Industry Committee on April 14th, 2016

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

That's fine, thanks.

I'll switch gears. As you know, I'm the chair for the status of women committee and I'm interested in encouraging more women to be in science, technology, engineering, and math roles. I'm interested to to know how much money in the budget is allocated to do that and what the strategies are that you're going to use there.

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Ms. Gladu, thank you for the question.

You and I have talked, and this is an issue that is very important to us both.

I've spent the past 25 years of my life fighting prejudice, fighting so that young women coming up behind me didn't suffer some of the things I've experienced. It's been 25 years. We need more women in science, technology, engineering, and mathematics. Thirty years ago, the percentage was 20% and today it is 22%. That's not good enough in 2016.

In terms of investments we have programs like PromoScience. We have Mitacs, which I've talked about. There's a $14-million investment in Mitacs, which is to bridge academia and industry. There is also a $73-million investment for co-op positions in budget 2016 to help more young people in under-represented groups, such as women and indigenous people.

Thank you.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

There's a lot of speculation regarding the NRC after the president went on personal leave and the reorganization was cancelled. I wondered if you could comment on what the plan is there to reorganize and what costs are associated with that?

[Kirsty Duncan, Liberal, Etobicoke North, ON]

Thank you for the question.

Let me begin by saying the National Research Council is one of the research jewels in Canada. This is an institution and organization that has a proud 100-year history of scientific discovery. We've had Nobel prizes associated with it.

Whether it's measuring the distance between electrons or the distance between stars, we have to ensure that the NRC is successful going into the future both in basic and applied research. Currently it's about 47% and 53% between the two, but it is our job to ensure it's success.

As you rightly point out, president John McDougall is on personal leave and in his place is one of the vice-presidents. Her name is Maria Aubrey.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We will now move to Mr. Baylis.

You have five minutes.

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

My question will be for Minister Bains.

I'm very interested in seeing how innovation is used to diversify our economy. I think the Canadian economy always benefits from being more diversified. The government has often mentioned an innovation agenda.

Can you expand upon how that is specifically going to help small start-ups? What is the plan for innovative small start-ups?

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

I'll start off, but I suspect my colleague from small businesses will also want to speak to the subject matter.

Your first point is with respect to diversification. We've seen a sharp decline in commodity prices, and it has exposed our economy. We realize more than ever the importance of diversification. I think Canadians understand that, and different regions of the country understand it. Our government is committed to diversification.

Diversification takes place with the regional development agencies, the RDAs. We focus a lot on diversification in some of the regions. We as a government have made commitments to clean tech. Again, much of the focus through the RDAs on clean tech, for example, is on small businesses, because they're the ones taking the risks. They're the ones coming out with new ideas. We want to make sure they have the opportunity to succeed.

With respect to the innovation agenda, I want to take a step back. What we need to be mindful of when we say innovation is why we are talking about innovation. It's very important to realize that innovation is important to deal with some significant macro-level issues that we face as a country. One is slow growth. It's a challenge we see globally, but in Canada as well. The other is an aging population.

To deal with these macroeconomic challenges, we need good policies domestically to be able to address the issues. Innovation is key.

When we talk about innovation, we want to focus not simply on innovation traditionally through the ICT sector, but on social innovation. This is the basic thing. We want to find solutions to problems. That is a much broader definition.

Keeping this in mind, we've focused on an innovation agenda that was articulated in our budget. It has laid down the groundwork for the comprehensive agenda that's coming forward, but it started to signal very clearly the areas that are priorities for us.

One is the need for enhancing skills and entrepreneurship. It's about making sure we bring the best and brightest from around the world here and that we equip our local citizens to become entrepreneurs, to really create the culture of risk-taking. With innovation, you're not going to get it right the first time or the second time or the third time. You're going to fail a few times. How do we create the entrepreneurial spirit? We raised that as a key point of our innovation agenda.

Secondly, and this is really neat, it's not simply about jobs alone. It's about making sure that we continue to innovate and find new ideas that will create future jobs. Research is so critical. World-leading research is absolutely critical. This is why we made significant investments in the budget for our granting councils and to post-secondary institutions. This is very important for us.

The third one is innovation infrastructure. You want the right people with the right tools in the right environment in the right place.

Of course, the $120-billion historic investment in infrastructure is absolutely essential for those who want to innovate, but specifically the $2-billion investment for post-secondary institutions sends a clear signal that this is an ecosystem we believe in, the kind of arena in which industry and academia and small businesses come together. We really invested significant amounts in that kind of infrastructure.

The last, of course, is supporting a business environment for commercialization and growth. To speak to that point, we invested $800 million on incubators and accelerators. I can tell you right now—I was at Ryerson University, a visiting professor there—the digital media zone is a great example of an incubator in which that magic happens. You have young people, and it's very important that we bet on young people—I think that's critical—who come together and to whom you provide an opportunity to take their ideas to market.

