Evidence of meeting #5 for Finance in the 41st Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A video is available from Parliament.
Manager, Green Budget Coalition
Absolutely. I think one problem is that we don't yet have full pricing of pollution and energy impacts; that when governments and businesses are looking to make the right choices, the fiscal framework doesn't give them the right structure.
NDP
Peggy Nash NDP Parkdale—High Park, ON
The World Health Organization has declared diesel a carcinogen, so maybe it is not the best investment for a highly dense urban area.
Conservative
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman. Welcome to our witnesses.
My first question will go to Mr. Davidson. Welcome to the committee.
You state, and I think everyone on both sides of the committee will agree, that Canada's universities are recognized as some of the top universities around the world. I don't think there's any question about that. You highlight that indirect costs of research are a barrier to maximizing Canada's potential.
Do you have specific recommendations on how the government can address this? And what impact would they have, first of all on students and second on the government?
President and Chief Executive Officer, Association of Universities and Colleges of Canada
This has been a longstanding issue before this committee and before Industry Canada. For many years, the AUCC has been speaking of the importance of getting the indirect cost program up to globally competitive levels. Globally competitive levels are somewhere between 40% and 50% of the direct cost of research, and the present average is about 21.6%, so there is quite a gap to close. That's why I say that the primary challenge is a question of funding.
In recognizing the challenges facing the government, Canada's universities have been working at alternative ways of addressing the problem. That is why the new excellence fund may be a way that is more appealing and more able to achieve a variety of public policy goals. But as we see our global competitors being funded at substantially higher levels for the indirect costs of research. It is a challenge.
With regard to the impact on students, I think it is fair to say that many universities need to cross-subsidize their research programs by taking money raised from students and directing it towards the research programs to meet those costs.
What are those costs? They arise from such things as improved ethics compliance, improved guidelines for the use and the storage of hazardous materials, and improved care for animals. These are real costs, and they are growing.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you. The big challenge, though, is still the 29% gap, without question.
President and Chief Executive Officer, Association of Universities and Colleges of Canada
Yes.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
This is for Elizabeth Cannon, with the U15 group.
You recommended that we provide predictable long-term support for Canada's research granting agencies. Everyone here agrees with the concept of supporting research and innovation; it is certainly a foundation for securing long-term prosperity. But can you expand on how Canadian businesses would benefit?
Vice-Chair, President and Vice-Chancellor, University of Calgary, U15 - Group of Canadian Research Universities
Thank you very much.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
I mean not something that will come in five or 10 years' time, but that is of direct benefit.
Vice-Chair, President and Vice-Chancellor, University of Calgary, U15 - Group of Canadian Research Universities
When there are investments in Canadian research, there are multiple outcomes. One that we talk about is commercialization, and depending on the research area, that could be medium- to long-term. But it should be recognized that the vast majority of research funding that is invested in our universities coast to coast supports graduate students.
We have seen an 80% growth in the number of graduate students over the last 10 years. We've also seen some of those funds support undergraduate students who are interested in research—summers in labs and that type of thing. It's those graduates who will have an immediate impact upon the Canadian economy. They bring their knowledge to business and help innovate and grow companies. We know that although we in Canada have had a tremendous growth in our graduate student cohort over the last 10 years, we are still lagging such countries as the U.K. and the United States in terms of the number, given our population, of our graduate students.
Higher investments mean more graduate students being able to become well trained and able to go out into the economy and build businesses.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
I think we're all in agreement on that as well. But if we look south of the border at the private funding that American universities are able to attract, we do not seem to have the same ability. Some of it might be due to economy of scale for the American economy and the population, but we don't seem to have that ability.
What is the biggest detriment getting in the way of attracting those private funds in Canada?
Vice-Chair, President and Vice-Chancellor, University of Calgary, U15 - Group of Canadian Research Universities
Well, it is certainly an ecosystem that has to be created. Government has its role, and we have talked about significant and sustained funding through difficult times. We also look at ways of bringing industry to the table. As I mentioned, the numbers—$1.5 billion per year of private sector research happening at our U15 universities alone—are significant. But all of us are interested in elevating our ability to work with industry to form partnerships, so that we can solve some of their challenges and help them innovate through our graduates and through our technology and innovation.
