Science and Research Committee on Oct. 29th, 2025

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC]

Mr. Sirois, Quebec connects training, research and innovation, from CEGEPs to universities, through college technology transfer centres and the Fonds de recherche du Québec, among others. It is also a matter of promoting research in French. The federal government allocates only 4% of total research funding to college institutions. Do you think that leaves out the most productive link in the innovation chain?

[Luc Sirois]

I am speaking to you today from the site of the annual symposium of college centres for technology transfer, which is a very effective mechanism for helping businesses, as the other witnesses mentioned.

I will go back to the previous question. We have quite a challenge in optimizing the integration of this mechanism throughout the chain and bringing more resources to support it, which promotes the transfer of technology, people, knowledge and skills in businesses so that they can perform well. In Quebec and across Canada, we have the opportunity to find ways to ensure that the entire chain is doing well and that, as a result, the funding granted to the last links in the chain, which focuses more on applied research and the actual problems of businesses, is increased.

[The Chair, Liberal, Salma Zahid]

I apologize for interrupting. The time is up for MP Blanchette-Joncas. Thank you.

Now we will go to MP Ho for five minutes.

Please go ahead.

[Vincent Ho, Conservative, Richmond Hill South, ON]

Thank you.

My questions are for Mr. Bergen.

We've seen declining GDP per capita in Canada for a while now. Ours is the fastest-shrinking economy in the G7. We're seeing jobs and capital flee the country at record levels, and there's a shrinking number of global companies choosing to make Canada their headquarters. As an example, we saw Brookfield, when the Prime Minister was its chair, make the decision to move its headquarters from Toronto to New York.

Do you see this trend continuing, and does it sound the alarm for you?

[Benjamin Bergen]

I would frame this as a moment when we're seeing the economy and real GDP per capita declining or becoming stagnant. To pull back my earlier comments, we as Canadians have not understood how wealth and prosperity are now captured. They're no longer in the tangible economy, but in the intangible.

When you look at the firms and businesses that are currently locally headquartered, very few of them are IP- and data-rich. If we're going to begin to dig out from the last 30 years, this should not be pinned on just a blue team, a red team, an orange team, a light blue team or any other specific team. If we're going to look at the ways we have to think about how we use innovation dollars to strengthen and create global champions....

Let's take a firm in the health care space as an example. There's an amazing firm called Intellijoint that's based in Kitchener-Waterloo. It's conducting cutting-edge research in creating joints for hip replacements. It can sell to the United States and other countries, but it struggles to sell to our own health care system. Here's a Canadian technology firm that was created out of the University of Waterloo through R and D that was supported by taxpayers, and we cannot get it into our own health system because of the way the procurement system is structured—

[Vincent Ho, Conservative, Richmond Hill South, ON]

It's all red tape. Canadians are getting poorer as a result.

I'll ask a different question to segue to the topic of the budget. In the last budget, in 2024, the Liberals flirted with the idea of and played around with hiking the capital gains tax, and then they walked it back.

What do you think the effects of this uncertainty in tax policy are on the business community and research and innovation?

[Benjamin Bergen]

One of the challenges with something like capital gains is that, in Canada, accessing capital is a challenge, so when you change that risk and reward dimension, it becomes more difficult to invest and attract capital. We heard from scaling technology firms that it is a challenge when there is such a delta and a difference in a jurisdiction south of our border. It's a problem and it makes it more difficult.

We were very pleased to eventually see Prime Minister Mark Carney come out against it and say it would be reversed. We were eventually pleased to also see the Leader of the Opposition, Pierre Poilievre, come out against it. If you remember, when the budget was originally being tabled, that wasn't a known guarantee.

Making sure that we have political parties, regardless of which side they're on, advocating for a growth and prosperity strategy that puts domestic firms at the centre is how we're going to get out of some of the economic challenges we find ourselves in now.

[Vincent Ho, Conservative, Richmond Hill South, ON]

I want to talk about the strategic innovation fund that the Liberals established a while back. Are you seeing that money? That was funded by Canadian taxpayers. Are you seeing that money go to Canadian enterprises, or are you seeing it go to foreign-owned firms that just happen to have a small branch presence here in Canada?

