Industry Committee on Nov. 19th, 2018

[The Chair, Liberal, Dan Ruimy]

Good afternoon, everybody. Welcome to the Standing Committee on Industry, Science and Technology. Today, pursuant to Standing Order 81(5), we will be reviewing the supplementary estimates.

With us today for the first hour we have, from the Department of Industry, John Knubley, deputy minister; Philippe Thompson, assistant deputy minister, corporate management sector; Lisa Setlakwe, senior assistant deputy minister, strategy and innovation policy sector; Paul Halucha, senior assistant deputy minister, industry sector; Mitch Davies, senior assistant deputy minister, Innovation Canada; and Éric Dagenais, assistant deputy minister, industry sector.

I believe you have seven minutes, Mr. Knubley.

[John Knubley, Deputy Minister, Department of Industry]

Very quickly, I have four or five points.

I would first like to present supplementary estimates (A) for 2018-2019.

There's an additional $286 million in total for the budget overall, and $160 million of that is for the department. The main component is related to steel and aluminum. There is $126 million for the portfolio overall. The largest component is $45 million for Churchill.

I have a few more points.

Who are we? We are the executives of the Department of Innovation, Science and Economic Development. ISED, as it's known, has a budget of over $3.4 billion and has almost 5,000 FTEs. In terms of the portfolio, which includes organizations like the National Research Council, the granting councils, Statistics Canada, Business Development Bank of Canada, the Canadian Space Agency, all the regional development agencies, Destination Canada and the Standards Council of Canada, this is an organization that spends close to $10 billion a year and employs almost 19,000 FTE employees.

As Minister Bains would say of me when I sit beside him next, my colleagues will take all the difficult questions and I will do the easy ones. Again, this is just to say we are the representatives of ISED. What we've done as a team working in support of Minister Bains is really focus squarely on implementing Canada's innovation and skills plan.

We have made significant progress to date in implementing a range of targeted, aligned and collaborative programs.

These include the innovation superclusters initiative, the strategic innovation fund, or SIF for short, and innovative solutions Canada. We'll have an opportunity to talk about those programs, I assume, in the questions.

The third point I wanted to make is that, as we've focused on implementation of these programs, which were largely introduced in budget 2017, there have been two new initiatives under way under the innovation and skills plan.

First, we conducted national digital and data consultations from June to October, and we pursued consultations with respect to three areas: innovation, workforce or workplace as related to digital, as well as trust in terms of how we create a trusted framework for working on digital and data strategies.

The other initiative—and this is my last point—is really a result of budget 2018. We had launched six economic strategy tables. They included agri-food, advanced manufacturing, digital industries, clean technologies, health and biosciences, and resources of the future. These tables reported a month ago in one report. Each got an individual chapter, and there was an overall chapter identifying six signature items that were crosscutting in terms of the activities. Much of their focus, of course, was on competitiveness issues and regulatory issues, among others.

Mr. Chair, I'll stop there as a way of introduction, but again, we're the department of ISED, and my colleagues will take all the tough questions.

[The Chair, Liberal, Dan Ruimy]

Excellent. We'll try to hold everybody to that.

[John Knubley]

Okay, that would be great.

[The Chair, Liberal, Dan Ruimy]

As I said, the first hour is for those here, and in the second hour we'll have Minister Bains with us. Please mind your times, because I will be holding tight and I want to make sure everybody gets in all the questions they can.

We're going to start right away with Mr. Longfield.

You have seven minutes, please.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair.

Thanks, Mr. Knubley and staff, for being here.

As you know, we're in the midst of the copyright review, the statutory act review.

In the estimates, the Copyright Board has been asking for $3 million over the last couple of years. This year, again, it's $3 million for program expenditures, more specifically to ensure balanced decision-making to provide proper incentive for the creation and use of copyrighted works. We've been hearing testimony that it's taking two to three years for some of the decisions to come through that board.

The question is around the supplementary estimates; there's no funding being requested there. Could you comment on how these decisions get made, whether it's the Copyright Board or whether it's the department that is reviewing the resources that are needed to do the job at the Copyright Board?

[John Knubley]

Well, I think it's both the department as well as working with the minister in terms of how we move forward. As you know, in the budget implementation act there were two fundamental focuses: notice and notice, as well as changes to the Copyright Board.

[Lloyd Longfield, Liberal, Guelph, ON]

Right.

[John Knubley]

Lisa, can you speak to the specific issues around funding?

[Lisa Setlakwe, Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry]

The funding was in fact acknowledging that there were delays in getting to decisions. Part of the legislative changes also allow, beyond the actual financial resources needed, the acceleration to make those decisions, but also how those decisions are made so there's flexibility for decisions and settlements to be made before you go through a long, arduous process.

It was in consultation. The decision ultimately is the government's to provide the additional funding, but it was certainly made in discussing with the Copyright Board the realities of today and their ability to turn around these decisions in a timely manner.

[Lloyd Longfield, Liberal, Guelph, ON]

Right. We are midstream in our study, but maybe that's a future opportunity, so I can just flag it. Maybe this isn't the right venue to do that in.

On innovation, thank you for the additional funding for Bioenterprise in Guelph. We announced about $2 million last week to work with Innovation Guelph, an organization I was working on before politics.

I found out at the meeting with them, though, that IRAP is no longer supporting not-for-profits as part of its mandate. This is moving over to FedDev. I'm wondering whether you're aware of whether there's a transfer there, or whether FedDev is getting the resources that used to go to IRAP to support projects like the ones at Innovation Guelph.

