Industry Committee on May 28th, 2019

[The Chair, Liberal, Dan Ruimy]

Good morning, everybody. This is meeting 164 of the Standing Committee on Industry, Science and Technology. Pursuant to Standing Order 81(4), we are studying the main estimates of 2019-20.

With us today is the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development; along with John Knubley, deputy minister.

Thank you all very much for coming in today.

Sir, you have up to 10 minutes.

[Navdeep Bains, Liberal, Minister of Innovation]

Thank you very much, Mr. Chair.

I'm glad to be back here again. It's nice to see a lot of familiar faces, and some new faces in the committee as well.

I'm here with my very able and capable deputy minister John Knubley, also referred to as “Mr. Newbly”. Either way, he's very capable.

Mr. Chair, remember you called him that last time?

[The Chair, Liberal, Dan Ruimy]

I got it right this time.

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

I appreciate the opportunity to meet with you on this occasion, as you mentioned at the outset, with regard to the tabling of the 2019-20 main estimates.

It's my intention to share with this committee the details of the continued implementation of our government's innovation and skills plan. That's what's reflected in the budget, and the estimates as well.

My comments will be brief. I want to allow the maximum amount of time for questions.

However, before I go further, I'd like to thank this committee for its ongoing review of the Copyright Act as well as its invaluable efforts and reports on the Canadian manufacturing sector; innovation and technology; intellectual property and technology transfer—which was very helpful for us when we unveiled our first national IP strategy—and broadband connectivity, of course. Your committee has also studied Bill C-25 and Bill C-36, as well as Canada's anti-spam legislation. Long story short, Mr. Chair, our government greatly values these contributions. They have helped shape our innovation agenda.

We are well on our way to accomplishing our goals, but we know there is much left to do. That is why I am here today to discuss the proposed budget allocation of $8.6 billion in the 2019-20 main estimates for the ISED portfolio and to answer any questions that you may have. I am seeking your continued support as we advance the innovation and skills plan.

Allow me to provide some examples of what's in that budget, particularly in the main estimates.

One issue that's very important to us, and that many of you are aware of, is CanCode. To develop the digital economy, our CanCode program has helped more than one million students learn digital and coding skills. It's more than simply coding. It's about collaboration. It's about teamwork. It's about preparing young people for the jobs of tomorrow.

Budget 2019 seeks to provide an additional $60 million over the next two years. Because of that initial success, we've allocated additional funds to help another million young students gain new digital skills. It's not only about the kids; it's also about the teachers. We're empowering many teachers to learn how to teach how to code as well so they can provide additional opportunities for future generations.

Broadband is another area that's very important and that's come up often in the many conversations this committee has had, and of course in our travels across the country.

To ensure we have the infrastructure to put the skills to use, which I just highlighted with regard to CanCode, budget 2019 proposes $1.7 billion for high-speed Internet access.

I look forward to working with my colleague Minister Jordan to implement this funding. Our government is committed to this initiative. It complements the connect to innovate program that we launched a few years ago, and we were able to leverage a billion dollars' worth of support in total through that program.

The next item I want to talk about is superclusters.

We've supported the creation of five innovation superclusters. These superclusters will strengthen key sectors of our economy, which will attract international investment.

In doing so, these superclusters are building innovation ecosystems that bridge the gap from idea to commercialization to growing global firms. It's really about creating this ecosystem. I think you'll find this stat very important as well. Superclusters are expected to create 50,000 jobs and to grow Canada's economy by $50 billion over the next 10 years. This is really about growth and jobs, and about continued global leadership for Canada when it comes to our innovation economy.

Complementing this initiative, we are providing new sources of capital for large-scale innovation projects, as well. One such project that is very important to highlight, and that impacts many of our communities, is the strategic innovation fund, SIF. Through the SIF, we have announced contributions of $1.2 billion, leveraging investments of $15.3 billion. We not only are making these investments but also have seen significant leveraged dollars. We're expected to create, again, tens of thousands of jobs. These range from, of course, the automotive sector, which is very critical to our economy, to the aerospace sector to food processing to digital technologies.

