Evidence of meeting #13 for Science and Research in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.
A recording is available from Parliament.
Liberal
The Chair Liberal Salma Zahid
I will suspend the meeting for two or three minutes so that the amendment can be circulated to all members. Please have a look.
The meeting is suspended.
Liberal
The Chair Liberal Salma Zahid
I call the meeting to order.
The amendment proposed by MP Blanchette-Joncas has been circulated to all members. Now we have an amendment on the floor.
Is there any debate on the amendment?
Seeing no debate, is everyone in favour of the amendment?
(Amendment agreed to [See Minutes of Proceedings])
We are back to MP Baldinelli's motion as amended. Is there any debate on the motion as amended?
Seeing no debate, is everyone in favour of MP Baldinelli's motion as amended?
(Motion as amended agreed to [See Minutes of Proceedings])
That was simple and easy.
Conservative
Liberal
The Chair Liberal Salma Zahid
With that, we will end this panel.
Thank you very much to all three witnesses for appearing before the committee.
We will suspend the meeting for five minutes so the witnesses for the second panel can take their seats.
The meeting is suspended.
Liberal
The Chair Liberal Salma Zahid
I call the meeting to order.
Good afternoon, everybody. I would like to make a few comments for the benefit of our witnesses on this panel.
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 select the appropriate channel for interpretation: floor, English or French. As a reminder, all comments should be addressed through the chair.
I would like to welcome our three witnesses on this panel. We are joined today by Dr. John Hepburn, dean emeritus, University of British Columbia. By video conference, we are also joined by Jim Balsillie, founder and chair of the Centre for International Governance Innovation. Our third witness for today is Dr. Julie Konzuk, senior principal representing Geosyntec Consultants, Inc.
All witnesses will have five minutes for opening remarks. We will start with Dr. Hepburn.
You will have five minutes for your opening remarks. Please go ahead.
John Hepburn Dean Emeritus, University of British Columbia, As an Individual
Thank you very much, Madam Chair.
Thank you to the members of the committee for addressing this important and long-standing topic.
I'd like to recognize my former CIFAR colleague, Jennifer McKelvie, who suggested that I speak to this committee.
I found out from the member from Hamilton that you've read my bio, so I won't go through the details, other than to point out that in addition to being an academic researcher, I've had three important executive posts relevant to today's considerations.
First, I was vice-president of research and international at the University of British Columbia, which is, I would argue, Canada's second most important research university. As part of that job, in addition to managing the research enterprise and promoting it, I was in charge of the university-industry liaison office, which is a very large tech transfer office at the University of British Columbia.
I was then the vice-president at the Canadian Institute for Advanced Research, which is a splendid Canadian research organization. It is undervalued, I think.
Finally, most recently, I was CEO of Mitacs, which promotes largely industry co-operation—but also not-for-profit and academic co-operation, including with colleges and polytechnics—through student internships. It is a very important and good organization.
There have been a lot of reports, a near-infinite number of reports, written about the so-called Canadian paradox: How can we have in this country the world's best, or among the world's best, post-secondary institutions with the fabulous research my former colleague Jesse talked about yet have such terrible and declining industrial innovation?
Peter Nicholson posited in a report from some years ago that a lot of this is due to the structure of the Canadian economy. We've based our economy on things like foreign-company resource extraction and being, as Peter Nicholson said, at the bottom end of the American supply chain. We also protect key industrial sectors from competition.
This strategy, such as it is, has worked out not too badly for us until, obviously, very recently with changes south of the border. It's not a winning strategy going forward to rely on large American multinationals, for example.
At the risk of oversimplifying the issue, I think a major problem is the scale of Canadian companies. Canada, compared to the Americans and compared to other economies, has a much larger fraction of the workforce working in small and medium-sized enterprises. It is much larger than that of the Americans, for example. We don't have, except in protected sectors, large Canadian companies.
When you look at broad-based research investments, the larger the company, the more the investment. We have many small companies in the tech sector. We're very good at starting companies based on research, largely university-based research, but those companies are busy trying to survive to develop technology, generally the sole technology on which they're based.
