Industry Committee on Nov. 9th, 2006

[Milos Jancik]

The recommendations we have made are broadly shared recommendations with other associations. I think the argument that Mr. Wood has made is not so much a railing against the initiative of the government, but is to say that the method of tax collection, when you look at the impact on domestically produced products and imported products, is significant and should be part of the design of the tax game, if you like. That is different from talking about the total amount of taxes collected. Obviously, reduction of the tax burden for manufacturers is advantageous, and we are supportive of the reduction in the federal corporate tax.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Mr. Pacetti.

We'll go to Mr. Van Kesteren. You have about four minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you all for coming.

Mr. Wood, I take it that the appliance company.... You are what generation?

[Dave Wood]

I'm the third generation. My grandfather started the business almost 77 years ago.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Congratulations.

This is a new concept, and it's intriguing, the tax you talk about. How many factories did your company close?

[Dave Wood]

We close our first factory at the end of this month in Guelph. We have three facilities in Guelph; one of them is closing at the end of this month.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Okay.

Have you opened up new operations in China?

[Dave Wood]

We have partners in China. We source from China; we don't own any facilities in China. We have trade alliances and joint ventures from a collaborative manufacturing standpoint. We have opened a new facility in Mexico and are expanding our operations in Ohio.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm going to ask you a really pointed question. You're a third generation and you're the new breed. Do you think maybe some of our companies just got a little bit fat and lazy? I'm not saying that to be critical. I'm thinking about this: I look at a refrigerator, I look at a washer and a dryer.... Now, that's probably an exception; there's some new innovation there. But were we cranking out the same stuff year after year, and did this high dollar just sneak up on us all of a sudden, and did we just fall asleep at the wheel?

[Dave Wood]

No, and I take great offence at the comment that we're not reinvesting. In fact I'd invite any one of you to come to our facilities in Guelph, even the one we're closing, and look at the millions of dollars we've been investing in the last three years. We've been consistently investing millions of dollars in our facilities and in our products. In fact, we have a very strong initiative to reinvest in our products. The products we build today are, without a doubt, the best products built anywhere in the world. And in fact, I would argue that our facilities are the most productive of anywhere in the world.

It's more than just making a good product that makes a good business.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We're finding that out. We're finding that out when we interview. The companies that are making it are the ones that are coming up with new ideas, doing things, reinventing the mouse trap by just making a better mouse trap.

So that is part of your strategy, and you see it as well and are answering the call, and as a result, your company is.... Is there a bright light there too? Is there some good news, aside from all these challenges?

[Dave Wood]

We certainly believe that Canadian manufacturers can compete. I think it's important that everyone on this committee understand that Canadian manufacturers can compete. We wouldn't be here if we didn't think so. But government is our partner in that enterprise, and government is there to help us. But we're there also to help government.

As Milos said, we're not here with our hand out looking for a subsidy, and our recommendations are something that benefit all manufacturers, regardless of size, regardless of where you're from; they're there to help the economy. We believe very strongly in the community we're in, we believe very strongly in this country, and we believe that manufacturing will do well in this country with your help.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We agree.

I would say, too, that I wasn't trying to be critical, because right here in this government we've done the same thing. We've gotten fat, we have this incredible amount of money that we've had as a nation, and all of a sudden we're realizing that it's a new world and we're waking up.

So you feel that you can respond to those challenges and you feel pretty positive about the way?

[Dave Wood]

If the taxes we paid on our product were equal to the taxes paid on an imported product, there's no doubt that we would be beat the Chinese day in and day out.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Okay, thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren.

I apologize for the short time, but we are trying to fit in a number of witnesses today.

I want to thank you gentlemen for coming out today. I also want in particular to thank you for the presentation, the letter, and the very specific recommendations. They're very helpful. If there are any further recommendations that upon further reflection you want to present to the committee, please send them in to the clerk or to me, and we will ensure that all members get them. Thank you very much for coming out.

We're going to suspend for about a minute or two and have a quick changeover of witnesses.

If the other witnesses can come forward as soon as possible, I'd appreciate it very much.

Thank you, gentlemen, for coming.

[Dr. Eliot Phillipson, President and Chief Executive Officer, Canada Foundation for Innovation]

Thank you, Mr. Chair.

I will not take the full ten minutes.

My thanks to the committee for the opportunity to appear before you. I am appearing with our vice-president for external and government relations, Suzanne Corbeil.

