Industry Committee on April 18th, 2013

[The Chair, Conservative, David Sweet]

Good afternoon, ladies and gentlemen. Welcome to meeting 64 of the Standing Committee on Industry, Science and Technology.

Before us we have the Honourable Gary Goodyear, Minister of State for Science and Technology as well as for the Federal Economic Development Agency for Southern Ontario.

Along with him we have, from the Department of Industry, Robert Dunlop, who is the assistant deputy minister for the science and innovation sector. From the Federal Economic Development Agency for Southern Ontario we have Bruce Archibald, the president; Linda Cousineau, chief financial officer, information management and informatics; as well as Clair Gartley, vice-president, business, innovation and community development.

Ladies and gentlemen, before I call on the minister to go ahead with his opening remarks, I should tell you that Minister Paradis and Minister Bernier have confirmed that they will be with us on May 2 for the first hour, from 3:30 until 4:30. We had already made our schedule and had, as was mentioned, some flexibility, so they will be taking that slot.

Without any further delay, Minister Goodyear, it's good to have you here, and please go ahead with your opening remarks.

[Gary Goodyear, Conservative, Minister of State (Science and Technology) (Federal Economic Development Agency for Southern Ontario)]

Thank you, Chair. I appreciate that welcome.

Good morning, committee members and honourable colleagues. It is indeed a pleasure to be here again with you to answer questions and share information about the science and technology issues as they relate to my portfolio and the main estimates. Given that my portfolio also includes the Federal Economic Development Agency for Southern Ontario, I'm more than happy to speak to you about the overall efforts in that regard as well.

Since 2006, our government has provided more than nine billion new dollars in new resources to support science, technology, and business innovation. This funding has helped to make Canada a world leader in post-secondary education research and to create the knowledge and highly skilled workforce that businesses require. We continue to work in this regard as well to innovate and create even more high-value jobs.

Economic action plan 2013, the latest budget, builds on this foundation, helping to position Canada for stability and long-term economic prosperity, as well as a higher quality of life for Canadians, while again sticking to our promise of keeping taxes low for families and businesses and balancing the budget by 2015.

We are working to strengthen Canada's world-class research talent through such programs as the Vanier Canada graduate scholarships, the Banting post-doctoral fellowships, and the Canada excellence research chairs programs, and many others. The economic action plan further strengthens our advanced research capacity by providing another ongoing $37 million in new annual support for research partnerships with industry through the granting councils.

We are strengthening research infrastructure as well, through the Canada Foundation for Innovation. As you know, the 2013 budget allocates $225 million to support new competitions and cyber infrastructure and to sustain its operations, as well as to deliver programs that enhance collaboration and partnerships between the private and public sectors. Programs such as the centres of excellence for commercialization and research, the business-led networks of centres of excellence, the industrial research and development internships, and the college and community innovation programs all aim to build industry-academic connections that we know will lead to new products and processes in the marketplace.

As well, let me take this opportunity to highlight some of the findings in the recent Council of Canadian Academies report on the state of Canada's science and technology enterprise as it currently exists. The report concluded that Canadian science and technology is healthy and growing in both output and impact, with Canada being the only G-7 country to have achieved an increase above the world average in the number of scientific papers produced between 2005 and 2010.

The report also notes that there has been a net migration of researchers into Canada. This is probably the most profound and irrefutable evidence that our strategy here in Canada is working and that we should continue, so of course budget 2013 focuses on the drivers of growth and job creation, which include innovation, investment, education, skills, and healthy communities. This approach promotes business innovation through improved support for high-growth companies, research collaborations, procurement opportunities, applied research, risk financing, and so on.

Those measures include: $121 million over two years for the National Research Council to help continue its transformation; $20 million over three years for a National Research Council industrial research assistance program pilot project initiative to help small businesses access the research capacity and services at our post-secondary institutions and at not-for-profit research institutions of their choice; $325 million over eight years to Sustainable Development Technology Canada to continue support for the development and the demonstration of new clean technologies that can create efficiencies in businesses and help them with their bottom lines as well as contribute, obviously, to a cleaner environment and more sustainable economic development; $60 million over five years to help high-potential incubators and accelerators; a new entrepreneurship award that celebrates Canadian entrepreneurs; and $18 million over two years to the Canadian Youth Business Foundation to help young entrepreneurs.

