Industry Committee on May 8th, 2008

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I don't have any difficulty with that. It's just that when someone suggests that they are investing in R and D, when investments or patents are being made in other countries, and we have a residual of simply warehousing in Canada, and yet these amounts of moneys that are being suggested....

I appreciate that you're working with universities, and I think that's very good. So are the generics, at the same time. I'm trying to figure this out, not with respect to SR and ED but with respect to the definition of the Income Tax Act. If you are educating the public about your product, for instance, and it falls under the definition of R and D, to what extent are your R and D claims in fact not real research? To what extent are they for advertising or marketing your product or, in other words, selling your product directly to pharmacists, or whatever the case may be?

[Rob Livingston]

As I say, the definition we have to comply with is from the Income Tax Act. It does not allow that , so therefore it couldn't be included in that number. Also, the restriction is that it has to be R and D performed in Canada. So R and D performed outside the country would certainly not qualify.

I guess one of the invitations I'd offer is this. We have a very large biomedical research facility an hour and a half down the road. I'd welcome the opportunity to take the committee through it. You can talk to the researchers and you can see what they're doing. You can see how they start with a disease target, how they do the screening, and how they do the molecule development. You can ask them yourselves. I'm more than willing to do that.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague.

I want to thank all of you for coming in. I know there are a lot more questions, but we do have two panels today of an hour and a half each, so I want to thank you for your presentations and your responses to members. If you have anything further for the committee, please submit it to the clerk, who will ensure all members receive it.

Members, we will suspend for a few minutes and bring Dr. Alper and Dr. Munroe-Blum to the table as quickly as possible.

[The Chair, Conservative, James Rajotte]

Order, please, members and witnesses.

We are starting our second panel here. We have two very distinguished guests and look forward to an excellent discussion.

From the Science, Technology and Innovation Council, we have the chair, Dr. Howard Alper, and we have a member, Dr. Heather Munroe-Blum, who is the principal and vice-chancellor of McGill University. I think we'll allocate about 10 minutes between the two of you for presentations, and then we'll go to questions from members.

Dr. Alper, do you want to lead off?

[Dr. Howard Alper, Chair, Science, Technology and Innovation Council]

Thank you, Mr. Chair.

I am speaking to you today in my capacity as the chair of the Science, Technology and Innovation Council. I am here with my fellow council member, Dr. Heather Munroe-Blum. On behalf of Heather and myself, I would like to thank committee members for the opportunity to speak to you about how the council is contributing to science and technology policy in Canada.

It's a great pleasure for us to be here.

It is very timely that your committee is studying science and technology issues, given the introduction last year of the government's Science and Technology Strategy, which positions science and technology as part of the government's economic agenda, directly supporting long-term productivity and competitiveness.

I will not go into details on the strategy itself, as I understand that Mr. Richard Dicerni, the Deputy Minister of Industry Canada, and Mr. Iain Stewart, the Director General of the Portfolio and Coordination Branch, already presented this topic to you a few weeks ago.

The S and T strategy highlighted the need to revitalize external science and technology bodies through the creation of a single integrated committee with a strong voice. The STIC, or Science, Technology and Innovation Council, is therefore an important element of the strategy.

Scientific and technological innovation not only provide solutions to environmental issues, health, and other important challenges; it also contributes to the enhancement of economic competitiveness and productivity. This multi-year S and T strategy is very important for the country. The Minister of Industry is fully engaged in advancing the strategy and council members are making a meaningful contribution by providing nimble—and I underline that word—responsive expert advice on issues in this respect.

In terms of the composition of council, Chair, you may recall that in March I sent a letter providing information on council membership. I also noted some of the work we have been tasked to do. But let me add a few comments.

First of all, personal. It's a great honour to serve as chair of this council, to serve my country and to contribute to the country in this regard. Canadians are so fortunate to have such a phenomenal group of people on this council. I've chaired 13 committees in Canada. I had to resign from all of them when I took on the council--conflict of interest--to chair or serve. I serve on a number globally. This is the best committee I have ever run. The people from industry, academia, and government are not only engaged; they are committed to this enterprise.

For example, recently we had to deal with a short-term issue and set up a meeting with four days' notice, and all 18 members but one for part of the meeting were there. That's just one minor point, but I think it's very important.

