Industry Committee on Dec. 5th, 2023

[Ed Fast, Conservative, Abbotsford, BC]

That's interesting.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you.

Mr. Van Bynen, the floor is yours for five minutes.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

The proposed artificial intelligence act does not provide for a pre-market conformity assessment of artificial intelligence systems, but proposed section 15 allows the minister to order an audit. The government’s proposed amendments to the AIDA include a series of tasks to be completed before the general-purpose or high-impact artificial intelligence system can be made commercially available, including an assessment of adverse effects and a test of the effectiveness of measures to mitigate the risk of harm and biased results.

What do you think of those new obligations that the government wants to impose on people who do develop the systems?

I'll start with Ms. Quaid and then I'll go to Mr. Harris and Mr. Gagné.

[Dr. Jennifer Quaid]

We talked about this a little bit in our written brief, but not in a lot of detail. Now I can draw on a different example, which is securities regulation. I think these amendments are in the right direction. I made comments in the brief that they probably don't go far enough. Part of the reason I think they don't is that you really need to build a base of understanding of what's going on in order to be an effective regulator. We see this in other sectors too. They need to know what's going on and get an understanding.

International finance and capital markets are things that change constantly—all the time—and we're always playing catch-up. They manage. Even with 13 regulators in this country, they manage. I do think that imposing disclosure obligations or having an audit function are important, but I would make it mandatory and I would make it standard, which is to say not ad hoc and dependent on having some inkling of what's going on. In fact, we learn things because we find them out. That's what continuous disclosure in securities regulation is about. It's making sure that we're constantly on top of things.

So I think it's in the right direction, but it could be strengthened.

[Jérémie Harris]

I'm just going to echo what she said, really. I think it's what you see in, again, the White House executive order context. There is a reason that everything is being designed around disclosure—tell us what tests you've run and what the results were—and setting up infrastructure to reveal that and to train regulators to understand the results of those audits.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Go ahead, Mr. Gagné.

[Jean-François Gagné]

I think that's where we have to be prudent. Canada is a small market. If you impose a cost that is too prohibitive or rules that are very hard to clearly comply with, companies will just elect to not publish their models or give you access to it. Entropik is not in Canada. Tons of companies decide that they're just not going to give you the tools, and then suddenly your entire ecosystem, all your industries, can't benefit from the uplift in productivity.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Should the artificial intelligence and data act require a compliance audit before the artificial intelligence systems are in place in the market?

Perhaps you could start, Mr. Harris.

[Jérémie Harris]

Yes. I strongly agree. I think that's essential. One lens that I'd bring to this is national security. You know, you build these systems and you don't have to deploy them for them to be tempting targets for theft and exfiltration. I can say from first-hand experience in certain contexts that the labs that are leading the way here are not resourced to withstand a sustained exfiltration campaign from nation-state attackers. Just through that lens, as we build more powerful systems, there has to be some level of responsibility prior to deployment. Then there is also the issue of loss of control, which can happen prior to deployment as well.

So I would say yes.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Go ahead, Ms. Quaid.

[Dr. Jennifer Quaid]

I agree. To go back to the fact that we do have examples elsewhere, we have high-risk industries that exist already. The nuclear industry is one of them, but there's also finance.

I disagree slightly with Mr. Gagné, because to the extent that the Americans are doing something, they have the force to insist. That is the importance of being a player at the international table with an advocate in the form of a commissioner who is truly independent and able to make decisions. Then you can make sure you're on side with everything. I do believe that at the end of the day international co-operation is essential, but I agree that looking for dangers ahead of time before they're launched on the market should be the case. We insist on that already for other things, in product safety and in other things, so to me it's not new. We have to adapt it to AI.

The other thing I would add that is important, because sometimes this comes out, is, oh, we can't force companies to share this sensitive information, because there's a competitive dynamic. But government departments handle confidential information all the time. That's what they do. The Commissioner of Competition does this all the time. Yes, of course there is a risk that it gets leaked or whatever, but I don't think that's any higher than other risks. I think sometimes that's overstated. Government regulators can handle sensitive information and can use it in the public interest. That's why we trust them to do it, I would say.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you.

Mr. Gagné.

[Céline Castets-Renard]

If I may....

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Go ahead.

[Madam Céline Castets-Renard]

I'd like to add that it's essential not only to provide for a compliance and verification system before putting products on the market, but also economically necessary for Canadian firms, because that's what other countries will have. We therefore need to start preparing Canadian companies for this level of competition and competing jurisdictions.

[The Chair, Liberal, Joël Lightbound]

Thanks very much, Mr. Van Bynen.

I now turn the floor over to Mr. Lemire for this last mini-round of questions.

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

I understand the time constraint, Mr. Chair.

Mr. Gagné, in your opening remarks, you made a fundamental point that deserves to be heard and that goes beyond the scope of Bill C‑27: there's an urgent need to provide new Quebec and Canadian businesses with computing power. How important is it to provide computing access? How essential is it globally?