Significant investments, obviously, in budget 2013 are also targeted toward human health and genomics, a very exciting basic research area, skills training, manufacturing, the aerospace and space sectors, infrastructure, and I could go on and on.

Given the level of business expenditures on research, science, and development, we want businesses to pursue innovation-based strategies that encourage them to increase their investments in machinery and equipment and help them gain access to highly skilled personnel and be more globally competitive. Our recent action plan 2013 included many new measures to do exactly that.

In addition to the science and tech portfolio, I am honoured to be the Minister of State for FedDev Ontario. This agency has been around a few years and in my view has made incredible efforts within southern Ontario to effectively support growth and long-term prosperity.

As you might know, southern Ontario, the area we work in, has approximately 12 million people, about 36% of the population of Canada. It is the heart of Canada's commercial core and does have incredible potential to create long-term success. Of course, the agency has funded hundreds and hundreds of projects in southern Ontario in this regard, but the agency is not just working with money. We are advocates for the region, conveners, and we are bringing together stakeholders, focusing on clusters, collaborations, and partnerships, building critical mass, again to get that edge on global competitiveness.

Some of the programs we have—and I'll be very brief—the applied research and commercialization initiative, for instance, have facilitated the development of hundreds of partnerships between the post-secondary institutions in southern Ontario and businesses. In fact, 560 businesses have been involved with students who get the added benefit of a real world educational experience.

We have put forward the prosperity initiative to help target investments to advance key economic growth in southern Ontario, including advanced manufacturing, digital media, green construction, and green automotive. I will give you another quick example of what this has done. We've made a significant investment in Western University's Fraunhofer Project Centre and Centre for Commercialization of Advanced Manufacturing Technology.

These centres will create opportunities literally for hundreds of businesses to collaborate with our educational institutions and not-for-profits to support global competitiveness coming out of southern Ontario in sectors, frankly, that are in the aerospace, defence, construction, medical devices, composite light-weight materials—another very exciting area of potential—automotive, and renewable energy sectors.

The facility itself will represent North America's premier hub for the development, validation, and industrial-scale testing of new advanced manufacturing materials and products.

We've also taken it upon ourselves to create a sense of curiosity for the next generation of business leaders with our youth STEM program. The folks involved in that have reached about 1.1 million kids in southern Ontario to get them stirred up about science and mathematics.

In our scientists and engineers in business initiative, we invested up to $7.5 million in this one project, VentureStart. VentureStart is a partnership of 12 research innovation centres throughout southern Ontario of course. It has already delivered entrepreneurship training to 128 highly qualified graduates, as well as provided mentoring support and seed financing for 88 new start-up businesses, and that's so far.

By the end of March 2014, VentureStart tells me they are online to fund 224 start-up businesses. Through other programs like investing in business innovation we're boosting private sector investment. This is an angel venture capital program to help businesses quickly bring their new ideas to market. We've been able to have significant leverage in this regard. I can tell you that the angel network in southern Ontario has grown from about 250 angels to well over 800 as a result of this program.

There are a suite of programs I'm happy to talk about, but mainly they fit under what we call the southern Ontario advantage initiatives. Under that suite of programs, we've invested more than $420 million in funding, resulting in partnerships with more than 5,000 organizations, and over $1.2 billion of additional funds leveraged for these investments—and those are almost exclusively non-governmental sources—as well as over $2 billion in a boost to the GDP.

In closing, Mr. Chair, I am pleased that economic action plan 2013 provides an additional $920 million over five years, which is basically renewing FedDev Ontario. This will start in April 2014 with $200 million of this renewal support to be allocated for the delivery of a new advanced manufacturing fund in Ontario.

The government's renewed commitment to the agency is clearly based on its success in creating jobs and increasing the productivity and competitiveness of southern Ontario.

There is still obviously a great depth of potential in the region, and I look forward to witnessing future successes in our incredible communities, forecasting great growth for them, for the nation, as well as continuing to grow the science and tech sector in Canada.

Mr. Chair, thank you for this time. I look forward to answering any questions the members may have with regard to my portfolio.

[The Chair, Conservative, David Sweet]

Thank you very much for your opening remarks, Minister Goodyear.

Now on to Mr. Lake for seven minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair, and thank you, minister, for coming here today.