If you're counting, that's more than 100,000 jobs from just those two initiatives. I'm talking about superclusters and SIF. I just wanted to highlight some of those key initiatives in my opening remarks as well.

I also want to take this opportunity to talk about the recently launched digital charter, which is central to the next phase of our innovation and skills plan. Under the digital charter, individual privacy and business innovation are complementary, not competing, priorities. This approach supports an environment in which business models that rely on leveraging data for growth put an even bigger premium on trust. This is really about creating and building trust in the digital world. Trust and growth should be mutually reinforcing principles. You can't have one at the expense of the other.

Our government's investments under the innovation and skills plan are working. Since October 2015, Canada's economic growth has led the G7 and unemployment is at a record low.

By building on Canada's competitive advantages—the most highly educated workforce in the world, unrivalled access to global markets and low costs for doing business—companies are growing in Canada, coming to Canada and investing in Canada.

Let me give you a quick snapshot. I'm an accountant; I like numbers. In 2018, we saw the highest levels of venture capital investments since the early 2000s. It was $4.6 billion. That's clearly an indication of how we're turning a corner. We're seeing additional investments—particularly late-stage investments—in companies that are scaling and growing. Foreign direct investment grew by nearly 60% as well, which is really important to know.

We're seeing nearly twice as many Canadian companies on their way to the billion-dollar mark, which is a true sign of global competitiveness. We call them unicorns. How do we create more Shopifys? How do we create more large-scale companies that are growing and creating jobs? Right now, we have 20 in the pipeline that are well on their way to doing that.

Canada has become one of the world's best places to live and do business. We saw that recently at two conferences. Collision in Toronto and C2 Montreal highlighted again how the world is coming to Canada to take advantage of all the opportunities here.

Our world-class workforce and cutting-edge infrastructure is attracting investment and opportunities.

Our government is committed to building a strong and innovative economy that benefits all Canadians.

Once again, I thank this committee for its work and for giving me this opportunity to speak today.

I'm happy to answer any questions you may have.

[The Chair, Liberal, Dan Ruimy]

Thank you very much, Minister.

We're going to jump right into questions.

Mr. Oliver, you have seven minutes.

[John Oliver, Liberal, Oakville, ON]

Thank you very much.

Thank you very much, Minister, for joining us this morning and for that presentation.

The first area I wanted to ask about is the innovative superclusters initiatives. For my riding of Oakville, this was a huge announcement. We have many advanced manufacturing concerns in my riding. There's food, innovative nuclear, aerospace, and of course, I'm home to Ford Canada and Ford's largest manufacturing plant in Canada. It's a really important area.

The one thing I heard from all the stakeholders working in this area of advanced manufacturing was what you said about the goal here, which is to go from an innovative idea to invention to commercialization to globalization, and assisting our homegrown Canadian manufacturers through that cycle into global competitiveness.

My first question is around that. Can you give the committee an update? Where are you in terms of the rollout? How do you see the supercluster initiative progressing? Maybe give us some highlights from British Columbia and from Ontario of what's happening in this area.

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

I think it really speaks to a key part of our innovation skills plan, which is around growth and jobs, of course, and also creating a collaboration in the culture of innovation.

We had a very competitive process when it came to the superclusters. Many companies, organizations and academic institutions partnered up to put forward their proposals. Ultimately, we selected five. One that really stood out was advanced manufacturing—the one that you highlighted—or NGen as it's called and as it's being marketing presently. It's a supercluster that really has brought together some key areas of strength in manufacturing. We have a footprint that's reasonably strong at 10%. It needs to not only maintain that level, but to grow now.

