Industry Committee on Nov. 9th, 2006

[Iain Stewart]

The practical application of ideas and talent to market opportunities ultimately has to be driven by the private sector. We spend a lot on higher-education R and D, and we get good returns on that investment. We do well; we have good statistics; Canada is a good provider of research ideas.

In a way, sustaining that research excellence is the challenge, but that's not the challenge for the whole system. In my presentation I mentioned 54% of R and D in Canada happens in the private sector. That's actually a much lower level than in most OECD countries; there, the average is 68%. The challenge is to get the private sector to compete on the basis of innovation and pull some of those ideas and people out of the system.

The university system is training young people, creating those ideas, and we use those ideas for all kinds of things--social, economic, and environmental applications. Sustaining that has a lot of societal advantages, but if we want to see it really have an impact on competitiveness, we have to see that market demand, that market orientation, and that business investment in R and D.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

We've had other witnesses in. One was from the Energy Innovation Network. When I mentioned earlier the array of research that you're involved in with those dollars, sometimes I feel we may be moving ahead with too much on the plate in terms of the spectrum. When you look at the number of things involved here, it's actually quite amazing.

He felt that the numbers should be condensed down, with not as many programs and with a focus more on those programs that were able to take that research and develop it better with the private sector and actually turn it into a return on the investment. I don't know if you have any comments on that, either one of you.

[Iain Stewart]

It's a complex research environment, in which many people are pursuing what they think is their opportunity for excellence.

If you haven't spoken with the Council of Canadian Academies, you might want to. They've just completed a study in which they looked at where research excellence is in Canada--not only in science, but also in technology, and therefore getting closer to market.

From that study it's clear that Canada has a very rich and varied research community, and that we're world leaders in a number of areas. A lot of the program activity is supporting people in an enabling way to pursue those opportunities. Consolidating the number of programs isn't necessarily good in its own right. The key question is whether those programs are meeting the needs of the client base effectively. I think that would be the way I'd look at that question.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

How am I doing?

[The Chair, Conservative, James Rajotte]

You're out of time, Mr. Shipley. Thank you.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

It's been great. Thank you.

[The Chair, Conservative, James Rajotte]

We'll go to Mr. Masse for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thanks, Mr. Chair, and thanks to the delegations here.

I will start with Mr. Philipson. One of the most interesting things you noted was a study--I'd like to know what study it is so we could be directed towards it--with regard to industrial technologies in the United States, and 73% involved the public sector. It really debunks just having tax reductions as a single-source bullet to start R and D.

You noted in your discussion that some of those projects were actually Canadian innovations that ended up getting patented and developed in the United States. Did they come from the public sector or the private sector?

[Dr. Eliot Phillipson]

It was a study of, as I indicated, 100,000 U.S. patents filed by the private sector in the United States to determine where the necessary knowledge comes from that sustains those patents. Some 73% of it came from university-related research, the public sector, of which a lot of that research--I am saying a significant portion--was done in Canadian universities. It is knowledge that is published in the scientific literature and that ultimately was made use of in those patent applications.

[Brian Masse, NDP, Windsor West, ON]

Which study was that, do you know? Can you forward that to--

[Dr. Eliot Phillipson]

We will be happy to send you the details. It was published in 1997. It looked at 1993-94. It was in one of the scholarly journals, and we will be happy to forward the details. I don't have them--

[Brian Masse, NDP, Windsor West, ON]

That's fine. What's interesting about this equation and the frustration to me is when I see Canadian technology going over to the United States and to manufacturing facilities and also to China and other places that then compete against some of our own products, eliminating our jobs. I think we have to ask ourselves how we ensure that our public sector involvement in the information that we generate actually leads to manufacturing in our own country, because this could really backfire.

I really appreciate your organization and Precarn as well. I'm familiar with some of the work that's going on. However, that's of great concern to me.

Do you have any suggestions on how we actually protect that information for domestic manufacturing versus it going to other countries and eliminating Canadian jobs?

I'll put that out to the table, actually.

