Industry and Technology Committee on Nov. 24th, 2025

[Jim Estill]

Investment in AI is going to have the best return. When a change happens, the companies that pivot to it the most quickly end up being the winners. We don't want to be the laggards in that.

We have a housing issue, so making investments in housing is logical. I hate to say it, but investments in defence are also necessary, based on the current state of the world.

AI is where I would put my money, personally.

[Dominique O'Rourke, Liberal, Guelph, ON]

That's terrific.

Are there other measures you believe would be important to boost productivity? Particularly, you mentioned medium-sized businesses. What do you think would be most effective for them?

[Jim Estill]

If you're going to be giving money to companies that have bigger lobby groups, you miss all of the middle pack. I don't really believe in having any programs, but if you're going to have programs, you have to have something for the mid-size in the market, because the mid-size in the market creates tens of thousands of jobs and creates diversity in our economy. If we're only a car-manufacturing economy or only an oil economy, then we have a problem. We want to have diversification in that.

I love the idea of selling to international markets, but I have to say that it is difficult for most Canadian companies. To make a sales call in Germany costs $10,000. We can't be there tomorrow. The regulations are different, and the laws are different. These other markets aren't sitting there saying, “Gee, we don't have any fridges. We're just waiting for you to ship your fridges in.” They already have fridges, and fridges are big and not very easy to ship, and blah, blah, blah.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you very much.

My next question is for Mr. Tapp.

Mr. Tapp, you were an economist with the Canadian Chamber of Commerce when we met last year in Guelph. You indicated my riding as one of the most vulnerable in the country to tariffs. At the same time, there was a conversation about the initial use of counter-tariffs, but you indicated that those could not be maintained in the longer term. The opposition has mentioned that this is “elbows down”.

I'm wondering if you would comment on the appropriateness of this situational leadership over time and whether we are meeting the moment with an appropriate response.

[Stephen Tapp]

Thank you for the question.

First, I think we have to acknowledge the difficulty of the moment. The uncertainty and the scale of changes in U.S. tariff policy have been more or less unprecedented. The discussions we had were early in the process, when I was with the Chamber of Commerce.

You're right. Guelph is very highly impacted. Southwestern Ontario is certainly going to be under the gun under these tariffs.

The government's response initially was the counter-tariff measures. I think that from a game theoretic perspective, people considered that if the counter-tariffs increased pressure politically on the U.S. and caused it to drop the tariffs, that was a smart move. It became clear a few months into this strategy that it was unlikely to have any deterrent effect on Donald Trump, and that keeping the tariffs in place was just going to raise our costs and reduce our productivity. Getting rid of those counter-tariffs is probably the best policy approach at this point in time.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thanks very much.

You indicated that the current uncertainty is also impacting productivity, and that counter-tariffs would raise prices, in addition to the tariffs that are in place.

I have a question from this perspective now for the Centre for the Study of Living Standards. A number of witnesses have come here to say that we need to eliminate taxes and regulations significantly, along with a number of measures.

Taxes pay for services in this country. They pay for education and they pay for the skills training that we're investing in. How do you avoid a race to the bottom in terms of taxation or regulation? That's not to say that we don't need to adjust things, but what's the framework to assess, from an economic point of view and from a productivity point of view, the best way to weigh those pros and cons?

[The Chair, Liberal, Ben Carr]

There are about 30 seconds left.

[Stephen Tapp]

There's a chart in budget 2025—I don't know the number of the chart—that looks at the marginal effective tax rate. That's often how economists will look at providing incentives for investment. You can see there that with some of the reductions and increased accelerated capital cost allowance for expenses, we have reduced it, to a great extent, across many sectors, and it is similar to that of the U.S.

The bigger problem, as I mentioned before, though, is the level of uncertainty right now. I think our folks at Danby, along with others, can attest to this. Regardless of the policies in place in the near term, it's going to be very difficult for people looking for longer-term investments to be sinking into multi-million or multi-billion dollar projects when they're unclear about the access they're going to have to the U.S. market in the near term.

[The Chair, Liberal, Ben Carr]

Thank you, Ms. O'Rourke.

Now we go to Mr. Ste-Marie, who is joining us by video conference today.

It's always a pleasure to see you, Mr. Ste-Marie.

You have the floor for six minutes.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you, Mr. Chair. The pleasure is mine.

Greetings to all my colleagues, and thank you to the witnesses for being here and for their presentations.

My questions will be for Mr. Miller from Universities Canada.

In your presentation, you gave an overview of the research being done at universities, but I'd like us to unpack the obstacles—

[The Chair, Liberal, Ben Carr]

Mr. Ste-Marie, hold on a second.

Mr. Miller, your body language tells me that maybe you need assistance with the interpretation.

[Gabriel Miller]

It already got a run-through. I apologize.

[The Chair, Liberal, Ben Carr]

That's okay.

Mr. Ste-Marie, we're going to do a little test.

Mr. Miller, is the interpretation working? Can you hear me? Yes? Excellent.

Mr. Ste-Marie, you have six minutes.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you, Mr. Chair.

As I was saying, I'd like to thank the witnesses for being here and for their presentations.

My questions will be for Mr. Miller from Universities Canada.

In your presentation, you alluded to the current obstacles to university research commercialization, and I'd like us to unpack that.

