Industry Committee on May 1st, 2008

[The Vice-Chair, Liberal, Dan McTeague]

Colleagues, I see we have quorum.

I have the honour to be chairing the 35 ^th meeting of the Standing Committee on Industry, Science and Technology. I am replacing Mr. Rajotte. Lucky you.

Pursuant to Standing Order 108(2), we are doing a study of Canadian science and technology, and we're joined by several witnesses. Mr. Robert Best is vice-president of the national affairs branch of the Association of Universities and Colleges of Canada; and Michelle Gauthier is director of research, policy, and analysis. From the Canada Foundation for Innovation, we have Eliot Phillipson, president and chief executive officer;

and Manon Harvey, Vice-President, Finance and Corporate Services; from Genome Canada, we have with us the President and Chief Executive Officer, Dr. Martin Godbout.

From Biotron we have Norm Hüner, scientific director.

We will give witnesses from each organization five minutes. I will try to hold you to that, as we have many questions.

Thank you for coming.

We will begin with you, Mr. Best.

[Robert Best, Vice-President, National Affairs Branch, Association of Universities and Colleges of Canada]

Thank you for the opportunity to be here today, Mr. Chair. With me is my colleague Michelle Gauthier. She is the Director of Research and Policy Analysis at AUCC.

Canadians' standard of living depends increasingly on our competitiveness in the global knowledge economy. To maintain and enhance the standard of living Canadians currently enjoy, we must secure our position among the world leaders in research.

Universities account for more than one third of the national research effort in Canada—a higher proportion than in all other G-7 countries. University research is more geographically dispersed than private sector and government research in Canada, and consequently plays a critical role in the economic and social development of all regions of the country. Universities educate the highly qualified researchers who are increasingly in demand across the economy, and the university sector is the only sector that performs research for all other sectors.

University research is a Canadian success story, but this was not always the case. Investments over the past decade by successive federal and provincial governments of all stripes, and by universities themselves, have turned Canada from a country at risk of experiencing a major "brain drain" to one that is benefiting from a "brain gain".

But while they are significant, Canada's gains in university research over the past 10 years remain fragile. Our competitors in the G-7 and newly emerging competitors like Russia, China and India are investing heavily in research—including university research—to increase their competitiveness in the global race to attract high-paying jobs, research talent and investment.

Mr. Chairman, the success of the federal S and T strategy will depend most fundamentally on people--on the development, attraction, and retention of talented individuals with the research skills so in demand in the knowledge economy. Over the next decade, we expect the knowledge economy to create significantly more jobs for advanced degree holders. As well, the retirements of advanced degree holders currently in the labour market will generate large-scale replacement demand.

Beyond people, a balanced approach to implementing the public-private and targeted and non-targeted dimensions of the federal S and T strategy will be very important. Significantly, the S and T strategy reinforces the importance of federal support for discovery and creation; for developing, attracting, and retaining research talent; for state-of-the-art infrastructure; and for the institutional costs of providing an excellent research environment. Increased and balanced investments in all four elements are essential to maintain and increase our competitiveness in university research.

As the strategy moves forward, Mr. Chairman, I would draw particular attention to support for the institutional or so-called indirect costs of research. These include the costs of operating and maintaining research facilities; managing the research process, from preparation of proposals to accountability and reporting; complying with regulatory and safety requirements; and managing intellectual property and promoting knowledge transfers.

As well, the strategy places considerable emphasis on developing private sector research and commercialization capacity while maintaining Canada's leadership in public R and D performance, and on identifying research areas where Canada can be a world leader while also acknowledging the need for broad strength in basic research.

With regard to the private sector, it is worth noting that Canada is first in the G7 for the share of private sector research investments going to universities, and second in the G7 for the share of university research funded by the private sector. Since 2001 the private sector has increased its investments in university research at a rate four times faster than investments in its own research. Despite these improvements, more can be done to enhance university-private sector partnerships as well as those with the public and not-for-profit sectors, particularly in relation to knowledge transfer.

Universities play an increasingly key role as cross-sectoral platforms, both through their regular programs and their research in general, and also through centres, institutes, and research in innovation parks that bring university researchers together with researchers and applications-focused personnel from other sectors.

