Industry Committee on June 12th, 2008

[Dr. Art McDonald]

In our case, we have six years of projected support from the Province of Ontario, combined with contributions from the universities over that period of time. We are in the same situation as NEPTUNE with respect to having two years of commitment from CFI and NSERC for matching, but it is the ongoing longer term that we're missing.

[Bruce Stanton, Conservative, Simcoe North, ON]

So in fact when we look at the big science projects across the country—and we can probably think of at least a dozen or so, including the three that are here today, but there are others, of course, that are very much in the same situation—we're faced with a situation where Canada already is proportionately investing more of its public investment in government-sponsored as opposed to private investment, or shared investment between industry and government, in research in the country. We're lagging behind other OECD countries in terms of tapping into that business component. What you're proposing is that we continue to bump up and invest more steadily.

This becomes a bit of a problem. As representatives of the public, in terms of the value for the dollar, if you will, we have a responsibility to make sure the public is getting their money's worth, yet we're already somewhat offside on that. Do you have a comment on how we can do what you would like us to do in funding those operating dollars more heavily but, at the same time, be able to rationalize that investment to Canadians?

[The Chair, Conservative, James Rajotte]

Why don't we start with Mr. McDonald this time, because I'm always cutting him off.

[Bruce Stanton, Conservative, Simcoe North, ON]

Then I'm be sure I'll be done, Mr. Chair.

Could each of you comment?

[Dr. Art McDonald]

As we said earlier, Canada is the envy of other countries in terms of its ability to move forward in research and development as a result of the programs that have been put in place in recent years. And we recognize, of course, that the percentage of GDP being expended by private industry in research and development is lower than in other countries, and that's certainly something we need to target as well.

However, we have to be very careful that we don't lose the advantage that we have in the research that is being supported by the government base, because it's that advantage in Canada that will translate ultimately into the ability of our industries to be competitive in high-tech areas. What we need to be doing is fostering that technology transfer process, but we don't want to do it at the expense of becoming poorer in our ability to do the basic things, or you won't have the ability then to get the industries to be world class.

What we're talking about is something that's missing in the appropriate distribution of funds within the original part you were talking about that is supported by government. Don't lose that advantage in the interests of trying to do something else.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay.

[Guy Nelson]

In the astronomy umbrella, I think our company is probably a good example of the direct benefits. The government initially invested in the Canada-France-Hawaii telescope. Our company built the first enclosure for that. From what was spent or invested to buy Canada's ownership position in that particular telescope, we made twice what other countries were contributing to the construction. That has continued to grow. Again, I would say it's probably because of Canada's strength in engineering and construction that we've been able to become leaders as a company and as an industry in the build-out of these facilities globally.

The spinoff we get from that.... I've actually been watching a group, the Fraunhofer Institute in Germany, which is more of an NRC equivalent, that has gone even further in taking research dollars and turning them into a significant revenue from commercialization. So I think there are things we can learn as a country by looking at some other places that have done quite well in commercializing technologies and emulating those where appropriate.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Taylor, just briefly.

[Dr. Martin Taylor]

Very quickly, I have two comments.

One is that in the case of NEPTUNE certainly, I think one also has to look at it in terms of the return on investment for the public good. And this is in relation to many of the areas I briefly outlined in my opening remarks on the public policy applications of the research, such as hazard mitigation, sovereignty and security, resource assessment, ocean climate dynamics, and those kinds of areas where that return on investment is vital.

My second comment, picking up on a theme that both of the others have mentioned, is that the partnering with industry is already under way. OceanWorks, a major company in North Vancouver, is now competitive in ocean observing systems in Taiwan and Europe as a consequence of the work they're doing with VENUS and NEPTUNE.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Stanton.

Monsieur Vincent, s'il vous plaît.

[Robert Vincent, Bloc, Shefford, QC]

Thank you.

Good day, ladies and gentlemen. Thank you for your patience.

I'm concerned about a few things. Mr. McDonald, you stated that there was no long-term funding program in place. What could potentially happen? In your opinion, could the government slash the budgets allocated to you at any time? Are you concerned that at some point, the powers that be may decide that you have received enough funding and let things slide? Are you worried that this might happen?

[Dr. Art McDonald]

Well, we certainly worry about such things. Who would not?

You are attempting to establish a world-class facility in a situation of great uncertainty, where you're attempting to make promises to international groups who are wanting to come and perform experiments at your facility. However, we were given assurance by the ad hoc actions taken by NSERC and CFI that they appreciated the value of not losing the opportunities that we had—and they should have, based on the strong peer reviews all of these projects had received—and in coming forward with the funding for the short term.

The difficulty is that it is not an appropriate way to do things, if you're going to start out and spend money from a capital point of view—and we have spent a substantial amount through CFI on very good projects—to not, at the same time, have a mechanism whereby you have the operating funding in place, matching the decisions that were made in the first place on the basis of strong peer review. NEPTUNE and SNO and the Amundsen were the top three out of 37 projects that were put forward at the time CFI made those decisions. And the fact that the operating program is not there to go along with these capital decisions for the long term is the thing that's missing. Right now, it is not within NSERC's capability to be able to provide such long-term operating funding without impacting the experiments that would happen at these facilities.

[Robert Vincent, Bloc, Shefford, QC]

If I understand correctly, it is like wanting to restore a car and midway through the process, funding dries up and the restoration is put on hold. It makes no sense for the government to think this way, that is to invest this kind of money in a research company... Every day, you must worry—and that goes for everyone here today—that you invested your time and money and yet, may not have enough funding to complete the project.