[John Knubley]

I think what has happened is that the National Research Council has received $540 million in budget 2018, and in budget 2017 there was $700 million specifically for IRAP.

I think people are looking at the delivery of IRAP broadly, partly in the context of a review that was conducted with Treasury Board around innovation programming. I'm not fully aware of what the situation is with not-for-profits, however.

Mitch, do you happen to know?

[Mitch Davies, Senior Assistant Deputy Minister, Innovation Canada, Department of Industry]

Specifically on the question of supporting regional innovation ecosystems, non-profits, or intermediaries that are helping organize in the local economy, that job essentially is assigned to the regional development agencies. You're accurate. There was funding brought forward in the last budget for all of the RDAs, and essentially this is to deal with a program count of some 92 programs touching business innovation. That's been reduced by two-thirds to streamline how many folks you have to deal with to secure support for what you're doing. That count has been brought down now to 35-plus, as a consequence of some of these realignments, but there are active relationships that are going on and picking up these things and smoothing the transition for stakeholders.

[Lloyd Longfield, Liberal, Guelph, ON]

Great. I remembered seeing that streamlining in the budget and wondered whether this was an example.

In the work that Innovation Guelph and Bioenterprise are doing around creating new businesses, there were about 135 businesses created in the last funding they received. They're hoping to help entrepreneurs to start up 56 more businesses in Guelph.

The innovation agenda seems to be paying back in dividends in what we're investing and what we're getting back. Do we track that in any way, in terms of the economic returns on investments going into supporting innovation start-up?

[John Knubley]

Yes, we do. We track it and we use evaluation methods as well as audit procedures to do that.

Backing way up and avoiding your question somewhat, just to clarify, what we did in this innovation review was to really identify four platform delivery agents. One is the regional development agencies, and in the context of the review, the focus on their new programming is around cluster development as well as technology adoption. On average, they are supporting SMEs in the $150,000 to $500,000 range.

IRAP, of course, is lower than that, so the National Research Council is at the beginning of the innovation pipeline. It's focused, again, on helping SMEs at that lower end, although it has been given authority now to give IRAP contributions up to $10 million, so it can actually do large ones.

Then there's the strategic innovation fund, which of course tends to be for larger projects and often consortia, so it isn't just for multinationals. There's the trade service that is also at play.

[Lloyd Longfield, Liberal, Guelph, ON]

It was great to see the $10 million bridging the valley of death, so congratulations on that funding.

[John Knubley]

BDC of course is part of this mix.

[Lloyd Longfield, Liberal, Guelph, ON]

Yes, thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Albas.

You have seven minutes.

[Dan Albas, Central Okanagan—Similkameen—Nicola, CPC]

Thank you, Mr. Chair.

Deputy Minister and ISED officials, thank you for the work you do for Canadians and for being here today.

I'd like to start with a follow-up to Mr. Longfield in regard to the Copyright Board. The BIA, the budget implementation act, has a series of reforms that many people said are necessary. Many also have said that the board was not sufficiently funded.

It sounds to me as if you're giving it the same allocation it previously received. Is it going to be able to enact some of the reforms that are in the budget implementation act, on the same budget?

[Paul Halucha, Senior Assistant Deputy Minister, Industry Sector, Department of Industry]

I'll just make a couple of comments on that.

I think the allocation has.... We have done a lot of benchmarking on the Copyright Board in comparison to similar organizations in other jurisdictions, and they compare quite well.

Second, the intention of the policy initiatives that were brought forward by the minister is largely to increase efficiencies and improve...not only for the board but also for the stakeholders who make submissions, and that was something that had been requested for a number of years. Our view—and I think the analysis supports it—is that those efficiencies should pass on and hopefully improve the flow-through of decisions in cases, in adjudication from the organization itself.

Third, one of the stakeholder comments that we've heard for a number of years is that often the amount of work that gets undertaken by the board can be disproportionate with the decision and the outcome from the board itself. For example, we've seen instances where it studies international experiences and then much of it doesn't ever get factored into and impact the result and the analysis that it undertakes in Canada.

The totality of the direction that the government has given is to hopefully enable it to both use its resources more effectively, to streamline, and then perhaps to have a process that's more in line with both what international jurisdictions do and what stakeholders' expectations are.

[Dan Albas]

Sure.

I'm a little skeptical when.... I appreciate benchmarking. Benchmarking needs to be done because then you know you're dealing with apples and apples, but to be asking for structural reforms to happen in an organization while it's delivering the same level of service means it's not always going to happen seamlessly. To me, it seems rather strange that your department would not be contemplating ensuring that those reforms can be done with the proper funding.

I'm going to move on.

[John Knubley]

The one thing I would further say is just that the two changes—notice and notice, and the changes with respect to the board itself—were really seen as actions that needed to be taken now. This is not to preclude the work that you would be doing as a committee. Again, there's a lot of opportunity for you as you move forward to look at that.

[Dan Albas]

Okay. I appreciate that.

The CRTC chair has recently stated that he desires flexibility on the topic of net neutrality. Many have argued that these statements refer to a desire by the CRTC to reduce or remove net neutrality entirely. I know that the minister has received many emails from concerned Canadians. I know because I'm being carbon copied on them, as well.

Are the CRTC chair's comments that net neutrality may be ignored telegraphing a change in government policy?

[John Knubley]

This is a question you should ask Minister Bains. I believe the answer is no.