[Jean-François Gagné]

It's definitely essential. You need only look at the numbers of the companies that build and produce these semiconductors. They're growing like weeds. It's as simple as that. It's reached the point where many new businesses—I don't want to name any single one over another—are making advances in artificial intelligence. They've had to raise so much capital just to stay in business that I don't see how the economics of it will work out.

Every form of assistance or support in accessing computing power counts. We already know, for example, that we want to use very large models to specialize them in executing tasks that will help us improve productivity. However, that requires computing power. Anything that can be done to facilitate it will accelerate its adoption by Canadian companies, improve their productivity and potentially help them make more realistic attempts to create new organizations and businesses.

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

I think the right people are listening to you now.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Lemire.

Thanks to all the witnesses for enlightening as us with their perspectives on this important bill this afternoon.

I spoke to Mr. Harris before the meeting. For those who submitted briefs before the amendments were made public, please don't hesitate to send the committee a revised document reflecting any necessary adjustments made in response to those amendments.

Once again, thanks to all the witnesses for appearing in person and by videoconference.

Thank you for joining us.

Thank you to the interpreters, support staff and analysts.

We'll be back shortly after the vote.

The meeting is suspended.

[The Chair, Liberal, Joël Lightbound]

Ladies and gentlemen, colleagues, we will continue this session and resume meeting no. 101 of the House of Commons Standing Committee on Industry and Technology.

I would like to take this opportunity to apologize for the accumulated delay as a result of the votes held following the oral question period and those just held, but here you are.

Pursuant to the motion adopted on November 7, 2023, the committee is resuming its study on the recent investigation and reports on Sustainable Development Technology Canada.

I would like to welcome today's witnesses.

We have George E. Lafond, Strategic Development Advisor. Stephen Kukucha, President and Chief Executive Officer of CERO Technologies, is joining us by videoconference from Vancouver, and we also have, in person, Guy Ouimet, Engineer at Sustainable Development Technology Canada.

If you wish, each witness will have five minutes to present your remarks.

Mr. Lafond, you have the floor for five minutes.

[George E. Lafond, Strategic Development Advisor, As an Individual]

Thank you very much, Mr. Chair and honourable committee members, for having me here today.

I want to begin by acknowledging that we are on the unceded and unsurrendered territory of the Anishinabe Algonquin people.

My name is George Lafond. I'm a citizen of the Saskatchewan Muskeg Lake Cree Nation in Treaty No. 6 territory. I currently serve as an adviser to businesses, educational institutions and social and cultural organizations and I am known for successfully leading strategic initiatives requiring first nation engagement.

Previously I served two terms as the treaty commissioner of Saskatchewan, the first treaty Indian to serve in that role. I was appointed by the Harper government in 2012 and then reappointed in 2014. I served as a tribal vice-chief and then later as a tribal chief of the Saskatoon Tribal Council, a first among equals, with seven first nation chiefs and their diverse first nation communities.

My entire public service has been devoted to supporting reconciliation, wellness, economic development and innovation for my communities. Improving access and the quality of education for indigenous youth is what underpins all of my efforts, and this work is informed by my educational background and experiences as a public school teacher some 42 years ago.

In the education sector, I served as an adviser to three university presidents and also served as a university board governor. I advised them on how to ensure that indigenous students could be set up for success throughout not only their time in post-secondary education but also their future careers. It is in this role that I worked with the Saskatchewan Indian Institute of Technologies, commonly referred to now as SIIT.

It was these public service roles that led me, in 2012, to be appointed by the Harper government as an expert to examine first nations education on reserve and to bring advice forward to address a new relationship between the federal government and first nation communities with respect to education. It was there that I witnessed the fact that first nations people were doing well in primary industries but were almost non-existent in the clean tech industry.

Since I was appointed to the board of SDTC in 2015 there has been a noticeable change in how this organization has modernized to better meet the needs of the markets and the Canadian clean-tech industry. It was paramount to ensure that indigenous communities were also factored into this equation, to determine how indigenous peoples could be set up with the proper skills and training needed to participate in this critical sector and also that this sector could respond to the unique needs of our communities.

Strides have been made over the last decade, but there's no denying that the clean sector and innovation agenda present an even steeper hill to climb given the lack of access to training and education for indigenous youth. Indigenous people are at risk of being excluded from innovation in Canada. We're under-represented in STEM, with Statistics Canada reporting that the total employment in this industry is less than 2.5% for indigenous persons with post-secondary training.

During my time on the SDTC board, I had conversations about this very issue with SDTC management and I advised organizations and post-secondary institutions of their obligations to ensure that indigenous youth did not miss out on the future of innovation.