Do you have any suggestions for us?Only 3% of the budget envelope goes to big science projects. How do you hope to get a share of this money in order to continue your work?

[The Chair, Conservative, James Rajotte]

Mr. Sinervo.

[Dr. Pekka Sinervo]

The CFI—which was one of the instruments by which the federal government had put in place the capital funding—recognized fairly early in the program that there was in fact a shortfall in operating support. The legislation for CFI was amended to allow the CFI to use some of its own funding to provide interim operational support. And that has now become a standard part of every CFI project.

However, it is a formulaic model, and it's a small fraction of the total amount of funding that's actually required, and there is no long-term, ongoing commitment. And that's what you're seeing happen with regard to NEPTUNE and the SNOLAB, in that such funding is simply no longer available.

So it's not that there wasn't a recognition early on, but that the government didn't act to put in place a program that would provide the ongoing operational support, or identify the agency that would actually take responsibility for that. And that's the situation we're facing today.

[The Chair, Conservative, James Rajotte]

Mr. Taylor.

[Dr. Martin Taylor]

As I mentioned in my opening remarks, there are models already in existence that I think are the solution to the problem. A five-year funding cycle that provides sustained and predictable funding based on peer review of performance is the way to go, in my view. We've got TRIUMF funding on that basis at the moment. It happens to be a contribution agreement through NRC. That's one particular mechanism; it's not the only mechanism that might be possible.

I think we've made a commitment to these big facilities for all the right reasons, and now we have to follow through on a mechanism that will allow us to sustain them so that we can take international pride in what we've achieved.

[The Chair, Conservative, James Rajotte]

Go ahead, Mr. Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Earlier, you alluded to applied science policies. I'm fascinated by the topic. Could you elaborate further on this for us? We can't help but think about funding. I emphasize this matter because it's important to you. However, we need to break down the budget envelope allocated to you.

Is the field of applied science important enough to take concrete initiatives to secure a portion of this funding?

[The Chair, Conservative, James Rajotte]

Go ahead, Dr. Taylor.

[Dr. Martin Taylor]

I think you're alluding in part to the remarks I made earlier in terms of the applications, particularly in the oceans area.

We obviously chose to build NEPTUNE Canada on the Juan de Fuca plate off the west coast of North America because it is one of the world's most active tectonic plates in terms of earthquake hazard and risk. The seismometers that are part of the NEPTUNE system will give us an ability to better understand those dynamics and earthquake forecasts as a consequence. That's one area.

Another area is fisheries. We're seeing huge changes in terms of fish stocks. Our ability to monitor how the oceans are changing as an environment and ecosystem that supports, or doesn't support, various fish stocks is critical, and so on. I don't need to repeat those areas.

I think a consequence of that--and it goes back to the comments I made just a few moments ago--is that these areas are essentially servicing both public good and private benefit. Industry obviously has a vital need to understand what's happening; the fishing industry is a major one. If we talk about offshore resources, that's another one, in terms of gas hydrates, for example, which we're into. We can bring private industry to the table as partners with us when we've got the basic research in place that helps them to move their commercial interests forward, but at the same time we do need to balance that with the fact that there is a vital piece of public good here. That's why we've been partnering with the Department of Fisheries and Oceans, Environment Canada, Natural Resources Canada, and DND. They're in there in spades in terms of their policy needs.

[The Chair, Conservative, James Rajotte]

Thank you.

Merci , monsieur Vincent.

We'll go to Mr. Arthur.

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

Thank you, Mr. Chairman.

I would like to move forward from the question that was asked by Mr. Eyking, who brought you to talk about science culture and the necessity of teaching kids the importance of science. Those kids have parents. Those parents pay taxes. Those taxes will perhaps come back to you as grants or operating expenses at some point. The problem is that the Canadian taxpayer will probably not go to university, has never been near a university, and doesn't know about a university. He dreams about the fact that his children will one day go to university; he's not sure about that either.

The responsibility to sell to the Canadian taxpayer the necessity of funding science has always been the responsibility of the government, but the government cannot do such a good job of selling its own expenses. Press conferences and cocktails are nice, but you have the responsibility of selling to the taxpayer the necessity of funding your projects and your toys.

Could you be very specific as far as NEPTUNE is concerned or as far as the underground laboratory in Sudbury is concerned? Tell the committee the concrete, practical things that you've done over the years to bring the Canadian taxpayer on side. What have you done? If the answer is not much, what do you plan on doing?

[The Chair, Conservative, James Rajotte]

Would you like to comment, Dr. Taylor?

[Dr. Martin Taylor]

It's a very timely question.

A week ago I was with the board of Ocean Networks Canada presenting a business plan to them. One part of that business plan is public outreach. NEPTUNE, remember, is going to be fully operational within the next year, so at this point we're talking more in terms of what will happen than what has already happened, but within that plan we have developed a number of initiatives that will indeed build on the very good exposure that we've had already.

Part of that is through the electronic media, but very significantly, I think, we are using the Internet now as a mechanism that brings the oceans into the lives of the people you're talking about--not the people who have to go to university to find it, but the people who find the research right where it is. Oftentimes that will come through their kids; the kids will be the conduit. There are all sorts of creative ways in which one can bring that ocean environment to the living rooms of the Canadian public--