Industry Committee on May 29th, 2008

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

Thank you, Mr. Chair. I will be splitting my time with Mr. Arthur.

Thank you, panel, for coming.

I'm going to direct my questions to Dr. Brooks. We had the privilege of doing a tour through TRIUMF and were introduced to young lady who was involved in particle physics work. I have to tell you something: there's a difference between scientists and entrepreneurs. These people are not entrepreneurs.

We've conducted this tour and, obviously, as a government, we want bang for the buck, but I want you to be dead honest. Are we barking up the wrong tree? I'm addressing you as an academic, but should we be allowing students who have the potential to go on with this? An entrepreneur is going to see an idea, and the reason he drops out of school is that he wants to get, and market, that thing before somebody else does. But these people are not slightly interested in that. They couldn't care a hoot.

Should we allow them scholarships, bursaries, and grants? And should we, as a government, just basically fund science, and just let it go and let the chips fall?

[Dr. Donald Brooks]

Well, the answer is yes, you do and you should.

Did you go to Nordion at the TRIUMF site?

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

Yes, but most of us were in a daze.

[Dr. Donald Brooks]

I understand that. I'm on the TRIUMF board, and I go to these meetings and come out after meeting atomic physicists and....

A lot of people at TRIUMF, as you said, are fundamental physicists at the very basic level. These are the guys who gave us the atomic bomb. They've done a lot. You could argue about this, but there's an immense amount that's come out of those programs generated by people like them.

There are also people at TRIUMF who recognize the strength in what they've developed. They don't expect the investigators to do it, but they have the engineering background or just the smarts to understand that, well, if we can make all these funny isotopes and there are some guys down the street who are looking in brains with these isotopes, let's get together. That's how the PET program started here, and where the medical isotopes that Nordion produces all over the world came from.

If you look at almost any field that suddenly takes off, there's some fundamental discovery behind it. There are all these stupid examples: RIM, and computers, and chips, and all of that stuff. And we cannot tell where these things come from.

This Galvanox process started with a modelling exercise. Dave Dolphin was working on those kinds of molecules for 20 years and suddenly this idea came along to make a drug that, when you flash it, does something inside your head.

We don't know where they're going to come from.

The question over here is correct: these are not the high percentage winners, but boy, when they win, they win hugely. And our society has moved ahead because of a lot of these events. Universities are the only places we can do that. You're not going to do it in a company, or rarely. So I think, absolutely, you have to fund it.

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

Do you feel that you're being pressured by governments to produce monetarily, when in fact you should—

[The Chair, Conservative, James Rajotte]

There are two minutes left, Mr. Van Kesteren.

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

I have to cede my time. Maybe we'll have a chance to talk about this a little later.

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

Thank you, Mr. chair.

Before asking my question, I want to express my satisfaction at the end of a week that has been remarkable. I want to underline your leadership and the leadership of your co-chairs as well as of Mr. Carrie. The working atmosphere of this committee is extremely positive. People In Vancouver will be very disappointed if they expected to see a House of Commons committee where members fight among themselves as it sometimes happens in other committees in Ottawa.

The Standing Committee on Industry, Science and Technology is very effective. I would like to thank our chairman, who is in large part to responsible for this state of affairs, as well as Mr. McTeague, Mrs. Brunelle and Mr. Carrie. I also want to thank our staff, the clerk, the researchers, the translators and the people responsible for the sound system and for logistics. This has been an exhausting but quite memorable week.

Now, we look for friends along the way, as we did during this past week. In Saskatoon the other day, we had a Mr. McCulloch, who was talking about his community college, like the infantrymen you just described, which cannot get any respect.

You just expressed the same thing. At the college level, you seem to be the Rodney Dangerfields of innovation: you never get any respect.

[Voices]

Oh, oh!

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

So my question is, are you victims of snobbery?

[Dr. James Watzke]

I'll take that.

You know what? I have a PhD and I'm proud of it, but some of that does go on. The reason I'm not in therapy over it is that my colleagues here know that when we do work together, BCIT has a contribution to make.

I'm not sure the external system encourages that marriage often enough. That's why I came today, as I'm hoping to make that work in some way. I hope they would agree that when we do get to the same table to help solve a problem—which often has started in their halls or labs—and which we're trying to get it closer to the market, they would know that we have a role to play. But the problem is that we're not forced to dance together.

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

You expect them to come and dance, but then you would like somebody to force them to see that you exist.

[Dr. James Watzke]

Yes.

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

Thank you, sir.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Arthur. And thank you for your very kind statement about our committee and our staff.

Unfortunately, we are running out of time, and three of our members have to catch a plane back east. Perhaps I'll ask a very short question, just to finalize this.

Mr. Volker, what you said about being an angel investor in the venture capital community was different from what we've heard before. I'm just wondering as chair if we would be able as a committee to unofficially observe your community get-together and see the process from the inside, so we have an understanding of how it would actually work at some point. Do you allow observers to come in?

[Michael Volker]

Absolutely we do, and we encourage it.

[The Chair, Conservative, James Rajotte]

I think it would be very educational for the committee to see that.

Mr. Brooks, you've mentioned some very important points about indirect costs, and you've also mentioned something with respect to affiliate programs. On the affiliate programs, could just get us some more information on how they actually work? They're new to us. You don't have to provide it now.

We appreciate the indirect costs of research, as we've asked a lot of witnesses what the ratios should be. So are you saying that if we increase funding, say, for the granting councils, there has to be a commensurate 25% increase for indirect costs of research? Am I reading you correctly on that?

[Dr. Donald Brooks]

Well, there are two elements. One is that if you increase it for the councils, you should at least increase the indirect costs to cover that increment. At the 25% level, that's an easy bit of math.

The other piece is that the real costs to us are between 40% and 50%. The universities and AUCC have been pushing for a long time to move that 25% to 40%, and then we'd be closer to recovering what it actually costs to do the research.

Right now, out of our pocket, out of our endowment, and from what we steal from our teaching—we get it from anywhere we can—we have to put the 15% or 20% that we don't get into each research project. It costs us money to do research. After a while you start saying, well, don't answer any more, because we can't afford it. We can't afford to run some of the buildings that we have from CFI funds. The carrying costs and the indirect costs are major things for the universities.

[The Chair, Conservative, James Rajotte]

If you have any further details on that, please provide them.

But you're saying about, for example, Genome Canada that if we increased the funding from $140 million to $280 million, the indirect costs would therefore be $70 million. So they are basically about 50%.

[Dr. Donald Brooks]

Yes. There's no money at all for the indirect costs of Genome Canada; they're not covered by the program. CFI is not covered by the program. None of the disease clubs, the charities, are covered by the program. Only NCE is. I don't even know if CECR is.

Does anybody know? We haven't been told. It was run through the NCE office, but I don't know if CECR has attracted indirect costs or not.

[The Chair, Conservative, James Rajotte]

If you have anything further to add on the ratio of funding, we'd certainly appreciate that number.

[Dr. Donald Brooks]

I'm sorry, but I don't understand what you mean. Do you mean the ratio of the indirect costs to direct costs?

[The Chair, Conservative, James Rajotte]

I mean in terms of the 40% figure; say $100 million were allocated under granting council funding, then I assume $40 million—

[Dr. Donald Brooks]

We would like to see it to go to 40%. Right now it's in the order of 25%, depending on the institution.

[The Chair, Conservative, James Rajotte]

But you also, then, want CFI and other programs—