Industry Committee on Oct. 26th, 2016

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

What are the changes that need to happen there?

[Paul Halucha]

They're pretty extensive. CIPO operates principally in a digital space, but there is still a fair amount of paper movement of files in their organization. If you talk to intellectual property lawyers, they can tell you in more detail than I can about some of the challenges of dealing with some of CIPO's infrastructure.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

We're behind the times—

[Paul Halucha]

They're behind in these treaties.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

—and because we're behind the times, we can't sign these treaties, and then Canadian companies....

We're studying productivity. It's our government's job to not block our companies from being productive. What should we be doing to address this problem at CIPO?

[Paul Halucha]

The implementing legislation passed through the House of Commons. It went through in 2013, I believe. We actually passed all the legislation to sign on to all of the WIPO treaties, other than the Marrakech Treaty, which we completed this spring. It was approved by both the House of Commons and the Senate.

The advantages of having those WIPO treaties operational are absolutely critical to the Canadian economy. Madrid and Singapore allow for Canadian firms to easily protect their IP in other marketplaces. As you know, we want to get Canadian firms into those marketplaces. Protecting your IP easily in Canada, with a lawyer, is critical.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

What do we need to do to get on with the other 98 countries, for example?

[Paul Halucha]

The challenge is with CIPO. They need to get the IT frameworks in place to enable them to do it.

I believe there are a couple of other challenges they have to deal with. There were some changes to the fee structure, which I believe they're moving forward with now. This will enable them to charge certain fees to disincentivize some types of behaviour, as other countries have done as well. Then they will be prepared to have those treaties come into force.

I agree with you. It's high time for that to get done. It's on the top of the agenda for the current commissioner at CIPO. It's their top priority.

[Lloyd Longfield, Liberal, Guelph, ON]

I'd like to ask some questions around rural Canada. Guelph is close to rural. We're outside the GTA, outside major centres, but we have military contracts in Guelph. Some of those companies have said that contracts have dried up over the last few years and that purchasing volumes are half what they used to be, in some cases.

Do we have an idea of money that is going through the department or money that's been allocated but isn't spent? Is there a pent-up demand that they might see sooner than later?

[Paul Halucha]

You're thinking of contracts from the Department of National Defence specifically?

[Lloyd Longfield, Liberal, Guelph, ON]

Yes.

[Paul Halucha]

These are firms that would benefit directly from those contracts versus from ITB policy then.

[Lloyd Longfield, Liberal, Guelph, ON]

Exactly. It would be people doing ergonomics, people doing steel for General Dynamics, as an example.

[Paul Halucha]

The department, along with PSPC and our department, put out a large design contract today on combat ships, the warship design, which I know is going to be one of the largest procurements in Canada's history. The government is going to make a decision around the purchase of jets, which will also result in significant direct and indirect work in Canada. There are a number of procurements that are coming, and Jeff can talk about the number that are active in Canada.

I can't speak to the specifics of your individual firms, but I can tell you there's a significant amount of procurement that's taking place or will take place that will have benefits directly for Canadian companies.

In terms of the industrial technology benefits, for every dollar of the value of those contracts, the primes are required by the contracts to invest a dollar in Canada, so it's 1:1. We'll see a significant amount of benefits for Canadian firms as a result of that.

[Lloyd Longfield, Liberal, Guelph, ON]

That helps our study. Thank you.

[Paul Halucha]

We do a huge amount of outreach, too, in that area.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Hoback. You have five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you. I appreciate the committee's indulging me. I sit on the trade committee, so I find a lot of this really interesting.

We see a proposed carbon tax or a charge on carbon coming into Canada in the next couple of years. I'm curious how you're going to consider that in your tendering and in your purchases. When you're looking at goods, and you have a Canadian company that's going to pay that carbon tax or that price on carbon, and you're looking at competing countries that may not have a price on carbon or a carbon tax, how will that be taken into consideration or will it be taken into consideration? I'm looking for some comments on that.

The second question I have is related to purchasing. I always find it interesting. There was an article I read a couple of years ago. A former adviser to Prime Minister Harper had this beef about how our military can't buy something off the shelf. If it's good enough for the Americans, why can't it be good enough for the Canadians? If it's good enough for the British, why can't it be good enough for Canadians? Why do we need to spend all this time and effort redesigning stuff that's already being used out there in the world today?

I'll start off with the carbon tax, and then I'll let you finish with the second question on why we feel we need to redesign everything before we buy it. This is wide open.

[Desmond Gray]

The answer is, clearly, we'll have to look at that.

One of the obvious ways it could be brought into the procurement process is through a specification that clearly identifies one of the characteristics of the goods or services that you want to buy. If you want to buy something more environmentally sustainable, it has to have certain characteristics. It may be that it will require a certain kind of certification to make sure it meets those requirements. These are all things we have done in the past, so there's definitely a mechanism there.

I would say, just to remind you, that one of the things—and it's a good thing, but it's an important thing to remember—is that PSPC responds. We provide the response to the request from other government departments about what they need. They're our client, and the more we can understand well in advance what our clients are asking for, the better we can really work with them to make sure we can find good solutions for them.

I would honestly say, based over many years, the more we can give a heads-up to industry, and especially Canadian industry, that this is where we're going to go, the better. You can tell them that if they are going to spend their money down the road in certain areas because they're looking for a change in behaviour or a change in product, let people know, or else what you do is penalize the market. For example, the first company might go from X to Y, and it may be very good, but it may not provide for a competitive situation in Canada. How do we make sure that we provide some insight? Advance notification would be very helpful.

[Randy Hoback, Conservative, Prince Albert, SK]

Then in that scenario you're obviously going to have more costs on your end to go through that evaluation process and to set up a system to take those types of things into consideration. Generally, the cost has to go up. Is that fair to say?

[Desmond Gray]

I wouldn't actually agree with that. I think there are two sides to it. I think part of our challenge is to make sure the process doesn't increase the cost in terms of an evaluation process. The real question would be, does that change in characteristic require an increase in price?

[Randy Hoback, Conservative, Prince Albert, SK]

Is that being realistic?

[Desmond Gray]

I've changed processes without increasing the cost and the overhead involved in evaluating a new system that has new requirements based on it. It's a generalization, I think it's fair to say, and this is a challenge, to be honest with you. I think we can do that, but I think we have to be adaptive in terms of how we evaluate it.

[Randy Hoback, Conservative, Prince Albert, SK]

Then you're telling me you've got room in your existing budgets and the existing way you're doing things to find even more savings?

[Desmond Gray]

Oh, I couldn't commit to that, sir.