In terms of what those gaps are, part of it is building the mechanisms to get industry and universities sitting across the table. Some of this was talked about by some of my colleagues here. Part of it is the realization that we have to put all of our capacities together, if we're really going to have the level of discovery, creativity, and innovation to increase productivity.
Conservative
The Chair Conservative James Rajotte
Thank you very much, Mr. Keddy.
We'll go to Mr. Hsu, please, for your round.
Liberal
Ted Hsu Liberal Kingston and the Islands, ON
Thank you, Mr. Chair.
My first question is for Mr. Gupta. You mentioned the idea of returning the eligibility of capital expenditures to SR and ED. It reminded me of the work I did in this committee a year ago opposing the removal of the eligibility of capital expenditures.
Here is my question for you. You talked about a time delay in moving from indirect credits to direct spending. How many dollars of investment have we lost because of the time taken to transfer? Do you have a number for that?
President and Chief Executive Officer, Information Technology Association of Canada
I don't think there is an exact number, but we know that the SR and ED changes that were made equalled about $300 million worth of funding being removed. If you take that and extrapolate it, particularly in a technology sector, it would be equal to somewhere between 1,800 and 2,000 jobs on a sum-sustaining basis. That is the relationship.
What we don't have is a countdown by corporation showing that these 10 companies, for instance, lost—
November 7th, 2013 / 1:15 p.m.
Liberal
Ted Hsu Liberal Kingston and the Islands, ON
Sure, but I think you are saying as a rough estimate that around 2,000 jobs were lost because of this loss in investment.
President and Chief Executive Officer, Information Technology Association of Canada
Yes, or the equivalent of that: it is money being removed from the system. We're basically extracting funds out of the economy and haven't poured them back, so it has a direct impact on jobs.
Liberal
Ted Hsu Liberal Kingston and the Islands, ON
That's good. I wanted to know the impact of that government policy.
Mr. Davidson, you asked for sustainable and predictable funding for the Tri-Council agencies. I'm wondering whether we should also have sustainable and predictable mandates and policies. I remember when the research tools and instrumentation fund was cut and then more or less brought back. That wasn't a result of a cut in funding so much as of the government's saying “we'll spend new money in this area, and you can't cut these other areas” and of NSERC's deciding that the only thing left to cut was the research tools and instrumentation program, which caused an enormous uproar in the research community, because it's such an important program.
Would you agree that we should perhaps have some predictable mandates and policies as well as funding levels?
President and Chief Executive Officer, Association of Universities and Colleges of Canada
I think there has been some very good work done at a number of levels over the last few years to look at Canada's research and innovation space. I think of the Jenkins report and of the Council of Canadian Academies report on Canada's place in the research ecosystem. What they talk about is a clarity of mandate and a clarity of purpose, and those are things we would support.
We have to acknowledge that the granting councils, like every other public agency, have really been under scrutiny to reduce their costs and deliver effective and efficient programs, and they come out at the top of their class in terms of the quality of their work and the efficiency of their administration. We have to acknowledge that the government has largely protected those investments. But given the number of faculty and the number of graduate students, now is the time to make significant, sustained investments at the rate of growth of the economy.
Liberal
Ted Hsu Liberal Kingston and the Islands, ON
Thank you very much,
Ms. Cannon, regarding the ACRE proposal, what fraction of the funds you are asking for might go towards pushing the results of research excellence out into the commercial world? For example, how much of it might you want to invest in technology transfer offices?
I'm not talking about industry-academic partnerships in which industry says, “ I have a problem. Can you please solve it?” I'm talking about something that happens, for example, in my own riding in a place called GreenCentre Canada, where there is a dedicated laboratory and scientists who actually look at research that comes out of universities and try to find a place for it in industy, taking advantage of industrial partners.
Is there a place for that in the ACRE proposal?
Vice-Chair, President and Vice-Chancellor, University of Calgary, U15 - Group of Canadian Research Universities
The ACRE proposal has three key areas of deliverables. One is in global excellence, the second is in talent, and the third is in knowledge translation. It is in that third area that some of the funds would absolutely be used to help push technology and create the industry pull to get the ideas out to the marketplace. The concept, though, is that individual institutions would be able to determine how much of their funds would be dedicated within that scope. I think it would be significant, but it could vary between institutions.
So absolutely, getting technology out to the marketplace is a key deliverable of ACRE, in addition to creating the entrepreneurial culture within our students that is also critical.