This is the 21st appearance by the CFI before a committee of Parliament since its creation in 1997. Today I want to talk to you about CFI's role in helping to secure Canada's future prosperity and competitiveness, in the context of your study of the challenges facing the Canadian manufacturing sector.

In your interim report of June 2006, you identified five principal challenges facing the manufacturing sector in Canada. My remarks today will focus on the CFI's role in addressing two of these challenges, namely, competition from emerging economies and the development of skilled labour.

The challenges we face as a nation in the 21st century are well known, particularly an aging population and increasingly intense international competition. In the face of these challenges, Canada cannot afford to slip in this global race.

In broad terms, Canada's prosperity in the 21st century will depend on our capacity as a nation to innovate, to generate new knowledge and ideas and translate them into products, services, processes, and policies that will create wealth, enhance our social foundations and improve the quality of life. In short, Canada must become a nation of innovation.

Innovative societies are increasingly characterized by three elements: first, a cutting-edge research enterprise; second, a highly educated and skilled workforce; and third, a business, regulatory, and social environment that encourages entrepreneurship and creative thinking.

The Canada Foundation for Innovation, CFI, is playing a major role in Canada's evolution into a nation of innovation by enhancing the capacity of Canada' s research enterprise, by providing state-of-the-art infrastructure required for the training of highly qualified personnel--that is, the human infrastructure that is the most important resource, renewable or otherwise, in a knowledge-based economy--and by promoting the development of technology clusters through collaborations between public research institutions and the private sector.

Nine years into its mandate, CFI has committed $3 billion to 4,700 research infrastructure projects at 128 institutions in 62 municipalities across the country. Included in these investments is more than $153 million in support of 230 cutting-edge research projects in a wide range of manufacturing sectors, including forestry, automotive, aerospace, biotechnology, and nanotechnology, to name but a few. The details are provided in the appendices.

Our strategic investments are made on the basis of a rigorous assessment of merit using international standards to determine the potential of the projects to increase the capacity of Canadian universities, colleges, research hospitals, and non-profit research institutions to compete internationally and to produce knowledge that will benefit all Canadians.

The results of CFI's investments have been transformative. If I had stood before this committee in 1996 and declared that a decade from now Saskatoon would be home to a state-of-the-art synchrotron, Canada's biggest science project in a generation; that Chicoutimi would be a world leader in developing de-icing technology for commercial use on airplane wings and hydroelectric wires around the world; that St. Mary's University in Nova Scotia would be a recognized leader in astrophysics; and that Montreal's McGill University would be internationally recognized for the development of groundbreaking technologies that allow scientists to identify the genetic basis of human diseases--if I had stood here and told you all of those and many other predictions, the reaction would likely have been one of disbelief. But I am pleased to report that a decade later, in 2006, all of the advances l've described are a reality, in large part due to investments made by the CFI.

By 2010 the total capital investment in research infrastructure by CFI, the research institutions, and their partners will collectively exceed $11 billion. These investments are creating jobs and are leading to innovative solutions in some of today's most important and exciting areas of investigation, from advanced materials to pharmaceuticals, renewable energy, high performance computing, advanced manufacturing, and early childhood education, as examples.

Furthermore, the discoveries are moving from the laboratory to the marketplace. Spinoff companies are being created to supply highly demanded technology, particularly in the bio-tech, communications, aerospace, and other related industries, and highly qualified personnel are being trained for careers in both the public and private sectors.

Last summer, however, CFI launched its last major competition, with the decisions to be announced over the next two months. Thereafter, our capacity to invest in cutting-edge research going forward will be largely depleted. Unless it is known well in advance that additional funding will be available after this last competition, the institutions, universities, and colleges will find it increasingly difficult to undertake the planning of infrastructure projects whose design and construction might span several years. As a result, Canada will begin to lose its hard-earned competitive advantage in public sector R and D.

As mentioned, innovation is dependent on the generation of new knowledge and ideas from research that eventually lead to economic health and social benefits for society at large. At times, however, the link between knowledge creation and technology development is not immediately apparent, and yet understandably governments, which invest considerably in public sector research, often seek evidence that their investments have yielded appropriate returns.

Such evidence can be derived from several studies of the economic impact of investments in research. As one example, and there are several I could cite, in a landmark study of over 100,000 industrial technologies that were patented in the United States in 1993-94, the study found that 73% of the science citations involved in these private sector patents originated from research conducted in public institutions, largely universities. Only 27% of the citations originated in industry-conducted research.

