Industry Committee on Nov. 28th, 2017

[The Chair, Liberal, Dan Ruimy]

Welcome, everybody, to meeting number 86 of the Standing Committee on Industry, Science and Technology.

Today we have, pursuant to Standing Order 81(5), supplementary estimates 2017-18. We have the Minister of Industry here to present to us and to answer some questions for us. Without any further delay, Minister Bains, you have up to 10 minutes.

[Navdeep Bains, Liberal, Minister of Innovation]

Thank you very much, Chair and honourable colleagues. It's great to be here on the 86th, you were saying, official meeting for this committee.

[The Chair, Liberal, Dan Ruimy]

Yes.

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

I'm glad to be back again. Let me take this opportunity to acknowledge my officials who will be here to answer some of the more difficult questions. As per previous practice, I will take some of the easier questions.

I also want to welcome four new members who have recently joined the committee. It's great to see a lot of new faces on the committee. I want to say from the outset that the work you do here is really crucial in informing, shaping, and advancing public policy. This committee has been particularly helpful to my department and to me personally during my time as the minister responsible for innovation, science and economic development.

The recommendations from your study on the Canadian manufacturing sector will promote skills, innovation, and market access. I can assure you that our government is working hard to implement your recommendations.

Just last week the committee tabled in the House its report on intellectual property and technology transfer. We discussed this when I was here last time. I can assure you that we are studying your recommendations very carefully. They will inform our deliberations as we move forward on a national intellectual property strategy in the new year.

Finally, I would like to thank the committee for its current work on reviewing Canada's anti-spam laws. Your report will assist us in improving this very importance piece of legislation.

Today I appreciate the opportunity to meet with you on the occasion of the tabling of the supplementary estimates (B) for 2017-18. In doing so, I am seeking approval for spending to address priorities announced in the budget, in particular promoting innovation. Despite a challenging global climate, Canada's economy continues to exceed expectations. In fact, according to the International Monetary Fund, our economy will be the fastest growing amongst G7 nations for this year and the second fastest growing for next year. As you know, the growth benefits Canadians, and we've seen incredible gains in the number of jobs created in the economy. In fact, the Minister of Finance has said on several occasions in the House of Commons that when our government took office, the Canadian economy created over half a million jobs.

This pace of growth did not happen by chance. It happened because our government has been making responsible investments that have resulted in better jobs and opportunities for Canadians.

Many of these investments are reflected in the supplementary estimates that we are discussing here today. Mr. Chair, you will remember very clearly in 2015 we changed the industry portfolio's name to better reflect its mandate and how it supports the Canadian economy. It's an honour for me to be the first official Minister of Innovation, Science and Economic Development.

We also brought the regional development agencies into the portfolio. This helps us better align and provide support to Canadians across the country, while at the same time recognizing the regional differences. Reflecting the broader mandate of the newly named department, we introduced the innovation and skills plan outlined in the budget. That was a key feature in our budget. It is a bold, forward-looking plan to invest in research, technology, and commercialization. That's how we will position Canada as a world leader in innovation.

As the minister responsible for ISED, I'm proud that we have a great story to tell about the real progress being made in delivering our innovation mandate through the $1.26-billion strategic innovation fund, which consolidates and simplifies existing business innovation programming into one single fund, while expanding support to the dynamic and emerging sector. This is really about diversifying the economy and looking at areas of high growth.

Under the Innovation Superclusters Initiative, the government will invest up to $950 million over five years to support business-led innovation superclusters in areas where Canada has the potential to lead.

Meanwhile, the newly established Innovation Canada is a very important collaborative platform led by ISED as well. It will make it easier and faster for Canada's innovators and entrepreneurs to access government programs.

Also reflected in the supplementary estimates is another budget 2017 initiative, innovative solutions Canada, a new procurement program modelled on the best practices of a U.S. program, called SBIR, to support Canadian innovators and entrepreneurs.

We also announced our economic strategy tables, which support innovation in advanced manufacturing, agrifood, clean technology, digital industries, health and biosciences, and clean resources. We actually have strategic focus on areas where there's high growth. Six industry leaders will chair these tables. I look forward to the opportunity to speak about that.

