Industry and Technology Committee on Nov. 24th, 2025

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

How much does the funding level have to do with that?

[Gabriel Miller]

Well, it has a lot to do with it because, first of all, our research ecosystem is only as strong as the institutions that drive it. As many of you know, universities in Canada are going through a period of profound financial challenge. The changed international student rules brought that to the surface, and we need to get that system working right again in a sustainable way, but, really, it just revealed a challenge that, nationally, Canada has been underinvesting in higher education for some time.

There are ways the federal government can be supportive. Its recent investments are helpful. Making its investments in research, infrastructure and even student housing as predictable and sustainable as possible will help our institutions be more sustainable. That way, they can do more work to attract research talent and develop the people who are going to lead us to the front of the global economy in a world that's going to be driven, increasingly, by AI, quantum computing and other cutting-edge technologies.

[The Chair, Liberal, Ben Carr]

Thank you, Ms. Borrelli. That's all the time we have for your line of questioning.

Mr. Bardeesy, five minutes are yours, sir.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you very much, Chair.

First, I have a question for Mr. Miller.

I want to pick up on the talent investment you referred to. What kinds of actions and activities will we need, now that this program has been announced, to make sure that these investments in new talent attraction, including doctoral and post-doctoral students, drive productivity?

[Gabriel Miller]

[Technical difficulty—Editor]

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Chair, I don't think the microphone is on.

[The Chair, Liberal, Ben Carr]

Okay, it seems to be good now.

Mr. Miller, do you want to repeat your remarks so we have them in both languages? Thank you.

[Gabriel Miller]

Sure, I will as soon as I remember what I was going to say.

I would say two things here. One is that what we're seeing in the budget and more generally from the government is a recognition that the more integrated the relationship is between universities, industry and business from the start in these initiatives, the better our performance is going to be. The feedback from business and from outside the university can help make sure that the research is as focused as possible on the needs of the Canadian economy. Going back the other way, those relationships will help researchers develop breakthroughs, technologies that will be applied and have the greatest chance to be commercialized. Early, ongoing engagement as these programs are designed and rolled out.... Also, to assist with speed is very important.

The other piece is that we need to have an integrated strategy. That's being increasingly recognized. We can see, with something like the defence industrial strategy, the recognition that these players need to be at the same table from before the design of a program. We now need to make the connection between.... Let's take the talent attraction investments. The government has made a sizable commitment to fund chairs and future researchers, the people who can make our labs leaders in things like AI. There is also work done at Global Affairs to promote Canada to talent globally, and then there's the process of welcoming those people and processing applications at Immigration. We need to get those folks, as much as possible, on the same page and working with our provinces and territories so that, in Canada and outside of Canada, the message to the talented people in the areas we want is being delivered very clearly and consistently and we're doing everything to bring them here in as seamless and effective a way as possible.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you.

Now I'll go to Mr. Tapp.

For quite a while, the centre has been doing research on a variety of productivity-related topics, and you referred to the major productivity set of studies you're doing. I want to ask about the most recent one. I'm just quoting from the abstract here: “Our analysis suggests that successive Canadian governments have generally pursued relatively market-oriented, pro-productivity reforms...yet productivity growth continued to falter”. The main drivers “appear to be declining technological progress and inadequate business investment”, not an absence of policy effort.

I'm wondering if you could maybe tease out this more fundamental issue of inadequate business investment that you see in your research over the longer term and what might explain it.

[Stephen Tapp]

I'll point out, concerning the research you're mentioning there, that we were asked to do the Canadian study. There are 17 different studies from 17 different countries for the U.K.'s Productivity Institute. We were trying to look at the productivity performance in Canada's economy over long periods of time and the role of public policy in either making that better or making that worse.

