Finance Committee on Sept. 26th, 2006

[The Chair, Conservative, Brian Pallister]

Excuse me, but your time is up.

We will now go to Mr. Dykstra.

You have five minutes.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Mr. Chair. This is an interesting discussion.

I just wanted to ask Ms. Cook a couple of questions with respect to the library funding. I actually spent six years on the library board in my community, two years as chair, so I certainly have a pretty deep appreciation, as does my family, for the library services that are provided in our community.

I know one of the things that we always struggled with as a board, and that I did in particular as the chair, was to meet funding obligations. To do that our only real additional funding, aside from that from the municipality and a grant from the province, came from the collection of library fines. We really didn't have a relationship with the federal government. I wonder if you could tell us your feelings on why the federal government should actually or potentially invest in libraries across the country.

[Linda Cook]

Actually, the federal government has been doing some investing across the country, especially, as I mentioned, in the community access program. That's the one that we're most concerned to keep going. It's the one that encourages the rural parts of Canada and ensures that they have access to not just the Internet but to tools to learn how to use the Internet.

Does that answer your question?

[Rick Dykstra, Conservative, St. Catharines, ON]

Okay. That helps.

I have one other brief question. I know one of the things that we were able to do locally was to build on relationships with local businesses, with non-profit organizations, and with government organizations. In fact the Ministry of Transportation relocated to St. Catharines, and one of the benefits that we achieved through that move was to be able to take over the library services of the ministry in the building itself, which produced a reasonable amount of income on a yearly basis.

I wonder if, from an organizational perspective, you have been able to enhance that, and whether that, from an overall strategic planning perspective, is something you're working on or is something you've implemented or that you'd be considering over the next number of years.

[Linda Cook]

It's something that I think the whole Canadian community, especially the public library community, is looking at very closely. Partnership is the key word across the country. I know in Edmonton, in my own constituency, we have partnerships with corporations, with other non-profits, and the whole idea is that we amalgamate our services and we bring them under one roof. It really does make the dollar go a lot farther.

[Rick Dykstra, Conservative, St. Catharines, ON]

Fair enough. I'm glad to hear that.

Ms. Fortier, I'm trying to get some clarification from you in terms of overall direction that you see in your research regarding the development in the future of our workforce, the strength it provides, and our competitiveness on an international basis. I look at RIM technology, space aviation, the pharmaceutical industry, and I see the leadership that we've provided in energy, and even in the automotive sector. I see that we as Canadians are on the cutting edge in so many different areas of business and technology. So I'm a little concerned, because the impression I have is that we're so far behind.

I had a really interesting time reading your presentation last night. I see a lot of references to a lot of other areas of strategic development. The question I put to you is, what is your long-term strategic plan? You're looking for a close to $750 million investment over the next number of years, but I don't really have an understanding of where you think we should be going with this strategic plan, where the development will actually take us, why we should show that type of leadership, and obviously why we should provide the necessary funding.

[Dr. Suzanne Fortier]

In one sentence, our long-term vision is to help make us a country of discoverers and innovators. This is our long-term vision, and we need to--

[Rick Dykstra, Conservative, St. Catharines, ON]

So you would argue that we're not that right now.

[Dr. Suzanne Fortier]

Not a significant portion of our population would fall into the category of discoverers and innovators. There are some, and I wouldn't say we are far behind. I think in this country we have great examples of people who have achieved these levels of success, but we need more, because this world, as you know, is extremely competitive.

We look at what consumers want. They want the products to be sophisticated, smart, and cheap, and that means investing in R and D so that we can increase both the value added and the productivity in this country. They also want environmentally friendly products and processes, so even in areas where we've been very strong, like producing our natural resources or doing mining, they want us to behave in an environmentally friendly way, and that needs a lot of R and D.

So we're looking at that kind of workforce.

[The Chair, Conservative, Brian Pallister]

Thank you, Madame Fortier. I apologize for the intrusion, but we have to move to our next and final round of questions, with Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

Thank you to all the presenters. I guess you saved the best for last.

[The Chair, Conservative, Brian Pallister]

No, let me clarify: Mr. Pacetti is the final questioner.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I want to concentrate on BIOTEC and the Partnership Group for Science and Engineering, to clear up.... One of the questioners, I think Monsieur Paquette, was asking questions, and I think I was getting to my answer, but I'm not sure. I want to allow both of you maybe to answer the question.