Because of my background, I'll talk about university-based research and the commercialization resulting from that.
I would argue the problem is not that university-based researchers don't want to commercialize their inventions. A former colleague from McMaster University was here and the polytechnics were here. There is no shortage of enthusiasm for doing this sort of research.
A single example is Pieter Cullis, who's renowned for developing the lipid nanoparticles on which messenger RNA vaccines are based. He's a colleague at the University of British Columbia who's founded 11 companies. This is fairly typical. Nobel Prize winner Mike Smith founded a company as well.
There's no shortage of company start-ups. There's no shortage of transfer of technology to small companies. However, if we go back to the biotech example, UBC is responsible for founding most of the biotechnology companies in the Lower Mainland in the Vancouver area.
Nevertheless, the typical pattern for these companies is that, as they get to phase one clinical trials, which are expensive—and phase two and phase three are even more expensive—they have to sell their technology to an American company or a multinational company—it doesn't have to be American—in order to afford the very high cost of clinical trials. It's estimated to be $1 billion to bring a drug to market. With that sale, the IP goes.
I would argue that—
Liberal
The Chair Liberal Salma Zahid
I'm sorry for interrupting, but your time is up. Can you quickly wind up in the next 10 seconds?
November 3rd, 2025 / 12:05 p.m.
Dean Emeritus, University of British Columbia, As an Individual
Sure.
I have three recommendations. First, we've heard about IP; we need to have a better system for supporting the development and protection of IP. Second—and I'd argue this is critical—we need to have a better system for allowing companies to scale, not just allowing them to start. Finally, we need to have a better system for creating venture capital for small companies. Other countries have done this through matching programs.
I'll stop there. Thank you very much.
Liberal
The Chair Liberal Salma Zahid
Thank you.
We will now proceed to Mr. Balsillie for five minutes.
Please go ahead. The floor is yours.
Jim Balsillie Founder and Chair, Centre for International Governance Innovation
Madam Chair and honourable members of the committee, thank you for the opportunity to appear before you today.
The digital transformation of the past 40 years has created a new economy in which wealth, power and security are rooted in the ownership of intellectual property and the control of data and AI. Prosperity today comes from new owned ideas that generate new high-margin revenue. Intangible assets now constitute over 90% of the S&P 500's total value, up from 17%.
Canada missed this shift. The federal government spends approximately $7.5 billion annually on research funding, with $4.2 billion via the granting councils and $3.3 billion internally.
When I last appeared before this committee in March 2023, I focused on Canada’s failure to adopt a framework to own, control and commercialize IP from publicly funded R and D, and I recommended building institutions and capacity for the knowledge-based and data-driven economy. Since then, there hasn't been a single new policy or institution created to meet the need for strategic reorientation.
Simply put, you cannot commercialize what you do not own. If you don’t own an idea, then you won't invest any more than you would build a house on land you don’t own or at least have prior explicit permission to build upon.
Canada has world-class universities, researchers and students. Our higher-education R and D spending ranks among the highest in the OECD, with billions invested each year, yet the translation of that investment into ownership and economic outcomes for Canada remains negligible.
Because we missed the shift from a production to a knowledge-based economy, Canada’s standard of living has been in steady decline. Over the past five years, GDP per capita has fallen by 0.4% a year, the worst among the top 50 developed countries. The OECD projects we will be the slowest-growing advanced economy through 2060. Both are a direct result of policy failure attuned to changing global realities. At the household level, the consequences are clear: As paycheques shrink, costs continue to rise.
Because IP and AI data directly determine wealth and power at both the firm and national levels, smart innovation economies reoriented to own and protect those assets and capture their economic and security spillovers.
South Korea elevated its intellectual property office to a full ministry, signalling that IP is a national economic priority. The Israel Innovation Authority office is located next door to the Minister of Finance. China built industrial strategies around massive portfolios of patents and data assets in AI, blockchain, clean tech and advanced manufacturing. Germany's Fraunhofer institutes convert public research into domestic industrial capacity, strengthening national champions in global networks. In the U.S., the Bayh-Dole Act is a sophisticated ownership framework that grants government march-in rights when publicly funded assets fail to serve the public interest. I could go on.
