Public Accounts Committee on Sept. 3rd, 2024

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

I'd like to begin with a follow-up on my previous questions on this issue of transparency.

You say that when the green slush fund gets merged over into IRAP with the governance structure there, it will somehow be subject to all the usual Financial Administration Act provisions. I presume that means access to information. However, when I go to the SDTC website, you can print off in great detail every single investment they've made going back to 2001, both active and inactive—when it was given, how much was given and who the proponents were—by date, yet no such thing exists for IRAP on a public disclosure that I can see. It looks to me as though by folding this in with IRAP, there will actually be less public transparency and accountability to the green slush fund, rather than more.

Will you pledge that everything SDTC does in its new incarnation under your leadership and the leadership of the Minister of Industry will have at least this? It didn't stop the corruption, with $390 million of $800 million going to conflicted parties, but at least we could figure it out and parliamentarians could see it. I don't see that NRC operates that way.

[Mitch Davies]

Mr. Chair, I'd be happy to follow up with the committee to provide links to all the proactive disclosure that takes place on the investments we make under NRC IRAP. That would hopefully resolve the member's question as to where he can find the information, because it's important. It's a matter of policy that this is made public.

I would similarly say that it's equally important for us for people to know whom we invest in, and how much, and the names of the companies, so that Canadians can look at that information. It's something that we have done, that we do and that we will continue to do. That will apply, of course, to any funding under any measures for sustainable development technology that we'll be offering under NRC IRAP.

I'd like to provide that link to the committee so that folks can see what we do disclose, if they haven't come across it before.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you. I'd appreciate that.

Second, IRAP is overseen by a voluntary, I guess, advisory board of 12 people. I believe they are appointed by you, Mr. Lisk. Is that correct?

[David Lisk]

The advisory board that supports IRAP does not have oversight. There's no fiduciary responsibility. All of that rests within NRC and with the government. The purpose of the advisory board is to provide advice to IRAP around programming, program evolution and developing new policies.

They provide advice. They do not have any oversight.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Do any members of the IRAP advisory board do business with SDTC currently?

[David Lisk]

To my knowledge, no.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Could you double-check on that and reconfirm in writing to the clerk, please?

[David Lisk]

Absolutely.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I would also like to understand this, Mr. Davies. I think you said that SDTC would be rolled over by the end of Q4 this year—which, for those watching, is March 31—to you, but is it not the understanding that this will actually be spun out of the NRC, including IRAP, to a new Crown corporation in 2026? You'll have very little oversight over time on what it's doing in actuality, unlike what the minister claims you'll be doing.

You have no oversight now, and then it will just be flipped to another Crown agency once you've gotten hold of it.

[Mitch Davies]

Mr. Chair, the question is about the Canada Innovation Corporation and the plan to put it in place in the 2026-27 fiscal year. There has been a law passed to create the Crown corporation; it's just not in effect. It's a policy question of when that will happen, and the government said it will do this in 2026-27.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It looks to me like the new SDTC is pretty much like the old SDTC, because it's being governed by a group of “acting” people. It will be given to you, and then it will be flipped out to another group. You're an agency in the middle of another government agency, so there's no assurance that there's going to be transparency.

The Auditor General reviewed 226 projects—

[The Chair, Conservative, John Williamson]

Get to the question, Mr. Perkins, please.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

—and 186 were conflicted. That's 82%. It doesn't look like anything is changing to me, except maybe the name or perhaps where it resides.

[Mitch Davies]

Mr. Chair, I don't have responsibility as a department. ISED and Finance Canada have responsibility for the Canada Innovation Corporation and the policy behind that, with the ministers they support.

The question is to look at that statute and see what similarities or differences there are between it and the foundation that is the subject of this committee's work and study. I think it was addressed in prior testimony here that there are questions of how to set that up and ensure that those initial conditions about governance are sound and proper. I would leave people to observe what they think about the Canada Innovation Corporation in that regard.

There are differences. One is that in the legislation, there's a review committee established by the board of that Crown corporation—this isn't in place now, but it is provided for—that is separate from the board members, so that any decisions will be taken by a review committee rather than the board itself. That was something that was put in the legislation at the time.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Yip, you have the floor for five minutes, please.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you, Chair, and thank you, witnesses, for coming today.

I'd like to start off by correcting the record.

The NRC has extensive experience in the innovation space, and IRAP is a flagship innovation program with over 75 years of experience. I believe that's what you said in your opening statement. Is that correct?

[Mitch Davies]

Mr. Chair, that is correct.

The NRC IRAP has been operating for over 75 years. It supports close to 10,000 companies with advice and provides close to 3,000 of those companies with financial assistance on an annual basis, depending on the year. It's a very strong part of the innovation system, and it's quite well known among entrepreneurs as being an important service for them when they're trying to set up their businesses and see them thrive.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Going through the audits, it seems that the majority of the IRAP-funded small and medium-sized businesses are profitable as a result of this funding.

Can you speak to this?

[David Lisk]

As part of the work we do with the firms as we do the assessments, we try to work with the entrepreneurs to help them establish the conditions not only to undertake the research and development work, but also to be able to commercialize and sell their products. Through that mechanism and because of that, we track all the firms and their results. On average, they are growing by 30% per year in revenue and increasing employment by 20% per year on average.

To answer your question directly, generally, they are profitable.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

What types of firms are benefiting from this?

[David Lisk]

Do you mean from the IRAP?

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Yes.

[David Lisk]

It's a very broad mandate. It works with any firm that is trying to commercialize innovation and bring innovation into the marketplace. We have firms that we support in agri-food, mining and ICT, and in just about every sector in the Canadian economy where innovation is being used to create commercial success. That also includes clean-tech firms.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

You mentioned the benefit to the economy. The net benefit of IRAP to the Canadian economy was calculated at $16 billion, which is 5.3 times higher than the cost of this program. I think that's a good return on investment.

Can you elaborate on that?

[David Lisk]

I believe the numbers you're looking at are from the latest evaluation of the IRAP program. It was released a couple of years ago. In the process of evaluation, the costs of the program are compared against the economic benefits through a cost-benefit model. Those are the results that were reported by the consultants.