Mr. Chairman, I would like to close on the subject of accountability. Our association is committed to improving the visibility, accountability, and transparency of federal investments in university research. In 2005 we published Momentum, our first periodic public report on the impacts of university research in Canada. We will be releasing a new edition of Momentum in October of this year as one of our many ongoing efforts to communicate to decision-makers and the general public the importance of university research and its contributions to Canada's economic and social well-being.

Merci beaucoup. Thank you.

[The Vice-Chair, Liberal, Dan McTeague]

Thank you very much, Mr. Best. You were virtually on time. I was going to use and indulge the privilege of the chair to ask your position on the RESP bill I have before the Senate, but I think I'll leave that for another day.

We'll now move on to Eliot Phillipson of the Canada Foundation for Innovation.

Sir, you have five minutes.

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

Thank you, Mr. Chair, for the opportunity to address the standing committee. I'm joined by Manon Harvey, our vice-president of finance and corporate affairs.

I want to talk to you today about the role of the Canada Foundation for Innovation, CFI, as a key player in Canada's science and technology enterprise through its investments in research infrastructure in Canada's universities, colleges, research hospitals, and research institutes.

As outlined in the national S and T strategy, CFI's investments are critical to strengthening our capacity for innovation by enhancing the quality and scope of Canada's research enterprise, by facilitating the training of highly qualified personnel--that is, the human infrastructure, which is the most important resource in a knowledge-based economy--and by promoting the development of technology clusters through programs that encourage collaborations between public research institutions and the private sector.

Since its creation in 1997, CFI has committed more than $3.8 billion in support of over 5,700 projects at 128 research institutions in 64 municipalities across Canada. These projects have covered a broad range of scientific disciplines, with considerable investment in the priority areas outlined in the S and T strategy: environmental science and technologies, natural resources and energy, health and related life sciences, and information and communications technologies.

CFI's investments are made on the basis of a rigorous assessment of merit, using international standards to determine the potential of the project to increase the capacity of Canadian research institutions to compete internationally and to produce knowledge that will benefit all Canadians.

The 2007 federal budget and the federal S and T strategy reconfirmed the CFI as an essential element of the country's science and technology enterprise and provided funding of $510 million for another competition to be held before 2010. After completing an extensive consultation with stakeholders, the CFI recently launched a major competition for this $510 million, which will ensure that universities and colleges in Canada continue to play a central role in Canada's future prosperity and competitiveness.

This prosperity will depend increasingly on our ability to innovate--that is, to generate knowledge and ideas from which are derived new products, services, and policies that create economic wealth, enhance social foundations, sustain the environment, and improve quality of life, concepts that are central to the Government of Canada's S and T strategy.

The CFI's investments in research infrastructure complement those made in people and in the direct and indirect costs of research by the three federal research funding agencies, the Canada research chairs program, Genome Canada, and other federal programs. Together, these investments have had a profound transformative impact on Canada's R and D enterprise. The brain drain has been reversed, as Canada has become a very attractive destination for researchers, and institutions have been able to greatly strengthen priority research areas identified in their strategic research plans.

However, the global S and T landscape continues to evolve rapidly, and international competition is ever more intense. The S and T strategy is therefore a very timely document in providing an articulation of the federal government's priorities and policies in promoting S and T in Canada and its clear commitment to sustain and promote Canada's competitiveness through investments in higher-education R and D.

In conclusion, the CFI is successfully meeting its mandate of strengthening the capacity of Canadian research institutions to carry out world-class research and technology development for the benefit of Canadians. An ongoing, robust, state-of-the-art research enterprise is fundamental as Canada's economy evolves from its traditional dependence on natural resources to one based increasingly on knowledge, technology, and innovation. Ensuring the success of this transition will require that the Government of Canada maintain its strong commitment to the nation's research enterprise. Canada's future economic prosperity and quality of life depend on this commitment.

Thank you. Merci.

[The Vice-Chair, Liberal, Dan McTeague]

Thank you very much, Mr. Phillipson, as well, for being on the mark.

I'd like now to turn to Mr. Godbout.

The floor is yours, Dr. Godbout.

[Dr. Martin Godbout, President and Chief Executive Officer, Genome Canada]

Thank you, Mr. Vice-Chair and distinguished members of the Parliament of Canada.

