Finance Committee on May 16th, 2022

[James Hinton]

International trade agreements are used by the stronger-power countries, like the Americans, to permeate rules that benefit their domestic industries. We see that with the copyright extension that's mentioned in this act. It's all about California and other content creators that we agreed to under the USMCA.

Really, it's not about free trade. These are made up. Intellectual property is all made up. Patents, trademarks and copyrights—none of those things exist without somebody saying we need to give somebody some proprietary rights over them. The finger is on the scales entirely in the U.S. and other jurisdictions. The head of the U.S. patent office influences a significant amount of the policy. That policy is designed to benefit domestic companies. We don't really have that. We don't recognize it.

Historically, our innovation policy is based off inputs from foreign technology companies themselves and then none of our domestic oligopolies—banks, insurance companies and telcos—drive global economic prosperity back to Canada. We need to be working closely with Canadian innovators to ask how we can increase their freedom to operate in global markets and decrease the freedom to operate of their competitors for that economic prosperity.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I think we saw some of that in the pandemic—

[The Chair, Liberal, Peter Fonseca]

Your time is up, MP Blaikie. I know it goes fast.

Now we have MP Chambers up for five minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

Thank you to all of our witnesses for coming today. It's a pleasure to have you here. I'm glad we could get to some of our witness hearings.

Mr. Cochrane, I wanted to touch base on where my colleague Mr. Baker left off with respect to the beneficial registry. As we understand, the registry that the government is introducing will not be searchable—at least not at the beginning. It is intended to be made searchable.

Can you talk about how important it would be to have that registry be publicly available, free and accessible?

[Dr. D.T. Cochrane]

This is an absolute need. It must be publicly accessible. Searchability is just the basic function of making something like that useful. This will enable not just government and government institutions, but all sorts of entities to make use of it.

One thing that we and our partners really emphasize is that this will actually be a big benefit to business as well. It will allow them to do a lot of the due diligence that can often be really onerous to make sure that they're not doing business with bad actors and unwittingly finding themselves in bed with them. It will allow journalists to undertake investigations to identify who the actual owners are behind assets. It will really just super-power the registry to make sure it's most effective to do all the things that we believe it's capable of doing.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much for that answer. There's full agreement, certainly from myself and members of our party, for the importance of it to be publicly available and accessible.

You mentioned the work of journalists. I thought maybe we would take the moment here to talk a bit about the Panama papers. Canada has not been successful in seeking, convicting or laying any criminal charges against any individuals listed in the Panama papers. It's one thing to uncover nefarious acts or acts that are potentially illegal and another to prosecute and convict.

Are you concerned with our track record on that front?

[Dr. D.T. Cochrane]

Absolutely. It points to a multitude of likely issues that are preventing the CRA from moving ahead with charges when the evidence, for those of us who aren't necessarily experts in all the legal ins and outs, it overwhelmingly seems that someone has done something that deserves to face the law.

What exactly is preventing this? We can't pinpoint it. There has been recent coverage about sweetheart deals being reached between some high-level officials and the people they're supposed to be responsible for overseeing and that might be a factor in this.

Yes, it's incredibly concerning. Frankly, it makes Canada look pretty bad when so many of our allies have been able to do something about the information in these leaks.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Yes, I've often said that if you just looked at conviction statistics and investigations, you'd think that Canadians are some of the most law-abiding people on earth and that there are no bad actors here. In Simcoe North, my constituents are incredibly honest and trustworthy, but I find it hard to believe that in our country we do have such a low conviction rate and investigations.

You mentioned some sweetheart deals. My colleague, Mr. Stewart, put forward a motion to the finance committee a couple of weeks ago—we have not yet had a chance to discuss that motion—where we are looking at the transaction or perhaps the forgiveness given by CRA to a large taxpayer.

Are you aware of that motion? Would you support additional information being made public?

[Dr. D.T. Cochrane]

I'm embarrassed to admit that I'm not aware of it. It got past us. We are definitely interested in seeing what has been suggested, and I'm always in favour of more information. More information is rarely a bad thing.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

For your benefit, it's a motion with respect to the decision on advance pricing arrangements within the CRA, so hopefully, we'll have some of that information brought forward to this committee, and we would appreciate your feedback on that.

