Evidence of meeting #16 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 innovation.
A recording is available from Parliament.
Liberal
The Chair Liberal Salma Zahid
Thank you, MP Blanchette-Joncas.
I think I have clarified everything in public to everyone that we have verified their identity. There have been instances and it is our duty to accommodate people if they do not want to appear through the video for security or any other reasons. It is my ruling that this is in order and we will proceed with the round of questioning. If anyone has a problem, please, you can challenge the ruling of the chair.
Can I proceed with the round of questioning?
Liberal
The Chair Liberal Salma Zahid
We will have one round of questions of five minutes each and we will start with MP Baldinelli.
Please go ahead. You have five minutes for your round of questioning.
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'm going to start with Mr. MacDonald.
Yesterday, the Council of Canadian Academies published a report entitled “The State of Science, Technology, and Innovation in Canada 2025”. The report says that “Canada's longstanding poor productivity performance has reached crisis levels, compromising the standard of living for people in Canada.”
If you look at the government's own budget document, on page 37, it says, “Investment pulled-back in the first half of the year as businesses delayed or cancelled projects. Private sector forecasters expect investment weakness throughout 2025”.
Also, on page 53 of the budget, it says, “If Canada's productivity growth had matched the U.S. from 2017 to 2023, the median income of a family with one child would be nearly $11,000 higher”.
Has the government acted with enough urgency to address and begin resolving the productivity crisis in Canada?
Director, Policy and Government Relations, Canadian Chamber of Commerce
We believe there are some good items included in budget 2025 that I spoke about, like the SR and ED reforms and accelerated investment incentive. We do think that more could be done on that end.
Specifically, with the accelerated investment incentive, we would want to see that made permanent. It's great that it's being extended for a few years, but that still brings with it some uncertainty when businesses are investing. Is it going to be extended again, or will it disappear? These are investments that are over multiple years, so they need that certainty over a long horizon.
You're right to speak about the gap in productivity with the U.S. A capital investment per worker is almost half in Canada what it is in the U.S., and that's definitely part of it, so we need to look at what we can do to incentivize that investment. Targeted credits that I've spoken about certainly are part of it. There is red tape reduction, which the government is moving on, and we're happy to see that and we hope to see that continue.
Conservative
Tony Baldinelli Conservative Niagara Falls—Niagara-on-the-Lake, ON
I'm going to move on to Mr. Kingston.
Thank you for appearing, Brian.
You had spoken in your opening remarks about the difficulties the CVMA is encountering with the CBSA. As one of the largest R and D investors in Canada, you had talked about $898 million in 2024 alone and $830 million in 2023. We're seeing the tangible investment dollars, yet there are always government and bureaucratic obstacles that stand in the way.
How long has this temporary import letter issue been going on? Have they indicated to you that it could be resolved quickly?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
No, it's been going on for months, and we've been engaged with the CBSA constantly. This all has to do with the implementation of the new customs and revenue management, CARM, system, which has caused serious problems. Despite trying to find a solution, none has been presented, and—I really want to underline this—it puts R and D in Canada at risk if we can't do a relatively simple thing, which is move vehicles back and forth across the border.
Conservative
Tony Baldinelli Conservative Niagara Falls—Niagara-on-the-Lake, ON
Can you verify that you did say CARM? It's the problems with CARM, and CARM has been a disaster since its implementation.
We did a study at our international trade committee, and we had indicated to the government that it should not proceed until it was time and until it was actually ready. It's never proven to be ready, and importers and exporters like yourselves, the vehicle manufacturers, are facing the consequences because of it.
I want to move on.
We had a discussion the other day about the government's role on the EV mandate and its pausing its decision. Quickly, firms such as Tesla can exceed the 20% threshold, while the Big Three have indicated to the government they're unable to meet that threshold by 2026, so they have to buy credits.
How much have the Big Three already paid to companies such as Tesla in investments to purchase credits?
President and Chief Executive Officer, Canadian Vehicle Manufacturers' Association
If the federal government does not repeal the EV mandate immediately, automakers that build in Canada and undertake R and D in Canada will be on the hook for over $3 billion in credit purchases. As of today, over $1 billion has already been committed.
Conservative
Tony Baldinelli Conservative Niagara Falls—Niagara-on-the-Lake, ON
It has been committed to Elon Musk. This government is empowering and enriching Elon Musk at the expense of jobs here in Canada, because that's another signal to these Big Three. Why would they invest in Canada? You've already got the tariffs in place. This is just another indication to them that they should leave Canada, and shame on them for that.
Liberal
Liberal
Taleeb Noormohamed Liberal Vancouver Granville, BC
This is one of those committee days where I think we're all just going to look back and shake our heads.
Liberal
Taleeb Noormohamed Liberal Vancouver Granville, BC
Welcome to our witnesses. Thank you for bearing with us.