Our government has also launched the global skills strategy, which is speeding the entry of top talent with specialized skill sets and global experience to Canada. With the talent comes the money. If we truly want to succeed and grow, we need to focus on people and talent.

What's more, we are rolling out a whole suite of programming to continue to develop our digital economy and give all Canadians the opportunity to participate.

Because digital literacy for all Canadians means that no one is left behind, no matter where we live, what our abilities are, or how much money we make.

Programming includes Connect to Innovate, which brings broadband Internet access to rural and remote communities across Canada.

Under this program, we've already announced investments that will connect, with high-speed Internet, all 25 communities in Nunavut plus communities in Quebec and northern Ontario.

Another program that is really worthwhile to highlight and that is part of the supplementary estimates is CanCode, which will invest $50 million over two years to help young Canadians from kindergarten to grade 12 prepare for the jobs of today and tomorrow. This is complemented by the digital literacy exchange, where we're investing almost $30 million over five years to support the teaching of basic digital skills.

We're doing all of this because we know that access to the digital economy for Canadians is a key component of the innovation and skills plan. Digital literacy is really important. I have my personal biases. I have two young daughters, and I know that in order for them to succeed, they need to be up to speed when it comes to digital literacy skills.

Another critical feature is continuing to build a clean economy. As you know, this is a priority for our government. The Minister of the Environment says it often, and we fully support her position. The environment and the economy go hand in hand. That's really important, and that's why ISED is focused on making Canada a global leader in clean technology. This is an industry projected to be worth trillions of dollars globally. Canada needs to claim its share of that market now. We need to really take advantage of those growth opportunities. That's why we're continuing to fund clean technologies through Sustainable Development Technology Canada, SDTC. This is one of the changes in the machinery of government. It previously existed with Natural Resources Canada and was moved into ISED to demonstrate more support for this initiative.

In the budget we also provided $2.3 billion to help Canadian clean technology grow and expand, including $600 million in new financing through the Business Development Bank of Canada, $800 million through Export Development Canada, and $400 million to recapitalize, as I mentioned, SDTC. It's a suite of initiatives to really focus on the opportunities in clean technology.

Finally, let me mention our support of Mitacs towards meeting its goal of providing 10,000 paid internships per year. I just made the announcement yesterday. There was a significant level of investment from the federal government, of $221 million over the next five years. This program has been very successful so far. They have a great track record. They had 21,000 paid internships in the past, and they supported 19,000 other students in training as well.

Mr. Chair, I just wanted to highlight these key initiatives. I look forward to the opportunity to address any questions the committee may have on supplementary estimates (B) or any other questions they might find pertinent.

Thank you very much for the opportunity.

[The Chair, Liberal, Dan Ruimy]

Thank you very much. We're looking forward to some good Qs and As here.

Ms. Ng, you have seven minutes.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you, Minister, for coming to talk to us about what the government has been doing, particularly on your file.

I would be interested to have you talk to me a little bit more, given the investments we are making, around the innovative companies and start-ups in particular. We've heard about their ability to scale. Tell me what the government is doing, and tell me how the investments that are being made there will help the start-up companies to scale.

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

It's a very good question, and thank you very much for that. Particularly in your riding in Markham, you see a lot of these ICT companies that are scaling up and growing. From our perspective as a government, there are really three areas of focus for an innovation and skills plan. The first one I alluded to in my remarks is talent and people. This is about promoting lifelong learning. It's really critical; if you talk to any company, the first issue they talk about is talent and people. It's an issue that not only Canadians talk about, but if you look internationally as well, it's the number one issue. This is why so many companies are investing in Canada. That's why we have made significant investments in education, in training, and in lifelong learning as part of our innovation skills budget.

The second area is the focus on technology and technology adoption. Compared to our U.S. peers, we are falling behind, particularly in the SME sector. We are focusing on many initiatives to promote more technology adoption and are making big bets on certain technologies, such as artificial intelligence, quantum computing, and digital. These are horizontal platforms that have enormous opportunities to impact very many different sectors. That's why we are focused on that through research funding and commercialization.

The third pillar you alluded to in this innovation and skills plan is really about scaling up companies. We are a start-up nation; we're really good at starting up companies. You and I may recollect that during our Ryerson days, the digital media zone, DMZ, at Ryerson University was a good incubator for starting up companies and creating the opportunity for individuals to bring their ideas to market, but now the question is how we help them to scale up and grow.

