Science and Research Committee on Oct. 29th, 2025

[Michael McDonald]

To answer your question, I think the CCTT network is an exceptional example globally. I actually attended a conference on this subject last summer in Montreal. Representatives from France and other European countries came to see the magic of the college centres for technology transfer system. They came to see a system integrated with the CEGEP system, a unique system that does not exist in other parts of the world. It is a unique system of innovation, collaboration and creation in Quebec. I think this initiative should be celebrated across the country. It must be recognized as a special project. It is important and deserves our utmost respect.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

Mr. McDonald, I'm not in the know, and I'm trying to understand. This has been going on for 15 years. This isn't the first time Colleges and Institutes Canada has talked about this. On a number of occasions, I even put questions to those who previously represented Colleges and Institutes Canada.

What are you hearing from the government? How can it justify such inequity?

[Michael McDonald]

This issue has been one of our priorities for the past few years. This is an inequitable situation that represents a significant problem for our college centres for technology transfer system, and we continue to point that out. I think the government has understood. This is a situation that we continue to call out to the government. I agree that no solution has been found.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

The government understands the inequity, but it doesn't want to correct it. Is that what you're telling me?

[Michael McDonald]

I think the fact that this inequity is problematic has been well exposed to several governments in recent years, but it persists.

[The Chair, Liberal, Salma Zahid]

I'm sorry for interrupting. Time is up.

We will now proceed to Mr. Holman for two and a half minutes. Then we will end the panel with MP Rana for two and a half minutes.

MP Holman, please go ahead. You have two and a half minutes.

[Kurt Holman, Conservative, London—Fanshawe, ON]

Thank you, Madam Chair.

Thank you to the witnesses for joining us.

I just want to do a quick paraphrase of an overview from one of our witnesses on Monday. Mr. Ryan Williams, a gentleman from the Balsillie School of International Affairs, mentioned that Canada must double research and development investment by 2030, assert our sovereignty, establish venture capital and be competitive. Canada's digital economy is expanding. Artificial intelligence start-ups, financial technology and other technologies drive hundreds of billions a year, larger than agriculture and larger than forestry. We have almost no protection for it, though. We give our ideas, our intellectual property and our digital sovereignty away. We spend over $10 billion a year in public research funding, yet approximately one-tenth of our patents in Canada come from Canadians. Approximately nine-tenths of our innovation is foreign-owned.

With that in mind, I also want to add that Liberal policies create high taxes, increasing costs, missed opportunities and delays, which damages Canada's ability to attract foreign investment or to keep Canadian investment here domestically.

Mr. O'Neil, how does this impact Canada's ability to promote and grow private sector investment in research and development?

[Dugan O'Neil]

There certainly is a need, as your previous witness said, to grow investment in research and development in Canada in order to capitalize on the strengths we have here. I think a number of reports have pointed in that general direction, including the Bouchard report in 2023. I think if we go in this direction, it will help grow the economy. It will help centre some of the inventions that you're referring to in Canada and have them go from being inventions that sit on a shelf to inventions that make a difference to the lives of Canadians.

[Kurt Holman, Conservative, London—Fanshawe, ON]

In addition, Mr. O'Neil, why is Canada losing and missing out on investment? Do you know any causes of this?

[Dugan O'Neil]

As we were talking about a little bit earlier in the discussion, the availability of capital in Canada is limited relative to the United States in particular. Quite often, an inventor or a company will go where the money is and where the market is. The American market is close to irresistible for those companies.

[The Chair, Liberal, Salma Zahid]

Thank you. Time is up.

We will now end this panel with MP Rana for two and a half minutes.

Please go ahead.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Thank you, Madam Chair.

Thank you to all the witnesses for their valuable time.

My question is for Mr. McDonald.

The scientific research and experimental development tax incentive program provides financial support to corporations, individuals, trusts and partnerships that conduct research and development in Canada. Between April 2024 and March 2025, a total of 220,738 SR and ED tax incentive claims were processed. This amounted to $4.5 billion in approved incentive tax credits.

How have you interacted with this tax incentive?

[Michael McDonald]

It's a great question. Given that the nature of applied research differs, again, with the nature of the contribution, it will depend on the centre and its interactions there. At the current time, we don't have survey data from our system on the exact details of SR and ED use in the college system directly.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Thank you.

How effective is this program for long-term growth in Canada?

[Michael McDonald]

On this piece, I think what we would say is that, again, programs that are able to ensure that Canada's SMEs, especially in the regional areas, are able to access any area of research expertise, especially when that equipment or that expertise is outside their normal availability of resources, provide significant value. We think that's what the college research system is able to do.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Do you have any idea of what kinds of policies or funding programs would best connect academic research with industry and innovation in Canada?