Who is on it? There are seven from the corporate sector, presidents and CEOs of small and medium-sized enterprises, as well as trend-setting research-based organizations. There are four outstanding university and college presidents, including my colleague to the left, who is a treasure to this country, in my opinion. It was important to have real researchers on the committee. I'm still a real researcher; I run a group of 15 graduate students and post-doctoral fellows. But it's important to have people from across the country, and there are three outstanding individuals, all Canada research chairs, who serve on the committee. There are three deputy ministers on the committee who serve as well. They add an important voice in terms of providing advice to the process from policy creation standpoint.

In terms of the role and work of council, we report to the Minister of Industry, and he is responsible for S and T across government. Our principal mandate is to provide timely advice, as I've already noted, on S and T issues identified by the government that are critical to Canada's economic development and social well-being. Additionally, we will provide regular state of the nation reports to benchmark Canada's performance in S and T against international standards. Heather Munroe-Blum will provide more detail in a moment.

In putting this council together, we looked at other successful models globally and tried to incorporate best practices. The council operates on the following principles. Our work supports the S and T needs and priorities of government. We address issues that are crosscutting in nature, that are relevant to STI, and that can be dealt with in a timely manner.

When an issue is brought to us for attention, we create a working group of usually four to six individuals, a subcommittee of council, to consider the matter, report to council, have a debate, and come to closure. Then the recommendations on the advice function are presented to the government.

I'll describe some of the issues that have been considered and that are being considered. The S and T strategy described four general priorities: environmental S and T, natural resources and energy, health and related life sciences, and information and communication technology.

We were asked to recommend themes or sub-priorities within each of these four areas that we should focus on as a nation to achieve accelerated growth or accelerated development in those areas. I served on John Howard's group setting national research priorities for Australia, as the foreigner, and that was an incredibly valuable exercise to learn from. It has transformed Australia in the last six years.

Another issue is to deal with Canada's international S and T portfolio, to look at opportunities for Canada on a global basis, and to provide advice on a coordinated strategy for S and T that's relevant to all sectors--industry, academia, and government. We had a working group this morning at nine o'clock that I left at 12 o'clock.

We're also looking at procurement policies at the present time. It's a separate working group that meets at three o'clock this afternoon. We have a meeting of STIC tonight and tomorrow. Today's a busy day.

Also, I should mention that council had a large role on two initiatives announced in the budget that I think are remarkable. One is the Vanier Scholarships, valued at $50,000 each--500 scholarships--and the other is the Canada global excellence research chairs program, with $10 million for seven years per chair.

Those are some examples. I'll ask Heather to comment on the state of the nation.

[Dr. Heather Munroe-Blum, Member, Principal and Vice Chancellor, McGill University, Science, Technology and Innovation Council]

Thank you, Howard.

Like Howard, I am very pleased to be with you today. I feel that the work of the members of this committee is very important for the present and the future of Canada.

It's an honour to come and present before you and talk to you about this new national initiative and also to see democracy working so well.

As Howard said,

I am going to speak briefly about one of the council's initiatives.

This is our Science, Technology and Innovation Council state of the nation report. Indeed, if you think about one of the big questions facing Canada right now, and if you believe, as certainly our gifted chair and the members of the council do, that science, technology, and innovation are at the heart of the future success of the country, it's important for us to know how Canada is actually doing in this domain. I'm sure as members of a committee you often wonder exactly that, as you have to deliberate on the important questions about our science, technology, and innovation programs and policies.

So the state of the nation report is one of the major initiatives being undertaken by the council in the first year of its mandate. The idea here is to create what will be a cyclical report, a public report that will serve to help us to benchmark Canada's science, technology, and innovation performance both against its own progress at year over year, but maybe most importantly, against the progress of the nations with which we both compete and collaborate worldwide. I think it has been well demonstrated that we have no benefit from science, technology, and innovation at the local level if this is not science, technology, and innovation that is recognized worldwide as having a quality and an impact that ranks with the very best in the world.

So the council has set to work, with me and Peter MacKinnon working with a group of the council, in the first instance, to develop a framework, which we will discuss at our meetings today and tomorrow, that will lay out key dimensions of performance that we feel will be very important for all sectors—government, universities and research institutes, and the private sector—both to understand how well we're doing against the competition worldwide, how well we're doing against our own progress over time, and to formulate recommendations related to areas of strength and weakness to build up our capacity and our impact, as I said at the beginning, for local benefit via worldwide recognition of our excellence and impact.

