Finance Committee on Oct. 21st, 2016

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you very much, Mr. Chair.

I want to thank all of you for being here today. Certainly we have had a large range of suggestions and perspectives. As we've gone across the country we've garnered some ideas, but we've also been able to certainly detect both the opportunities that are out there and the anxieties that are out there. The next budget will absolutely have to address both the opportunities and the anxieties.

Ms. Benczkowski, as I go through my riding, coupled with the economic anxieties I hear the anxieties about maladies and afflictions such as the neurological diseases that people see around them. I think you mentioned your mother. We've all been touched by Alzheimer's or dementia or other neurological diseases. We heard in Halifax from representatives with Parkinson's as well. As people deal with their economic anxieties, they're also dealing with this category of diseases that seem very mysterious and exotic to them. I for one hope that Canada will participate, in a bit of a moon shot as an advanced country using our best and our brightest, in trying to find cures or ways to deal with the symptoms of these diseases.

I wanted to ask you to perhaps reflect a little more broadly on the strategy you're urging the government to adopt and on the money you're looking to the federal government to invest. What do you see as the outer limits or the possibilities of such a strategy?

[Debbie Benczkowski]

First of all, I think we should talk about the financial investment we're requesting the government to make. It's $30 million a year over five years. That is really less than $1 per Canadian, per year, for a disease that's already costing well over $1,000. So it's a modest investment.

We already have Bill C-233, which is a private member's bill, as you know. It's been through second reading and it's at the health committee right now. It's really for direction to Canada to have a strategy on Alzheimer's disease and dementia. The money that is being requested is to establish the Canadian Alzheimer's disease and dementia partnership, which is a suggestion to the government on how we develop a strategy. Thirty countries around the world already have dementia strategies in place. All the G7 countries except for Canada and Germany have dementia strategies in place. We have taken the best of all of those strategies, which are now being evaluated at an international level. The World Health Organization has also called on all member countries to really make sure that countries address the rising tide of dementia and the increased numbers of people who will be affected.

As I said, there are three areas of investment that we're looking at. There's research. There's prevention, with early diagnosis and early intervention, making sure that people get an accurate diagnosis so that they can avail themselves of the proper care and support they need. Then there are the medical and clinical interventions that will help them to lead a better quality of life.

We feel we've addressed the jurisdictional issues between the federal government and the provinces, because all of the areas we've suggested to be part of the partnership are within the jurisdiction of the federal government. One of those key areas is that we develop plans and then make sure that indigenous communities have access to culturally specific and appropriate care and services across Canada.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you very much. There's so much more I'd like to hear and learn about that, and I know that I and other members of the committee will be spending a lot of time reflecting on it, as we will on all of your suggestions.

I do want to use my remaining time to go right across the table to Mr. Paterson. Could you reflect a little more broadly, for our benefit, on how you see GM Canada fitting into your worldwide organization, how you see the Canadian auto sector fitting into the worldwide auto sector, and perhaps just, as they say, “blue sky” it a little for us? What do you see as Canada's role in this new wave of innovation in the automobile sector?

[David Paterson]

As indicated before, we're at a time of profound global change in our industry, and I believe we're going to see, over the coming five to 10 years, significant movement towards electric cars, cars that are very connected with each other. That's really important because we have 32,000 people a year die in car crashes across North America because of driver error. If we can reduce that through systems in our cars that have automatic braking, lane-keeping, and awareness of the environment around them, that will be an incredible health improvement for us in that regard.

Then finally, we are seeing huge disruption with companies like Uber, Tesla, and others. These are good things in bringing forward technology, but we have to think as a nation about what that means for us, too. We're thinking about that as companies.

We've thought about it in terms of the technology that we need to develop, the software we need to develop. We looked at Canada. I worked formerly in the ICT sector at BlackBerry. What do we have in Canada? We have a legacy of the world's best mobile communication networks, systems, cybersecurity, and these are really important things for the future of the auto industry. We have that knowledge embedded in our universities. We have more Ph.D.s in artificial intelligence at the University of Toronto, nearby in this city here, than anywhere else in the world. We've looked at all of those things but we had to go university to university to find that capability. There's nothing in Canada that gives you a game plan across those universities because they're all competing with each other.

