Industry Committee on May 18th, 2017

[The Chair, Liberal, Dan Ruimy]

Sorry, Mr. Masse, we're out of time.

[Brian Masse, NDP, Windsor West, ON]

Okay, I'll follow up.

Thank you, Minister.

[The Chair, Liberal, Dan Ruimy]

Thank you.

On that note, I wish to thank the Minister and the deputy ministers for attending with us today. Great job.

We are going to suspend and switch over to Minister Bains.

[The Chair, Liberal, Dan Ruimy]

Keeping on track here, we are going to continue.

For the second part of this, we have the Honourable Navdeep Bains, PC, MP, Minister of Innovation, Science and Economic Development, as well as, again, John Knubley, deputy minister.

We are going to jump right into it.

Minister Bains, you have up to 10 minutes.

[Navdeep Bains, Liberal, Minister of Innovation]

Thank you very much, Chair. It really is a pleasure for me to be here again. It's a delight to be back and to have an opportunity to speak with my colleagues. I'm pleased to share with the committee the details of our government's plan to create the well-paying jobs of today and tomorrow that was outlined in the budget, and I know today we'll be talking about main estimates and supplementary estimates (A) as well.

Our plan will provide a better life for the middle class and those working hard to join it. That's a commitment we made and that's what I will try to reflect in our remarks this morning.

Canada has a stable and growing economy, which is increasingly rare for countries these days. The Bank of Canada's April monetary policy report projects economic growth of 2.5% in 2017.

According to the International Monetary Fund, Canada's economy will be the second-fastest growing among G7 nations for this year and next, and this growth benefits all Canadians. We've seen incredible gains in the number of full-time jobs added to the economy, more than 250,000 good-quality jobs have been added since last fall. This pace of growth did not happen by chance. Our government is making the smart and responsible investments that have resulted in better jobs and opportunities, as I said, for all Canadians.

As part of the innovation and skills plan outlined in budget 2017, our government is investing in research, technology, and commercialization. That's how we'll position Canada as a world leader in innovation. Our focus is really on making sure that Canada is at the leading edge when it comes to innovation.

Our objective is to encourage more business investment in research and development, and to turn more ideas into solutions for the marketplace.

We're also targeting those investments in high-growth areas where Canada is a world leader—and these are included in the budget—for example, advanced manufacturing, agrifood, clean technology, clean resources, the digital economy, and health and biosciences. Canada already has a globally competitive advantage in these sectors, and worldwide demand for the goods and services produced by these sectors is growing rapidly, so there is enormous growth in these areas. That's why in the budget we committed $1.8 billion in new financing for clean technology, because clean tech is a promising area for growth and investment. It's also an area of the economy that will cushion us against the intensifying effects of climate change. This funding will result in more equity, financing, working capital, and project financing for clean tech companies and will enable them to become more export-oriented. It also includes $400 million in recapitalization funding for Sustainable Development Technology Canada, which supports early-stage clean tech companies.

Budget 2017 also includes nearly one billion dollars to accelerate innovation. This investment will support a small number of innovation superclusters. These dense areas of business activity contain large and small companies, universities and colleges, as well as specialized talent and infrastructure.

Business-led superclusters have enormous potential to energize economies as engines of growth. We've seen this globally, and that's how our government will support the start-up and scaling up of Canadian businesses. As these companies grow beyond our borders, they will create well-paying jobs for Canadians, so again, it's about growth and jobs.

Mr. Chair, Canadians are living in a period of enormous change. Technology and automation are rapidly reshaping the job market. These changes require Canadians to reimagine how we prepare for the jobs of today and tomorrow. That's why our government is making targeted investments in skills training that starts early and continues throughout a person's career. It's about lifelong learning.

As part of this plan, we are giving more Canadians the opportunity to develop digital skills, skills needed for them to succeed today and tomorrow.

Under our government's plan, school-aged children will have the opportunity to learn how to write basic computer programs. They will also be encouraged to take courses in science, technology, engineering, and math.

In addition, our government will provide support for the creation of 10,000 work-integrated learning placements a year. Again, it's really about that culture of lifelong learning. These programs will help university and college students integrate more quickly into the workforce after they graduate.

The innovation and skills plan will also deliver simpler, more coordinated support for the country's innovators and job creators. It's about program simplification: being more client-oriented and being more customer focused. Companies trying to focus on their technology and sales find it far too cumbersome to navigate through a patchwork of government programs to get support. In the budget, we address this issue through the creation of Innovation Canada. This new single-window service will bring all of the government's business innovation programs together.

The objective is to facilitate access to programs for Canadian innovators. To begin, Innovation, Science and Economic Development Canada will create a strategic innovation fund with a value of $1.26 billion.

This new business innovation fund will continue to support the aerospace and automotive sectors, and it will be expanded to support high-growth sectors, such as clean technology, information and communications technology, and agrifood, some of the key areas that I identify in the table set out in our budget. To support this program expansion, the budget proposes to build on the existing funding by providing an additional $200 million. We'll combine these programs and then provide an additional set of resources, up to $200 million.

