Thank you, sir.
Good morning, and thank you for having us. I understand I have about five minutes. It's a 106-page document, but there are short versions and longer versions, if you're interested.
My remarks have been distributed, so you have them. What I'll do is go through them as quickly as I can and hit the high points.
The S and T strategy provides a multi-year framework to guide the government's approach to science and technology, with the objective of guiding science and technology to create a long-term sustainable economic advantage for Canadians. As a result, it's a guide for how the government invests in S and T as well.
So the remarks I've provided for you set out that multi-year S and T framework, its objectives, the advantages it seeks to create, and the guiding principles. Then my remarks identify a few of the initiatives undertaken, for instance, in Budget 2006 and Budget 2007, to populate these advantages or to achieve the objective of the strategy.
So just to go through this very quickly, as I mentioned, the overall objective of the S and T strategy is to build a national competitive advantage based on science and technology. The structure of the strategy and the objectives set out in the strategy flow from a diagnosis of what are the Canadian challenges, what is the situation at a very high level. In this page, I've captured them here. They're set out in much greater length, of course, in the S and T strategy.
First of all, the single most important theatre for research and innovation in Canada is the private sector. About 54% of all R and D in Canada happens in the private sector. Although that sounds like a lot, it's actually less than in competitor countries. The OECD average for research and development performed by the private sector is actually about 68%. So one of the key objectives of the S and T strategy is to create an environment in which Canadian companies compete on the basis of innovation and therefore invest in R and D in science and technology.
Secondly, one of the key things that we determined in our analysis leading up to the strategy was that Canada has a very strong university and public R and D base. Our universities and colleges across the country are very good. However, we don't always achieve the levels of excellence we should. Given how much the Government of Canada and governments across the country invest in R and D in the private sector, but also in the public sector and the university system, we would expect to be excellent in a number of areas to the advantage of Canada, and that is an important element of the strategy flowing from this diagnosis.
Lastly, in the same way, we have a very well-educated workforce. If you look at OECD, Canada has the most educated workforce of any country with respect to tertiary education. However, if you look at advanced degrees that are important to research and innovation, like Ph.D.s, our performance is much weaker.
So the three things this strategy sets out to do become the advantages, and you'll see those set out starting on page 3. All of the actions intended to build these three advantages that speak to those challenges are guided by four core priorities—and they're also set out on page 3.
The core priorities include promoting world-class excellence; everything the government is doing should be driving to encourage Canadian researchers to achieve excellence in their activities. Given that the Government of Canada needs to work with the universities and private sector to achieve these objectives, another major principle of the strategy is that things should be done in partnership, through collaborative approaches. Also, the government is focusing resources and energy and activity in the research community in priority areas, so that we achieve those levels of excellence in the areas that are important to Canada's long-term future. And the last priority is accountability, so that we're seeing results and the system we're supporting is responsive to the needs of Canadians—civil society, more generally—and not just academic research happening in an ivory tower.
The first of the three advantages is an entrepreneurial advantage. So if Canadian businesses tend to use innovation as a competitive strategy less than their competitors do in other countries, we need to create an environment in which they wish to compete on the basis of innovation.
For those companies that do want to compete on the basis of innovation, we need to ensure that the government is supporting collaborative R and D approaches, so that the firms that want to be innovators and to be excellent in their business area can access the very strong public resource we have through the universities and colleges and their faculties and students.
Also, where government is intervening to encourage an entrepreneurial advantage, where government is doing direct activities, we need to ensure that we're doing it effectively, that we're achieving results and our programs are working together.
One of the initiatives we highlight in the S and T strategy in that regard is a collaborative dialogue among the NRC, NSERC, and BDC—three entities that are all supporting different aspects of research and innovation—so that they're working together to support their clients.
So those initiatives are there to create an entrepreneurial advantage.
The second big advantage is this knowledge advantage, which is about focusing resources in areas that are important to Canada's long-term base, but doing so on a healthy discovery base of research. So the Government of Canada is supporting researchers across the country to pursue excellence in their field, and we are also at the same time identifying some areas where Canada could be truly excellent.
The S and T strategy sets out four priority areas in that regard. The environment is number one. Natural resources and energy is the second area. The third area is health and related sciences. The fourth area is ICTs, where we've had a strong research community for many years. So there is that idea of building a critical mass.
A third advantage is around this people advantage, and that's encouraging young Canadians to want to be interested in being part of the research community. Secondly, it's ensuring that they have adequate support in order to participate in graduate research through scholarships. Lastly, we're bridging those young people who are interested in joining the research community over into the private sector or into areas where they can apply their expertise.
The last general section of the S and T strategy is around some of the important things that are not necessarily directly linked to any one of these three advantages, but nonetheless are crucial to having a well-performing government support for the innovation system.
One of those areas that's talked about in particular is the importance of ensuring effective, high-level, comprehensive science advice. So the S and T strategy set out the objective of consolidating various bodies that were each handling individual slices of science advice into one body that would speak to basic research through to commercialization...across all discipline lines involving researchers and research experts from academia, the private sector, government, and just the research community--Canada research chairs, for instance, end up being on this body--and that, of course, is the Science, Technology and Innovation Council that was created as a result of the strategy by Minister Prentice.
In each of these areas there are examples of budget initiatives that were taken to make these things happen. My remarks include them. Under each of the three advantages there are examples, so I will just pick a couple. If you're going to create an environment that encourages people to invest and compete on the basis of innovation, you have to ensure we have a competitive market. The government created a competition panel to look at how competitive the Canadian market is. What could be done to improve competitive intensity, which we know from economics results in innovation?
The SR and ED tax credit is the single-biggest program the government runs. Last year it was about $4 billion in deferred income for the treasury. Is that program achieving the impacts it could? The Department of Finance did a review of that, and through the budget, Minister Flaherty announced changes to improve its impact, particularly for small companies, which are the innovators quite often that grow. So additional changes were focused on that client community.
If you want companies to invest in innovation, they can perform it themselves, such as being supported by the SR and ED tax credit, or they can also buy the latest technologies and equipment from abroad. The changes to the capital cost allowance that were made in particular were important in that regard.
Other things were done to improve venture capital. The last budget created a $75 million contribution towards the establishment of a larger fund by the Business Development Bank. Those are all done to improve the competitive environment that would encourage this entrepreneurial advantage.
With respect to the knowledge advantage, significant investments were made in Budget 2007 and Budget 2008 in support of the knowledge advantage. There was $510 million for the CFI, new money for the granting councils, etc. That's in support of those objectives.
Lastly, on the people advantage, it has encouraged young people to be involved in this area through the provision of new funding for scholarships. So the Canada graduate scholarships program has gotten larger. As well, new flagship programs, as announced in the last budget, like the Vanier scholarship program, will focus on the best and the brightest in the world. Also, there is a new Canada excellence research chairs program to concentrate resources for world-leading researchers in Canada to achieve international excellence in the results of their work.
I'll stop there, sir.
