Industry Committee on April 20th, 2021

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Absolutely.

What are the regulatory roadblocks to innovation currently faced by our businesses and entrepreneurs?

[Jim Balsillie]

Well, there are many things.

In a sense, the ideas economy, the intangibles economy, works opposite to the tangible economy, so it's actually about creating regulations that favour you.

When we hear people like Robin Shaban speak, we know we have to look after the power of our own companies by how we run our Competition Bureau. We have to look at the power of our own citizens and companies for how we regulate data in our privacy economy, how we set standards, how we do trade agreements and how we do research funding.

It's really about programs that focus on what the gain is, which is generating the assets that determine our prosperity and our security. It's a totally different role for government. This is, frankly, what's been missing in our approach for the last 25-plus years. It's why we've faded in these regards, but it can be fixed.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you very much, Mr. Balsillie.

[The Chair, Liberal, Sherry Romanado]

Thank you.

Our next round of questions goes to MP Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I'm going to follow up with Mr. Balsillie.

This is with regard to your experience with the U.S. Business Council and the Business Council of Canada. I'm vice-chair of the Canada-United States Inter-Parliamentary Group. Some members here have been part of the delegations where we lobby the U.S. Congress and Senate. It's a bipartisan thing for Canada. In fact, it involves members of our Parliament and our Senate. It's been effective in many respects.

One of the things that I don't think we quite grasp over here is that there's always a sense of free trade, as you mentioned, or a free market economy. I've never seen that in my years of being elected. All we have right now is buy American, but the buy American act before that, the Jones Act, is a whole series of trade agreements that favour the United States.

Is this something that, as well as the Economic Council of Canada would give advice on how to deal with some of these things? We just finished our lobby to Congress and Senate a few weeks back. Even the strong supporters there—being American, they are elected officials—who have a lot of empathy don't seem to have any traction whatsoever on giving Canada an exemption from buy American, which we've had in the past.

What's your sense of these elements? Does this tie into what you're proposing as well?

[Jim Balsillie]

Yes, it does. The world has changed to one that's more rivalrous rather than co-operative.

In the tangible economy, when you sign a free trade agreement and get rid of friction, everybody wins. However, the ideas economy is based on the principle of friction. They're always creating ways to extract rents. Yes, it absolutely is one that should help us.

It's much harder to create barriers for a highly value-added economy. It's hard to stop a product. It's hard to stop technology products, value-added automotive products or pharmaceutical products, but when it's commodities, it's much easier to create trouble.

On your previous question about how to set up this council and deciding on the kind of roles, if it is of interest to you or the committee, I'd be more than happy to create a paper that summarizes some of the approaches for that.

We have to understand that the world has changed. We're in much greater need of sovereign approaches than we were 30 years ago. The world has changed in the last 25 years.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I see the yellow flag, Madam Chair, so I'll cede the floor.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We'll now go to MP Dreeshen.

You have the floor for five minutes.

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

Thank you very much, Madam Chair.

It's great to have all the witnesses here this morning.

Mr. Balsillie, some of the things you mentioned earlier were that we are first world as far as income is concerned, but we are third world as far as our outcome is concerned. We heard earlier that a bunch of money is going to be allocated to different potential projects to help out as far as industry issues are concerned, but you also indicated lots of money but poor results. The other thing that you mentioned on our research funding with great fanfare was that the superclusters are a great idea, but of course, so much of the intellectual property and the main focus go to other countries.

I know that in the past you've made comments about how we seem to be losing our place. I'm wondering if you can comment on some of those issues right away.

[Jim Balsillie]

Sure, I'm happy to.

It's really just a set, a patchwork of prior approaches, but with more money. When you look at the superclusters, they were set up with no idea, data or strategies, without the governance set up, and then they started to try to fix that as they were rolling. When we did our SIF program, half the money went to foreign companies. Again, if it's a traditional production economy, you count on the positive spillovers of those partnerships. In the ideas economy, all we're doing is making other countries rich, impoverishing Canada.

I don't think we have an innovation strategy. These are job strategies, but they're low-quality jobs. It's a race to the bottom. If we had a proper lens of expertise, we would recraft these programs.

The government has a central role in this. I do believe in investing in these things, but I would like to see us get $10 out of our $1, not 10¢.

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

Thank you. I think that's an important aspect.

In the past, Canada has designed our energy prosperity and sovereignty. We created innovative hydroelectric projects. We developed transformative technology in nuclear power, oil and gas extraction, and so on. According to the 2020 Bloomberg innovation index, Canada fell to 22nd place. This would seem to indicate that somehow we've abandoned the concept of those nation-building ideas, which we've been so good at in the past.

Of course Mr. Balsillie, you've given previous testimony that I think is important for us to look at, as far as protecting intellectual property and data is concerned. Could you perhaps outline some of the factors that you feel we could use to correct some of those issues over the near term and the long term?

[Jim Balsillie]

I'm happy to.

