university- or business-based researchers, yet investment in basic monitoring of scientific variables by the federal government has continued to decline, in spite of the fact that inadequate monitoring and last-minute science will carry a high degree of risk to the economy to Canadians and their environment and will compromise future socio-economic development.

On the international scene, Canada's capacity to participate in international science and technology programs is--

[The Chair, Conservative, Brian Pallister]

Excuse me, sir, could you bring your presentation to a close now? You have a few seconds to conclude.

[Ian Rutherford]

I'll just finish then.

Our program is weak and dispersed. We need strong participation to access resources, expertise, and infrastructure that would be available for our scientists and engineers. We need timely decisions in order for Canada to play a leading role in these initiatives. An innovative form of seed risk capital is essential for Canada to establish or maintain its international credentials and to benefit from science and technology on the world scene. There are six recommendations in the report to cover each of those reports.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir. Thank you all for your presentations.

We'll begin with the first round of questions. Mr. Savage, seven minutes.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Chair. Thank you all. We say to every panel that we don't give you much time to present. We know you put your heart and soul into these presentations, and they're important to us.

I'd like to start with NSERC, with Madam Fortier. In your statement you made the comment--and I'm trying to quote directly--that “We cannot afford to waste any human talent in this country”, which I think is entirely admirable and apropos. You talked about the BlackBerry. We have in fact reversed the brain drain, which was such a big deal in Canada five, six, seven years ago, until the investments in publicly funded research, which has an impact far beyond what I think a lot of people even realize.

Notwithstanding that, Mr. Rutherford, you are right that federal investment in their own science.... I see it in my own riding, at the Bedford Institute of Oceanography, where we have not in fact kept up with the scientific investments, but we have put a lot of money into NSERC, SSHRC, CFI, CIHR, and all those sorts of things.

You indicate that your budget now is $902 million, of which about $700 million is A-based and $200 million is the Canada graduate scholarships, CRC, and things like that. Can you give me a reference? What would that $900 million have been--and you may not have the exact number--five, six, or even 10 years ago? Do you have a sense of what it would have been?

[Dr. Suzanne Fortier]

About half of that, I believe, yes.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

About half of that? So we've doubled our investment in science, which I think is pretty significant.

You mention research facilities and equipment as an ask. I assume here we're talking about the indirect costs. What you refer to is....

[Dr. Suzanne Fortier]

No, we're talking about small equipment. We've done a lot in providing our researchers with the larger facilities, particularly through the Canada Foundation for Innovation. In order for our researchers and our students to use these facilities and pursue their research programs, they also need the smaller types of equipment, and this is something that is provided through our council to our researchers.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Okay. So you're not talking about what we refer to as the indirect costs of research.

[Dr. Suzanne Fortier]

No. We're talking about equipment.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Okay, but the indirect costs are also important to researchers as well, correct? I didn't notice if that is in here. Is there a request for increasing the indirect cost to 40% as well?

[Dr. Suzanne Fortier]

We have not made that request; however, it is clear to us that there are four pillars to support the research environment: the direct cost is one of them, and that's through the granting councils; the indirect cost, of course, the equipment; major facilities, which are supported through CFI; and also people, and the program of the CRC is one that has helped us. We also have programs within NSERC to support people. A lot of our moneys in fact go to support people.