Industry Committee on April 20th, 2021

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

It would seem it would be worth it, obviously, for our country to do so, if you think that it would increase our GDP, I believe, by 4%. Is that what you had...?

[Dr. Trevor Tombe]

Yes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Also, you mentioned recognizing certificates across provinces. A lot of times that's a barrier in general with regard to other countries. I understand that being the case, but within different provinces, I don't see why that is an actual issue within Canada.

Can you speak a bit more to this issue?

[Dr. Trevor Tombe]

There are hundreds of professional associations and occupational licensing authorities that largely operate at the provincial level. That means for an individual wanting to provide their service to a buyer in a province other than where they reside and are regulated, there may be barriers to doing so. These exist in lots of professions. Here in Alberta, we have provincial rules and exemptions surrounding dental hygienists, nurse practitioners, podiatrists, radiologists and things where skills, one would think, are largely portable across the country, yet there is a system imposed on new individuals moving into Alberta to recertify in those professions.

For others, Manitoba stands out as having an explicit restriction on the ability to provide legal services with respect to Manitoba law, if you do not have a physical law office in Manitoba or if you don't predominantly, actively reside and operate as a lawyer within Manitoba. That's another explicit barrier that exists there.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you.

Mr. Balsillie, you said that we need to rebuild the Economic Council of Canada “to create in-house capacity for the analysis of the contemporary economy.” Clearly our economy has changed and evolved over the last decade.

I believe we've already had this discussion in the past, but I'm wondering what exactly you think needs to be changed. What needs to be taken into account with regard to analysis? Why is it that Canada isn't doing it when other countries around the world seem to be there?

[Jim Balsillie]

The world has changed to a degree and with a rapidity that is unprecedented in mankind, and we have not changed our approach to these policies. Whether it's about how we want to get into electric vehicles—and we give our taxpayer money to Tesla—or it's about our publicly funded virus research in Winnipeg at the National Microbiology Lab, we haven't aimed at owning and controlling the outcomes of 91% of the economy. This is what needs to be fixed. It's a policy reorientation.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We will continue with Mr. Lemire.

You have the floor for six minutes.

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

Thank you, Madam Chair.

I will start with Mr. Balsillie.

It was a pleasure to hear from you last June, and it's a pleasure to have you back today. Thank you for your comments.

In the rapidly developing digital economy dominated by large U.S. technology platforms, what are the strengths and the weaknesses that characterize Quebec and Canadian companies in the face of U.S. power in the digital world?

[Jim Balsillie]

The thing you need to look at here is that we have considerable confusion in Canada because we had a set of policies for the tangible economy, but when the economy changed, the role of government changed. I'm the only Canadian ever to have been on the U.S. Business Council. We worked hand in glove inside Washington on standards, FDI, trade agreements, IP considerations and data strategy. Canada got captured by market fundamentalism, which is all hands off. That's how the tangible economy works, which I talked about in my comments, whereas the intangible economy works in the exact opposite way. Trade agreements, as an example, spread competition, but in the tangible economy they spread monopolies. Therefore, as Robin was talking about, you have to update your competition authority rules; otherwise, you lose the efficiency, performance and competitiveness of your economy.

We need to reorient ourselves and understand that we missed the changed role of the government in these last 20 or 30 years that the economy has changed. That's why our competitiveness has eroded.

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

Therefore, how can the governments of Canada, Quebec and the provinces mitigate the weaknesses in our industries and our businesses, which are affecting our competitiveness in the digital economy?

[Jim Balsillie]

The first thing we have to do is aim at what matters, which is growing and controlling the intangible assets of our intellectual property and data. We talk about becoming an electrical vehicle superpower, but we use taxpayer funds at, say, Dalhousie, where a professor will say, “We get the research papers but Elon Musk gets the patents,” or we let our vaccines go to China or the U.S. If we want our companies to do better, they have to be in the business of accumulating the intangible assets that they can ask rent for. We can't be doing things like Sidewalk Toronto with Google so they get richer or courting Amazon or Facebook, because we get the low-cost jobs. It's a race to the bottom and they get the wealth effects.

The key is what you aim at, and that's why I proposed this economic council. These are integrated, crosscutting areas where you need the expertise. We have to build that capacity in our civil service so that they can create the policies we need hand in glove with our companies to prosper in this 91% of the economy. We focus a lot on the 9% piece, but I think we need to focus on the 91% piece because that's where the money and security are.

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

The last time you testified, I became keenly interested in the issue of intellectual property. I'd like us to talk about it.

To make better use of intellectual property and digital opportunities, how can the federal government influence Quebec and Canada's interest in competing in the digital world this way, particularly in the face of the U.S. technology giants?

[Jim Balsillie]

Well, the great thing about intellectual property is that it favours smaller countries that are focused, whether you're pharmaceuticals in Switzerland, micro-electronics in Singapore or gaming and telecommunications in Finland. The government has a central role in this, because it creates the framework.