In 2020, SDTC approved funding for a maker's lodge for SIIT, Canada's first innovative accelerator dedicated to educating and empowering grassroots indigenous entrepreneurs. This pilot project was done through the SDTC ecosystem funding stream, which encourages innovation and collaboration among diverse persons in the private sector, academia and not-for-profit organizations. This is a part of SDTC's mandate and a part of their contribution agreements.

I want to be clear. Although I spoke to SDTC about these important issues and about finding solutions to ensure indigenous participation and I introduced them to SIIT leadership, I was in no way part of the decision-making process with respect to funding the SIIT project. When SIIT entered conversations with SDTC, I proactively disclosed my conflict and recused myself from any and all discussions moving forward.

Following the RCGT report, I was made aware that SIIT mistakenly included my services as a part of their expenses under the guidelines of the SDTC project. This was an error. I immediately contacted SIIT, which promptly resubmitted their expense claims. I never received a payment from SIIT related to this project. My contract with SIIT is as adviser to the president and is unrelated to this project.

As I've said, I had spent years working in indigenous education and on improving outcomes for indigenous communities. Although I'm an adviser to the SIIT, this program has provided no personal benefit to me. However, it does have potential benefit for thousands of indigenous youth, giving them an opportunity to combine traditional knowledge with a new idea and to contribute to the innovation landscape of Canada.

As the committee does its study, I do not want this important work to be lost. It is important that, through the creation of innovation programs like this innovation accelerator, we help mentor indigenous leaders and entrepreneurs, and ensure that not just middle-class communities but all Canadians benefit from a meaningful contribution to a modern Canadian economy.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I'll now yield the floor to Mr. Kukucha for five minutes.

[Stephen Kukucha, Chief Executive Officer, CERO Technologies]

Thank you, Mr. Chair and honourable members.

My name is Stephen Kukucha, and I have served on the SDTC board since February 2021. I live in Vancouver. I'm a retired lawyer, and I'm certified by the Institute of Corporate Directors.

SDTC's work is critical to the development and success of Canada's clean-tech ecosystem. I believe that my unique perspective and positions within the clean-tech sector bring value to my role on the board. My over 20-plus years of experience in clean tech provide me with an understanding of the challenges that companies face in acquiring capital. That struggle has been exacerbated by the market downturn in late 2021, the dramatic increase in U.S. government investment in this space, and now the pause in SDTC's work.

Whatever happens because of these hearings or other investigations, it's critical to state the important and unique role that SDTC plays and that the organization's mandate has for Canada. I ask this committee to consider its importance to all the fledging companies it supports.

As well as my work in clean tech, I should also disclose that I have been involved in politics in the past, both federally and in British Columbia, and I'm very proud of that involvement. I believe that engagement in our country's democratic process, no matter what party one supports, is important to civil society. For example, I have a profound respect for all of your decisions to run for office and to seek careers in public service. It's one of the more important things a Canadian can do.

I would also like to disclose that I was the recipient of the whistle-blower call to the board. I'd like to put that on the record. Unknown to me, our call was surreptitiously recorded. However, I'm comfortable tabling a transcript to show the level of professionalism that this individual was afforded in good faith. On multiple occasions, the whistle-blower was asked to share their dossier and the facts that they were basing their allegations on so that the board could respond and address them in a professional manner. Unfortunately, they did not.

After my one-hour conversation with this individual, I quickly realized that the board needed to be informed, that legal counsel need to be engaged and that a proper process needed to be followed. An immediate investigation was commenced without informing the individuals who were the subjects of the allegations. I acted in good faith and followed proper governance, and in my opinion, the board undertook its fiduciary duty.

With regard to my investments in clean-tech companies, any and all conflicts I had were disclosed prior to my appointment. In fact, I was asked to resign from the board of a company that had previously received SDTC funds, and I promptly did so. Any conflicts after joining, either real or perceived, were also disclosed. Finally, I have not had access to any files related to those conflicts, and I have recused myself from any decision-making.

With regard to payments during COVID to SDTC companies, I'd like to share my perspective as well. At my first board meeting, two weeks after being appointed, a recommendation came forward to give management discretion, within an allotted pool of capital, to make assistance payments if required. No individual companies were listed in the board documents. I'm willing to table a copy of that document to show you what the board received if required. There was also legal advice given to directors at that meeting: that if they had previously declared conflicts, they did not have to redeclare. I had declared mine two weeks prior.

Finally, I have not received a dollar from any company that has received SDTC funds, and none of the companies I'm invested in have exited or provided any return to me. I've not been compensated in any way by these companies or other organizations I'm affiliated with. I've received no payment, no dividend and no remuneration at all. In fact, my partners and I have contributed significant personal time and financial resources to keep these companies and other non-clean-tech companies contributing to the Canadian economy over these last few very challenging years.

In closing, in my experience, the team at SDTC has been professional and has delivered results. While no individual or organization is perfect and we should always strive to improve, I'm very proud of the SDTC team and the work I've done on this board.

I'm happy to take your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Kukucha.

Mr. Ouimet, the floor is yours.