Given that we have very limited time for this round, I'll split my time with MP Jaczek. I'll also apologize in advance to my friend Mr. Kingston that I won't have any time to ask him questions.
I have one question I'd like to ask you, Ms. Sultan. You know, one of the things we were speaking about with Cam Linke from AMII earlier this week was how we get the private sector to be more actively engaged in early-stage activity and early-stage investments, particularly from innovators and innovation coming out of some of our AI institutes. I wonder if you could share from your standpoint what you want to see from private sector early-stage investors to help support and bolster some of the work that government is already doing in terms of the investments we're making to support the AI sector.
Chief Data Officer and Vice President, Health, Vector Institute
Obviously, our focus at the Vector Institute is really about how we create the right conditions to drive that private sector investment. There are obviously no concerns around a lack of research excellence here in Canada, but it's really a translation and confidence issue with three specific root causes.
First, we do have a cultural risk aversion combined with a lack of trust. We've seen polls indicating that 51% of Canadians are concerned about generative AI and misinformation. The Office of the Privacy Commissioner of Canada's public opinion research on privacy issues showed that 83% of Canadians have privacy concerns when using AI tools. These concerns translate directly into business hesitation. When business leaders lack confidence in AI safety and governance frameworks, they delay investment.
Second, we know that there is insufficient research into application infrastructure. The Vector Institute has observed that promising research areas in AI shift multiple times per year. Traditional university hiring cycles and government grant structures simply cannot respond to that pace. The Vector Institute has built a fast-follow capability through its AI engineering team, which specializes in extracting value from research in a practical manner. Most Canadian firms lack that talent bridge between breakthrough research and business implementation. In order to de-risk and to drive confidence, we need to bridge that more effectively.
Third, the demonstration effect from government cannot be understated. When only 26% of Canadian companies adopt AI versus 34% globally, it reflects a lack of confidence. The more government can demonstrate confident, transparent AI adoption in its own operations and in the sectors it funds, the more private sector confidence can follow. We can drive that investment to continue to move up. Government itself can really be the proof of concept that shows AI can be trustworthy and Canadian-controlled, or it can facilitate market access for AI start-ups and scale-ups in Canada to create a pathway to securing their first institutional customer.
Liberal
Helena Jaczek Liberal Markham—Stouffville, ON
Thank you, Madam Chair.
I apologize; because of all the commotion, I'm not quite sure whether this came from Mr. MacDonald or Dr. Lehtinen. There was a reference to Canada learning from other jurisdictions, specifically the U.K. and Belgium.
I think it was you, Mr. MacDonald. Could you elaborate on specifically what they are doing that we should be doing here?
November 19th, 2025 / 5:45 p.m.
Director, Policy and Government Relations, Canadian Chamber of Commerce
That was a reference to a patent box regime that those countries have. Essentially, a patent box is a preferential tax treatment for intellectual property that's developed and then commercialized in Canada. It's preferential tax treatment for the revenue that's earned from that intellectual property. The goal is to incentivize more intellectual property assets. We know that's one area in Canada where we lag quite a bit behind international partners. We have quite a large trade deficit in IP.
That's essentially the logic of a patent box. There was a study done in the U.K. after they introduced theirs. They were able to measure an increase in assets with the companies that have used it.
Liberal
Helena Jaczek Liberal Markham—Stouffville, ON
Thank you.
Dr. Lehtinen, you were nodding. Do you agree that this would be an asset for us?
Executive Director, RXN Reaction Hub
Yes. When looking at how we protect, keep and allow the IP that we've developed here to flourish, it's a combination of learning from others and adding measures that can support that. Then, adding to that, it's ensuring that the ecosystem is able to foster an environment that's ready to scale.
It's a mixture of policy and people.
Liberal
The Chair Liberal Salma Zahid
The time is up. If you want to send something in writing, that would be great.
We will go to MP Blanchette-Joncas for five minutes.
Please go ahead.
Bloc
Maxime Blanchette-Joncas Bloc Rimouski—La Matapédia, QC
Thank you, Madam Chair.
Before I begin my turn, I'd like to know how we will proceed for the rest of the meeting. A second hour is scheduled for the meeting, and other witnesses may be waiting for us.
Can you tell us how we will proceed?
Liberal
The Chair Liberal Salma Zahid
After your five minutes, we'll suspend. Then we'll go to the next panel.
Bloc
Maxime Blanchette-Joncas Bloc Rimouski—La Matapédia, QC
Thank you very much.
I'd like to thank the witnesses for being here today. I would also like to thank them for their understanding with respect to this somewhat unique situation.
Ms. Lehtinen, both Canada and Quebec excel in research. We have many people with potential. However, developing that potential requires support. As you yourself said, the marketing and industrialization of our discoveries are not keeping pace.
Can you explain the reasons to which you attribute Canada's chronic inability to translate its scientific breakthroughs into economic benefits?