Finance Committee on Nov. 7th, 2013

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Adler.

Mr. Côté, you have the floor.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Mr. Christie, thank you for being here to talk to us about one of the most important sectors that involve Canada's outreach. Unfortunately—and this was confirmed by a 2010 Deloitte & Touche Inc. audit, and by the Emerson report—your sector has been considerably neglected by the current government.

I would like us to broach the matter of the Strategic Aerospace and Defence Initiative. In fact, the program reached its peak in 2012. Currently a curtailment has been announced.

Could you give us some idea of the repercussions of this announced decline, and of your concerns in that regard?

[Iain Christie]

I think we foresaw the decline coming, which was why we had advocated, prior to 2012, having the Emerson report. There was a general concern as far back as 2009 about the state of the industry and the state of government programs and policies. We have, by and large, been very satisfied with the results of the report. We thought it was an excellent report. It has been well received and implementation is moving along at a pace we are happy with. SADI has been recapitalized. We have a technology demonstration program that has been announced. I think the misgivings we felt seeing that decline coming have been answered, and are in the process of being answered, by the Emerson report and the response to it.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

I would like us to talk also about the Canadian Space Agency. At a certain point that organization was a powerhouse, but it is now reined in among other things by cuts to its funding. However, some amounts had been allocated but were not used. There was $66 million, that is to say more than 17% of its funding, in 2012-2013. Clearly, things are going very badly.

Could you comment on the internal dynamics at the Canadian Space Agency that led to everything being reined in, and on the fact that there don't seem to be many hopeful aspects in that particular sector?

[Iain Christie]

Again, I think this question is exactly the kind of question we were asking two and three years ago. Once again I point to Mr. Emerson's recommendations and the government's response as already beginning to address these questions. Anyone who has heard the current president of CSA, Walt Natynczyk, speak cannot believe that things aren't happening at the Canadian Space Agency. They are.

Although none of Mr. Emerson's recommendations with respect to space have yet been implemented, we believe that progress is being made towards their implementation and we are awaiting their fruition. We believe things are moving in the right direction, but as you point out, things have gotten to a very serious pass. It is not time to take our foot off the gas in terms of trying to revitalize the space sector in Canada. It's important. It is in trouble. Things do need to change. I don't want to take the committee's time in recapping Mr. Emerson's recommendations, but they basically need to be implemented.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Patry, I really liked your remark on basic research as it compares to innovation. You said that we should not make too strict a distinction. In fact, that would be very reductive. Nevertheless, in general, there has been a levelling off of federal spending on research and development.

I'd like to go back to comments made by the senior deputy governor of the Bank of Canada, Mr. Tiff Macklem, when he addressed the Economic Club in Toronto, in October. He talked about very grave concerns regarding the dramatic reality that some Canadian exporters eventually go bankrupt or turn to the domestic market. In fact, there are 20% fewer exporters. I would venture to say that there is a link between that and our shortcomings in innovation. Would you make that kind of connection?

[Gilles Patry]

There may be one. Personally I cannot draw such a direct link.

I will come back to your question on the funding of research. Over the past two years, there was certainly a levelling off, but it was during a very difficult economic period for all countries. Even though the funding has levelled off, we have to celebrate the fact that it was maintained.

We must also remember that during that same period, the number of full-time students increased significantly over the past six to seven years. Moreover, there were inflationary pressures on institutions, that did indeed result in a decline in research capacity over the past few years. We have to correct the situation. This may answer the question you raised expressly.

[The Chair, Conservative, James Rajotte]

Merci.

Merci, Monsieur Côté.

Mr. Van Kesteren, please go ahead for your round.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Patry, with regard to your research council, I just want to understand this. You are in charge of taking the government funds and then finding universities that apply for grants? Do I have that right?

[Gilles Patry]

Let me explain—

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Be really quick, because I have a whole whack of questions.

[Gilles Patry]

—what CFI is all about. CFI is not a granting council per se. We are an independent—and I guess this is why I've been invited here—organization, an arm's-length organization, which benefits from the investments that the Government of Canada is making in the Canada Foundation for Innovation so that we can reinvest these funds into universities, colleges, and research hospitals.

We do this on a competitive basis. We've been in existence for the past 15 or 16 years and we have benefited, as I said in my presentation, from an investment by the Government of Canada of about $6 billion over the last 15 years, so about $400 million a year.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

So you receive $400 million a year?

[Gilles Patry]

No—and that's the challenge we have. I'm glad you're raising that question. Essentially we receive money at the will of government on a sporadic basis. So for the past 15 years our awards have been somewhat unpredictable depending on the environment and the conditions and so on and so forth.

It used to be that at year-end, essentially when there were surpluses, the Canada Foundation for Innovation benefited from investments that came from surpluses.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm going to ask you to stop. Forgive me, because I'm getting more confused. That's a dangerous thing.

In your brief we talk about SSHRC, NSERC, and CFI. Are you part of that granting body?

[Gilles Patry]

We are. We call ourselves TC3 plus. So the Tri-Council—SSHRC, NSERC, and CIHR—are the three granting councils that are obviously agencies of government. CFI is another group that essentially supports the research activities by providing research funding for equipment and facilities.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Okay. So if a university, for instance, has a proposal, would they go to one of your agencies and say that they need money for this, and you would help them get that money?

[Gilles Patry]

They would go to the agencies—SSHRC, CIHR, or NSERC—for the research funding. They would come to us for the facilities, for the equipment and the installations.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Okay.

I've been a member of Parliament since 2006. I was fortunate to sit with Mr. Rajotte on the industry committee, and as long as I can remember, in this committee and the last committee, we've heard the same thing, that we're spending the money but we're just not getting the results. We don't seem to have the answers to those things.

I'm going to tell you where I'm a little bit concerned. I pulled this up from the web. It's an article in Maclean's about pensions and how Canadian universities are just going wild in terms of their pension shortfalls. For instance, from 2008 to 2012 they've gone from a $680-million deficit to one that's over $3.2 billion.

I know you're not directly responsible for this, but is it possible that a lot of this money...? This is just an awful thing to say, but I'm going to say it anyway. Again, I'm not making this stuff up. I just found it. There's the case of a particular university president, and I'm sure Ms. Robinson will love to hear this too, that—

[The Chair, Conservative, James Rajotte]

You have one minute.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I had better wrap this up as quickly as I can. In 2003 this university president made, I think it was, $237,000, but somehow has raised that to $500,000, and his benefits on pensions would be $320,000 per year.

He would probably be rewarded for bringing in granting money. Is that where a lot of our money is going? Suddenly I'm starting to get really concerned about this.

[Gilles Patry]

Let me try to answer that.

[The Chair, Conservative, James Rajotte]

Put your former hat on, chancellor.

[Gilles Patry]

That's what I was going to say, Mr. Chair. I'll put on my former hat as a former university president.

First of all, we have to recognize that defined benefit plans across Canada are very, very challenging in a period where the inflation rate is extremely low and where the actuarial estimates also need to be adjusted, number one.

Number two, I would argue, and this was the case at my university, there was a rule of having a maximum 10% surplus in your pension plan, at which time you had to have a contribution holiday. Even then, many pension plans had to pay the surplus back to employees. I remember very well at the University of Ottawa, where I was the university president, having to take a pension holiday. We did not necessarily want everybody to take a pension holiday, the staff and/or the university. This I think is responsible for a large part of the problem that we have right now.

[The Chair, Conservative, James Rajotte]

Thank you.

We're over time, Mr. Van Kesteren, unfortunately.

We're going to move on to Mr. Rankin.