What's neat is that they have a business acumen there: the legal advice, the mentorship, the support system. That's the kind of investment we're making when we talk about incubators and accelerators. We want to invest in these start-ups, we want to invest in young people, we want to be a global hub of innovation, and we want to help them scale up as well. That's where the accelerator part comes in.

These are some of the key areas we mentioned with respect to the innovation agenda that help small businesses in particular and will allow us to diversify. As I said, we have to grow the economy and we have to create jobs.

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

That leads me to a second quick question.

[The Chair, Liberal, Dan Ruimy]

I'm sorry; you're done.

We will now move to Mr. Albas for five minutes.

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

Thank you, Mr. Chair. I appreciate your having me here today.

Also, ministers, thank you all for attending and for your testimony here today.

Let me follow up on MP Baylis's last line of questioning, if I may. Regarding the innovation, you said that about $800 million has been set aside. Is that something for which you're going to be the minister responsible, or is it something that innovators and incubators are going to have to apply for through the Minister of Finance? How does it work?

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

In our platform we made a commitment that innovation is critical for our growth. There are three areas that we emphasized. We talked about infrastructure, we talked about helping the middle class, and we talked about innovation in our platform, but somehow during the campaign, innovation didn't get talked up as much. We got caught up in other issues, and other challenges came about. It is really great to see it emerge again in the budget that was presented on March 22.

The $800-million commitment that we have put forward will be managed by ISED. The idea is to say that those monies will go toward accelerators and incubators for the purposes of investing in young people, creating jobs, allowing small businesses to scale up.

That is a key part that I want to emphasize. We do reasonably well when it comes to start-ups as a country, relative to our international peers. The area in which we do a poor job or in which we have an opportunity to really succeed is helping them scale up. There are going to be takeovers. There are going to be individuals who buy out companies, but we want, through this initiative, to help companies scale up and stay in Canada.

If we create these large, global, successful companies—not only in Canada but globally as well—they also then help with a supplier base. They help mentor other companies. Executive management members go out and start up other companies. It just creates a really neat ecosystem.

This is an initiative that I'm proud to say will be worked through, and the program requirements will be brought forward in a timely manner. It is something that our department will take a leadership role in.

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

I appreciate the answer, Minister.

By the way, I would love to ask you about interprovincial trade, but that really isn't on the topic for today. I just appreciate the efforts—

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

If you want to talk about it by the way, we're open to any question you have.

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

No, I would just encourage you to continue, because that is a big aspect and I know it's a big challenge. I appreciate that you've been working with the provinces on it.

I'm looking at the forecast and planned spending for Industry Canada's transfer payment programs on page 2 of the document we were given.

If you look at the automotive innovation fund, the forecast for the last fiscal year was $92.3 million. In what you presented, it says $64.7 million this year, and it decreases the following year to $54.9 million and then reduces to zero in 2018-19. Conversely, if look at the automotive supplier innovation program, you'll see that from $7.6 million last year it will go to $16.5 million forecast this year, to $24.5 million the following year. In 2018-19, it's $29.4 million.

To me, this sends the signal that it seems—

By the way, Jerry Dias came to this room in a pre-budget consultation and spoke about how competitive and innovative our automotive manufacturers are. But in the Trans-Pacific Partnership, some concerns have been raised around how our supply chain can compete. Are the two related?

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

Which two?

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

I mean the fact that we're drawing down the innovation fund and that we're seeming to ramp up the automotive supplier innovation program and according it more money.

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

This is the challenge we have with the main estimates and when we present a budget. It is something that my colleague from Treasury Board, Mr. Brison, will help reconcile, because I think it's very important. The main estimates that you see don't reflect our budget commitment. In our budget commitment, we were very clear that we extended the $500 million AIF program for another three years. You will see that extension for the AIF in the supplementary estimates.

ASIP is a very important commitment that we think is critical for our supplier base. As I mentioned, my colleague Ms. Chagger and I had the opportunity to make some meaningful announcements.

The member before was asking about job numbers with regard to Pravala, where we made an investment of $9.7 million to the ASIP program that you're alluding to. That investment will create up to 50 jobs. We're very keen, then, to ensure that we invest in our supplier base in the automotive sector.

This was welcome news to Jerry Dias as well. He understands. This sends a clear signal to the OEMs that we're serious about investment, that we're serious about competing with Mexico and the United States, and that we're very serious about bringing any kind of opportunity that exists, particularly on the innovation side.

As I mentioned before, the auto sector is going through a major transformation, and it's about software. QNX, right here in Ottawa, provides 192 software—

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

I only have about 10 seconds. I wanted to add on to this. The estimates show the automotive innovation fund going down. You say that there are going to be significant funds going up, so you're saying that the funds to that auto innovation fund will go up. Is that correct?

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

We have extended the program by three years, so it's a commitment of $500 million that will be available and that will be reflected in the supplementary estimates.