If we're putting significant investments of public money into our leading research facilities and into our universities, we might want to think more carefully about how we can identify those veins of technology that could be enabling for technologies, as we've heard from other panellists, or in the auto sector, so that we can liberate that and find ways to work it better with our Canadian companies. They can take that, skill it up, and become the next BlackBerry that will grow into 170 countries instead of just serving our Canadian market here. So that's what we're looking at. We think we can help because we're already in those countries and we can use our international supply chain to help deal with it.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Thank you to everyone for your presentations today.

I'm going to go through pretty rapid-fire just so I get to as many as I can, and unfortunately I won't be able to get to everyone.

I'll go to Mr. Paterson first. Mr. Paterson, I'm going to give you a lousy analogy. Oftentimes if the economy is viewed as a stage and a production that's going on, I believe the government should set the stage and let actors like GM and other Canadian companies run the production, because government is usually a lousy actor.

I want to talk to you specifically about the Trans-Pacific Partnership. You said we should be building the technology. We may not end up installing it. You mentioned intellectual property. Intellectual property provisions in TPP, I believe, with a wide variety of countries, would allow greater protections for Canadian companies operating in those areas. Would you agree with that?

[David Paterson]

I come from the school of working for Jim Balsillie for four years, so it won't surprise you that I've also had an inside look at some of the concerns. I would say that the intellectual property provisions within the TPP are good for multinational companies that are already strong in that area. I think what I have learned is that if you are a small Canadian company and you're growing up, and you get past that stage of $100 million, one of two things is likely to happen to you. One is some people will come along and try to buy your company if you're really good, and if not, they might try to block you by using patents and patent trolls and a whole variety of other things that could be frankly set to shut you down.

We have to think strategically in Canada in terms of how our small companies are going to be able to compete in that kind of world. So I go back to those universities. We have an incredible amount of intellectual property in Canada that we've paid for through our tax dollars. What if we were to establish patent pools so that those little companies that go out with one or two essential patents were armed with 200 essential patents that came from Canadian investment? This is what Korea does. This is what Europe does. This is what France does. This is what the United Kingdom does. We don't do it in Canada. We should think about that so that we can make sure that Canadian companies can go from being small companies starting on top of a doughnut shop to working in 175 countries.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

The commissioner of competition put out a report around two years ago saying that for new emergent technologies like the sharing economy, etc., there should be a federal role for getting a common regulatory market approach across all provinces. I'm worried that autonomous vehicles that you're mentioning may get mired up in red tape from different approaches and different provinces.

Do you think that the commissioner has a point when it comes to this, and that perhaps the federal government should look at taking a leading role in this?

[David Paterson]

Yes. I think that there is merit in that. We're seeing this already across the United States where different states are setting different rules in terms of how one can go about testing autonomous vehicle technology. What happens in California is very different from a new set of regulations that's being developed in Michigan right now or in Boston or wherever.

Ontario, of course, is the one province that's come forward, and it has set a very pro-innovation regulation in place, which I applaud. It gives us the ability to test new autonomous vehicles on the roads in Canada. To my knowledge, it's the only province that has done that to date. It would be an advantage for Canada to have a pro-innovation—but safe—set of regulations that enables people to look at Canada as the ideal place to develop this new technology, so that we can get advantage from that, both economic development as well as the knowledge and the building of that industry.

The regulatory environment that you establish is critical in terms of drawing jobs. One of the things that is essential—and you make the point, and this is critical for the auto industry—is that we build and design a vehicle once to sell right across North America. If we face a differentiated set of regulations in Canada, the costs go way up, and you're very unlikely to get the investment to be able to build and design here, so you need to be aligned.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I'd like to go to Ms. Long.

Ms. Long, thank you for the work that you do. One thing that I've heard from some of your members is that they are held back from offering samples in store of health products that are completely safe but highly regulated. They are obviously very proud of our Canadian products, but one of the challenges is that they cannot, under the law, offer samples. It has to do with packaging and a number of concerns. That's red tape to me. That's stopping them from being able to sell more products that make us healthier. Would getting rid of that red tape help your membership make better sales?

[Helen Long]

Yes, that's a great question. Absolutely.

Quite interestingly, I spoke earlier about the challenges with the recent Health Canada proposal for regulatory changes.

We were in the process of developing an interim policy with the inspectorate at the regional operations branch to allow for sampling, not only for our industry but also the cosmetic and some of the OTC manufacturers associations. That proposal was presented. We went through some drafts, legal, etc. Late in June, we met with the inspectorate and were told that we were looking at a fall consultation and would be good to go early in the new year. Last week we went to a meeting and were told that that policy is dead and will be developed under the framework, which is well under way. It is in direct contrast to what we've been told by Health Canada about the current consultation being the first of many.

