Industry Committee on May 28th, 2008

[Richard Florizone]

That would be about right, yes.

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

Is it part of the problem too--

[The Chair, Conservative, James Rajotte]

This is your last question, Mr. Van Kesteren.

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

--that we've traditionally kept the price of tuition down, and as a result, you've had to come cap in hand to the governments for a lot of these projects?

[Richard Florizone]

That's a very difficult issue and one we're wrestling with now. Education is obviously both a public and a private good. What's the appropriate price to pay for it from a public policy perspective? It's a very thorny question and one we're still wrestling with.

Certainly, university core operations, in some ways, are still underfunded versus their American counterparts. Does that translate into funding for major research facilities? I'm not sure I'd make that link, because synchrotrons, for example, in the U.S. wouldn't be funded through tuition. They would be funded directly by Department of Energy grants.

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

But it comes from somewhere, and if it's going somewhere, it's obviously coming out of the same pie.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren. We'll go to Mr. Simard.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much.

Mr. McCulloch, I just have a comment with regard to the built-in biases against community colleges. I think you're absolutely right, but I think things have changed, and I'm not sure we get that message out to young people. When I go to my schools and tell them that a commercial construction project manager can now make $120,000 a year in Manitoba, people don't believe it. I'm not sure that message is getting out there. So there may be some work to do there.

Mr. Florizone, one of the questions I asked in Ottawa with regard to big science projects was what the benefits to Canada are. We've seen your project today. We visited the level 4 lab, the disease control lab, in Winnipeg. And one thing you're not talking about is third-party success.

In Manitoba, Smith Carter Architects and Engineers Inc. is now involved in almost every level 4 lab in the world. They've benefited from $1 billion of work in the couple of years since they built that lab. Cangene is another one that's benefited hugely from that. You've spoken about UMA Engineering Ltd. here that has basically worked on future synchrotrons. I think that is something you should be talking about. We just heard about it in passing, and I think it should be front and centre. It would be easy to convince me to fund you $20 million a year if you told me that the spinoff has been this, this, and this.

I don't think we have those numbers very clearly. But I tell you, in Winnipeg it was very clear from Smith Carter Architects that the benefits have been huge. They've doubled their volume and doubled the number of employees. And that's only one firm. I think you should probably put that one front and centre.

So that's one of the comments. With regard to SaskTel, one of the comments we had this morning was that some of the start-ups and some of the smaller companies in the technology field were having a hard time getting on with bigger companies like SaskTel, because they're not tried and proven, if you will. What came to mind is that SaskTel actually signed a contract with a small firm in my riding in Manitoba that was an up-and-comer. So I congratulate you for that. Obviously, it's not everywhere in the world that you're seeing people having to go to IBM, and that's a big challenge, and we can talk about that later. I'm not going to name the company, but it was at a critical time in their career. You signed a contract with them and got them up and running.

I wonder, Mr. Florizone, if you could just comment on that. How come we're only hearing about these third-party successes as kind of an afterthought? I think it is absolutely one of the most important things we've heard here today.

[Richard Florizone]

That's a good reminder, and if you don't mind me saying, Smith Carter is the lead consultant on InterVac. So that's an excellent example.

I don't know what to say except thank you for the advice. I think we need to continue to think about that. I think the benefits of these types of facilities are multiple in terms of the training of the people and the economic spinoffs. The challenge is always to kind of give a balanced explanation of that. You can see from the early days of the synchrotron when, I think, in some ways, the industrial spinoff part was maybe overplayed. We've seen that when the expectations are not right. So the challenge is talking about the reality, talking about the real things we've achieved, and setting expectations.

[Raymond Simard, Liberal, Saint Boniface, MB]

The challenge is always finding a balance between the public policy debate and the taking-care-of-business part. We have to be careful. If one of these projects discovers a great product, it could end up helping Canadians down the road. There are public policy issues as well. You have to find a balance between working 24 hours a day and a mandate that makes sense, something that is good for Canada over the long term.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

Monsieur Arthur.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Mr. Florizone, how long is it since you had your first industrial customer at the synchrotron? When was your first customer present?

[Richard Florizone]

It was before the facility was operational. That sounds like a crazy answer; because this was a core part of the mandate and we were so committed to it early on, we built an industrial development team before the machine was actually operational. So some of the early partnerships would go back roughly three years, when we actually entered into partnerships in conducting experiments at other facilities.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

How many times were industrial customers refused time because the machine was busy doing something else?

[Richard Florizone]

We've done about 60 industrial projects. I don't know the number of refusals. If there were any, though, it wouldn't be because of the peer-reviewed science, the competition from that. It would be simply because we're still up and running with the operations.

In January 2007, we started to get our first publishable data. These types of facilities are very complicated. It's kind of like saying January 2007 was the first time the car started and went down the track, but yet you continue to refine and tune the instruments. Along with pursuing funding, a lot of the time has been invested in fine-tuning the machine. So that's been a bit of a barrier.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Okay, I understand that. Fine-tuning, repairing, not having enough electricity to operate—these I can understand. But I'm trying to figure out if there was a time when an industrial customer was refused because the machine was busy doing something else.