Meanwhile, AI has emerged as a new factor of production and a form of machine knowledge capital that both competes with and complements human expertise. It is transforming industries and the workforce at scale. Approximately two million AI-related patents have now been granted globally, yet Canada does not appear among the top 100 holders even though our publicly funded research helped build the foundations of the field.
Now politicians are exhorting Canadian businesses to adopt AI, which is to say to buy technology from abroad despite inventing it here with taxpayer funds because we have not secured the IP rights to deploy the AI into new processes, products and services. How is this a path to sovereignty and prosperity?
Lastly, I want to address the myth that a lack of business investment is the reason for Canada’s low productivity. Canadian firms are not lazy; they are rational. They will not invest because the policy conditions do not support earning a return. Until we fix this, domestic BERD trend lines will not reverse.
These are my recommendations to this committee: One, embed domestic value-capture provisions into the granting councils; two, establish a sovereign innovation asset bank; and three, build institutional capacity for the knowledge-based and data-driven economy. The solution is not to spend more or less on R and D but to strategically course correct by creating institutions and capacity to ensure Canada generates intangible assets and then captures the economic and security benefits from its investments.
Thank you. I look forward to your questions.
Liberal
The Chair Liberal Salma Zahid
Thank you.
We will now proceed to Dr. Konzuk for five minutes.
Please go ahead.
Julie Konzuk Senior Principal, Geosyntec Consultants, Inc.
Thank you, Madam Chair, for the opportunity to address this committee.
I'm here representing Geosyntec Consultants, a multinational engineering and science consulting firm operating in 10 countries with nearly 200 employees in Canada.
Innovation is a strategic pillar for us. We drive it by partnering with universities and our clients to translate academic advances into practical solutions. To support this, we have developed several internal programs that fund university collaborations, and we invest in employee-led R and D. I have chaired several of these internal R and D committees and have also served as an industry partner in university consortiums.
Over the past decade, Geosyntec has invested millions in internal research. Last year alone, we collaborated with 113 universities globally, including 11 in Canada. Beyond self-funded research, we have secured millions in client-sponsored R and D annually for over 20 years, again often partnering with universities.
As a consulting firm, our revenue model is “brains by the hour”, so non-billable R and D time represents lost revenue for us. This limits our capacity for substantial self-funded R and D, and we are heavily reliant upon client or government funding to push forward our innovations.
Our primary motivation for collaborating with academia is early access to innovations. Canadian universities are world class, and our federal NSERC funding is a key driver of cutting-edge research. The ability to match our funding with NSERC support has been crucial for these successful partnerships, and it helps to successfully fuel early-stage innovations.
We have observed, at least in our industry, that Canadian universities rarely take innovations through to full commercialization—obviously, we've heard differently today in other industries—especially for services rather than products. Geosyntec's expertise lies in advancing and commercializing practical solutions. Our collaborations have led to the development of technologies across various sectors and the creation of two businesses: a specialty laboratory and a remediation technology vendor. Both of them were a direct outcome of university partnerships.
I have two specific examples where we as innovators, in partnership with universities, have had the greatest success in pushing forward innovations.
The first is the U.S. Department of Defense programs. Their SERDP and ESTCP initiatives, as well as other programs, fund R and D for military readiness across a number of categories. This funding is open to universities, consultants and industry. These programs excel at scaling technologies because funding is inclusive of those who are experienced at scale-up. However, recent administrative changes in the U.S. government have resulted in this funding becoming more challenging for us to win, and there is a risk that the government may restrict Canadian participation in the future.
The second example is research consortiums. When our industry partners, universities and consultants form these consortiums, the R and D is focused on practical solutions that benefit industry. These structures facilitate direct collaboration and effective commercialization, but are not supported by current Canadian government funding programs, which is making them a little more rare despite their proven effectiveness.