You and I had the opportunity to take part in the Genome Canada funding announcement recently in Toronto. I had the opportunity to meet Dr. Stephen Scherer, a world-leading researcher based right here in Canada working on the autism genome project.

Time and again we hear wonderful things about great research being done across this country. Despite that, we hear you in the House of Commons having to answer questions from the opposition as well as questions from the media with respect to this apparent muzzling of scientists. I suspect that as we go through the course of this meeting today the opposition will continue to weave that fiction.

You consistently responded that there hasn't been a government in Canadian history that has invested in science and technology to the extent that our government has, and how proud we are to promote the important work our scientists are doing. You provided wonderful evidence, I think, demonstrating the extent to which we share research material and publish research findings. Their scientists provide thousands of interviews per year regarding their work and lecture at conferences all over the world.

Despite all this, and again as we'll probably hear a little later today, the opposition continues to weave their fiction and play political games with this. Could you share with us some facts and figures that might help clearly dispute any notion that our scientists are muzzled?

[Gary Goodyear, Conservative, Cambridge, ON]

Thank you for that question.

With respect to the parts of the science and tech file in Canada that I'm responsible for, I think I speak for some of my other colleagues as well when I say we are very proud of the work that our scientists and our academic community do. These are world-class people.

We absolutely understand that research findings and their benefits must be effectively communicated and shared with Canadians. In fact, our government has put in place foundational pieces that actually call and guide...to support open and transparent communications. In fact, in accordance with the government policy regarding government scientists, I can tell you that they regularly provide media interviews. They publish thousands and thousands of research papers. I'll provide some numbers here. Environment Canada has provided more than 1,300 media interviews. Scientists in that one area have published some 524 articles. There are reports that we are leading the world in some cases on our published articles.

The official communications policy directs federal departments and agencies to properly address media inquiries. Federal scientists, as you know, are non-partisan. They do their work to achieve the results they're after. They're very professional. They do not comment on government policy. This is a role that we are required to leave to ministers who, as people can understand, are primarily responsible for their files.

With respect to your first question about the unprecedented funding, if I may, Mr. Chair, there is no question that this government has provided more funding in its time than any other government has in the history of this country. If I may, I will close that question by quoting a reference from the Canadian Council of Academies, which is an independent body:

There is much for Canadians to be proud of as Canada's international reputation is strong, science and technology research is robust across the country, and globally we are considered to have world-leading research infrastructure and programs.... The Panel's findings are comprehensive and represent one of the most in-depth examinations of Canadian science and technology ever undertaken.

That's from the chair of the panel, Dr. Eliot Phillipson.

Hopefully, that answered your question.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you.

I want to talk about that investment in science and technology. Something that I find interesting is the debate about funding basic versus applied research. If you look at the government's record on investment in research, you clearly see that we have made significant investments in both areas of research. I've talked about the genome side on the basic side of the research equation, the NRC transformation on the applied side, and the Canadian Foundation for Innovation, which you mentioned in your opening remarks, which kind of invests in both.

When we talk about making those significant investments, what is the appropriate balance when it comes to basic versus applied research?

[Gary Goodyear, Conservative, Cambridge, ON]

I think you've hit the issue right on the head.

My point is that it's not one or the other. It's actually finding the balance between the two. We do support basic research and we have always supported basic research. I see no reason not to continue to do that. But when it comes to basic or applied funding, I think it is really more important to look at the bigger picture of science in general and determine, first of all, what investments are most important for Canada, for Canadians at this particular time, not only in the economy but in terms of our social needs and our economic needs, of course. For me, it's not one or the other. It is about finding the balance and continuing to support both.

Perhaps I'll read another quote here. Gilles Patry, the president of the Canadian Foundation for Innovation, recently stated:

All research whether it is applied or yet to be applied is at the service of society. Since no one can predict where the next economic social or environmental breakthrough will come from, it is vital that the full spectrum of research be supported. This is the established policy of the Government of Canada and we encourage you to continue.

We will, because I totally agree with that.

[The Chair, Conservative, David Sweet]

You have 20 seconds.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I think my question would take more than that.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Lake.

Mr. Stewart, you have seven minutes.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Thank you, Mr. Chair.

Thank you, Minister, for coming today. I think this is one of the most important portfolios the government has—

[Gary Goodyear, Conservative, Cambridge, ON]

I couldn't agree more.

[Voices]

Oh, oh!