Mr. Brenders, when you were speaking, you said there's not enough money for the end product, commercialization, or just finishing the portion at the end when you're ready to sell the final product, or at the end part of the research, if I'm not mistaken. And then, Mr. Rutherford, in your presentation, you said, “There's a lot of money out there, but we can't seem to access it.”

Can you just correct me, if I misunderstood? At the end, when you were replying to Mr. Paquette, you were saying that there is money, but it's just in the final stages. I want to understand what we're to try to recommend, because I would like to simplify what we recommend, and to know whether we're talking about the same thing. I understand it's not the same subject matter but that we're more or less talking about the same type of reasoning.

[Peter Brenders]

BIOTEC is a narrower sector, I think, than what PGSE is looking at, in terms of the area. There is a lot of money in Canada, there's no question about it. A lot of our institutional funds are investing, but not in biotechnology, not in the cutting-edge technologies. A lot of it's going to oil and gas and natural resources that are out there.

We're seeing some good support in earlier-stage funding. Historically—through CFI, CHIR, granting councils, and whatnot—there have been good early-stage investments, and we'd like to see them continued. The challenge for a company is that once you have that early-stage development and turn it into a company you want to grow, you go after your angel investors and then go out to the venture capital market, but the venture capital market is not in biotechnology—not in our sector—significantly, and especially when it comes to later rounds of funding. So you get your first couple of million dollars, but by comparison, whereas Canada's first round of funding might be $1 million or $2 million, in other markets, such as the U.S., the first round of funding is $10 million to $15 million. Then, when we get to later rounds of funding, there is no source of capital for Canada. It doesn't invest in this technology because it's too long a development cycle to get product out there.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Help me understand a little bit why somebody would invest in the first round but not invest in the second or third. If I'm a believer in a company or in your project, I would invest the first time around, and if there is some progress, why would I not invest a second or a third time around?

[Peter Brenders]

Usually, the first-round investors mean angel investors. They'll put in their $500,000 to $1 million. They don' t have the wherewithal to come in with the $10 million to $15 million on the next round. So as much as they'll want to do the add-on—and we do see some with the add-on—they can't come up with the total area. They'll be part of what we're basically seeing as syndicate investors, but the leads in the late-stage development of our industry are coming from where the money is, and the money is south of the border. We're trying to make sure it comes here so that we can do more investment here.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But is it the job or the role of the government to get into those final stages? Isn't that a market issue?

[Peter Brenders]

Absolutely. But we're not asking for the government to invest in the companies in this one. What we're asking the government to do is not create barriers to make it difficult for companies—things such as our tax law not recognizing LLCs.

In the other areas, in the competition for SR and ED, as attractive as it is, there are parameters we're putting in that hinder companies from investment. We're just asking to make it even, I guess, more competitive.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you. Our time is limited.

Mr. Rutherford?

[Ian Rutherford]

Government makes the rules. We were not arguing for government money to go into this area, but for trying to make it easier for money that is available in our economy and outside the country to come in and to fund, at the venture capital stage, developments in Canada—to keep them in Canada, rather than people having to go to the United States to find the venture capital and developing the invention and producing the product down there.

I made the remark, too, that there are moneys for R and D outside of Canada that we're not tapping because we don't have the mechanism in place to allow Canadians to tap them. The European Union has something called a framework program for research that provides money for R and D projects, and it's available to people outside the European Union. Canadians can apply for it, but they have to come to the table with some Canadian funding.

We're arguing for the creation of a pot of money somewhere so that Canadian researchers could compete to get the Canadian component, which then will allow them to apply to the European Union and get another slice of money and bring it into this country to use here.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So it's not simply to get the money, but it's a matching fund?

[Ian Rutherford]

Yes, it's a kind of matching fund.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

In order for a Canadian company to get money, lets say in the U.S. or in the European market, does there have to be some matching on this side of the border?

[Ian Rutherford]

On the R and D side for European money, it's a question of matching. For venture capital, it's a question of the rules governing investments in research, the SR and ED-type things.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Is that in your brief?