I'll stop there. Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you. We're over time here, and I do know members have a lot of questions.

On a procedural note, Dr. Alper, you mentioned a letter you had sent. I believe I saw the letter at the time, but if it's possible to get a copy of that letter again—

[Dr. Howard Alper]

I have it.

[The Chair, Conservative, James Rajotte]

Okay. We'll get to that to the clerk and then to the members.

We'll start with Mr. McTeague, for six minutes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Ms. Munroe-Blum and Dr. Alper, thank you very much for being here today. It has been very informative. I think I speak for some of the members in saying we hope afterwards to get more from you, as opposed to lengthy questions.

Dr. Alper, in your own view, what could Canada be doing that it is not already doing to meet the challenges of science, our reputation internationally, which Ms. Munroe-Blum referred to? Are there countries that you can identify that tend to be leaders in this area, particularly the commercialization of R and D?

[Dr. Howard Alper]

That's a very good question.

I think Canada has done very well on the so-called knowledge advantage, the support for research in public institutions and universities. But we have challenges, as you noted, and one of our major challenges is research and development in industry. We need to do better.

I didn't have time to tell about all the working groups we have, but a very important one is one led by David O'Brien on industry R and D, to review and consider where we are now, benchmark us against the best in the world—and we'll come to that in a minute—and provide advice on any new initiatives, instruments, etc., that different stakeholders, not just government, can undertake for the future.

Some of the major success stories on a global basis include Finland, Korea, and Sweden. In all three, there are very large investments within industry for R and D and commercialization.

Last week I had the honour—it really was an honour—to speak to the European Union committee. I was the keynote speaker in Istanbul on research and technology for development. That is the terminology the Europeans use, which we would call science and technology, or research and innovation. I was invited there, I have to tell you, because of the reputation Canada has in S and T policy and accomplishments. Yes, we have challenges, but we also have accomplishments.

The warm-up speaker before me was the former Prime Minister of Finland, Esko Aho. He spoke for 15 minutes on transforming Finland from a natural-resource-based economy to one that is knowledge-based, a mixed economy. It's not just Nokia, which we all know, just as we do RIM in Canada, but it's also converting forests to value-added products, something in an area Canada has not taken advantage of, other than to produce paper and some other things. He mentioned some of the tools or instruments the Finnish government has used to make this happen and to accelerate its development. I fed that information in to David O'Brien's working group.

There are other best practices elsewhere, but those countries I mentioned really have much to be proud of in terms of what they've done in that regard.

So there is commercialization from an industry perspective: big companies spinning off small companies, small companies being created, and then of course the creation of companies from academia. We've made progress in this regard, but this is an area in which we need to make significant improvements in the coming years.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you for that.

I have no more questions, Chair.

But Mrs. Munroe-Blum, could you please answer?

[Dr. Heather Munroe-Blum]

Yes, if I could augment what Howard said, I think we've been in an experimental mode in Canada for the last 10 to 15 years. When I think about the middle of the 1990s, when dramatic cuts were taken in the federal granting councils, in the provincial university systems, I think we've come an enormous way forward with the great, well-thought-out, creative investments in attracting and retaining great talent--the Canada research chairs, the Canada Foundation for Innovation--the transition of the Medical Research Council into the Canadian Institutes of Health Research, and beginning to deal with the full research costs of research done through universities.

I'll just say our challenges are twofold. One is that we are still undereducating our populace. At the end of the day, whether you look at commercialization as one of the outcomes or you look at the health and societal benefits that come from having a strong research, science, and technology innovation culture, you can see that Canada is doing well at the community college level, but underperforming in preparing people at the masters and doctoral levels, particularly in science-related degrees. That's an area I think we can take on and prevail in.

The second is that when we look at inter-country comparisons--and this will be very important for our state of the nation report--we tend to look consistently at those that have been successful, which are, as Howard said, these small nation states. You could add Israel and Singapore to the list he gave. Both our challenge and our strength is that we have a huge geography with a relatively small population. It would fit into California readily. Tokyo has more people than the whole nation of Canada. This large geography has created strength in our capacity to network, strength in our ability to understand that it's only through harnessing the synergies of private sector and government investment and what our universities, research institutes, and educational institutions do that we will really have outstanding areas of impact. We need to think more strategically about that. In that regard, Australia is a great example. It doesn't have the U.S. south of its border, but it has some other comparisons with Canada.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. McTeague.