So, yes, it would be an excellent opportunity. I can't tell you what's going to happen with that.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Again, the controls are there, the safety is there. Literally, it's just denying the opportunity to promote your industry.

[Helen Long]

Yes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I'm sorry to hear that.

[The Chair, Liberal, Wayne Easter]

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank, Mr. Chair, and my apologies for being late. The traffic on the 427 was not great this morning.

My first question is to Madam Long.

I met with some people who own NHP stores and natural health bar stores, and they're very concerned about the new regulations that have been proposed.

You're advocating for the de minimis to be raised to 200, is that correct?

[Helen Long]

No. We're advocating for the de minimis to stay where it is.

[Raj Grewal, Liberal, Brampton East, ON]

At $20?

[Helen Long]

Yes. We like that number.

[Raj Grewal, Liberal, Brampton East, ON]

Okay. That makes sense.

We just heard from eBay yesterday, and they're obviously on the other side of that argument. I just wanted to clarify that you wanted to keep it at $20.

How will the new regulations affect your business in terms of economic impact?

[Helen Long]

It's a hard question to answer.

The proposed changes, I'll be honest, are very unclear at this point. They're not giving us a lot of detail as to the specifics of how they're going to administer them, but, for example, a group of products will be shifted to require pharmaceutical-like, double-blind, clinical-trial type evidence for claims. There's been a long history of the government looking at natural health products. When the standing committee first developed the regulations, they spent a year and met with hundreds of different people in the industry from academia, the medical community, and consumers to establish the guidelines. When we look at that, the cost of doing that for products that you can't patent will cause large numbers of products to be eliminated. For some of our retailers, that could be up to 50% of the products they sell. If you were a retailer, and you lost 50% of your products, that would be a pretty significant impact.

At the other end, there will be products that are not able to say what they do. Disclaimers will be required that say that Health Canada hasn't reviewed the products. Ultimately, that will result in lack of consumer confidence and interest, and again, those products will be discontinued. So, with the lack of products available to consumers and the lack of information being provided to consumers—the totality of that—the effects could be enormous.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

For the record, you're the only industry that's happy with the regulation.

[Helen Long]

It took us a long time to get there. We have the best system in the world, quite frankly, and we believe in it.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you to all the other panellists. I'm sorry, we only have four to five minutes so we can't get into questions with all of you, but we do read your briefs.

My next question is to Mr. Paterson. Obviously the automotive sector is extremely important to Canada. Our government has extended the automotive innovation fund, as you know. Chrysler is one of your competitors. I don't know if you're allowed to use their name or not, but their plant is in my riding.

A lot of your comments were about the future and the investment in innovation. You gave an example of Israel. I had the good fortune of travelling there and being in Tel Aviv, and I saw how remarkable innovation is fostered in one of the smallest countries in the world. I also give credit to GM for looking into the future to see where the economy is going to go in terms of the shared economy and investing heavily.

How can we make sure that the economic benefit stays in Canada?

[David Paterson]

Part of it is, as we've said before, to set the table properly so that we are the most inviting jurisdiction in the world for this new technology development.

Israel, as you mentioned, is a really great example. I mentioned in my remarks that you need to have talent, you need to have capital, but you need to have customers. It's remarkable how many people, when they're talking about public policy, forget that you ultimately need a customer for the technology that you're developing. Israel is extremely adept, as they develop partnerships with companies both multinationally and locally, at using national procurement and their relationships with the military and others to be able to create large customer bases for the work they're doing. Effectively they say, come to our country, set up, and we will work with you and we will give you a great environment, but we expect you to help our little companies grow.

We've taken that type of mindset here in Canada. Next week in Kitchener-Waterloo we will meet with over 35 small Canadian start-up companies and we'll discuss their capability in this area of autonomous vehicle development. Some will offer things that we can do and some won't. However, if you were one of those little companies and you were trying to develop on your own without a customer....

We get these science projects happening in Canada all the time where people go out and say, let's go invent the technology and then people will come, but they don't think about the customer who is going to be there. In big industries such as the automotive industry, it's really wise to have some of the large multinational companies that produce a million vehicles a year as a customer base for the things you're doing. We're trying to build those relationships, not just with universities for the technology and liberate some of the IP that they have in the universities, but also work with these great companies in areas such as mobile communications, which are going to be critical for the future.