This supercluster is really focused on advanced manufacturing, 3D printing and skills. They have a concierge service where they are upskilling and re-skilling individuals to understand that as technology evolves and changes, so do the functions and the roles of individuals who use this technology. They need the skills and upgrading as well. It's a really big play on talent and people.

As you highlighted, the digital supercluster has not only moved from a strong governance model, but ultimately now has announced projects as well. You will see projects coming forward in the coming weeks that highlight collaboration where data strategies are shared, where intellectual property strategies are shared and where collaboration will take place, particularly between the larger and smaller companies. How to integrate the supply chains was also a key desire of our programming.

It's also really interesting to note that when we are out there trying to attract foreign investments, many of them are talking about these superclusters because it allows companies that are new to Canada, for instance, to automatically connect into an ecosystem where they can leverage relationships and really be part of some interesting collaborations.

It's across the country. We'll see investments in the ocean supercluster in a timely manner, as well as in Scale AI for artificial intelligence.

As I mentioned in my opening remarks, we are very confident that we'll hit a minimum of 50,000 jobs. We think that we will exceed that, but that's a very minimum benchmark in the coming years.

[John Oliver, Liberal, Oakville, ON]

Great, and the 50,000 job count in advanced manufacturing or across those types of skills is enormous. Those are high-quality, well-paid jobs that are going to support Canadians for years to come.

On the B.C. digital supercluster, can you speak to some of the outcomes and what's been achieved there?

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

Absolutely. I was there when we announced the projects in British Columbia. British Columbia is taking a lead when it comes to superclusters, unveiling its projects first. What's really exciting is using data for good. One area that this digital supercluster is focusing on is health care. There were numerous companies that were announced as project winners that looked at using data for early diagnosis of diseases using artificial intelligence and big data.

That really speaks to why we also unveiled the digital charter as well. We want to build trust in this area. We want people to have confidence in their personal privacy and in their personal data. Not only do we need to generate more data, but we will need to use it in a thoughtful way to get positive outcomes.

The B.C. digital supercluster really focused on health care. They're focusing on health care and forestry, two areas that are important to British Columbia, but really across Canada. They announced projects in early stages at companies that really looked at early diagnosis of diseases, particularly cancer, which, as you know, is a challenge for many Canadian families and many people around the world.

Not only can we see these projects succeed in Canada, but I'm confident that these projects and these solutions can ultimately be exported to other jurisdictions and help other people as well.

[John Oliver, Liberal, Oakville, ON]

I noticed in the 2019-20 estimates that there was a decrease in the appropriations requested for the innovative superclusters initiative after a really large launch the year before. I'm assuming that you're busy getting things implemented.

What does success look like? How will your department monitor progress? What are the measures and marks that we look for? Obviously the 50,000 job count is an important one. How will you monitor the development of these?

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

We have a robust governance structure. The first thing we wanted to do, as we put forward these superclusters, was to really create an environment for small businesses to have a strong voice, for academic institutions to have a strong voice and obviously the main partners as well. The goal is to make sure that we really promote collaboration.

The key success markers, of course, are the contributions to the economy, $50 billion to GDP growth, and that's going to be something we'll track very closely. The job numbers matter, and we're going to be tracking those very closely as well, but also how much IP is generated. We're an intangible economy now. It's really about intellectual property and making sure that the IP that's generated is done in a manner that provides maximum benefit and that the benefits remain here in Canada. That's really important to us, and we'll be keeping an eye on it.

We're also looking at data strategies, privacy protection and making sure the data that is generated is done in a way that still protects privacy. Particularly in health care, that data needs to be anonymous and needs to be protected. That's really critical.

Then, of course, I would say the other area that's really important to us is the promotion of diversity. This has been a priority for our government. We want to see the metrics diversity in every aspect in terms of the workforce but also diversity in implicating smaller businesses. This is something critical to integrating the supply chain.

Something my deputy minister has talked about often is how we help smaller businesses tap into the superclusters so they can scale and grow. I mentioned in my opening remarks that there are 28 companies that are on their way to becoming unicorns. A lot of them are also implicated in these superclusters as well. How can we accelerate that growth? We're keeping an eye on that as well.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Albas.

