Industry Committee on March 25th, 2022

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Vats.

I now turn the floor over to Mr. Lewis for five minutes.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Chair. Thank you for the excellent dialogue here so far today.

To be honest, when I was invited to come here on behalf of MP Gérard Deltell, I didn't quite know what quantum computing was all about. Because of that, I really dove into it with both feet, so to speak. Then I realized just how close it was to international trade. I could probably go on for an hour, but I have only five minutes. I'm going to get right down to it.

Dr. Vats, you mentioned that quantum computing cannot be developed in any single country. I found that really remarkable. My riding of Essex is right next to Mr. Masse's riding of Windsor West. There are a lot of international travellers every single day.

I have a concern with regard to Huawei. For a moment, let's just imagine that Huawei was allowed in Canada and wasn't allowed in the United States. If we have autonomous vehicles that cross our bridge each and every single day, what would look like? What is the government doing to ensure that crossing the border is going to be free and clear with whatever way both countries go?

[Dr. Nipun Vats]

The most important thing in these collaborations from that security perspective is that we make sure that we're engaging with our trusted partners in a way that we can actually have interoperability. At earlier stages of research, it's less of a contentious issue because the research is very fundamental in nature and maybe doesn't have as much of a technological implication. However, as you get further downstream, you need to think about how you're going to make sure that the technology you're developing will be able to plug into supply chains internationally.

This is something that's being discussed in terms of standards, in terms of whether we have appropriate security understandings with our allies when it comes to some of these more sensitive security technologies. A lot of those types of things are ones that we're also trying to do in parallel with these investments through the strategy, to make sure we're strengthening those—

[Chris Lewis, Conservative, Essex, ON]

I'm so sorry to cut you off, Doctor.

With regard to allies, are we suggesting then that China is our ally?

[Dr. Nipun Vats]

No. I'm sorry, I was talking about the Canada-U.S. border.

[Chris Lewis, Conservative, Essex, ON]

Okay, fair enough.

I was speaking specifically to Huawei. Do you have any thoughts on that front?

[Dr. Nipun Vats]

I'll give you an example. In the alliance program, which is one of the key delivery vehicles for the quantum strategy when it comes to research, there are some research security provisions that are built into that which basically require that we understand, where there are industrial partners involved, whether those partners meet the international norms in terms of transparency, openness, state control and other factors. We're actually reviewing these things when research polls are brought forward through that program.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much, Doctor. I'm going to move off that.

On international trade, then, in regard to CUSMA and CETA, and looking ahead to our trade agreement with the U.K., will quantum computing be a part of those agreements, if it's not already? Number one, do we need to amend those agreements at all in regard to quantum computing?

[Dr. Nipun Vats]

Well, I'm not an international trade expert, I have to admit.

I would say that there are typically provisions in those agreements with respect to trade in goods, services and procurement. As well, there are provisions related to national security. I think all would be relevant to quantum.

I don't know whether you would need quantum-specific provisions in an international trade agreement, particularly because this is a space where the technology is still evolving. In general, you want to try to have a framework of general application that will allow Canadian innovations to have access to those markets.

It might be a bit premature to be thinking about the specific tweaks you need to make to international agreements, in that perspective.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Doctor.

Mr. Chair, I'm not sure, but am I all done?

[The Chair, Liberal, Joël Lightbound]

Yes, you have no time left.

I'll now move to Mr. Erskine-Smith for five minutes.

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

Thanks, Joël.

Thanks for your presentations.

We could have a long conversation about basic research, but I just want to talk about commercialization. In the “What We Heard Report”, they note that “Canada has a history of producing excellent research that often does not get commercialized.” That doesn't only apply to quantum; that applies across the board, unfortunately.

In the quantum space, we see a few different kinds of investments. We see from the NRC these challenges, obviously identifying mission-driven priorities and saying that any companies can compete for this. But in other contexts, we have large public funding for specific organizations. We saw $40 million, for example, for D-Wave in March 2021.

In the “What We Heard Report”, there's an acknowledgement that “there was consensus that government should remain inclusive and not pick winners at this time, as quantum is a developing sector.” That seems right. They note that “At some point, Canada will need to make a strategic decision whether to support a few large players or projects, or many small ones.”

Given that money is being rolled out the door already as part of the $360 million, what's the answer to that question?

[Dr. Nipun Vats]

When it comes to quantum computing, we're still at a relatively early stage in many ways. When you talk about the need to not be picking a lane at this point in quantum computing, I think that's probably right.

We have a number of players within Canada that are all pursuing slightly different approaches, and sometimes very different approaches, to achieving the ultimate goal, which is a quantum computer that can correct for errors and that enables you to do some really meaningful real-world types of calculations on it.

It may be the case that one, two or more technologies actually emerge as being the most likely to achieve that goal of what's called “fault tolerant” quantum computing—

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

I'm sorry to cut you off, but I have limited time.