Genome Canada, a not-for-profit organization established in February 2000, was given the mandate by the Government of Canada to develop and implement a national strategy for supporting large-scale genomics and proteomics research projects for the benefit of all Canadians.

In the last eight years, our achievements have been many. Genome Canada has adopted a dynamic and systematic approach aimed at activities exclusively in the fields of genomics and proteomics, with a goal of achieving tangible and measurable results. This has allowed Canada to have pride of place among the world leaders in genomic and proteomic research in the fields of human health, the environment, agriculture, forestry, fisheries and the development of new technologies.

In addition, Genome Canada continues to play a leading international role in funding research projects to study the ethical, environmental, legal and social implications of genomic and proteomic research.

Since 2000, the Canadian federal government has invested $840 million in Genome Canada, to which has been added close to $1 billion in partnered co-funding and interest earnings.This additional funding was secured through the development of collaborative relationships and partnerships with private, public, and venture philanthropic organizations, both in Canada and abroad, to jointly finance large-scale genomics and proteomics research projects.

These investments have enabled Genome Canada to build a very strong organization that supports research projects, thus allowing Canadian genomics researchers to gain well-deserved respect and credibility in both the national and international arenas for cutting-edge research science that will have tremendous results for Canadian society and the global community.

Genome Canada's innovative business model is based on the funding and management of large-scale, multidisciplinary research projects that are evaluated by international peer committees. This model also allows researchers in all the areas I have previously mentioned access to groundbreaking scientific and technological platforms. The model also includes the creation of local centres of expertise in genomic research across Canada and the co-funding of projects with strategic research partners, both national and international.

Of high importance to Genome Canada is assuming the role of facilitator, drawing together industry, government departments and agencies, universities, research hospitals, and the public in support of large-scale genomics and proteomics research projects of strategic importance for Canada.

I will be pleased to take your questions.

[The Vice-Chair, Liberal, Dan McTeague]

Very good, Dr. Godbout.

We'll now go to Biotron.

I'm glad to see you here, Mr. Norm Hüner. You have the floor.

[Dr. Norm Hüner, Scientific Director, Biotron]

Thank you very much for inviting me and giving me the opportunity to describe the Biotron, a facility funded through CFI.

The Biotron is an interdisciplinary international experimental climate change research facility located on the campus of the University of Western Ontario and dedicated to the elucidation of the impact of climate change and extreme environments on plants, insects, and micro-organisms.

Experimental climate change research represents an important new experimental approach whereby researchers can quantify the ability or inability of organisms to adapt to new environments. Thus, this research approach not only provides important insights into the impact of climate change on biodiversity and ecosystem health, but also identifies possible ways to maintain food and energy supplies under future suboptimal climate conditions.

The principal collaborating institutions for this initiative include the University of Western Ontario, the University of Guelph, and Agriculture and Agri-Food Canada.

The three primary missions of the research programs enabled by the facility are, first, to accelerate understanding of the responses to and consequences of global climate change on terrestrial and aquatic ecosystems; second, to provide the research infrastructure to support and stimulate the shift of growth markets towards so-called bioeconomy in the areas of medicine, agriculture, and forestry; and finally, the Biotron provides the expertise and analytical facilities to assess and quantify the potential environmental benefits and risks associated with emergent biotechnologies on biodiversity and general ecosystem health.

This facility allows world-leading scientists not only to elucidate mechanisms by which organisms as diverse as plants, algae, cyanobacteria, soil micro-organisms, and insects sense and respond to environmental change at the community, whole organism, and molecular levels, but also to assess the impact of climate change on the interactions of these organisms within controlled ecosystems.

The Biotron was funded in March 2004. CFI contributed 40%, Ontario Innovation Trust contributed another 40%, and the University of Western Ontario and industry contributed 20%. Construction of the Biotron was completed in the summer of 2007, and the grand opening is planned for September 2008.

Since the year 2000, funding for basic and scientific research in Canada has exhibited unprecedented growth through the Canada Foundation for Innovation as well as through programs such as the Canada research chairs program. The visions represented by these innovative programs have received international recognition by the scientific community and represent a major attractor for hiring new faculty at universities as well as in attracting post-doctoral fellows and graduate students who are HQP.

