Industry Committee on April 10th, 2008

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much, Mr. Chair.

Welcome, gentlemen. It's very nice to have you here.

I have three very different questions that I hope you can answer, and if you can't directly, I'd like to get your feedback on some of these issues.

The first one is on centres of excellence. I know it's referred to in here. I understand the synergies behind them and I understand the whole philosophy behind them, but we seem to be finding, in a lot of cases, that money draws money. So you end up with four or five big universities in Canada, such as UBC or the University of Toronto, getting most of the money for research and development, and the disparity between these universities and other universities seems to be increasing.

Do you have any feedback on that? Is there any way we can rectify that? Or does that really exist, in your mind?

[Richard Dicerni]

I have two comments.

One, we do try to emphasize the peer review part of it, whereby these are identified on the basis of competition and reviews by other people who identify the best.

Secondly, with a view to diversifying that, we did establish a private sector advisory board to complement, if you will, the academic peer review, to say where we could get the best bang for the R and D investment.

The last thing I would say is that in the government, if you look at the panoply of instruments, granting councils are definitely one and the NRC also supports research. They have a number of clusters that are spread across the country. So I think you have to look at the broad base of instruments the government uses.

But on your specific point on centres of excellence, we do tend to privilege peer review to draw out the best.

[Raymond Simard, Liberal, Saint Boniface, MB]

We have indicated here that we have established a strategic aerospace and defence initiative. A little higher than that we talk about a review we've launched of Canada's competition policy. I'd like us to be aware of a few things.

For instance, there's a company in Winnipeg that apparently builds world-class satellites. Their difficulty is that they're competing with a British company that is heavily subsidized by the government, which allows those people to apparently build five or six satellites at one time, therefore reducing the unit cost of the satellites. Then, down the road, Canada is buying satellites and the Winnipeg people are having to compete with the European satellites. Inevitably, Canada buys the European satellites. I've been hearing this a lot lately, and there's a huge concern.

Will the review of Canada's competition policy consider some of these issues?

[Richard Dicerni]

You raised two issues.

One is strategic aerospace and defence initiatives. This program is administered by the Department of Industry and is focused very much on the aerospace industry to identify partnership opportunities for Canadian companies to work with government to bring new products to market. It is focused on the aerospace sector.

In terms of the competition panel you referred to, which is led by Wilson, they have a fairly broad mandate. It is initially focused on two pieces of existing legislation, the Competition Act and the Investment Canada Act. Secondly, they look at other sectoral restrictions that preclude investments in key sectors; and thirdly, they look at all other government types of policies and programs that may negatively impact on Canada's competitiveness.

[Raymond Simard, Liberal, Saint Boniface, MB]

So this kind of situation would be looked at in that review.

Thank you.

My third question is with regard to federal funding on R and D. Again, this is something we hear about a lot. The federal government has funded R and D for a long time--the people and labs, for instance--but does not fund the operating costs, for instance, the electricity, the water and the day-to-day stuff. We're finding that a lot of very bright people are spending a lot of energy trying to find the money to operate on a daily basis. As a matter of fact, we're losing people because of that frustration.

Are there any thoughts on whether we should change our policy on that? What can be done with regard to that?

[Richard Dicerni]

I have two points.

One, provincial governments do have the primary responsibility for the electricity, water, rent, and that type of stuff. I'm somewhat familiar with this, having been a former deputy minister of education and post-secondary....

Secondly, the federal government does have a program, which is delivered through the Social Sciences and Humanities Research Council. It is an indirect cost program, which I think is about $325 million this year. That goes to universities to provide some support for what is referred to as the indirect costs of research.

[Raymond Simard, Liberal, Saint Boniface, MB]

What is that called?

[Richard Dicerni]

The indirect costs program.

When you have Chad Gaffield next week, or whenever, he's the president of SSHRC and that particular federal program is delivered through his granting council.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

We'll go to Mr. Van Kesteren, please.

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

Thank you, Mr. Chair.

Thank you for appearing again. It's good to see you again, sir.

I want to talk to you about STIC and the influence government has on it and what influence STIC has on government. I understand that STIC will be reporting annually. I'm wondering if you could talk to me about the advice to government and how it works. Talk to us a little bit about STIC.

I'm splitting my time with Mr. Arthur.

[The Chair, Conservative, James Rajotte]

It's the science advisory council.

[Richard Dicerni]

I've been around governments for a number of years. What has struck me is that governments at different points in time get advice in different ways. Sometimes they institutionalize advice by salvaging something within the bureaucracy and sometimes they go outside.

Recently I did a paper, and it got me to read the Glassco report. I noted that there was a fundamental chapter, the first chapter ever written on this, and you might, Mr. Chair, take a look at it. I think it was chapter 22 or 23 of Glassco. It was the first time anybody had looked at S and T. In particular, there was a recommendation to establish a science and technology advisory council, bringing people from the private sector, from universities, from government together in an integrated manner to give advice to government. So in some ways the genesis of STIC is 50 years old.

Secondly, we are quite proud, because it is a really good cross-section of people from the private sector and from academia--both academia from the research perspective, because there are some people who have research as their day-to-day job, or administrators, i.e. university presidents. You have people who actually use research in their day-to-day lives. I think it's a good cross-section.