I'm less interested in our picking a technological winner, but more interested in the latter point, where the “What We Heard Report” says, “At some point, Canada will need to make a strategic decision whether to support a few large players or projects, or many small ones.”

Given that money is rolling out the door, have we arrived at the conclusion? What's the strategic decision?

[Dr. Nipun Vats]

I guess what I'm saying with respect to quantum computing is that we're still at that early stage. We're not at the point where we'd be in a position to pick winners, because of our small number of investments. The race is still on, and we're still at a fairly early stage in development. I think it would be unfortunate at this point to be closing doors to what look like viable candidates for a quantum computer.

It may be the case, though, as the report says, that we arrive at a point where we have to make some of those decisions, or the markets will dictate or technology will dictate—

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

Let me take a step back with a similar problem. The report also acknowledges—and many people, businesses and responses acknowledge—that Canada has a venture capital climate that tends to be highly risk averse, and that we see a lot of basic research that happens in Canada and people leave to find financing elsewhere. Venture capital is more easily found in other countries, potentially.

When you look at the approach of funding by large companies, which may well be at a place where they are more easily able to access capital in the private sector and private markets versus early stage companies exiting from research and trying to commercialize, is that not a space where Canada has a gap there, potentially, and that Canada with public dollars maybe ought to fill?

[Dr. Nipun Vats]

I think that's true. I think there are programs that are doing that right now. You mentioned the investment in D-Wave. That was done through the strategic innovation fund, which is for those kinds of companies at a certain threshold level.

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

Pause there. Is it really for those companies?

D-Wave strikes me as a company that is much more established than what I'm imagining. When you're thinking of the start-up space, where they're exiting the incubators and looking for venture capital in the private market, D-Wave seems a little more advanced than that.

[Dr. Nipun Vats]

That's true. If we were to walk through that kind of translational space, I think the first barrier is the scientist who is trying to figure out what their product is. There are some questions about whether we actually have the tools we need to help a scientist innovator define the economic opportunity, the product, and then to develop a business that can actually succeed in raising capital. Even before you get to the traditional incubator stage, there is work that could be done there, and there are a number of places that are doing that work.

When you are a small start-up firm, it's partly about the C-suite kind of expertise. It's also partly making sure that you have strong connections to the research base that can help support your innovation and emerging tech area, and we have programs like IRAP at the NRC that actually provide funding and expertise to help those companies.

Then, as you go further downstream, there are some specific things that companies may be looking for. For example, it may be the case that there are common platforms or test beds that could be deployed to help them test some of these technologies, whether they're in sensors or in computing, infrastructure and other things, and looking at ways to support those. Again, they're not necessarily picking winners, but it's to give them a leg up to be able to test. Then as you get further downstream, you get to programs like SIF where people are at a scale where they're bringing in series-B investment and they want some supportive investment. We also have the BDC deep tech venture fund, which is another sort of venture capital vehicle that can provide support in that space.

There are a number of different pieces that already exist in the system. I think one of the things that we're looking at through the quantum strategy is how we tie them together, particularly in an emerging tech area like this, to make sure that our companies can connect all of those tools in an efficient way and that we have a line of sight on how they're progressing so we can help them along.

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

And where the gaps are.

[Dr. Nipun Vats]

And where the gaps are.

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

Thanks, Dr. Vats. I really appreciate your contribution.

[The Chair, Liberal, Joël Lightbound]

Yes, thank you very much.

We'll now move to Mr. Lemire for two and a half minutes.

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

Thank you, Mr. Chair. I would note in passing that you are wearing a very gorgeous tie today.

I am going to continue in the same vein as the questions asked by my colleague, Mr. Erskine-Smith. I would like to address the issue of intellectual property, one that I see as fundamental, especially in an emerging sector.

How is intellectual property dealt with in this sector in Canada?

[Dr. Nipun Vats]

When it comes to intellectual property that is generated in universities, universities themselves have their own kinds of approaches to management of intellectual property and they have different models. Some are owned by the researcher, some are owned by the institution and licensed to the researcher, and they're looking at ways to maximize the economic potential of the IP that is generated here in Canada.

When it comes to companies, of course, I can't speak to the individual company's decisions here, but a lot of it is dependent on their business strategy. In some cases like in quantum algorithms, it may be that the key is not the IP itself but being the first to seize a space, as is often the case in software. When it comes to some of the hardware innovations, I think IP is a much more important piece of the puzzle. I believe some of the speakers in the second hour will have a pretty good understanding of those issues as well. I know we don't have very much time at the moment.

Our goal always is to try to make sure that, while respecting business decisions, you can maximize the retention of that IP here in Canada, particularly in areas where the federal government is investing. But I think you have to look at it in a context of how companies deploy IP to ensure their future growth as well. So there are strategic decisions that companies need to make with respect to that.

IP is a very deep, as you know, strategic kind of asset that you need to think about.