[Benjamin Bergen]

That's a great question. The strategic innovation fund has, in some instances, been quite successful, but in others, there have been some real challenges.

Of every dollar from the SIF, 60% has ultimately gone to foreign, multinational firms. I think it's close to $9 billion, and 60% of that has gone to foreign firms that just have offices here. A really good example is in the city of Vancouver. Mastercard received $40 million through a SIF application. That ended up making it a lot harder for fintechs in Vancouver to hire highly skilled workers, because it drove up costs and provided a subsidy to Mastercard in that space.

When we're looking at—

[Vincent Ho, Conservative, Richmond Hill South, ON]

[Technical difficulty—Editor] a start-up that isn't a multinational company like Mastercard.

[Benjamin Bergen]

That's correct. Is it strategic for us to be giving $40 million to Mastercard, or should we actually be looking at how we support domestic players?

In that particular instance—

[The Chair, Liberal, Salma Zahid]

I'm sorry for interrupting. The time is up for MP Ho.

We will now proceed to MP Rana for five minutes.

Please go ahead.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Thank you, Madam Chair.

Thank you to all the witnesses for their time.

Mr. Sirois, in your interview with McGill in August 2023, you talked about a decline in the R and D investment that Quebec needs to promote economic growth. What specific policy changes do you believe should be the highest priority for reversing that decline in the private sector?

[Luc Sirois]

I deposited with the committee our report of recommendations, which is called “Vers un Québec innovant” or “Towards an Innovative Quebec”.

Number one is the shift towards providing support to applied sciences; testing more down-the-road types of activities in innovation, pre-commercialization and commercialization; and reducing tax rates on the benefits coming from the exploitation of IP and patents developed by Canadian companies through these investments.

There is a significant lack of know-how, personnel, ability and culture to deploy the proper practices and ways to manage innovation and manage R and D, so as surprising as it may sound, it is an area of training and skills development that could make a huge difference.

I could go on like this. Regarding incentives, as we've heard before from other people around the table, it's not more money that's going to make a difference in this case; it's making sure to provide more impactful incentives. Some of the most impactful ones are on the public procurement side, but also on the procurement and use of Canadian technologies, products and services from large anchor companies.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Thank you very much.

Canada's innovation ecosystem is spread across the provinces with variable resources and industry presence. From your work in Quebec, what would you recommend for national-scale coordination to ensure that regional innovation capacity is built and leveraged across Canada?

[Luc Sirois]

That's a very interesting question. It's critical here to have both central coordination and decentralized execution. Nothing is more powerful than local orchestration and a mobilization of the on-the-ground actors, the enterprises and the proper decision-makers. You need feet on the ground and to trust local leaders in stimulating that.

We've done that in Quebec with the regional innovation spaces and initiatives. La Zone Innovation Quantique has been mentioned. We have four innovation zones. There are examples like that across the country where local implementation is essential because it rallies the driving forces, individuals and leaders who will make things happen with a global coordination.

I would argue that you need a similar approach on a sectoral basis. Sectoral leaders from the industry are better placed than anyone to figure out where and how to achieve results. We've done this in Quebec with RSRI, Regroupements sectoriels de recherche industrielle, where, together with the groups of enterprises, they identify where to focus and provide investment.

It's a critical initiative to have this orchestration effort with dedicated data to see exactly, region by region and locality by locality, what's going on in which sectors, where productivity is happening and where it is draining down. How do you compare enterprises in the same sector, in different sectors and in sectors in the different regions? There's a whole architecture that I believe we can achieve in Canada that will drive results.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Thank you very much.

[The Chair, Liberal, Salma Zahid]

Time is up for you.

We will now proceed to MP Blanchette-Joncas for two and a half minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC]

Thank you, Madam Chair.

Mr. Sirois, Quebec already has everything to succeed: a chief scientist, a chief innovation officier, the 2022-2027 Québec strategy to support research and investment in innovation, the Conseil de l'innovation du Québec, strong players like Axelys or Synchronex, 59 college technology transfer centres, Investissement Québec, the Caisse de dépôt et placement du Québec, the Fonds de solidarité FTQ and, now, the innovation zones, as you just mentioned.