For sure we have to fix the Competition Bureau. You've heard Robin Shaban talk about that. We absolutely need proper privacy regulations to control data. Bill C-11, I've written, is woefully inadequate in that it's written to favour Silicon Valley, not Canada. I know that the ISED minister has responded to approach universities on guidelines for research funding. I don't know why we spend taxpayer money to make Huawei and China richer and more secure at the expense of Canada's security and prosperity.

It's up and down the line. Look at the right-hand side of the chart I showed you. Countries have been doing each one of these items for a changed economy for 25 to 30 years. The most important message I can leave you with today is we need to understand that the role of the government changed 25 years ago. This is not about industrial strategy. This is the role of the government. How do we build that role?

That's why I talk about this economic council. That's a place where we can build the expertise. We haven't built the expertise. You can spend all the money, but if you don't have the expertise to perform it well—whether it's competition, research funding, the Privacy Commissioner; whether they're standards; “trade agreements” which are mega-regulatory agreements—until we understand the role and the focus and the technocracy of it, we're just going to be making foreign countries richer and more secure on Canadian taxpayer funds. That erosion I showed you in that chart is going to continue because this rate of change is accelerating.

I stress that it can be fixed. This is an optimistic story. We have lots of expertise. We can reverse this course, but we have to understand it's an issue.

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

In the few seconds that I have left I will just say that you mentioned to Mr. Masse that perhaps you could present a paper to us using many of the things that you've been hearing here. I'm sure it would be appreciated by all of us.

Thank you very much.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

Mr. Balsillie, it would be very important that you send that document to the clerk so that he could make sure it was translated so we could circulate it amongst the committee members.

With that, we will now go to MP Erskine-Smith.

You have the floor for five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much, Chair.

I want to start with Robin.

You spoke about dropping the efficiencies defence and giving the commissioner the power to compel information with respect to market studies. I have a few more specific questions in relation to the act.

We obviously heard from national grocers in a little bit of a blow-up related to concerns around wage fixing. Would you agree that we should update that area of the Competition Act as it relates to wage fixing to keep up with the U.S.?

[Robin Shaban]

Yes, and I did mention that in the opening statements. Hopefully it wasn't too fast.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That's all good.

We heard testimony previously from a competition lawyer that we should also ensure that we extend the private right of action to abuse of dominance. Do you think that's a good idea as well?

[Robin Shaban]

Yes. My only thought on that is that it's really important for Parliament to think about what the role of the Competition Bureau is going to be if private right of action is permitted.

Right now, competition law in Canada is not about advancing public interests. That isn't a philosophy that's ingrained in the legislation, and there aren't a lot of aspects of the act that allow the bureau to take on cases for broader public interest such as we see in other jurisdictions. This is evidenced by the fact that there's a real schism between competition policy and consumer protection, whereas in many places, these two policy areas are intertwined and actually undertaken by the same agency.

To wrap up quickly, I want to make the point that I think it's important that if we're going to open up private access to the tribunal, the bureau should be committed to still taking on cases and the private—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That's right; it's not a substitute for strong public enforcement.

On that strong public enforcement, do you think the fines should be increased?

[Robin Shaban]

Our fines are really out of line with what's done internationally.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I have one last question in relation to updating the act, although I know you're going to submit a brief, and I appreciate that.

When I look at the threshold of $400 million as relates to M and A and I hear Jim talk about the modern economy, it seems there are any number of start-ups that we might be concerned about being taken over and acquired that don't meet that $400-million threshold. Do you think the thresholds should be adjusted as well?

[Robin Shaban]

The bureau has the ability to review mergers that don't meet the threshold. This comes back to the resources issue. The threshold is important but it's not the be-all and end-all. Our thresholds are in line with what America has.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Jim, you and I have spoken a number of times on IP strategies. When I read yesterday's budget, I feel as though maybe your comments are being heeded in some respects and your advocacy is being listened to.

I read that there's going to be a program to help accelerators, incubators, provide start-ups with access to expert IP services and that IRAP will provide high-growth firms with access to expert IP services. Then there was one line, but it wasn't expounded upon in a serious way, which said that a strategic IP program review will be launched which will do a broad assessment of IP “provisions in Canada's innovation and science programming” to “make sure Canada and Canadians fully benefit from innovations and intellectual property.”

I know it was one line relating to strategic IP program review, but if developed in a fulsome way, it would get at some of the concerns you're talking about, including that the superclusters program or other government financing isn't really considering IP in a serious way. Do you think there's reason to be optimistic when you consider these provisions?

[Jim Balsillie]

I do 100%. I give real credit to the acknowledgement, understanding that this should have been done 30 years ago, so that's on both parties, but absolutely this is very encouraging. My principal concern now is how we do it, because if we do it wrong, it won't work.

I will say—this is an associated thing—that there was talk of a data commissioner, which I find very, very troubling, because if they put this into a little box, that would compromise the role of the Privacy Commissioner, and yet it's not integrated as a crosscutting thing. It really says to me that this all goes to the expertise and the implementation, but absolutely, the direction on IP is very, very positive. Let's make sure that we have the experts implementing it and that we build the capacity in the civil service to do it in a crosscutting fashion. Yes, it's very positive.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks, Jim.

Trevor, really quickly, tell me about optimism as it relates to internal trade barriers from the budget.