What is the general situation? What are the barriers to university research commercialization?

[Gabriel Miller]

Thank you very much for your question.

There are two obstacles, I think, that are most relevant to the committee's work.

The first is that there are very limited resources inside the university to support researchers in commercializing their work and creating the linkages to industry that are required to take it to market. We have, in many universities, offices that are set up to do this, but they are, in many cases, underfunded. Providing proper support to build the capacity within the university among researchers to commercialize research so that Canada can benefit is key.

The second part, of course, is that you need partners outside the university in order for Canada to benefit from what's happening inside the university. Steps that can help us scale up investments and turn them into viable industries, businesses and products are critically important. One area where I think we're seeing some progress on that is the work the government is doing to tie research investments to its broader industrial strategy, including on sovereignty in defence. That work is important and should continue.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Your recommendations for the budget include more financial support for university research commercialization programs. That was the first part of your answer.

With regard to the second part, in your presentation, you talked about technology transfer to businesses, and you gave examples of what should be targeted, including incubators.

Can you give us more details and examples of the ways in which the technology transfers you're talking about could be done?

[Gabriel Miller]

I'd be happy to follow up with the members with a list of specific examples.

What's key in these tech transfer offices—and there are not many in Quebec or elsewhere across the country—is that one of the most important functions they play is helping university researchers turn their work into intellectual property. That capacity is critically important. They also help them develop the skills and the connections so that IP can be turned into economic opportunities, both in their community and in other parts of the country.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

I would like us to talk about the situation of small and medium-sized enterprises, or SMEs. Once again, you mentioned this in your presentation. There are a large number of SMEs, and they represent a very significant part of our economy.

Could you explain in more detail how to better apply the advances made in universities to SMEs so that everything is better integrated?

[Gabriel Miller]

The real challenge here is simply in the capacity of smaller businesses to free up the capital and access the expertise required to take advantage of these opportunities, and then to scale them up in Canada. This is one of the reasons why so much of the research we produce and the intellectual property we create ends up being taken to market outside of Canada by much larger firms.

There are a number of programs within the federal government now that have scaled up and could continue to make it more viable for small and medium-sized enterprises to scale up, and to scale up in other ways. We can use, for instance, the research agenda and the procurement associated with Canada's new defence industrial strategy to make the commercialization of Canadian research more viable.

Let me be more specific on this piece. The use of procurement is a really valuable opportunity, because oftentimes, it's the lack of certainty facing a smaller company about its ability to recover its investment and profit in the future that ends up discouraging it or making it financially impossible for it to take that leap and scale up using Canadian research. The proper use of procurement and guaranteed customers at the other end can de-risk that process for smaller companies and make it much more viable for an economy like ours, which is so dependent on small and medium-sized enterprises, to keep more of its research commercialized here in Canada.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you very much.

Mr. Chair, I see that my speaking time is up. I will continue my questions when it is my turn again.

[The Chair, Liberal, Ben Carr]

I will add the 30 seconds you have left to your next turn, Mr. Ste‑Marie.

Ms. Borrelli, it's nice to see you virtually this morning. The floor is yours for five minutes.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Thank you, Chair.

Thank you to all of the witnesses for being here this morning.

My questions are for Mr. Miller right now.

Talent shortages are a major factor behind weak business investment. How important are universities in fixing this gap? What reforms do you believe are most urgent?

[Gabriel Miller]

Thank you for the question. I completely agree that our future success—whether it's in these giant national ambitions that have been announced recently by the government or simply in terms of making our economy more productive—is going to depend on the quality of talent we have, both in what we make of the Canadian talent that's born and raised here and also in how we use our system of attracting international talent to the greatest effect.

I would focus on one thing right now when it comes to near-term talent needs. As we all know, Canada has substantially scaled back its system for international student attraction. That means we'll need to make the very most of the more limited number of spaces that we're going to have, and bring those future entrepreneurs, engineers or doctors here—people who may end up staying in Canada if they decide to immigrate and they're accepted, or, in many cases, going back to other parts of the world and creating invaluable trade connections to Canada.

The single thing that I think the country could do right now to improve our performance in that area is to begin to coordinate more strongly within Ottawa and between the federal government and provincial governments to make sure that we're achieving our objectives. A very encouraging development recently was the announcement of a $1.7-billion talent attraction strategy in this year's budget. If we pair those investments in future researchers with a highly effective visa-processing system and a strategy to promote Canada to the best and brightest, we will begin to win again in the international competition for talent.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Which industries do you believe are struggling the most with talent gaps?

[Gabriel Miller]

This will give me a chance to go back to the point Mr. Falk raised, which is that one thing we can see is that Canada has a shortage of highly skilled talent, particularly in key areas such as artificial intelligence. There are two things that I think we need to highlight about this. One is that Canada was a global leader in AI. It remains one in a research capacity, but it has lost a good deal of the talent that came up through its universities. We need to focus on equipping the country's economy to hold on to more of those people.

I think we also have to acknowledge that Canada is not a top global performer when it comes to creating graduate-level researchers and future workers in key strategic fields. I have a number in front of me, which is that we are 25th among OECD countries in the share of adults with graduate degrees. We need to have not just good general education performance; we need much more high-level performance when it comes to the best and brightest in strategic areas.