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

—so it's a pleasure to share it with you. Many of the programs you mentioned, of course, are worth funding.

In your opening statement you said that your government has provided $9 billion in new funding since 2006. I'd like to substantiate this figure, and really let Canadians know what we're talking about here.

A cursory result reveals that the source of this figure is from CANSIM table 358-0142. Perhaps your officials can confirm this. It's a calculation from a 2006 baseline that gives you this overall figure.

The problem is that this total number fails to account for inflation, so it's misleading. As you know, with inflation, a dollar today is worth much less than a dollar of, say, 10 years ago. You have to build that into your calculations.

I did take the trouble to adjust for inflation. You should know that the figure is actually halved from the figure that you're suggesting and that you continually suggest through your speeches.

With this in mind, would you agree to revise your future statements to reflect a more accurate level of expenditure?

[Gary Goodyear, Conservative, Cambridge, ON]

Inflation has been considerably low the last couple of years, certainly since 2006, with the management of the economy by this government. We've been working very well with a very low inflation rate.

To a bigger point, I see figures around the world, funding as a percentage of GDP, gross domestic outputs, and so on and so forth, and the bottom line is that this government, and you can't deny this, has provided more than $9 billion. You are, and I appreciate it, admitting that this is true.

You want me to calculate it for inflation and then give you that number. Well, I'm happy to calculate it any way you want, but the bottom line is that nine billion in new dollars.

Right now the S and T budget in Canada is around $11 billion. When we took office, it was just over $5 billion.

I don't see how inflation is that high. It certainly hasn't been where I'm looking. It's more money.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

It is your global figure that you're reporting. When you adjust for inflation—and you should do so, because it's misleading if you don't—it's about half of what you're reporting.

If we move on to the decline in funding, the same CANSIM tables show that from the peak spending in 2010-11, you've actually had a decline in S and T funding by 14.5%. This takes the funding level down to almost exactly the same level when you took over this job in 2006, so really we've had no growth in spending at all. In fact since 2010-11 we've had a 14.5% decline.

I'm wondering if you could explain this decline and tell us whether or not it will continue.

[Gary Goodyear, Conservative, Cambridge, ON]

Again, if you do choose and select your statistics and your timelines, you can get any answer you want.

In 2008-09, I believe it was budget 2009, we had 4.9 billion in additional dollars. While I know some people would want us to continue to spend that kind of money, we don't have a carbon tax coming up. That was stimulus funding from a temporary two-year stimulus program, as you recall.

I'm sure you will recall that the government came forward with a fairly aggressive and quick stimulus program. It included billions of dollars for infrastructure, and $2 billion was for infrastructure for science, research capacity, at our universities and colleges.

While we completed some 550 projects, highly successful, the vast majority on time and on budget, there was no need to continue that program, as these were temporary stimulus programs.

With all due respect to my honourable colleague, if you're going to take the year after all of those programs ended, you should see a decline. We made the commitment to temporarily stimulate the economy. We did, and those programs, or most of them, ended.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

The key is that in real terms, you're actually spending less than in 2006.

I'll move on to the next—

[Gary Goodyear, Conservative, Cambridge, ON]

That's absolutely not true.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Let's move on to your planning and priorities document.

Under the section regarding advancements in science and technology, it says that actual spending in 2010-11 was $1.3 billion, but your projection for 2015-16 comes out at $400 million, which is kind of almost a billion dollars. I'm just wondering if you could explain that. It's under the section on advancements in science and technology in the report on plans and priorities from Industry Canada.

[Gary Goodyear, Conservative, Cambridge, ON]

Did you mention 2016?

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Yes, it was 2015-16. It's the Treasury Board report that comes out to tell us what your planning and priorities are. It starts with actual funding from 2010-11, which is $1.3 billion. When it goes out to 2015-16, it declines to $414 million. That's a $1-billion decline. I'm wondering if you can tell me whether these cuts will....

[Gary Goodyear, Conservative, Cambridge, ON]

I'm not sure how to handle this. My chart goes to 2015-16. Is that your chart?

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

That's what I just said, yes.

[Gary Goodyear, Conservative, Cambridge, ON]

Okay.

Most of this would be addressed by a couple of things that I can tell you about, and then perhaps Rob can fill in. One is that the stimulus funding that ended would be reflected in that chart, but this year's budget would not be reflected in that chart.