However, we see that the federal government retains a large part of the financial levers, while scattering resources in programs and imposing priorities that are often far removed from regional strengths and needs. Is this financial and structural dependence now hindering the full effectiveness of the Quebec model? For example, if our levers, our budgets and our innovation zones were entirely managed according to our own strategy, would the benefits for our economy and our regions be stronger and faster?

[Luc Sirois]

It goes back to focusing on areas where we are strong and able to succeed. Focusing financial resources also means focusing on some players on the ground. In Quebec, there is also a risk of having too many programs and too many organizations dedicated to the same causes. So it is essential to simplify all that to enable businesses to have a greater impact and have better support.

The diversification of organizations and programs is amplified by our system, since the federal and provincial governments are not necessarily coordinated. We did a detailed inventory of all the financial support programs for innovation in Quebec, and it is discouraging to realize that there are more than 200 of them. It is impossible for entrepreneurs to navigate provincial programs, federal programs, municipal programs, programs dedicated to specific populations, and so on. Something has to be done.

[The Chair, Liberal, Salma Zahid]

Your time is up.

Now we will proceed to MP DeRidder for five minutes.

Please go ahead, MP DeRidder.

[Kelly DeRidder, Conservative, Kitchener Centre, ON]

Thank you.

Thank you, everybody, for coming and speaking at our committee today.

My questions are for you, Mr. Bergen.

As the MP for Kitchener Centre, Canada's innovation capital, something you said today really stood out to me. You talked about Intellijoint Surgical, which comes from my home riding, being an innovative joint replacement technology, but they can't monetize. They're having trouble scaling because of red tape bureaucracies. It's hard to scale here in Canada.

Also, there was an article that came out today from CTV that said, “Warren Lovely, managing director with National Bank Financial, told BNN Bloomberg...the private sector has already lost confidence in the federal government, and the country is dependent on the U.S.”

Current policy, in the past 10 years, has not been in the form to create innovation and technology in Canada, and we've lost investor confidence in this country. This has been over the past 10 years. To me, these are policy and bureaucracy problems. You even said that it's not something to throw money at. It's how we create investment.

In terms of policy, what can we do to create investment here in Canada and to support our innovation and technology sector?

[Benjamin Bergen]

This really is about an orientation. It's how we think about how we support the innovation economy.

I'll break it down as simplistically as I can, and it sounds very simple: At the end of the day, when we look at public policy, is it generating IP? Is the R and D that we're spending money on creating the intellectual property behind it in order for us to monetize it? The second question is this: Is the public policy that we're implementing helping to commercialize that IP that's being generated here in Canada? The third piece is this: Are we able to retain and keep that IP that we're generating here in the country?

When you begin to orient all of your public policy around that type of narrative, it begins to correct itself.

Let's take an example, like SR and ED. It's roughly a $4-billion-a-year program. It turns out that about 50% of every SR and ED dollar goes towards companies that claim to be Canadian, but it's in name only, meaning that we are subsidizing large, foreign multinationals in a space where unemployment is effectively zero. At some point, that's just philanthropy.

Huawei received $100 million in SR and ED in one year, not too long ago, when we had already banned Canadians from using its technology.

[Kelly DeRidder, Conservative, Kitchener Centre, ON]

This has to be a negative net return on Canadian investment right now.

[Benjamin Bergen]

Yes, we call those negative spillover effects. Not only are we subsidizing foreign firms, but we're also depriving our own domestic technology companies of talent. Let's take, in this city, Ericsson. They were given $79 million through SIF. That is money that's going to help support a foreign firm that's hiring here in Ottawa in a sector where unemployment is effectively zero. What does that do to the labour market? It makes it more difficult for domestic firms to hire because of these types of subsidies.

When we think about the innovation economy, we have to think about how we are orienting it to support domestic firms so they can scale, grow and create wealth and prosperity. This is what all open small economies do. This is what they do in Denmark, in South Korea and in Japan. This is what they do in the United States as well.