Industry Committee on May 28th, 2019

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

That's good to know.

In recent news, there has been a 60% lift in direct global investment in Canada and investor confidence in Canada is growing faster than most other countries. What conditions have made that happen?

[John Knubley]

I would say the following. In terms of the traditional approach to industrial development, there has been an emphasis on creating the right macro framework and then creating the right tax regime to incent research and development among firms and that sort of thing. That is the policy that we have basically followed since 1995.

What has happened in the last four years is really an elaboration and a greater emphasis on direct programming so that we are investing, using programs like SIF and superclusters, to directly target specific microeconomic results that we would like in the economy.

This is something that is being done by all governments. What I would say, to give you a sense of where Canada stands on this, is that Canada had always been, in the OECD countries, an outlier in terms of the balance between tax and direct programming. That is to say we used, almost exclusively, tax measures like SR and ED to promote research and development.

What's happened over the last four years with the innovation and skills plan is that the balance has moved much more in line with more direct programming. I think an increase of about 40% has been around direct programming.

This is something that is not unique to Canada. In fact, many countries have been re-examining what the right balance is between tax and direct programming.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

What about Canadian investment? Again, foreign investment seems to be picking up, but are there still barriers to Canadian investment, either in terms of ability and willingness to take risk or the ability to use insurance funds, etc., to make investments beyond what has traditionally been made?

Are there initiatives to basically free up more money, especially some of the dead money? Four years ago, the Governor of the Bank of Canada said there was $600 billion in dead money just sitting there in corporate treasuries not working. Have we managed to coax some of that out?

[The Chair, Liberal, Dan Ruimy]

Be very brief, please.

[John Knubley]

I'll just highlight two aspects. One is the issue of venture capital. There have been a series of investments by the government in the area of venture capital that have required matched funds. If you look at the data and evidence around venture capital, today we have much more money available in that space, partly as a result of these programs, but partly because the companies stepped up and matched the funding.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Mr. Albas, you have five minutes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

I just want to say, on the concept of dead money, that unless someone is hiding it in their backyard or under their mattress, when you put money into an institution, it is then loaned to other people. I've just got to keep hitting on some of those things, Mr. Chair.

To the deputy minister, I'll talk about something that is probably more germane to your file. Could you let the committee know the status of the 3,500 megahertz clawback? Last I heard, people in the sector were expecting to hear something soon. Is that accurate?

[John Knubley]

Yes, the sector should hear something soon.

And the minister would say the same thing.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I would assume that the planning for the 3,500 megahertz is quite in the advanced stages, correct?

[John Knubley]

Yes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

The last time we discussed this, you said you were going to do your darndest to make sure people in the rural areas were not clawed back. I guess we'll wait and see.

Could you tell us—

[John Knubley]

[Inaudible—Editor] 600 auctioned as well.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

What is the time line for the tier 5 consultations, and would it be possible for that consultation to finish prior to the announcement for the 3,500 megahertz auction?

[John Knubley]

That's an issue I'll come back to. I know the tier 5 consultations are ongoing. I don't actually know when we would be reporting on that.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

When would you come back to us?

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

We know. I just don't know at this moment. I could get back to you today on what the timelines are for the tier 5 process.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Is it possible to have that directed to the chair?

[Lisa Setlakwe]

Yes, absolutely.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay, I do appreciate that.

I'd like to unpack the issue of the connect to innovate program because I believe a lot of Canadians are wanting answers.

Deputy Minister, can you provide further context as to how it is possible that a majority of applicants for a program that closed in 2017 have not been notified?

[Lisa Setlakwe]

I would say a couple things on that.

One is that we have a CTI top-up where we're hoping to be able to use some of those applications. As for the negotiation process with the ones that are live, there's quite a bit of readjustment of an application, so if they come in with an application and there are competing applications, then we have to negotiate what's in and what's out. That has often liberated money and allowed us to fund other projects. The main answer is just that there was still the possibility that some of these projects could get funded, so we didn't want to close the door entirely to them.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Can the department not take the perspective of the people who are applying? Oftentimes, you have townships, counties, municipalities or first nations communities that just need an answer because if they can't apply and receive funding under your program, they may want to proceed on their own. Two years passed without any status updates. Was no one in the ministry ever even tasked with contacting the applicants? I heard someone on the other side say that they probably heard the same kinds of questions.

[John Knubley]

I think the [Inaudible—Editor] there's still opportunity for these groups, and my understanding is that our officials have had ongoing discussions with groups.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

But when you have over 500 groups that have applied—

[John Knubley]

Do they prefer to hear the “no” or to carry on conversations about the opportunity to be funded?