One of the initiatives I want to highlight is innovative solutions Canada. This is a procurement initiative by the federal government to be a marquee customer, to say that we're willing to be a marquee customer, especially for companies when they go abroad. Often they're asked whether they do business with the Government of Canada. If they say yes, that opens up many more doors. We want to use government's purchasing power. We spend $18 billion on procurement. If you take away defence, for example, we still spend $9 billion on goods and services, so we have enormous opportunity exclusively at the federal level to support Canadian companies that are scaling up.

Another initiative is superclusters. One of the key features of this is not simply about the large anchor firms, but really about the supply chain and the small businesses that want to scale up and grow. When they work with large companies, they get the mentorship, the know-how. They understand how to build capacity internally. That knowledge transfer, that supply chain integration between the large and small firms is another example of scaling up. We're really focusing on areas of high growth. That's why we identified in a very strategic way six areas of growth. We have chairs for those six strategy tables.

Really, that's the government's focus. It's first on people, then on technology, and then on making sure companies can actually scale up through our being a marquee customer and our connecting them with large firms. That's our approach when it comes to scaling up companies.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you.

I'm going to split my time with my colleague, Mr. Baylis.

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

Thank you, Mary.

Thank you for being here today, Mr. Bains.

I have some questions about the superclusters. As you know, the aeronautics sector is very important in Quebec. We are now seeing the emergence of artificial intelligence technology in that sector.

I would like to know what impact the planned $950 million investment will have on these superclusters.

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

Thank you for the question.

You are correct in saying that artificial intelligence is very important, especially in Quebec. In my opinion, and the member can confirm this, all the superclusters have an artificial intelligence component.

It's such an important platform, especially in the aerospace sector. There's such enormous opportunity. This is a non-partisan issue, and I'd like to give the previous government kudos as well. Since 2005 and up until now, there has been close to half a million dollars' worth of investment in artificial intelligence. Some of that started with Mr. Martin's government and continued on with Mr. Harper's government. Then we really stepped up under Mr. Trudeau's government, most recently with the $125 million for the pan-Canadian framework for artificial intelligence.

The logic is very simple. We have great strengths in Montreal, Vancouver, Toronto, Waterloo, and Edmonton. We have pioneers in artificial intelligence like Rich Sutton. We have Geoffrey Hinton from U of T. We have Yoshua Bengio from Montreal. Too often we compete against each other. The objective of our government is to determine how we can actually collaborate our AI, artificial intelligence, initiatives and our power to bring people together so they can work together as opposed to fighting for resources and competing against one another.

That's what we're seeing in the supercluster initiative, the supergrappes initiative. It's really about collaboration, and I think there are enormous benefits in that area, particularly in the aerospace sector.

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

Excellent.

I have a question about the Connect to Innovate program. There have been some investments...

[The Chair, Liberal, Dan Ruimy]

There's a fire alarm, so we are suspending.

[The Chair, Liberal, Dan Ruimy]

In the interests of time, we'll rejig some stuff.

In conversations I had outside, I learned the minister is able to stay an extra 15 minutes max. The challenge will be that we won't be able to get him back because we're so close to the end of the session, so we want to be able to move forward with this.

The Liberals had six minutes. Maxime, we'll give you six minutes, and Don, we'll give you six minutes. Then we'll divvy up the rest of the time appropriately.

Mr. Bernier, you have the floor for six minutes.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you, Mr. Chair.

I would like first to read a motion for which notice was given and which I would like the committee to consider. The motion is as follows:

That the committee review the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act, and the Investment Canada Act; and that the committee invite relevant stakeholders to appear before the end of 2017 in order to provide members with information about the impact on pensioners of companies involved in bankruptcy proceedings such as Sears Canada and U.S. Steel.

We will discuss this later.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Maxime Bernier, Conservative, Beauce, QC]

That being said, Minister, thank you very much for being with us. I really appreciate that.

First of all, I know you have had some questions about my favourite corporation, Bombardier. As you know they received $372 million, not as a grant but as a contribution that must be reimbursed. You will have the authority and responsibility to approve the transaction between Airbus and Bombardier. Do you know when you'll issue your recommendation about that transaction?