In closing, to accelerate innovations through to commercialization, I encourage the committee to consider the following.
First, allocate increased defence spending to support innovation in all the ways that support our military readiness—that is, anything the military spends money on. This can include military technologies, the environment, health care, material sciences, electrification, the energy transition, climate resilience, AI, etc. Funding should be available for both fundamental research and commercialization and should be open to all involved in the commercialization process. Industry partners should be Canadian, but global university collaboration could be encouraged to bring high-value innovation to Canada and directly benefit Canadians.
Second, expand NSERC to fund the development and management of commercialization-focused research consortiums that include industry, universities and consultants.
Third, reduce interprovincial barriers to commercialization, such as by streamlining permitting for pilot testing and establishing federal approval mechanisms for new technologies so that we can avoid having to go through province-specific mechanisms.
Thank you for considering these recommendations to strengthen Canada's innovation ecosystem.
Liberal
The Chair Liberal Salma Zahid
Thanks to all the witnesses for their opening remarks.
We will now start our fourth round of questioning. We will begin with MP Baldinelli for six minutes.
Go ahead, please.
Conservative
Tony Baldinelli Conservative Niagara Falls—Niagara-on-the-Lake, ON
Thank you, Madam Chair.
Thank you to the witnesses for being with us this afternoon.
I found it quite interesting, Mr. Balsillie, when you talked about how the “digital transformation of the past 40 years has created a new economy”, and you indicated that Canada has missed the shift.
Mr. Hepburn, you talked about the structure of our economy placing us basically at the bottom of the U.S. supply chain. Times have changed over the decades, and we're missing the shift, to Mr. Balsillie's point.
Mr. Balsillie, I was reading an article from the National Post in June. In it you indicated that the key is the “capture structure” to ensure good ideas are commercialized in Canada. Could you expand on that, please?
Founder and Chair, Centre for International Governance Innovation
I'd be happy to.
The traditional production economy operates on positive rights where you own something physically. The ideas economy, that 90% piece, operates on negative rights, which are legal structures that allow you to tell somebody, “You can't use my idea.” That is the capture structure, its legal frameworks.
The strategic thinking in institutions in Canada has been completely opposite to that shift over the past 30 or 35 years. That's why you've seen a precipitous decline in Canada's productivity and GDP per capita.
Conservative
Tony Baldinelli Conservative Niagara Falls—Niagara-on-the-Lake, ON
Mr. Hepburn, you talked about the scale of Canadian companies, the lack of large industries based in Canada and Canada being more a country of smaller SMEs.
You talked in one of your recommendations about allowing companies to scale. How would you do that? In what ways can the government be supportive to ensure that happens?
Dean Emeritus, University of British Columbia, As an Individual
Basically, we can learn lessons from other jurisdictions. For example, Israel, which everybody always points to as the great innovation nation, has chief scientists whose job it is to look into commercialization rather than the support of research.
The ill-fated Canada innovation corporation was an example of an attempt to create support for growing companies. Creating funds where government funds are basically low-interest or zero-interest loans matched by private capital is important.
The main value I saw in the proposed structure for the Canada innovation corporation is that it was to be non-governmental, arm's length and run by successful entrepreneurs rather than by government, providing matching funds and supporting start-ups in their ability to scale.
Conservative
Tony Baldinelli Conservative Niagara Falls—Niagara-on-the-Lake, ON
It's also a foundational policy idea about how one goes about supporting the economy and this shift.
Mr. Balsillie, you mentioned that you've been appearing before government in this committee since 2023. Going back to the article from the National Post, you said:
I was in Ottawa yesterday dealing with them on this. We have to get the ex-ante capture structures right before we throw more money into it. But that’s been a product of this colossal policy failure because they’ve used production economy attitudes where it’s a market failure, that you fix the market with a grant.
Could you expand on that? Essentially, the government is taking an approach of just buying jobs rather than supporting the creation of an idea and then scaling on it. Can you elaborate on that?