The fourth element of the innovation and skills plan is strategic investments to grow Canadian companies. For young companies, having government as a first customer has been much more important to them. It's not simply about the size of the contract, but about the strategic value. That early-stage validation by government can change the trajectory of a firm. That's why the budget proposes a new procurement program called “innovative solutions Canada”. It will create more opportunities for business to develop innovations that address the pressing challenges of the government, and this program will provide small and medium-sized businesses with a platform to develop and test new products and new services.

All these initiatives clearly illustrate that the Government of Canada is willing to take risks and bet on new ideas. We're also willing to be a strong partner in their growth. In return, our government will have access to the most innovative products and services.

In addition, the budget proposes the new venture capital catalyst initiative. I know that we've discussed this in the past. This funding will increase the availability of risk capital for Canadian entrepreneurs. This $400 million in private sector funding is very important. It would inject a large infusion of venture capital into the Canadian market.

Finally, Mr. Chair, our innovation and skills plan will strengthen Canada's business framework in support of innovation and growth. For example, we are developing a national strategy on intellectual property. I'm honoured to work with David Lametti, who understands this subject matter really well.

Having ownership of the ideas and solutions that Canadians create is critical to a knowledge economy. We can do more to ensure that investments in research and development go beyond innovation. They should also lead to innovations that actually benefit people, that benefit Canadians. We need to create a culture that ensures policies and business strategies are developed with intellectual property in mind as part of the business strategy.

We are also modernizing the Broadcasting Act and the Telecommunications Act, and we're working with the provinces and territories to implement the new Canadian free trade agreement, which will come into force on July 1.

Mr. Chair, our government's investments under the innovation and skills plan ensure that Canada will compete globally for the most talented people, the newest technologies, and the fastest-growing companies. This plan will allow Canada to develop a workforce that can compete based on advanced and specialized skills. It will also encourage Canadians to develop a culture, as I said before, of lifelong learning. It will create stronger public-private partnerships, and it will create well-paid middle-class jobs for Canadians.

I'm also confident that as a result of our government's investments, a new generation of Canadian firms will develop into globally competitive companies—true strong global brands.

Mr. Chair, members of the committee, I will be pleased to answer your questions.

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

Thank you very much for keeping your opening remarks brief.

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

I wanted to follow your instructions, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Arya.

You have five minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

Thank you, Minister and deputy.

Minister, I would like to ask a question on commercialization, especially the technologies that have been developed in the government labs.

Being from Ottawa, I am always keen on the defence side of things, especially the defence C4ISR industries. Take, for example, Defence Research and Development Canada. Two or three times I've asked the defence minister what steps he's taking to unlock the technologies that have been developed by DRDC and to allow them to be commercialized by the private sector. Every time, he did acknowledge that, and he mentioned that he's in touch with you on those things. We have invested like that in several other government labs over a long period of time.

What are you doing to unlock these technologies and to commercialize these technologies?

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

Thank you very much for that thoughtful question because it really is a priority for our government, as I mentioned. We want to get these good ideas that we invest in. We want to commercialize them. We want to generate revenue. We want to create jobs. We want to find solutions that benefit Canadians. Innovation is really about better outcomes: a better quality of life, a better society, etc. It's not always about the latest gadget. It's about how we can really improve things going forward.

You're absolutely right. I work very closely with Minister Sajjan and National Defence in a range of areas where we want to help accelerate commercialization of ideas. One area is through the industrial and technological benefits program when we acquire major assets for military. That's an area where, I think, through our value proposition, we really move the yardstick, and it's going to be really meaningful for the economy and for different sectors, particularly the aerospace sector.

With regard to government labs and DRDC, as you mentioned, we're widely engaged with the National Research Council, NRC. One of the objectives of the National Research Council is to take these government lab initiatives, to partner up with them, and to help further accelerate that commercialization. That's an area where we're working very closely together with National Defence. We are taking these ideas that are generated in the lab to quickly commercialize them so Canadians can benefit. Actually, society can benefit.

[Chandra Arya, Liberal, Nepean, ON]

With regard to NRC, there appears to be a decreased budget for supporting industry-related research. For example, IRAP's budget is staying flat, and technology development and advancement is dropping from main estimates of $382 million to $279 million.

Is there something I don't understand here?

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

No, not at all. As you know, I'm an accountant, so I'm very comfortable with numbers.

Actually, if you look at the budget cycle, the main estimates, and the way the main estimates are done, they really reflect a bit of a time lag up to the timeline that we're looking at. For example, the main estimates are from June to December. Supplementary estimates are from December to April 13. What you see is really the profiling and the approval process through Treasury Board. As you know, in the budget we committed more money for NRC through IRAP, the industrial research assistance program. What you're seeing is that the decrease in funding is mainly due to a one-year funding announcement in budget 2016 for the industrial research assistance program.