The point to note is not simply the extension of the program. I must confess it wasn't really well received before, because it was considered to be a repayable loan, and companies essentially said that this is not helping them out. We said we were going to change the profile of the funding to make the funds more accessible and to increase the limits to allow OEMs and others who want to make investments to say that they're serious about it. We have not only allocated the funds, but we're willing to change the profile to make sure that we get the investment to come here. That has really been a cornerstone of the AIF going forward. It's something we talked about in Kitchener a few days ago and that was really well received by the automotive community and the supplier base as well.

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

Thank you.

[The Chair, Liberal, Dan Ruimy]

Okay, we will move to Mr. Jowhari.

You have five minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

I'd like to take the discussion back to the plan, but before I ask a question of Minister Bains, I'd like to make a statement.

I believe we have a very clear plan and I'm proud of our budget 2016. I'd like to cite page 110 of our plan, which clearly lays out the innovation agenda. A copy of it is available, if any of my colleagues want to follow as I am asking the questions.

This plan is strategic, it is focused, and it is based on a number of pillars.

Mr. Bain, a couple of minutes ago you touched on those pillars. It has key drivers, it has enablers, and it is backed up with strategic investments. Let me ask you, sir, whether you could circle back and cover off an overview of the plan in this framework and tell us how this framework is going to help us shape the agenda we are planning to follow over the next year and how specifically these drivers and these enablers work hand in hand to give us the growth we need.

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

Thank you very much for that question.

The one point I want to highlight is that innovation is not going to happen overnight. This is a long-term commitment that we made as a government.

Point two is that we have an amazing department. Not only do I get the pleasure of working with my colleagues, but we have StatsCan, the Canadian Space Agency, and all the economic development agencies. We have Destination Canada. We have the granting councils. We have BDC. We have 15 different portfolios that are going to be aligned as a whole-of-department initiative to really help drive this innovation agenda.

This is about the whole of government. This innovation agenda is saying that we as a government have a responsibility to our respective departments to drive this agenda. I will give an example on procurement. We procure in the billions of dollars. As I said before, we invest a lot in start-ups. We do a really good job. When they want to do business with Canada, however, with our government, we find every excuse in the book not to do it.

It's very frustrating. Ms. Chagger and I have talked about this, and she has raised this issue time and again. We've heard it at round tables time and again. These businesses that start up are looking for their technology, their innovation, to be validated. Why can't we provide some sort of demonstration program, or some sort of procurement initiative, to create an opportunity for them to go abroad and say yes, we do business with the Government of Canada?

That is an example of “whole of government”. That same kind of mindset will prevail throughout the different departments. Our department will play a leadership role. We're going to work with our cabinet colleagues to help drive this agenda.

When it comes to strategic, as I said, it is not simply government. Industry is going to help drive this. Companies take risks. They're the ones that create the jobs. They're the ones that come up with the products. They have to put some skin in the game as well. If you look at the balance sheet for some of the large companies or some of the companies across the board, however, they hold about 11% in cash holdings right now. They're not investing their money in innovation, not investing their money in R and D. They're not taking risks. Why is that? The onus, then, is on them as well.

We spend money across the country. Different provinces and different municipalities have unique initiatives when it comes to the innovation agenda. Before, we talked about diversification. How do we better align this? How do we make sure we're not duplicating efforts? How do we leverage it?

I'll be working with my provincial and territorial counterparts, because we built such a good relationship during the agreement on internal trade, as was mentioned before. We said, that's great; if we're confident that we can overcome that and deal with that issue, what is the next item? The next item is slow growth and to deal with it is innovation.

Strategically, then, I think we understand the importance of this initiative. It is a big issue. It's going to require a long-term lens. It's going to require a lot of energy and effort from a lot of different stakeholders.

What I also want to highlight is that I don't want to spend too much time on analysis and reports. I want to focus now on an action plan and outcomes. People are looking for outcomes. People are saying they know what the issues are.

There might be some new areas in which we need to do analysis, such as around artificial intelligence or big data or the Internet of things. In those areas we would have to explore and do additional analysis and ask what kinds of disruptive technologies we are dealing with and how they will impact our innovative economy. However, we know what we need to do with respect to increasing R and D investments, helping companies scale up, really allowing us to become a global hub for entrepreneurship.

That is what I articulated before. It's really about putting forward an agenda that's meaningful. If you look at this budget and all its initiatives, as Minister Chagger mentioned, from the Canadian Space Agency to broadband to IRAP to the post-secondary institute infrastructure initiative to the cluster initiative, it is, combined, $4.6 billion that we are investing in infrastructure. We're not just talking the talk. We are actually making significant investments to drive this agenda.

This is very important, because it sends a very clear signal to our partners, our allies in different levels of government, that we are serious about this and are very committed to it.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We will move to you, Mr. Masse. You have two minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I had the opportunity to rise in the House of Commons on this and then follow up with the parliamentary secretary. Since we've had our health break, I want to talk gas—