[Michael McDonald]

We think there are a variety of different models. For instance, we would be very happy to explore further things like innovation vouchers to be able to access research and development opportunities at Canada's colleges and institutes. It's also about being able to demonstrate that there's clear market demand for these kinds of services and being able to channel that.

It would be those kinds of elements, as well as other features, that can help in commercialization services at colleges and support SMEs' access to federal services through a variety of different means. We think we're a good gateway for that, too, when SMEs come in the door, especially in a locality where the entrepreneur may not be particularly familiar with the federal granting system.

[Aslam Rana, Liberal, Hamilton Centre, ON]

What helps or prevents Canadian companies from working with colleges and universities on applied research and development projects?

[Michael McDonald]

At this point, we would say it's the capacity of systems. Many of our systems are deeply oversubscribed, and a challenge is that they do not have the resources available to them to continue partnerships that they may want to persist and continue. We think it's a real opportunity, when it comes to expanded investment through federal support, to ensure that private dollars are leveraged to deliver real, tangible and clear results for Canadians.

[The Chair, Liberal, Salma Zahid]

Thank you.

With this, this panel comes to an end.

I really want to thank both witnesses for their important time and important testimony.

We will suspend the meeting for a few minutes so that the witnesses for the second panel can come in.

As a request to all the members, just take two to three minutes maximum so that we can start the panel on time.

The meeting is suspended.

[The Chair, Liberal, Salma Zahid]

I call the meeting to order.

I would like to make a few comments for the new witnesses. Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. For those on Zoom, at the bottom of your screen, you can make a selection of the appropriate channel for interpretation: floor, English or French. This is a reminder that all comments should be addressed through the chair.

For this panel, we have two witnesses. We are joined by Luc Sirois, chief innovation officer of Quebec, representing the Conseil de l'innovation du Québec. We are also joined by the Council of Canadian Innovators, being represented by Mr. Benjamin Bergen, the president.

Welcome to both witnesses. Thanks a lot for appearing before the committee.

Each of you will have five minutes for opening remarks, and then we will proceed to the round of questioning.

We will begin with Mr. Sirois.

Please go ahead. You will have five minutes for your opening remarks.

[Luc Sirois, Chief Innovation Officer of Quebec, Conseil de l'innovation du Québec]

Thank you very much for hosting me today. It's a real pleasure and an honour to share some perspectives on these very fundamental questions for the future of the nation.

If I may, I will speak in French.

The Conseil de l'innovation du Québec—Quebec innovation council—was created to develop innovation within Quebec businesses and society. The chief innovator's mission is to focus on research, development and creativity in our industries. A number of the recommendations we are proposing today were designed for the reality of Quebec businesses, but we believe they could also apply to the Canadian reality.

According to Quebec's tax data, companies that innovate and conduct industrial research and development saw a 13% increase in their assets, a 25% increase in their sales and a 27% increase in their profitability over a period of five to eight years. Unfortunately, while the countries of the Organisation for Economic Co-operation and Development have experienced a 32% growth in research and development spending as a share of their gross domestic product since 2000, Canada has experienced a 32% decline in that spending, and Quebec has experienced a 25% decline.

To take action and stimulate industrial research and development by companies, product development, as well as the development of new services and solutions for integrating new processes, we have a variety of policies, which consist of tax measures, direct and indirect interventions—we’ve heard a lot about this in connection to support from universities and colleges—as well as non-financial contributions.

In terms of tax measures, compared to all the other countries or regions of the world whose data we have been able to examine, particularly Europe, our level of tax assistance is extremely competitive and very high. In Canada, it's at 67%, and in Quebec, it's at 73%, whereas in Europe, it's at 59%. So it's not a lever we can use.

In addition, businesses are asking us to simplify the process so that they can access incentives efficiently. In light of these findings and at the request of businesses to find zero-cost solutions, without additional funding, the Conseil de l'innovation du Québec is proposing a series of recommendations that we have submitted to the committee.

First, it would be a good idea to encourage businesses to invest more in research and development by redirecting some of the tax incentives for basic research activities to applied research, experimental development and innovation commercialization. This recommendation by the council was followed by the Quebec government's department of finance, which proceeded, in its last budget, with a fundamental reform of the tax approach and tax credits for research and development in order to create the tax credit for research, innovation and commercialization.

Second, the Grande enquête sur l'innovation québécoise, a large survey conducted by the Conseil de l'innovation du Québec of Quebec's and Canada's businesses, revealed that one of the main obstacles to innovation, experimental development and research is skills. It is therefore essential to propose measures to strengthen the skills of leaders in development, management and commercialization, as well as in innovation management.

In addition, unproductive businesses that have not undergone any digital transformation will not be able to make the necessary margins to invest in research and development. Therefore, significant incentives will have to be provided to them in terms of the digital transformation.