However, the long-term sustainability of the new infrastructure created through CFI remains a major challenge for the future. The potential demise of support for these infrastructure facilities created through CFI will be inevitable without continued long-term public support combined with industrial support for basic research in large facilities such as the Biotron, so it's critical for the life of facilities such as this that we find a balance between targeted research funds and discovery-based research.

Thank you very much.

[The Vice-Chair, Liberal, Dan McTeague]

Thank you very much, Mr. Hüner.

We'll now turn to questions and answers. The first round is six minutes.

Feel free to respond as well as you can. I will be making sure our colleagues stay to the time that's provided. The first round is six minutes; the second round will be five minutes.

We'll begin with Mr. Brison, from the Liberal Party.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

I have a question for Mr. Best.

You cited that Canada ranks first in the G7 in terms of private sector investment in university research. You also referred to some challenges we have around commercialization. I'd like to understand how that is sustainable. If the private sector is investing significantly in university research, yet the commercialization is not occurring at the rate it ought to at the other end of the process, it doesn't strike me as being a sustainable situation, because ultimately the private sector tends to base investment decisions on commercial outcomes.

I'd be interested to know how we have those two seemingly divergent facts.

[Robert Best]

First of all, the question is where the private sector is having its research done. To the extent that it is funding some of the research in the universities, in many cases it's on a contract basis. When I talk about commercialization, I'm not necessarily talking so much about the results of that research directly funded on a contract basis in the institutions; when we're talking about commercialization, I think we're talking more generally about the wide range of research done in the universities, most often publicly funded, and how that research then makes its way to the marketplace.

In five minutes I didn't have time--in fact, I lost some of this as we practised, but I would stress that the relationships between universities and the private sector have become much more complex and much more extensive over the last decade. I think what we have come to understand is reflected in the S and T strategy: that commercialization is not like we used to think of it, a one-way push out of the universities, but is really about building partnerships and a complex network of interrelationships at various levels between the private sector and institutions.

When I say “challenges”, I mean yes, there's more we can do. We've made significant progress, not least in a change in attitudes on both sides, but I think there's room for more. Part of the challenge is that our private sector still does not often have the receptor capacity necessary to be able to take discoveries that have potential market applications and move with them, so part of the challenge is to build that capacity in the private sector.

Again, the S and T strategy notes that our private sector is better able to make use of and see the importance of people with advanced degrees who can form that crucial link. That's part of the challenge. To the extent that the private sector is doing research in universities, that relationship is being enhanced over time.

[Scott Brison, Liberal, Kings—Hants, NS]

If you look at the models, for instance, there wouldn't have been a Silicon Valley had it not been for a Stanford, and there's wouldn't have been a Silicon Valley had it not been for a very vigorous venture capital and entrepreneurial community there. If we consider that model for a moment, Canada probably needs a more vigorous venture capital industry, and that becomes an issue of government in terms of tax and policy, among other things.

Taking a look at what happened with Silicon Valley and the incredible boom on the technology side that is now being almost entirely focused on cleantech, how can we learn from that example and apply it to Canadian research and commercialization? What can we do with our universities, our capital markets, and our entrepreneurs here to try to recreate that? When you're making your investments, Mr. Phillipson, on behalf of CFI, do you involve venture capital community members and identify the kinds of early-stage technologies that they're interested in over the long term, for instance, like cleantech?

[Dr. Eliot Phillipson]

We don't specifically identify the venture capitalists, but we do--

[Scott Brison, Liberal, Kings—Hants, NS]

Do you use their expertise? Do you speak with them to identify the kinds of things they're interested in over the long term and try to determine a path that can lead to commercialization, based on their understanding of where the markets are going and what the world is really demanding?

[Dr. Eliot Phillipson]

It's really the institutions. Our applicants, as you know, are the institutions--the universities and the colleges. Because we fund only 40% and a great deal of the balance comes from industry, the institutions are generally in close touch with their industries, particularly regional industries that may have an interest. They are the ones that end up investing a significant part of the other 60%.