[Dr. Eliot Phillipson]

That study looked at patents filed 1993-94. I think since that time there's been a much increased awareness on the part of the Canadian research community of the importance of the potential commercial value of the knowledge that is being generated in universities. Not given to you today, but in our data, and we would be happy to send it to you, is evidence of the number of patents and spinoffs that are being created as a result of the research being done in the universities. I think there's an increased awareness of the importance of it.

I would also point out that Canadian industry needs access, of course, not only to the research done in Canada--Canada produces about 4% of the world's knowledge, and considering we're half of one per cent of the world's population, that's not bad--but also to the other 96% of knowledge being produced around the world. If there is one thing that's global, it is research and knowledge. It's extremely important that we have the highly qualified personnel in the private sector, because they are the surveillance and intelligence systems for the private sector, who are scanning not just the 4% of knowledge produced in Canada, but the entire 100%.

If we had done a similar study in Canada, the percentages would have been the same, but I expect a lot of the scientific knowledge that went into the patents filed by the Canadian industrial sector would have been to the research done in other countries, so there is a free exchange that benefits everyone.

[Iain Stewart]

You want to see research happening in Canada, find applications in Canada, and contribute to jobs and growth in Canada, but part of being part of an international dialogue on research and innovation involves those ideas and those people moving back and forth. We need to be, I would perhaps suggest, in that community and aware of those developments and bringing them back to Canada as much as they come out, in the way Eliot was referring to.

If you look at the suite of programs we use to support research in Canada, like for instance the granting councils, they make investments not only in research, but also in that translation of research out into the community, and Graham's organization is also a good example of that. They try to line up a user with a researcher to try to get that connectivity to happen.

In the case of NSERC, which has a budget of about $860 million a year, it spends about $160 million of that on trying to make those networks or collaborations happen, to have that stickiness occur that you're looking at. But you don't necessarily want to go too far down that road, because we only produce, as Eliot put so well, 4% of the world's ideas. We need to be part of that dialogue and be part of that international community so that we are excelling in that. It's attractive to put the question as you have, but there are some advantages to being open as well.

[Brian Masse, NDP, Windsor West, ON]

The thing I worry about, and I don't know how to solve it, is if we produce 4% of the world's knowledge, which per population is higher, we also have to explain to workers in automotive factories, for example, or in a Canadian technology or innovation that they've subsidized, that the development goes abroad internationally to a factory that gets subsidization--for example, in China, Mexico, or Alabama--and then ships in another innovative product that takes them out of their jobs. That's what I worry about.

[Graham Taylor]

If you think for a minute that we're operating on a level playing field--and I think that in the field of scientific research, Canada is as good as anybody, there's no question about that--and if the playing field is level, and I hope it is, then if you're going to win, you've got to run faster than the other guy.

I think what we need are more mechanisms to encourage and facilitate companies to go to the institutions and pull the technology out. It's one thing to say that.

The second thing is when you say to a company, especially a small one, that they need to go to the door of a university, they may not even know which door to go to. That's what we do.

[Brian Masse, NDP, Windsor West, ON]

Very good. Thank you.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

We'll go to Mr. Pacetti for five minutes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

Thank you, witnesses, for appearing. It is a very interesting topic.

I'm going to try to get more focus and tie it into the study that we're conducting, but before we get into it, Mr. Taylor, just to clear it up, is Precarn a for-profit company or a non-profit?

[Graham Taylor]

Precarn is a not-for-profit federally incorporated company. It was formed by private individuals.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The money all comes federally, or it's matched?

[Graham Taylor]

We have a certain amount of operating financing from member companies. Most of the money that goes into our projects is provided by companies, but the public funding that we put into projects comes primarily from the federal government--in the current instance, from Industry Canada.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Who are the member companies?

[Graham Taylor]

We have a wide range of member companies. We have some very advanced technology companies, software and hardware companies. We also have some large resource companies like Syncrude and Inco.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

And your mandate is what aspect of the research component? Is it the valley of death component?