Last, priority will need to be given to certain sectors, as well as to support for certain businesses. The various players and organizations that provide support to businesses will have to be consolidated in order to simplify and strengthen their power and impact in strategic sectors. The capacity of the venture capital funding ecosystem will also need to be strengthened by developing the next generation, expertise and critical mass, and new ways to financially support innovation, other than through grants, will need to be explored. Think, for example, of forgivable loans or subsidies from royalties. Data will have to be generated to fully understand the situation and to simplify administrative processing processes and methods in order to reduce red tape, delays and opacity. Finally, access to the various programs will have to be centralized. When data is available, it is possible to assess a situation and determine its strengths and weaknesses, as well as the evolution of progress, so that adjustments can then be made.

In the current context, it is an essential strategic objective for us to help innovative, profitable and resilient businesses that are able to export and bring wealth to the country, wealth that we need in our social model.

I will stop here, but we have many other ideas to submit to you.

[The Chair, Liberal, Salma Zahid]

Thank you.

We will go to Mr. Benjamin Bergen for five minutes.

[Benjamin Bergen, President, Council of Canadian Innovators]

Good afternoon, Madam Chair and members of the committee.

Thank you for the invitation. I'm grateful for the opportunity to discuss business R and D investment in Canada with you today.

My name is Benjamin Bergen. I'm the president of the Council of Canadian Innovators. We're a national business council representing over 175 of Canada's leading technology companies. All of CCI's members are headquartered here in Canada, with more than 52,000 employees across the country. They are market leaders in sectors as diverse as health care, financial services, agriculture and, of course, AI.

CCI was founded a decade ago on a simple but powerful idea: Canada's prosperity depends on the success of Canadian-headquartered companies. From day one, the council has championed unapologetically a domestic economic strategy, one that treats innovation and ownership as cornerstones of national sovereignty.

In the past year, it feels like the national conversation has finally caught up with us. It was good to hear Prime Minister Mark Carney recently say:

The scale and speed of these developments are not a smooth transition, they’re a rupture.

They mean our economic strategy needs to change dramatically. And that your future will not be the same as my past.

Against that backdrop, the committee's study today is valuable work for Canada. We have been laggards in terms of productivity growth and corporate R and D investment. Why is that? It's not that we lack subsidies. The government spends around $4 billion annually on the scientific research and experimental development tax credit, or SR and ED. This is support that technology companies from across the country very much appreciate.

The root of the problem is that Canadian companies look at their balance sheets, and every day they decide it's not worth it for them to invest. The CEOs I know are sharp and highly competitive individuals. If they're not spending on R and D, we should assume they have their reasons.

Moving the needle on business R and D means making investments worthwhile for firms. To do this, the government has to create the conditions that enable firms to scale and reap the profits from the R and D. Fundamentally, that means Canadian companies need to own and commercialize the ideas they generate through research and development activities. In short, Canadian companies need to own and defend their intellectual property, and the federal government has an important role to play in achieving that goal.

Too much of our economic policy is rooted in outdated ideas about how value is created, ideas that don't reflect today's reality. In a globalized intangible economy driven by software and technology services, productivity gains are derived from generating and owning valuable IP, such as patents, trade secrets, copyrights and data.

What's worse, so much of the economic value created from $7 billion in annual existing federal R and D support is left undefended, because we don't prioritize the intellectual property protection and strategy for owning Canada's intangible assets. This approach is out of step with today's economy, where 90% of the value of the S&P 500 companies comes from intangible assets.

Owning IP also gives firms freedom to operate. It allows them the ability to grow and compete without infringing on someone else's rights or paying steep licensing fees. Without ownership, there is no freedom to operate, and without that freedom, companies can't earn a return on innovation, so they don't invest.

The rate of return on intangible assets appears to only be accelerating over time. Markets are increasingly dominated by winner-take-most dynamics or winner-take-all dynamics. Canadian firms need a savvy government that can lead with clear IP and freedom to operate strategies.

We have heard rhetoric from Prime Minister Mark Carney and his ministers that suggests they understand the seriousness of this moment. We are pleased with some of the reforms we're hearing about for SR and ED in the upcoming budget. The government's buy Canadian directive is a watershed moment for federal procurement and long overdue. This is the kind of support through government purchasing that can be a huge accelerant for the growth of innovation and innovation companies in Canada.

However, the missing piece in all of this is still the intellectual property and other intangible assets. A sharp IP strategy should be effusive on its ability to look at innovation funding programs. It should be a facet of government procurement. Intellectual property should be a lens for every aspect of government economic policy in the 21st century, because these intangible assets are the lifeblood of the innovation economy.

The CCI has proposed that Canada should establish an innovation asset bank—a public institution with a mandate to generate, assert and defend Canadian IP—to catch up with countries where IP has been the cornerstone of their economic strategy for decades.

[The Chair, Liberal, Salma Zahid]

Can you please wind up? Your time is up.