[Scott Brison, Liberal, Kings—Hants, NS]

Let's say we wanted to position Canada as the best place in the world to research, develop, and commercialize cleantech opportunities. In 2005 $30 billion was invested globally in cleantech; in 2006 it was $60 billion, and last year it was $150 billion. Are you saying that federally your organization cannot take that kind of focused approach and try to create those conditions within Canada on a national basis? You mentioned environmental sciences, but are you saying that you rely almost exclusively on what is coming up from the institutions to determine investment?

[The Vice-Chair, Liberal, Dan McTeague]

That will have to be your last question, Mr. Brison.

[Dr. Eliot Phillipson]

Yes. That is, our applications come from institutions based on their research priorities, but they also reflect the government's priority research areas, so it's a two-way process. In other words, we may indicate the areas that the S and T strategy outlines are priorities, but the projects within each of those areas come up from the institutions that are most heavily focused on that particular area.

[The Vice-Chair, Liberal, Dan McTeague]

Thank you, Mr. Phillipson and Mr. Brison.

Ms. Brunelle, from the Bloc Québécois, you have the floor.

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

Good morning, ladies and gentlemen, and thank you for being here.

As we know that there can be no research without researchers, I would like to put my first question to Mr. Best. In your brief, you told us that, with all the advanced degree-holders in the workforce who will be retiring, there will be a huge demand for renewal. On the other hand, you tell us that the OECD indicates that, compared to other countries, Canada is significantly behind when it comes to people holding doctorates.

My question is: what solutions do you have? I would also ask the other participants if this situation has repercussions for their organizations. Do we, for example, have to go and look for researchers overseas, or do we have enough in Canada to meet our needs?

[Robert Best]

Thank you for the question. We have to do a combination of things. First, without doubt, we must produce more PhDs here in Canada. For at least 20 years, we have looked overseas for a significant proportion of our PhDs, immigrants with doctorates. They are going to remain a significant source of our advanced degree-holders and we are going to have to be able to compete globally in order to get them. There is global competition for that kind of talent and for those PhDs.

At the same time, we are going to have to develop more talent and train more PhDs here. So we need investment, like scholarships, to encourage more people with the talent and skill to complete a doctorate to do so, often when they are in their 20s, and to make sacrifices in that quite critical stage of their life.

Scholarships are part of the solution, but universities also have to have the means to train these people. That is both a federal and a provincial matter. So it is a combination of things. At the same time, we have to do what we can to attract immigrants.

[Manon Harvey, Vice-President, Finance and Corporate Services, Canada Foundation for Innovation]

The Canadian Foundation for Innovation funds the infrastructure or the tools for research. Our experience over the last 10 years has shown that these tools have really helped to attract researchers to Canada. The new challenge is to keep them here. Our investment has been considerable and we must be able to sustain it. We have a lot of statistics that tell us that attracting and retaining people depends a good deal on the tools we use and on having laboratories on the cutting edge of technology. This helps with their training so that they go into industry afterwards.

[Dr. Martin Godbout]

For Genome Canada, given that we invest in very few projects—less than 110 of them in eight years—the good news is that the projects are very large-scale. This has had a huge impact on the training and recruitment of post-doctoral students and principal researchers who have joined and trained Canadian teams.

As you said previously, the competition is not in Canada, it is worldwide. Fortunately, because of the funding and the infrastructure that provides the necessary equipment and facilities, our statistics show that there has definitely been recruitment all over Canada in genomics and proteomics.

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

Related to that question, are our efforts in research and development adequate on a more global scale? Are we investing enough compared to similar countries, whether the investment is financial, in the originality of our research, in the support we provide to our researchers or in our commercialization efforts? Is Canada doing enough?

[Michelle Gauthier, Director of research, Policy and Analysis, Association of Universities and Colleges of Canada]

If you compare the situation 10 years ago with today's, you will see that the very significant investments in the last decade have changed our ability to compete internationally. Other countries are always improving their competitiveness. Our GERD to GDP percentage is 1.9%. Countries should have a figure of 3% to be competitive with, say, the top five in the world. This is only one indicator, but it shows that we should be continuing to increase our investment in the area.

I will add that this is not just a challenge for the university community or for the researchers that we would like to have in the university community. More than 60% of PhDs choose to work in other areas of the Canadian economy, whether it be for the federal government, for provincial governments or in the private sector. With all those different areas needing people with Masters degrees and PhDs, we need to invest more.