I have a list of things in the digital policy infrastructure. In my business around the world, in about the 150 countries that I did business in, the successful countries focused on the right-hand side of that chart in making sure that they all operate together. If we don't work in alignment with our companies, our national champions, and understand that our companies are going against national champions in other parts of the world.... It's a central job, whether it's how we do research funding or how we do foreign direct investment. For instance, if you look at the SIF program that got topped up and at the superclusters, half of that money went to foreign companies because we think it's a job strategy, which is a race to the bottom.

Every successful economy focuses on generating those assets for their domestic economy, where they get the rent wealth effects but they also get the security effects of that. It's an orientation and it's an expertise issue.

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

What could we do to make our industries more attractive?

[Jim Balsillie]

Well, I think you make them attractive by relating to them. Quebec does this very well. They have their champions and they focus on growing them. You get all the wealth effects and the headquarters jobs from them, and all of the positive spillover. The economy works differently in intangibles than it does in the traditional production economy.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Masse.

You have the floor for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Thank you to our guests for being here.

My first question is for you, Ms. Shaban.

I don't know if you saw the budget, but there's finally some increase to the Competition Bureau. That will be my first question. I know it's super early, but what do you believe might be the focus if the Competition Bureau has to deal with some priorities but has a little more resources right now?

I know that you used to work there ages ago, but perhaps you could give us a bit of a glimmer as to what we can expect with some of the resources that are coming. What would you say might be the priorities?

[Robin Shaban]

It's hard to say. I'd be speculating.

I think head count is important: having more people to actually undertake investigations.

I'd be interested to see whether the bureau spends some of that money on using modern tools for undertaking investigations. Like the commissioner talked about before, as investigations grow in these modern times, they're seeing more and more data come to them as they are compelling information from businesses. Having tools to enable officers to sift through all of that information and pick out compelling information that will go into a case I think is going to be really important.

[Brian Masse, NDP, Windsor West, ON]

Since your testimony and that of others has brought this more to light, I'm convinced the Competition Bureau has no place in the industry portfolio. I've done quite a bit of work since this has been brought to the forefront of the discussion. Do you have any suggestions on where it should go? That's the challenge.

I definitely agree with the position being presented by you and others that it is a complete conflict of interest for it to be in this portfolio. It's not that I don't like dealing with it in my critic responsibilities, but I definitely can see that this is just not sufficient, especially when we don't even have some of the powers the U.S. has and also less independence. Putting it under this umbrella is just improper structurally.

[Robin Shaban]

Yes, I think that's a really valid question.

My next step for understanding that would be to understand how the European Commission, for example, fits within the broader EU, or how the Federal Trade Commission or the Department of Justice in the United States fits within that bureaucracy. I recognize that those organizations are hived off from the broader government. They're not government departments. They are separate agencies.

As to how that would play out within our government structure, I'm still unclear on that as well. Now that I know you're thinking about that, I'm going to make a note of it and do my best to address that in the briefing note.

[Brian Masse, NDP, Windsor West, ON]

It would be great to get your ideas.

I have a couple of models that we're looking at too. I'm looking for input and analysis. It's definitely possible. It's just a matter of how we want to do it.

I'm going to switch over to Mr. Balsillie.

I'm really glad that you brought up the issue of Amazon as an example. People see it as innovation because they call a warehouse a fulfillment centre. I know they get upset with me when I tell them it's a fancy....

I come from just-in-time delivery in the auto industry, and we've been doing these types of logistics for 30 to 40 years. Giving it a different name isn't necessarily innovation. It's fine. It can move stuff quicker, can be more autonomous and so forth, but I don't see that as innovation, quite frankly.

With regard to your suggestion, what would be the mechanics to get the national strategy together with regard to the Economic Council of Canada? What are the mechanics that are necessary to actually lift it up?

[Jim Balsillie]

I think you need to resurrect it and house it either independently or at the most senior level reporting into the Prime Minister's Office and then the PCO, or part of that. It's so important that we build this expertise.

If I may, I'm hearing a lot of comments on industrial strategy. We've had industrial strategies for decades in Canada. We spend lots of money on superclusters, on the strategic innovation fund, and those have been topped up. We have to understand that this is not about industrial strategy. This is about appreciating the role of government in an intangible economy. You need to house a very expert zone that makes sure that we actually prevail in this.

I'm not talking about more money or less money. We're first world in our inputs but third world in our outcomes. Whether this is for $100 million or $1 billion or $10 billion, this is about changing our outcome. It has to be a place that guides all of these decisions at the most senior level, and it has to be experts. It has to interact with global experts, domestic experts in this, or we will find that we don't get the returns for the money we spend.

We've invested [Technical difficulty—Editor] for decades, yet we keep getting shorter and shorter returns, which is Einstein's definition of insanity. It's the approach that's our issue.

[Brian Masse, NDP, Windsor West, ON]

And we have no measurables.

I know my time is up.

Thank you, Madam Chair, and to the witnesses.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now start our second round of questions.

Our first five-minute round goes to MP Baldinelli.

You have the floor for five minutes.