It's profiling issue; it's not a decrease in the budget. If anything, we've actually added more money to IRAP, and you'll see that ramping up through future supplementary estimates.

[Chandra Arya, Liberal, Nepean, ON]

Thanks, Minister. In fact, I was thinking along those lines.

I was in the technology sector before I moved into politics. We had support from the government through various programs like IRAP and SADI. There are a lot of government programs that support research and development in the private sector, but what I notice is that they are operating in silos.

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

Correct.

[Chandra Arya, Liberal, Nepean, ON]

We are funding things under IRAP, but those people are not talking to the people who are managing the SADI program, the strategic aerospace and defence initiative. We invest billions of dollars through SRED, and of course, the sustainable technology development you're funding.

How can we integrate all these?

[The Chair, Liberal, Dan Ruimy]

Very briefly. You have about 20 seconds.

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

As you know, when we engage with innovation leaders and businesses, clearly, as I mentioned in my remarks, being customer oriented and client service oriented is critical. We as a government want to be nimble and thoughtful about that. That's why we introduced Innovation Canada as an initiative. It is a single window for all innovation-related programs and policies to help businesses to coordinate to avoid some of those cumbersome challenges that businesses face. If we get another opportunity to speak about it, I can speak to some of the initiatives in that area of Innovation Canada.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move on to Mr. Dreeshen.

You have five minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you, Mr. Chair.

Thank you, Minister, for being here today.

I'll try to keep my preambles as short as I possibly can.

One of the things that we've heard consistently is how your plan is to provide a better life for the middle class and those working hard to join it. It seems to be in everything we hear.

On your first comment on the economic outlook, Canada has been doing amazingly well. If we take a look at what happened back in 2008 and 2009 and are realistic about where Canada has gone and how it managed, I think that's really a critical part. All Canadians should be proud of what we have managed to do over the last decade under the circumstances that we were presented with.

You did talk about how you want to look into new areas like clean tech and so on. You want to push dollars, or at least push thinking that way. Of course, one of the concerns....

Our group was down in the U.S. a couple of weeks ago.

I just want to make sure, though, that whatever governments do, they aren't out there picking winners and losers, and they make sure that everybody gets an opportunity. Again, if you look at things like carbon capture and storage that we have out in the west.... We have windmills all over the place as well which, of course, there's a big debate on as to whether or not that is clean technology.

These are the sorts of things we take a look at, and when we look at that, then it begs the question when we are taking a look at the dollars that are being spent for ACOA and Western Economic Diversification. The four Atlantic provinces have a population of 2.4 million. They get $311 million, or 27% of the government's expenditure. Compare that to $199.6 million, 17% for the four western provinces that have a population of 11.5 million.

When you start to take a look at it and you ask what areas actually need the extra help and so on, it doesn't really look at though that's what is happening as far as those departments are concerned, so you start to take a look at it and say, “Are we really picking winners and losers on the tech side, or are we taking a look at places to invest?” And the question is, that are somewhat more political in nature....

I have some other questions, and I'll give you an opportunity to explain just what is happening with investments, whether or not they're being targeted for specific industries, and what the rationale is, especially looking at the economic conditions in western Canada.

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

I think your earlier observation about the fact that growth is up, GDP is up, exports are up, and jobs are up is all indicative of the fact the economy is doing really well. Obviously we're proud of the fact that it's headed in a positive direction, but we can and must do better. That's why we have a plan, and we want to implement that plan, so I'll talk briefly about that.

With regard to the banking sector, you're right, this is a point of pride as well for Canada, and we really weathered the storm in 2008-09.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Could you be more specific?

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

Okay. I was just commenting. I understand. You had brought that up, so I wanted to—

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

I'm not offended if you go straight to the answer.

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

Understood.

The question you asked is how we determine priorities and how we make those decisions. What we're saying is, we go out there in the market and look at where the growth areas are. If you look at clean resources, if you look at clean tech, if you look at agrifood, if you look at digital industries, or if you look at advanced manufacturing, these are areas where growth is taking place. This is where there's growth within Canada but globally as well.

For example, we're proposing initiatives such as the superclusters initiative, and I'll be proposing the criteria in a matter of days. That speaks to, again, a partnership model. Government doesn't choose, but government wants to be at the table, and these are the six areas where we determine where the growth is—

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

I'll just interrupt. Are those then being dealt with through Western Economic Diversification and so on and so forth? If that's the case, then that would explain that part.

You're talking about how the federal government is going to get into provincial jurisdiction as far as education is concerned and so on. As a former teacher, I understand what the ramifications of that are. Of course we went through the financial literacy initiative and so on. There's a lot more detail then simply saying, “We're going to throw some money out there, and everybody should be happy because we've dealt with all of this.” I'm just wondering if you could quickly comment on that.

On our space exploration, there's been a plan to cut funding for the Canadian Space Agency when it comes to the portion related to space data information and services.

So you don't have much time; I don't have much time, so let's go ahead.