In regard to who gives advice to whom, who listens, I think it's a two-way exchange. I've said to people in STIC that they give advice, but like any advice that flows within a university environment, it has to be peer reviewed. It has to be peer reviewed by other ministers, other departments. So you give advice, governments feed back and forth, you exchange, and on that basis, I think a good product comes out.

They are involved in a number of ways on an ongoing basis to give advice on things that are topical, but they also take a longer-term perspective, i.e. the state of R and D and S and T in the country--not just the Department of Industry, not just Government of Canada, but broadly speaking as a country. How do we stack up? How can we improve? What are things we should change?

I think the committee membership is very good; the interaction with the minister is quite good. The minister meets with them on an ongoing basis--he has had three or four meetings with them--and I think the value is the interactive part of it.

[The Chair, Conservative, James Rajotte]

You still have about a minute and a half, Mr. Arthur, or you could take the spot after Mr. Vincent. It's up to you.

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

I have one more question. As I was reading through the CCA report I saw that there were four areas identified, and those are the four areas that were specifically chosen to be addressed.

The other area that we have found in our study that we're very strong on is banking. I'm curious why we didn't choose that. I understand that science and technology.... There may be those who would argue that there really isn't any room for that, but I would argue, in regard to what's happened in the States, that good science and research could have prevented some of those things.

I'm curious to know why we didn't move in those areas as well.

[Richard Dicerni]

What's happened in the States is a terrain where prudent bureaucrats dare not venture.

In regard to how we went about picking those four sectors, we had requested the Council of Canadian Academies to do a broad sweep across the country to truly identify where we have research excellence, what the strengths are. They had a grid, and they produced report--which we could share with your committee--that I thought was quite comprehensive in describing where Canada was known to have excellence, where Canada was known to have strengths.

We used that as a platform to start with. That was the reason. You have to start somewhere, and that's where we started.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren.

Members, just for a point of information, we are at twelve noon.

Mr. Dicerni, I know you have a flight at one, but you indicated that Mr. Stewart could stay. As long as you can stay, you're certainly welcome to, but if you do have to go--

[Richard Dicerni]

As I said to you, Mr. Chairman, I'm quite prepared to come back on any point the committee would like to pursue.

[The Chair, Conservative, James Rajotte]

We did start a few minutes late. We have Monsieur Vincent, Monsieur Arthur, Mr. Eyking, and me. Hopefully we'll finish within 20 minutes. Then we will go in camera, members, for our committee business.

We'll go now to Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chair.

Earlier, you talked about intellectual property. In recent weeks, the events surrounding the sale of MDA have arisen as an issue. Do you believe that, when the Canadian government invests in companies, it will keep or acquire the intellectual property associated with research and development?

We must not put ourselves into that kind of situation again, that is, selling the intellectual property of companies in which Canadians' money has been invested. Given that we were almost caught out, have you considered establishing priorities, or more specific measures that would keep our intellectual property in Canada?

[Richard Dicerni]

When we are dealing with intellectual property, we have to ask ourselves whose it is. In pure research, it varies greatly among universities and among researchers. It is often specifically included in collective agreements between researchers and universities. It varies a lot from country to country. I do not feel that there is one universal, specific answer on intellectual property.

[Robert Vincent, Bloc, Shefford, QC]

I seem to remember reading somewhere that intellectual property in a university setting remains the property of the institution. Is that the case?

[Richard Dicerni]

That is what varies greatly among universities and depends on the negotiations that unions and researchers have had. There is one arrangement at Waterloo University, another at the Université de Sherbrooke, and yet another at the University of Calgary.

In the United Sates, at Stanford University, for example, intellectual property completely belongs to the researchers.The university does not get involved because it gets its investments back indirectly. But it is true that the private sector in the States is much more likely to invest in universities. It really varies a great deal and there is no one national system.

As to dealings with companies, these are partnership agreements. When the government invested in RIM as part of the IRAP-TPC program—I cannot remember when that was—the company had to pay royalties. That is how most partnership projects work in the program that replaced IRAP-TPC, in aeronautics certainly.

In these partnership agreements, the government puts in a certain amount and expects to receive royalties when the program is up and running. That does not happen in all cases.

In fact, if projects were guaranteed to be successful, companies could go to the banks for loans. People come to see us when their project has an element of risk. That is why they pay us when the investment is up on its feet.

To answer Ms. Brunelle's question, I said earlier that a product needs five or six years of investments before it can be put on the market and sold. In the case of MDA, we are talking about a decision made by the government at the end of the 1990s, I believe, and with very specific parameters. So it varies somewhat. Each situation is in some ways a case unto itself.

[Robert Vincent, Bloc, Shefford, QC]

I understand, but we cannot get taken in again. The question is: how is Canada going to protect its investments in the future? The money is not lost because of an agreement on services, on loans, grants or investments by Canada in intellectual property.

[The Chair, Conservative, James Rajotte]

Please be very brief, Mr. Dicerni.

[Richard Dicerni]

We would appreciate the committee's views.