Mr. Chair, I think I probably have maybe 20 seconds left. Since we are over time, I'll yield that back to you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

We'll move to the Liberals. This will be our last questioner, MP Dzerowicz, for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I'd like to go back to Mr. Hinton and maybe continue some of the questions that Mr. Fast asked. In response to the question about the investment that we provide to universities for research, you had indicated in one of your responses that there were no strings attached to encourage innovation.

Can you make a recommendation about what could do at the federal level that would encourage innovation and patent protection? I know that you mentioned that a number of different provinces already have a number of bodies that are starting to work on this, but what can we do federally to help support this?

[James Hinton]

What we need to do federally is really to mirror some of the activity that's already happening. The Ontario Expert Panel on Intellectual Property released a report and, as part of that, detailed action items and is now putting resourcing together. The universities are, generally speaking, under-resourced, so they need to be properly resourced and supported to be able to reorient on this.

Fundamentally, universities are not the centre of where innovation happens, so we need to say, “Okay, what is important for Canadian companies, Canadian SMEs and their IP and research needs?”, to ensure that Canadian universities can support those needs and not say, “How can we make universities perform better when it comes to innovation?” but rather, “How can Canadian companies be stronger by using and working with Canada's universities, colleges and research institutions across the board?” It means putting the Canadian SME at the centre of that, and then having those organizations support those companies.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thanks for that.

We often hear that businesses aren't making the investments in innovation that they should be. Do you feel that is because they don't have the freedom to operate, as you indicate?

[James Hinton]

Yes, that's right. You're not going to invest in a line of business or a new business where the foundational IP is owned by your competitors, because you don't have the freedom to operate. Purely domestic companies don't have very good IP positions, and they need to work hard to be able to keep their, let's say, more provincial and domestic shuffling of economic returns, but it's not that global economic opportunity that we really need to see.

[Julie Dzerowicz, Liberal, Davenport, ON]

How do we help build that? There seems to be a lack of capacity or—I'm not sure whether we can say—expertise, whether it's understanding or engaging in the innovation economy at the government level, at the business level or at university level. How do we improve that at each of those levels?

[James Hinton]

Foundationally, it's about IP education, and we're doing that with the Innovation Asset Collective. I'm doing that this Friday. You can join my Western University class on commercializing innovation. It's really about getting Canadian SMEs to be more savvy about IP, but it's also fundamentally about giving resources like we see here in the budget.

The CanExport program is fantastic, through the Trade Commissioner Service, giving resources to Canadian companies to protect their intellectual property globally. Then again, without that underlying freedom to operate...so resourcing properly things like the patent collective so that we have that freedom to operate or improve the freedom to operate for key economic sectors for Canada.

[Julie Dzerowicz, Liberal, Davenport, ON]

How much time do I have left? I have one minute.

Is Mr. Strickland still with us, or has he left us? He has left us.

[The Chair, Liberal, Peter Fonseca]

He's having connection problems, MP Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

All right, thank you so much.

Mr. Hinton, I have one minute left, if you have anything else you would like to advise the committee on, or if you wish to make a recommendation to the committee, the floor is yours.

[James Hinton]

One key thing would be to start getting away from this FDI fallacy. There are jobs there, but that's not economic prosperity. We had discussions about the trades. There are not even enough people to go around for these jobs. Stop investing in a job strategy. That's the 9% tangible economy. Start investing in the intangible economy, like electric vehicle parts and battery manufacturing. We saw a lot of recent investment there, but the IP and data are going to be held by American companies. We're participating, but we're not getting the lion's share of the value.

I worked in heavy truck manufacturing before getting into IP. The jobs will be gone when the subsidies go. The thing that retains economic value is intellectual property. It's data, and those intangible assets. That's what we need to be growing, not participating in somebody else's manufacturing facility. They're the ones that own the IP and data, and manufacturing, just like any other sector, is dominated by IP and data.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much. That's excellent.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Thank you to our excellent witnesses for your remarks. Your many answers to the many questions by members were really appreciated in informing us about Bill C-19. On behalf of the members, the clerk, the analyst, and everybody here who helps with this production, thank you very much to all for joining us.

The meeting is adjourned.