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

As you know, I'm the minister responsible for the Investment Canada Act. When they present a notification of a particular transaction, we will go through a rigorous and robust process under the Investment Canada Act to advance Canada's national interests.

[Maxime Bernier, Conservative, Beauce, QC]

I appreciate that. Maybe it will be in the best interests of Canada and our country if you have a condition about that authorization, if you can ask Bombardier to reimburse the contribution they received, because it was for a Canadian corporation and now it's going to France and Airbus.

We asked you to make public the deals that you have with Bombardier or GM or another corporation, but you said it's a private agreement between you and the department and these corporations. So we didn't see the details of the reimbursement of these contributions. Is your position still the same?

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

It's a very thoughtful question because as you know, taxpayers' money is very important. We want to make sure we get a good return on investment.

Similarly, you may recollect during your tenure in government the $350 million that was disbursed by the previous Conservative government. The same disclosure requirements are applied here, which is that they're commercially sensitive. We're mindful of the fact that on one hand we want to be open and transparent with taxpayers, but at the same time, we do not want to compromise the commercial sensitivity of the transaction.

[Maxime Bernier, Conservative, Beauce, QC]

Yes, you're right. I understand that.

When I was Industry minister in 2006 and 2007, I had that discussion with my department about that being public. We were successful, and all the contributions and reimbursements while I was the Industry minister were on the website of Industry Canada. But after that, when I was promoted to foreign affairs minister, the department decided to shut down that website. But it was the same contract. I just want to let you know that under the contract that you signed with these corporations, you can make that public on the website. I did it at that time. That would be good for Canadians to know.

That being said, I'm against corporate welfare and big grants to corporations. I know that the counter-argument to that is to say that other countries are doing it so we must do it if we want to be competitive. Why not try to sign a new agreement between aircraft manufacturers and countries to limit state aid in the aerospace sector? We had that kind of agreement before, and it was very useful. I think we must review that kind of agreement to limit state aid between countries that have aircraft manufacturers, because we cannot compete and give subsidies like other countries are giving to their manufacturers like Boeing.

I know it's not in your mandate letter, but it would be great if you could ask your department to look at that and be a leader in that in discussions with your counterparts in other countries. Do you think you could look at this?

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

This is where I think we fundamentally disagree. I think we are in a global innovation race. I do believe other jurisdictions are stepping up in a meaningful way to support key sectors. The loan, the repayable contribution, that we had for Bombardier, for example, is really focused on research and development, and especially in the aerospace sector, which is highly intensive in research and development.

This sector employs over 208,000 Canadians from coast to coast and contributed $28 billion. We just need to be mindful that we have a level playing field. When other jurisdictions are stepping up for their aerospace sector, we in Canada must be strategic and thoughtful.

In a perfect world, you're right that no government would be involved, but that's not the reality, and we have to be mindful of that reality, because these are good quality jobs that, on average, pay 60% more than other manufacturing jobs. They are good quality jobs, and it's about research and development and being competitive relative to our international peers.

[Maxime Bernier, Conservative, Beauce, QC]

I know that there are very good jobs, but also in my riding, I have small business people who have very good jobs, and they pay their employees very well, but they don't receive subsidies and grants and contributions like that. For me, the fair thing would be to abolish all that and lower the tax for all businesses, the big ones, small ones, and medium-sized ones. That would be the thing to do, and at the same time, negotiate an agreement with other countries that are manufacturing aircraft in their countries to limit this kind of contribution.

We disagree on that, and I understand that.

Do you have a—

That's it? Okay.

[The Chair, Liberal, Dan Ruimy]

You have two seconds.

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

Very quickly, I do want to echo the comments about the importance of supporting small and medium-sized enterprise as well. One of the benefits of these investments is the 800 suppliers that also benefit.

As you know, when you were in government, and support was given to the automotive sector, it was to support the supplier base, the dealerships. It's the same thing with the aerospace sector. It's not only the large anchor firm but the 800 suppliers that also are supported by the activities in the aerospace sector, and that benefits many small and medium-sized enterprises.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Davies, you have six minutes.