We analyzed a lot of different data. We did some decompositions and various measures. As you mentioned, we came to the conclusion that it's not as though Canadian policy-makers have been asleep at the wheel. Don Drummond, in the International Productivity Monitor that we published about 10 or 15 years ago, said that economists have come forward with a lot of different recommendations. We cited some of those. About 70% of that list has been implemented, maybe not to the full extent of what people wanted, but we shouldn't think that the remaining 30% would necessarily get us to the point where productivity is going to take a major improvement.

Our diagnosis came down to there being a variety of.... It's a systemic and complex issue that has been going on for a long period of time, but slow technological progress is a driver. That's happening in Canada, but it's happening globally as well. We're getting more and more research dollars and getting less and less out. That's just getting towards the frontier and moving more slowly. That just seems to be the case of where we are with technology.

I do think, as others mentioned, that we have some options with AI, but the weak business investment in Canada is something that stands out relative to others. As I mentioned, the government is making some policies now to really put investment front and centre. They're looking at a capital budgeting framework, which is going to sharpen incentives and improve that.

In the near term, I'm relatively pessimistic about the ability to have a big impact on major projects in Canada, at least from the private sector and at least in manufacturing, as we're facing a big trade shock. I'm optimistic over the longer term that Canada can do better.

[The Chair, Liberal, Ben Carr]

I'm sorry, Mr. Bardeesy, but it's cutting it tight now for the introduction of another question.

Mr. Ste‑Marie, I have added 30 seconds to your speaking time. You therefore have three minutes.

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

Thank you, Mr. Chair.

Mr. Miller, in your presentation, you mentioned the great potential of artificial intelligence to increase productivity, which is a hot topic.

I would like to talk to you about the potentially negative impact of artificial intelligence on student education. We know that students often use generative artificial intelligence programs, such as ChatGPT, to do their homework, such as research projects.

According to your organization and your members, what strategies should be adopted to ensure that young people continue to receive high-quality education, given these new tools?

[Gabriel Miller]

It's a very good question.

It is important to be honest about the fact that artificial intelligence offers great opportunities, but also entails risks and major challenges.

There are huge challenges here, and I hear about it from our members all the time.

Obviously, one of the things that leap out is the challenges it creates in terms of assessing and evaluating students. Universities are busy addressing that to make sure that they're changing or adjusting the way they test students so that they're responding to the challenge that people could be relying on artificial intelligence to do their work for them. We know that making sure that we're getting a clear picture of what students have learned is going to be critical to the effectiveness of our education system.

What we're also hearing more about, and I think the research on this is still developing, is the effects on people's critical reasoning abilities and, frankly, their capacity to learn and to solve problems on their own if there is an artificial intelligence agent or resource that can do so much of that work for them.

I would say that some early indications of this—of where we're heading and what's going to be important—suggest that it's very important that we not try to push AI away or to seal the university or our workplaces off from it. What we need to be doing is engaging with it and confronting these challenges directly.

I also think that what's critically important is that students are being asked to use AI in a way that actually strengthens and reinforces those fundamental capacities that we're worried about being eroded. The latest numbers I've seen show that we are now up to about 50% of university classrooms that are using AI consciously and deliberately as part of the program, and nearly that number are asking students to use it as part of their assignments, so that they're engaging critically with these tools, and in fact critically assessing the information and the tasks that AI is performing.

This is what it's going to require for us to succeed socially and economically. These tools can massively amplify what humans can achieve, but we need to maintain our ability to steer and to think critically about them. By harnessing their power and exposing students to them, we can get the best of what these tools can offer them while managing the worst of what they might threaten.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Ste‑Marie.

Mr. Guglielmin, you have five minutes.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Mr. Estill, as somebody who spent their career on the operations side in the manufacturing sector, you and I certainly share a lot of views on plant productivity and efficiency and how it's likely the best mechanism to drive ROI for a business.

In recent remarks, you suggested a simple change allowing full writeoffs for venture investment to encourage Canadians to invest more of their own capital into new ventures, noting that Canada has strong early stage programs, but very few mechanisms that actually reward private investors for backing new ventures with their own capital.