You have seven minutes, sir.

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

Minister and Deputy Minister, thank you for your ongoing commitment to this country.

Minister, off the top, I do think it's important that we have someone to deal with financial responsibility before the committee and answer questions on the estimates. In the second hour we have some officials. I'm sure they're very talented, but I would just ask you, right off the top, since the deputy minister is also an accounting officer, if you would ask him to please stay for the second hour.

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

Well, the deputy can speak to his schedule.

[John Knubley, Deputy Minister, Department of Industry]

Yes, I'm happy to stay for the second hour.

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

Thank you, sir.

Minister, you've mentioned your so-called digital charter. Why should any Canadian trust your government to have their best interests at heart?

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

It's the role of government to create conditions to protect citizens. Our government takes that very seriously. Not only did we put forward a digital charter that engaged Canadians, this charter is not something that was done in the last few weeks or few months. We've been engaging Canadians over the past year. We've done thorough consultations with academics, experts and businesses.

The idea is that these principles we put forward should also be put into action. We proposed changes to our privacy legislation, PIPEDA, to demonstrate this charter in action. The fundamental goal is to build trust in this digital economy. Survey after survey indicate people have less trust when it comes to their personal data and privacy online. I think it's the role of government to really step up and create conditions that help rebuild some of the trust that's been eroding with a lot of the platforms and with digital technology.

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

Minister, on the trust that's eroding, let's start off with using the correct language. This is not a charter. It's a set of vague guidelines with no legislative authority. Why exactly did the Prime Minister announce these new guidelines in France and not in Canada? What exactly are you trying to hide from Canadians? Why not do it here in the Parliament of Canada where you could have the press gallery, and you could have members of Parliament asking questions right from day one?

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

First of all, you are asking questions—

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

From day one.

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

We're not hiding. From day one, as you know, the Prime Minister was in Paris. We all supported the Christchurch call for action. At that meeting, he also indicated that we would be coming forward with a digital charter. No specific principles were highlighted there. When I came to Canada the following week, I made an announcement where I clearly articulated the principles within the charter here in Canada, spoke to Canadian media, engaged with Canadian businesses and other community members to talk about these principles. We're far from hiding. We've actually been open and transparent about our commitment to building trust and dealing with a lot of issues around privacy.

As I mentioned, the changes being proposed to PIPEDA, for example, talk about the fact that people should have more control over their data and should be more empowered. How have we done that? We have significant enforcement mechanisms in place to make sure that companies are held accountable, that companies take privacy laws seriously. We provided clear language guidelines around consent, because there are these complicated user agreements that individuals sign off on that create challenges that we've seen. Cambridge Analytica, for example, comes to mind.

We've also said it's about transparency. If an ad pops up, for example, on your screen, you have the right to know how that particular ad popped up. Transparency, control, enforcement—these are examples that all provide greater tools for individuals to be more empowered and make it very clear that privacy is important, and so is control over their data.

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

On the subject of transparency, when exactly do you plan to pass this new set of guidelines into law? The session's over in a matter of weeks. Isn't this just an election ploy?

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

We're governing, so every day we're going to come forward with policy proposals. We're going to continue to move the agenda forward. We're not going to stop governing. Wherever the opportunity presents itself in the next few weeks, next few months, we're going to continue to advance this agenda.

As you know, there's a limited runway in the House of Commons with our legislative agenda, so it's whenever the opportunity presents itself. We owe it to Canadians to continue to govern. We owe it to Canadians to continue to put ideas forward. Anything we do now until the election you'll put through the lens of “it's an election issue”, but that's going to happen six months before an election, eight months before an election, a year before an election. Would you propose—

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

Okay. Minister—

[Navdeep Bains, Liberal, Mississauga—Malton, ON]

—that we would not put politics forward?