[Richard Florizone]

I would be very surprised. I would need the director to give you a full answer, but I would be very surprised if that were the case.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Are you able to realize that if such an event had happened it would be kind of revolting for Joe Canadian, who paid for your machine?

[Richard Florizone]

Certainly.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

I'm going to take the last spot here, as the chair's prerogative.

I wanted to touch upon two broad things, both related to the question of innovation. I want to ask about how it happens, and how the innovation continuum works. I wanted to use two examples: one in the ICT sector, one in the health sector.

Mr. Meldrum, I'll put this question to you. You'll probably enjoy answering this, because one of the common criticisms of business in Canada is that it does not invest enough in research and development. However, your sector is probably the biggest exception. It invests in R and D. It invests in innovation, and it has stupendous successes. Take this BlackBerry; if you'd told me 10 years ago I could have something that would have phone, e-mail, and Internet capability, 6,000 contacts.... Everywhere I've travelled in the world, this thing has worked. That's an amazing innovation.

Could you talk about why your sector invests in innovation? What is it that causes you to invest? Just give us your thoughts. Is there a government policy we should look at changing? Or do we just have to tell other sectors to pull up their socks and start investing the way the ICT sector does?

[John Meldrum]

Technological change in the telecommunications industry started the day after the phone was invented. So there's a long history of innovation and improvements. I'd say today this is driven primarily by consumers and their needs and demands, and it's centred on the imagination of folks who see the opportunities out there.

We're probably more of an exception, not being a standard incumbent phone company. But as an industry, the incumbent phone companies traditionally haven't done a lot of direct investment themselves. I would say most of the investment in R and D is by suppliers, who are trying to keep ahead and develop new products and services to sell to the phone companies. Indirectly, we do a lot of investing in R and D, but it's mostly applied research and development that we do ourselves as a phone company.

[The Chair, Conservative, James Rajotte]

Can I just follow up on that? You've mentioned two things--being driven by consumers and imagination. I think that's exactly right. The key question is how you keep that in, whether it's a company or an institution or whatever.

I had the opportunity to tour the Google facility in New York, and it was fascinating. Twenty percent of the employees' time is blue-sky time, where you leave your desk and you go wherever you want and you think. They try to be so non-traditional in the way they run their company. As one of them said to me, “If we become traditional”--and they used that as a pejorative term, even though it's not a pejorative term--“a conservative company, we'll cease to be an innovative company. We don't want to become like those other companies.” They didn't mention names. But they want to have this really non-traditional environment where people can just sit around a desk with their colleagues and imagine and dream up concepts like Gmail.

How do you keep that imagination alive in a company that gets bigger and bigger, like Google has over the last 11 years?

[John Meldrum]

It's certainly a challenge. One of the initiatives for us this year is to focus on innovation, to try to get back to where we were a few years ago when I think we were more innovative as a company. It is hard to say to an organization, to the 5,000 people who work for SaskTel, “Be more innovative.” You can't just instruct it. You have to feel it, you have to feel that you're empowered to do things differently, and try to achieve different objectives.

With a company like Google, we may find that they lose that edge and start to go backwards.

[The Chair, Conservative, James Rajotte]

For the second example, I want to turn to the health sector. It deals with so many...certainly from my city and very close to me. It's the Edmonton Protocol. It involves a researcher named Ray Rajotte, whom some of you may know.

Ray was a graduate of a polytechnic school. He was an X-ray technician, and he then went on to get other degrees at the University of Alberta. He started his research in an old abandoned washroom on the bottom floor of the University of Alberta, and 30 years later he's on the front page of The New York Times. President Clinton is talking about the Edmonton Protocol. By taking islets from a pancreas and transferring them into a patient, you can get that person off of insulin shots.

I had someone actually come up to me and say that my uncle improved their life, and that was a real moment for me. But if I'd said to Ray in 1977, “Ray, you're going to be famous for the Edmonton Protocol on taking islets out of a pancreas”, he would have said that I was nuts, that there was no way he was going there.

It shows the challenge we face as policymakers and parliamentarians. How would you identify a Ray Rajotte in 1977? It's easy in 2005 for us to all stand up and say what a wonderful thing this is, let's fund it. And that's what we did. The federal government stepped in at the end and started funding it, saying “Isn't this wonderful.” But how do you identify that? You are talking about funding basic research over a 30-year period. Maybe that would have ended up producing nothing, but it did end up making a difference in a lot of people's lives.

Mr. McCulloch, I was struck when you talked about big science projects requiring both. One of the reasons it was successful was that Ray had an engineering technical background that allowed him to make different products to actually freeze the islets and then transplant them.

That's a key question for me. How do you recognize that there's a genesis there that could turn into something, allow it to turn into something, but not fund 20 white elephants? It's a real challenge, and I think that's where a lot of our questions are going.

I don't know if anyone wants to address that issue.

Mr. McCulloch, do you want to address that?