Would you say that in the past the federal government has relied too much on its own subsidy and not enough on tax changes that actually mobilize private risk capital, like the full writeoff idea that you floated, and to do this for productivity-enhancing purposes?

[Jim Estill]

Well, what I like to do is come up with win-win solutions.

A full writeoff doesn't actually cost the government anything but possibly a little bit of interest. If I invest $1 million in a new business and it goes bankrupt, I get that writeoff five years from now or 10 years from now. If I invest $1 million, get a full writeoff today and sell it for $10 million in five years, you still get the tax on my capital gain. That was one of the reasons to float that idea.

Anything we can do that has low cost to the government and encourages more entrepreneurship, in my opinion, stimulates.... One of the other witnesses talked about the uncertainty in the current environment. With tariffs, and given where things are going, everyone is going to underinvest. No one is going to build a new factory today, because you don't know where you're going to sell the stuff.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

If we were to adopt some of these programs—specific, targeted tax incentives, for instance—to try to drive this type of investment at home, do you think that would prevent some of the capital flight that we're seeing in Canada today?

[Jim Estill]

Nothing is going to prevent it, but yes, it would slow it. Investors invest where they think they can get the best bang for their dollar. It would stimulate investment, but nothing ever stops that flight.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you.

Mr. Miller, the Council of Canadian Academies' “The State of Science, Technology and Innovation in Canada 2025” found that Canada is facing “a worsening productivity crisis”, with business and government sectors' STI performance declining, “stubbornly low” business R and D and slow technology adoption, even as higher education remains a “bright spot”, as they put it, in our country. It notes that our research and talent base is strong, but it's at an increasing amount of risk.

From where you sit, do you feel that we're converting that university-based talent and research excellence into domestic capital formulation and productivity growth, or are many of our top graduates and ideas, when it comes to commercialization, still going abroad?

[Gabriel Miller]

Well, there's no question that many of our top graduates, as you just put it, and a lot of the IP that's generated in our universities are leaving the country.

I think we've accomplished a lot in Canada in preparing for a time, which is now, when we can benefit more from the research and training being done in our universities, but to do that, we are going to have to really bear down and increase the capacity of our researchers to connect with the private sector and for the private sector to scale up here at home in order to have the benefits and the opportunities that go with that.

There is a long way for Canada to go on this, but there's no time to waste.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Can you identify any specific policies that could explain some of that disconnect and how our world-class research could be used in a more productive way by attracting investment capital to Canada and retaining some of that talent?

[Gabriel Miller]

Well, we know that some inherent challenges in Canada relative to, say, the United States make it challenging for us to scale up the commercial opportunities from our research into our own economy and keep those opportunities here. I do think that we've done a good job of building the capacity to start changing this situation.

I just want to say, as a broad point, that the gap between what's happening in labs and classrooms and what's happening outside them in the economy can sometimes be big. I think one of the things Canada has done over the last 30 years is to really try to narrow that gap, in two ways. One is by exposing more students to the workplace while they're being educated, so about half of our students now graduate with workplace experience when they leave the university campus. The other has been reorienting our research culture to be much more focused on the needs of our business community, and we're starting to see that bear fruit.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you, Mr. Guglielmin.

Mr. Danko, the floor is yours for five minutes.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you, Chair.

My first question is for Mr. Miller.

I represent a riding that has three post-secondary institutions: McMaster, Mohawk and Redeemer. I also happen to have two kids who are 17 and 19, so they're right in that area where they're transitioning to their post-secondary career.

You talked about the role of universities in developing Canada's highly skilled workforce, and we talked about engineering, science and research. I'm a structural engineer, so I'm very familiar with that part of a university education, but I want to give you an opportunity to expand on the role and the value of the humanities, the social sciences and the arts, because when I talk to businesses, I often find that they are looking for employees who can act independently, have critical thought, are solution-driven and can articulate themselves and communicate.

Would you like to talk about the value of those other parts of a university education as part of Canada's workforce development?