We'll go to Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chair.

The government would like to concentrate its research resources in four priority areas: environmental science and technologies, natural resources and energy, health and related life sciences and information and communications technologies.

Could you expand a little more on the first two of those areas and tell me what mandate the government has given you in that regard?

[Dr. Howard Alper]

If I may, I will answer in English.

In the two areas you mentioned—natural resources and energy, and the environment—vis-à-vis also commercialization, there are a number of issues and challenges in Canada that need to be addressed and that can make significant progress through research in the next five to ten years.

Water is one area. Water is very important to us environmentally, the water and energy nexus. For instance, in Alberta with the oil sands, technology has improved significantly in the last 15 to 20 years such that, at the current cost of a barrel of oil, it is profitable to upgrade the tar sands. But there are challenges. There are technology challenges, and there are environmental challenges. So it really spans both areas, energy and the environment.

The consumption of water in the process used to upgrade oil sands is not sustainable. We're using far too much water, so we need to develop some new technology that either reduces the consumption of water or a totally different technology that doesn't use water at all. A lot of important research needs to be done in that area, and from an environmental perspective, the byproducts in the upgrading of oil are mountains of solids, sulphur-containing solids and others, that are damaging to the environment. That issue has to be addressed. So that's just one.That's the water issue, and as well, there is the oil sands issue.

There are areas in Canada that, for the future, could yield new benefit. One is research in the Arctic, the north, both from an environmental point of view and from an energy perspective. That too is important. There is sensor technology for environmental applications, not only discovery of new places to farm—more advanced GPS technology—or security-based work to protect our environment, but other applications as well.

Heather, do you want to add anything?

[Dr. Heather Munroe-Blum]

Did you also ask why those four areas?

[Robert Vincent, Bloc, Shefford, QC]

No, I did not ask why the four areas.

[Dr. Heather Munroe-Blum]

I misunderstood. Thank you.

[Robert Vincent, Bloc, Shefford, QC]

I was interested in the way that you spoke about the tar sands. You said that water is used to extract oil from the tar sands.

Would it not be up to the oil industry to do that research? Why has the government given you the mandate to do the research at the same time as the oil industry? Is it to help the oil companies speed up the process? The deadline to find a solution to the tar sands is 2010 or 2012. By giving you the mandate, is the government not diverting the work that should be done by the oil companies?

[Dr. Howard Alper]

A lot of the work that has to be done is fundamental, and to address the two issues I just described requires basic research. That research takes place not only in a company but also in academia, particularly the two issues I mentioned, developing technology to reduce water consumption and to minimize economic issues. But there are other places. Alternative energy such as wind power, solar energy, and so on, are all part of the energy domain, and those are important areas for research for Canada.

When we say energy and natural resources, we are referring to a portfolio of approaches to address the challenges of non-renewable energy and dealing with opportunities in the renewable sector. It's not just dealing with oil and gas, it's not just dealing with Alberta; it's dealing with the east—for example, Nova Scotia and carbon capture, storage, and sequestration. This is a big issue. The G8, at its summit in July, will be dealing as a priority with the development of a low-carbon society, and that's one approach to doing so.

This research spans many different parts of the country and different components in addition to petroleum.

[The Chair, Conservative, James Rajotte]

Do you have any other questions, Mr. Vincent?

[Robert Vincent, Bloc, Shefford, QC]

I would have preferred your answer to have been a bit more specific to the tar sands. My main question had to do with the tar sands. I would like to hear you respond about your study of the tar sands.

[Dr. Howard Alper]

I'm a chemist, and that's not a disadvantage. By the way, my answer has nothing to do with the science, technology, and innovation account. I'm talking as a chemist about a particular issue that needs attention.

Enormous progress was made, from the 1970s to the 1990s, in the tar sands technology. We produce quite a lot of oil per day by these methods. Nevertheless, there is research going on now, but certainly not enough of it, on trying to make a watershed discovery will change the dynamics of the field. Let me phrase it that way. I think this is important to understand. We've made enormous progress in this sector; however, challenges remain in both water consumption and environmental issues. These challenges are non-trivial, and we need to focus our energies on developing new technologies that minimize their impacts.

The other thing is to—