I'm quite sure the data for Canadian industrial patents would be very similar. In fact, many of the citations in those U.S. patent applications were to research done in Canada.

However, the process of knowledge transfer, which is what we're talking about, is not simply a matter of the acquisition of intellectual property by the private sector. Rather, the transfer requires a close working relationship between the public and the private sectors, a relationship that ultimately involves the free movement of people and ideas between the two domains.

This interplay between the supply forces of science and the demand forces of the marketplace greatly facilitates knowledge transfer and its eventual commercialization. As has often been said, tech transfer is a contact sport.

CFI promotes the process of knowledge transfer by enhancing the development of local and regional technology clusters that bring together the industrial, financial, and academic enterprises and their respective talent pools. We do it because such clusters often coalesce around infrastructure facilities or specialized technologies.

In so doing, CFI is helping to ensure that universities and colleges play a critical role in the sustainable development, both social and economic, of communities across Canada, large and small, and thereby contribute to Canada's prosperity and competitiveness.

In conclusion, by investing in leading-edge research throughout Canada, by supporting world-class expertise in universities and other research institutions, by putting in place the right conditions to attract and retain top-quality researchers in Canada, and by training young Canadians for the knowledge-based economy—by doing all of these things—we are ensuring that Canada will become a nation of innovation, one that will compete successfully in the global knowledge economy and that will ultimately bring benefits to all Canadians. We owe it to future generations to maintain this commitment.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Dr. Phillipson.

We'll go right away to Mr. Taylor.

[Graham Taylor, Vice-President, External Relations, Precarn Incorporated]

Good afternoon.

Thank you, Mr. Chairman.

Thank you to the committee for the opportunity to share our thoughts on the challenges facing Canadian manufacturing.

My name is Graham Taylor. I am the vice-president of Precarn Incorporated. I wish to convey the regrets of the chair of our board of directors, Jean-Paul Boillot, and the president and CEO of Precarn, Paul Johnston. Unfortunately both are out of the country honouring business commitments, which they were unable to change. So you get me, and I hope this works out for all of us.

My message to you today is that boosting productivity and competitiveness in the manufacturing industry will require a broad-based approach. Policy measures to condition the business environment must be our first priority, but simply getting certain business conditions right, although necessary, will not be sufficient. Smart investments of public funds can complement the policy framework by promoting risk-sharing and stimulating the right kinds of investments and business relationships.

In particular, we have to encourage industry-driven collaboration in that crucial and difficult stage, which Dr. Phillipson referred to, between the development of an idea and its take-up by the marketplace. We need to drive more resources, both private and public, to the interface among companies, universities, colleges, and government laboratories, in a way that puts the private sector in the lead.

First, let me tell you a little about Precarn. Precarn Incorporated is an independent, private, not-for-profit company that supports collaborative research and development on what we call enabling technologies, such as robotics, intelligent systems, and advanced information and communications technologies. Since its founding in 1987 by visionary individuals in the private sector, Precarn has generated impressive results by investing modest amounts of federal funding in projects led and primarily financed by advanced technology companies.

For 16 years we have also managed a network of centres of excellence, the Institute for Robotics and Intelligent Systems. IRIS gave rise to 38 start-up companies and remains the only NCE managed outside of a university. We integrated it into our industrial network.

Precarn's distinctive collaborative model brings together technology developer companies, end-user companies, universities, colleges, and government laboratories in projects that take new technologies from ideas to working prototypes. The leverage available increases the scale and scope of the research, shares costs, and reduces technical risks. Having an end-user involved in the project right from the beginning increases the potential for immediate commercial success. This improves the return from publicly funded R and D.

My remarks to you today are based on Precarn's 18 years of experience operating that model, supporting over 200 projects—which involved hundreds of companies, about 200 professors, and 3,000 graduate students in 25 universities—and working with partners from coast to coast, including many federal and provincial government organizations.

By the way, I would like to take this opportunity to thank Industry Canada for the support and good advice that they gave us over those years.

Suppose for a moment that we think of the Canadian economy as a business. What would a business plan for Canada look like? Among other things, our business plan would recognize that an aggressive R and D plan, driven by opportunity and vision, and based on the principle of smart spending, is essential. It would recognize that to be a market leader, we need to do more, do better, or do differently than the competition.

Simply waiting for cues from the competition is not enough. It would recognize that the success of the business called “Canada” depends on the decisions of individual people working together and sharing confidence about their ability to turn risky propositions into commercial successes.

