Industry Committee on Feb. 12th, 2008

[Etienne Couture]

We have been told that there is full employment at present. Obviously there will be a shortage or, at the very least, a very high demand for engineers in several areas. This is already evident in civil engineering, for example. It goes in waves according to the sectors that are most in demand. Thus, it varies but overall there is a shortage.

With regard to differences arising from interprovincial trade, accreditation and the licence to practice differ from one province to the next. To practice across Canada, we must obtain ten provincial accreditations.

In Quebec, there is a type of basic barrier because engineers must have a mastery of the French language. Some Quebeckers have mastered English. It may therefore be easier for them to work anywhere in Canada. However, learning French to practice in Quebec can represent an additional barrier for most Canadians.

It is not at all a question of protectionism but rather a matter of practicality: you will not be able to practice engineering in Quebec if you do not master the French language.

[Raymond Simard, Liberal, Saint Boniface, MB]

Mr. Gehrke, you said that chiropractors could take some of the pressure off doctors, as much as 30%. We realize there's a great shortage of doctors. Are you telling us that chiropractors are able to take up that slack? The chiropractors I know are extremely busy.

[Richard Gehrke]

We could pick up a significant portion of it.

I don't mean to sound like a whiner, but ours is a gatekeeper issue. We're the new kids on the block. We don't have enough champions in industry, hospitals, and in allopathic medicine to allow us the prerogative to do the kinds of things we say we can do. We have numerous studies that suggest that we can do this, but we need the opportunity in hospital-based, more than likely study-group situations to sort of walk our talk, and that's not being made available to us. And it is, among other things, a turf issue.

[Raymond Simard, Liberal, Saint Boniface, MB]

Okay. Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

We'll go to Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

I'd like to take up the topic with Mr. Turk on the question of funding for post-secondary.

You mentioned in your pre-budget consultations as well as today the target of half a point of GDP. Was there a time when Canada did achieve that?

[James Turk]

Yes, between 1978 and 1983 we did achieve that, and then we fell back away from that.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay.

In terms of the recent change, we went from $2.6 billion to $3.2 billion, and that represents about a 40% increase. Could you say again what that did in terms of closing the gap?

[James Turk]

What I said in my opening remarks was that to get back to the level of funding on a constant dollar population basis that we were at in the early 1990s, over and above what was in the last budget, would require an additional $1.2 billion per year.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay.

Assuming a government were to hypothetically close that gap with the $1.2 billion, what would you advance in terms of trying to maintain that?

[James Turk]

Our approach generally has been to favour as a long run tying what the federal government puts in as a percentage of GDP—that is, when the economy constricts, the amount would go down, and when the economy expands, it would increase—because we do view the funding for post-secondary education as a necessary investment in the future of the country.

[Bruce Stanton, Conservative, Simcoe North, ON]

The 3% accelerator that I think was tied to budget 2007's announcement would probably be a start to doing that, and I'm trying to recall whether that accelerator rate was in place on the previous allocations. I don't think it was.

[James Turk]

No, it was not, as far as I know.

The difficulty again is that these are block transfers that may or may not be spent on post-secondary education. Even though they are designated for it, there is no obligation to spend them, which is why we've advocated a different approach in our submission to the finance committee, and we've been talking about that for some period of years, a model in which the--

[Bruce Stanton, Conservative, Simcoe North, ON]

Kind of like the Canada Health Act.

[James Turk]

Yes, that's right.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay.

Just to go back, touching briefly on the research points that you raised, we've heard through the course of our discussions at this committee that in fact Canada spends a proportionately higher amount on research that is actually managed at the academic level. That seems to be somewhat inconsistent with what I'm hearing from you today. Could you speak to that?

[James Turk]

Compared internationally we do, but that's largely a function of the underdevelopment of the industrial sector in this country, and the amount of research financed by the corporate sectors is proportionately less in Canada than in other countries. Historically that's been due to the large percentage of foreign ownership: major transnational corporations tend to do the bulk of their research and development in their home country, so the big American corporations do the bulk of their R and D in the U.S. Canada, because it has been relatively underdeveloped in that regard, has had to rely more than other major developed countries on academic-based research.

[Bruce Stanton, Conservative, Simcoe North, ON]

Regarding this imbalance, you suggest that there is too much emphasis on commercialization. Is there a ratio you can point to that we should achieve in that regard? For example, I think you used the term “basic research”, as opposed to that for commercialization.

[James Turk]

Our view is that the money should be provided to the granting councils, and the scientists should decide in a peer review process what research proposals seem most meritorious. Our ability to forecast what is going to lead to a certain end is so low that we do better by trying to identify what looks like the most promising research, whether or not it appears to have a commercial outcome, because in fact most of what has a commercial outcome in fact did come from basic research. Whether you look at MRIs or lasers, a whole variety of things all came out of basic research.

[Bruce Stanton, Conservative, Simcoe North, ON]

Whether or not it's by design, it would appear from some of the previous witnesses we've listened to that Canada hasn't been as good as it could have been in taking some of the research work and achieving commercialization of that. I don't know whether we're not getting the efforts where we need to or we're not getting the post-research steps as solid as they might be, but certainly the outcomes suggest that what you're suggesting may not in fact be true.

[The Chair, Conservative, James Rajotte]

Just a brief response.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thanks, Mr. Chair.

[James Turk]

I think you've identified it correctly. The problem is the post-research; that is, there's been a relatively smaller proportion of venture capital to invest in these risky outcomes. Somebody develops something that has promise, and it may be a decade before that promise is realized. Is there the capital in the country to invest in that? There's been more of that in the United States, for example, than in Canada.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Stanton.

Madame Brunelle.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good afternoon, ladies and gentlemen. It is a pleasure to see you. I missed the beginning of the meeting as I was meeting with the Canadian Manufacturers and Exporters. I realize that the issues I wish to address overlap and that the comments are the same.

Mr. Couture, you spoke about the manufacturing sector being the heart of our economy. We are definitely in the grips of an unprecedented crisis and that certainly affects the engineering profession. At the very least, it is about know-how. And when we meet with people from the academic community, we gain a better understanding.

We have already discussed, Mr. Couture, the need to provide tax support for research and development and innovation in the form of refundable tax credits, loans and loan guarantees to encourage investment. As Mr. Turk said earlier, one thing is certain: the results of research are not necessarily immediate. We have to promote investment, at least in research.

Mr. Couture, tell us a little about how the Réseau des ingénieurs du Québec intends to weather the crisis in the manufacturing sector, particularly with respect to research, development and innovation.