Founder and Chair, Centre for International Governance Innovation
I quite disagreed with the Canada innovation corporation, absent the precondition that I talked about, because we keep thinking it's Ken Arrow economics from the 1950s, as if it's an incentive structure where you have to tweak a granting council, share a risk or change a tax factor. In fact, the difference between us and a $1-trillion participation in these things is not a tweak here or a tweak there from the incentives.
If you look at the notes that I gave you as a committee, I gave a small example of the dozen elements of strategic frameworks the U.S. has deployed in these negative rights structures just this year. They really have nothing to do with grants, innovation corporations or the changing of taxes. It's about the legal frameworks to ex ante capture structures in a way that makes them richer and more powerful. That form of thinking has been absent in our policy architecture from the day the economy started changing to this intangibles economy, to a degree, about 35 years ago.
I'm not saying spend more, and I'm not saying spend less. Let's get more out of the money we spend, understanding the nature of the legal frameworks so we can enclose and capture them and can charge a rent for them. That's why I say people are not going to build a house on land they don't have ownership of or a right to. People say if we just give more money, start a new investment corporation or change a tax act, then it makes sense. No. If the government subsidizes half the money, it's only half-senseless, but it still hasn't addressed the precondition.
Where do we capture the benefit of our $7.5 billion a year in research funding? You will find there is no institutional apparatus, no capacity and no orientation to that, and there's a direct link between that failure and our inability to grow in this innovation-productivity realm, whether it's in new industries like biotech or traditional ones like value-added energy or farming.
Conservative
Liberal
The Chair Liberal Salma Zahid
Thank you.
We will now proceed to MP McKelvie for six minutes.
Please go ahead.
Liberal
Jennifer McKelvie Liberal Ajax, ON
Thank you, Madam Chair.
My first question is for Dr. Konzuk.
I absolutely heard the advocacy for spending on defence. I think some of your colleagues have good examples from the Dover Air Force Base—my research had examples from the Vandenberg Space Force Base—of something that was done very well by our neighbours to the south and that we can learn from.
Likewise, on your comments about interprovincial barriers, we've certainly heard about that, not just on the environmental side through you, but also on health—for example with drug approvals and things like that being different across the country.
What I was hoping you could elaborate on a bit more is the work you've done with NSERC, particularly on the alliance grants, and the idea you're bringing forward on commercialization-focused consortiums. How do you see this working, and what role would NSERC and/or the federal government have in that?
Senior Principal, Geosyntec Consultants, Inc.
The NSERC alliance grants have been very useful for us in building relationships with new professors and in being able to support early innovation work. I think to get it beyond the next stage, NSERC is a bit less useful for us, just because we can't capitalize on some of that. The university partners we work with aren't necessarily interested in setting up their own businesses and pushing forward technology, so that's been our role, typically.
Usually we get the funding from our clients to do that, or from the U.S. government. One great example of a university consortium we've been involved in is the groundwater university consortium that's based out of the University of Guelph. They have brought together a number of universities across not only Canada but also the U.S. A number of our clients, which include a number of multinational firms, are also sponsoring this.
The group meets twice a year, and industry partners are in the same room as university partners. Part of the day is put aside for brainstorming about the research directions so that university partners have an opportunity to provide direction to the university. It also provides us with an opportunity to be in the room with our clients and listen to their solutions, and then work with our university partners to help them develop technologies.
Liberal
Jennifer McKelvie Liberal Ajax, ON
That's great.
My next question is for Dr. Hepburn.
You started to touch on having a better system for IP. I'm sure Geosyntec has had this as well: You're working with a university and you retain non-exclusive rights to reproduce or use information for non-commercial purposes. It's very difficult to commercialize. There's a huge amount of overhead going into the university sector. Interestingly, we're learning more that colleges and polytechnics don't do that and the IP remains with the business that's coming in.
What are your ideas about transforming the way we handle IP in universities? I'll also note that the number of patents happening in universities is quite low because it's not really a criteria for success. It's publish or perish, and commercialization isn't necessarily rewarded as much.
What are your thoughts about IP and transforming it so we have better commercialization?