So how can we stimulate increased business investment in R and D? How can we improve the payoffs from research dollars? If we had one more dollar for science and technology, how would we invest it to get the broadest impact?

The business of Canada is in pretty good shape. As we look ahead, we have an opportunity to be a world leader in the development and application of advanced technologies. Elsewhere in the world, we are being undercut on labour costs and left behind by major investments in emerging areas. We have some fundamentals right, such as education, academic research, social services, and governance systems, and these need to remain strong, but some other things need improvement.

The business called Canada needs to improve its industrial R and D department. We are great at pioneering new discoveries and expanding knowledge, but not so great at making the follow-up investments in order to translate these into economic returns.

Our generous R and D tax credits contribute positively to the business environment but can still be improved. I will not dwell on this issue, since you have already heard testimony from people more expert than I. I would just say that we need to be confident that these incentives will result in increased private sector R and D investments, beyond simply reducing business costs.

These tax credits are intended in part to deal with the well-documented gap between research and the marketplace. Some call this the commercialization gap; others call it the “Valley of Death”. This is the stage where public money begins to pull out because the returns are increasingly appropriated by private interests, but private money is not yet fully committed and in fact has a tendency to retreat over time because the risks turn out to be very high.

Will business framework measures, along with continued support for academic research, bridge this gap?

In fact, tax incentives alone will not help a company that is underperforming on R and D create productive relationships with academic researchers. Business environment measures by themselves will not show a company how best to get leverage on its R and D dollars. More money for university research by itself, as welcome as it may be, will not cause a company to understand how it can achieve a competitive edge by collaborating with suppliers, customers, universities, colleges, and government laboratories.

Precarn recommends that a business plan for Canada have a strong emphasis on collaboration. It should promote technologies with the broadest impacts. It should allow market demand to drive investments, with leadership coming from industry-based technology developers working with their customers. It should couple project funding with other services and relationships that are essential for commercial success. It should help companies learn how to collaborate successfully.

To illustrate how this is relevant to manufacturing, let me turn to the automotive parts sector.

I don't need to tell this committee how important the automotive industry is. Last week I believe you heard from my colleague and collaborator, Dr. Peter Frise of AUT021, who knows a lot more about this than I do.

The automotive parts manufacturing sector consists of several hundred companies, large, medium, and small. They are part of an increasingly globalized industry. They are under intense competitive pressure. Automobile assemblers have become more aggressive on price reduction, putting pressure on suppliers. Development and design functions are being pushed down the supply chain. Everyone is striving to deal with a compelling demand for new ideas and smart technologies to improve both products and productivity.

With labour-intensive production moving offshore, the future of the auto parts industry in Canada depends on its ability to innovate, to lead in the adoption of new technology, and to collaborate. This has been recognized by both the Canadian Automotive Partnership Council, or CAPC, and the Automotive Parts Manufacturers Association, or APMA, in recent policy papers.

There is a big job to be done on R and D. Only one company in the automotive sector, Magna, ranks among the top 100 corporate R and D performers in Canada. Canada contributes 4.2% of worldwide vehicle production but only performs about 0.6% of the R and D.

A big challenge is that most companies in the auto parts sector lack cash resources. They also lack technical expertise. And their relationships with their customers, surprisingly, are often more adversarial than collaborative.

Still, it's an exciting industry, and its global markets are growing—people are still buying cars. Companies need to develop new ways of doing things: new ways of collaborating along the supply chain, new ways of getting the expertise and skills they need, new ways of employing technology not just to stay in the game but to achieve market leadership.

That's why Precarn has joined forces with AUT021, the Ontario Centres of Excellence, and the APMA to propose a fund that will create R and D relationships among auto parts companies, their customers and suppliers, academic institutions, and government labs. The fund will integrate Precarn's proven collaborative model with the successful approaches of AUT021, OCE, and APMA, enabling companies to draw on the deep knowledge, experience, research capacity, and highly qualified and skilled people of these partners.

Most of the project funds will come from companies. But given the risks associated with early stage pre-commercial R and D and the need for new ways of doing business, investments from federal and provincial governments will be necessary.

In conclusion, Mr. Chairman, boosting productivity and competitiveness in the manufacturing industry will require a broad-based approach. Getting the policy framework right is the first thing to do. But we need also to open the collaborative interface between knowledge developers, technology developers, and technology users. Strengthening these relationships mitigates the risks of R and D and technology investments, while accelerating commercialization. And exerting a market pull from end users that reaches back into research labs will help capture the value of Canada's investments in scientific research.

Mr. Chairman and members of the committee, Precarn would welcome the opportunity to provide to committee members, either as a group or individually, a more complete briefing on our collaborative R and D model. For now, I welcome your questions.

This concludes my remarks. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Taylor.

We'll go right away to Mr. Stewart, for your presentation.

[Iain Stewart, Director General, Policy Branch, Science and Innovation Sector, Department of Industry]

Thank you very much for having me.

My colleagues Eliot and Graham have both touched on a number of things that I would have touched on. I guess that, coming late in your proceedings, some of the things I would say have perhaps already been said by others, but I'll have a go. I'll try to summarize my presentation, accordingly, to move it along.

I would like to begin by highlighting the critical importance of R and D to manufacturing and to industrial competitiveness. We see R and D all around us. We see it in our lives; we see it in social and environmental applications. But we also see it most directly in how it supports prosperity. In our 21st century global economy, our competitiveness going forward is going to increasingly rely on R and D and the application of R and D to create competitive advantage.

R and D creates competitive advantage in a number of ways, as you probably know. It helps firms develop new products and services that they can use to create market niches for themselves; it supports process innovations that increase the productivity of their industrial production; and it also is embodied in the latest machinery and equipment they buy.

Canada produces a small amount of innovation in the world. We're big consumers of innovation. One of the main ways we consume it is through purchasing goods and services to be used in the production process—investment in M and E.

Investment in R and D brings a lot of rewards as a result: companies have new product offerings, they're move adaptable companies, they're more efficient in their production processes. It makes the companies more robust and able to withstand the processes of change in the marketplace that we're experiencing.

Looking at the importance of R and D for industrial production, for manufacturing, and for competitiveness, we have to ask ourselves how we are doing as a country in supporting R and D.

Canada has made tremendous gains over the past ten years with respect to building up the R and D capacity of the country. We've seen this through the substantial investments that have been made in our higher education R and D capacity. Eliot, of course, is here representing one of the initiatives that is from that investment in building capacity to do R and D.

In fact, we've gotten to the point where Canada is now first in the G-7 and second in the OECD with respect to the amount of R and D that's done as a proportion of GDP in the higher education sector. So we have a strength there; we've achieved a position of leadership.

We also are doing very well in the outputs from those investments. It's not just that we're spending highly; we're also generating good output. Canada ranks very well with respect to the volume of publications. We are a major source of advancement of knowledge in the world. We also are doing good-quality research. Canadian researchers are frequently cited. So we do well with respect to our higher education R and D.

Higher education R and D is important not just for producing raw ideas or basic research; it's also where we train our talent, our young innovators of tomorrow, our highly skilled people, who are going to move out of the university or the college system into the marketplace, into government labs, into the university labs doing research. And there Canada does relatively well also.

We do extremely well in producing post-secondary education, but when you start to deconstruct that post-secondary education performance, we see that we do less well in the production of advanced degrees—science and engineering degrees, the kinds of things that are important for having a more innovative economy going forward. In fact, if you looked at our ranking for the production of all levels of post-secondary education, we're first in the OECD—but that includes colleges, just some post-secondary education. If you move to the production of advanced degrees, such as PhDs, we're actually eighteenth. So we're not supplying necessarily the level of talent that's required for an innovative, R and D-intensive economy.

Another interesting aspect is our use of highly qualified people. If you look at Canada and at the United States across almost all industrial sectors, you'll see that Canada uses fewer advanced research degrees than the United States for the same industrial sector; and then secondly the remuneration for those advanced degrees is lower. The more advanced a degree becomes, the more that gap, the difference in the premium for having that advanced degree in the labour market, diminishes.

So we may produce fewer degrees, we may produce not as many of the right kind of research degrees, and we may as a society have a softer labour market. Now, that labour market is strongly influenced by private-sector demand for advanced research degrees, because R and D in Canada is 54% located in the private sector. That's an indication to us that we have soft demand in the private sector for investment in the kind of input they need to perform R and D. In fact, when you look at the performance of our R and D in the business sector, you begin to see that finding reinforced.

As a proportion of the R and D done, Canada ranks below the OECD average for the proportion that's done in the business sector. The R and D intensity of the Canadian economy in the private sector is lower in Canada than it is the U.S. and lower than the OECD average. We're sixth in the G-7. Canadian companies tend to spend less on R and D.

Also, when we do spend on R and D, we tend to generate fewer innovations from each dollar we expend. There is some evidence done by Pierre Therrien and some others around the return on investment from the innovations that the private sector generates, and again, Canada's a bit weak in that regard. Overall, some surveys suggest Canadian companies tend to use innovation less often than cost reduction as a competitive strategy, although the findings are a bit mixed there.

If we look at what kinds of factors explain why Canada spends less on business R and D, why we underinvest in business R and D, there are a number of explanations, but we have to say that we don't have the definitive answer. Some analysts have pointed to our industry structures in Canada--the profile of our economy, as it were. If you look at some industry sectors like pharmaceuticals or ICTs, Canada's very competitive vis-à-vis the United States with the level of investment in industrial R and D, but they are smaller parts of the economy than they are in the United States.

In contrast, as Graham was just mentioning, the auto sector's a big part of the Canadian economy, and it invests surprisingly little in R and D. If you look at other countries with automotive sectors, there's a much richer investment in innovation going on.

As for other factors, we have a large natural resource endowment. Because innovation or competitiveness there works on a longer cycle time than perhaps ICT, you see that they might underinvest, and that might be a contributing factor to our overall R and D performance. Others note that we have a large preponderance of SMEs. Others point to foreign ownership, the idea being that headquarters tend to be the places that attract the R and D mandates; since Canada does have some foreign ownership, that's influencing our outcomes. Lastly, others point to framework policies, asking if we have the right competitive intensity in Canada, and so on.

Understanding why we have an underinvestment in business R and D is an area of inquiry that's getting a lot of attention. Industry Canada and many others have been researching it for some time, but it continues to be an area in which further research is required and further advice is required on what could be done to improve. What underlies the underperformance of business R and D, and what specifically could be done in this area?

To sum up, R and D plays a key role for long-term competitiveness. R and D in the higher education sector, in fact, is very strong in Canada, and our challenge is to sustain and maintain that level of excellence. However, that translation of those ideas, the translation of those young people into private-sector applications that would see an influence on productivity, is weaker.

Governments around the world play a role in these areas. One of the foremost things the government seeks to do is create a competitive environment in which companies are incented to compete on the basis of innovation, as opposed to cost reduction.

Also, governments work to ensure that we have effective marketplaces, good regulatory environments in which consumers understand biotechnology products and understand health and safety around new products. Government is providing a regulatory framework that allows an effective market operation around innovative products.

Government also plays a key role in supporting basic research. As I was mentioning earlier, the Government of Canada makes a sustained investment in support of higher-education R and D. We spent about $2.2 billion annually, 2004-05, on supporting research, supporting students to participate in research, supporting professors, attracting professors to come to do research here, supporting the indirect costs of research at universities, and supporting networks of the nature that Graham touched on when he mentioned ISIS, which was in the networks of centres of excellence and a government-supported initiative, among other players as well.

Lastly, the government can play an important role encouraging linkages, trying to connect up universities with that talent flow and that idea flow coming out of the university system. There are many ways that can be done, and there is a range of programs in place at this time. Whether it's the National Research Council's cluster initiative, whether it's the networks of centres of excellence, whether it's Precarn or others, the idea is to bring together researchers and users of R and D to get those practical applications of innovation.

As a concluding word, my minister was here two days ago. He mentioned that he is bringing forward a science and technology strategy, and it will speak to these issues over the coming period.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Stewart.

We'll go right to questions from members. We'll go to Mr. Boshcoff first, for six minutes.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you, Mr. Chair.

If a regime in Canada had a buy-Canada preference, similar to most of the rest of the nations of the world, and our manufacturers knew that they had some competitive advantage too--say what the Americans do with public transportation or some of these other things--would that actually provide incentives to companies, seeing that they could actually launch some product without another country taking advantage of it? Could we actually compete better?

[Graham Taylor]

I'm not sure I can comment on the policy, but I can tell you one way we approach that, which is that the projects we support involve an end user, as I say, and this is almost always a Canadian company. We try to create a situation in which a technology developed in Canada is first proven in the commercial operations of the Canadian company. You develop the Canadian supply base for that company and a Canadian customer base for the developer.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

That's not quite what I was looking for, but I appreciate it. The answer is actually very good, so thank you.

When we talk about the federal role, it seems that lots of people want to be assisting--that is, provinces and territories--but as an order of government, the federal role seems often to be siloed from other provincial domains. Is there a suggestion, perhaps from Industry Canada or someone who's experienced it, of a way of coordinating the national approach?