Proceedings of the Standing Senate Committee on
National Finance
Issue 20 - Evidence - November 4, 2014
OTTAWA, Tuesday, November 4, 2014
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to study the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2015.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this morning, we are continuing our study of the Main Estimates for the fiscal year ending March 31, 2015.
[English]
From the National Research Council of Canada, we're pleased to welcome: Michel A. Piché, Vice President, Corporate Management & Chief Financial Officer; Gail E. McLellan, Deputy Chief Financial Officer and Director General, Finance Branch; and Bogdan Ciobanu, Vice President, Industrial Research Assistance Program.
This morning, we are also hearing from the International Development Research Centre. From that agency, we are pleased to welcome: Mr. Stephen McGurk, Acting Vice President, Programs and Partnership Branch; and Sylvain Dufour, Vice President, Resources and Chief Financial Officer.
We thank you all very much for being here. We have two hours set aside to get to know your organizations better. I'm going to suggest that we begin with the National Research Council of Canada. Mr. Piché, you have some introductory remarks. Then we will go to the second group, the International Development Research Centre.
After that we'll deal with some questions and answers, and engage in some dialogue.
Michel A. Piché, Vice President, Corporate Management & Chief Financial Officer, National Research Council of Canada: Honourable senators, I would like to thank you for the opportunity to appear before you today and talk about the National Research Council's 2014-15 Main Estimates. First, I would like to share some background information on our organization and then continue with the highlights of our Main Estimates for the fiscal year 2014-15.
The NRC's mission is to provide clients and partners with innovation support, strategic research, and scientific and technical services to bridge the gap between the early stages of research and commercial development. Our organization focuses on increasing the performance of business-led R&D and innovation with socio-economic benefits for Canada. As a federal leader in technology development, the NRC supports Canadian industry by enhancing its innovation capabilities.
In 2013-14, the NRC put into motion its long-term plan to become Canada's research and technology organization, also known as RTOs. The RTOs are mission-oriented providers of innovation services to firms and governments. Our new business model provides the outcome-driven R&D programs and industry focus expertise required to capture lasting benefits for Canada.
We work with companies of all sizes and provide them with advice, education and training, with access to facilities and equipment to enhance the development of commercially viable products and solutions.
An example of this business partnership is the NRC's collaboration with Zymeworks, a Vancouver-based biotherapeutics company. The NRC assisted the company in addressing a significant pharmaceutical gap. With the NRC's support, Zymeworks earned numerous awards, secured international clients, attracted millions in financing and created Canadian jobs.
In addition to private-sector support, the NRC works with government departments to address critical issues such as sustainable economic and natural resources development, climate change, security, and health care. These critical issues are aligned with the priorities of the federal government and guide the NRC's strategic direction.
I would like to mention the NRC's Industrial Research Assistance Program, known as IRAP. IRAP has long been recognized for the effective support to Canadian small- and medium-sized enterprises, which are also known as SMEs. The IRAP field-staff works closely with these companies to provide advisory services, potential financial support and opportunities for networking, which help these companies grow in Canada. More recently, IRAP launched its new Concierge Servicewhich helps SMEs learn about and access available innovation services and research support programs that best suit their needs.
And now for a review of NRC's Main Estimates.
In 2014-15, NRC was granted federal spending authorities of $896 million, a net increase of $76 million from the previous year. From this amount, voted authorities represent $655 million, while statutory authorities amount to $241 million — $197 million of which is spending related to statutory revenues and $43 million for contributions to employee benefits plans.
There are significant changes from the Main Estimates for fiscal year 2013-14. There is an increase of $59.6 million for realignment to industry-focused research. As announced in Budget 2013, the government is investing $121 million over two years, starting in 2013-14, to enable the NRC's new strategic focus to support business innovation growth in Canada. Of this amount, $59.6 million relates to 2014-15.
There is an increase of $14.5 million for the Canada Accelerator and Incubator Program, known as CAIP. Economic Action Plan 2013 proposed a total of $60 million, over five years, to help outstanding and high-potential incubator and accelerator organizations in Canada to expand their services to entrepreneurs. Of this amount, $14.5 million is included in NRC's 2014-15 Main Estimates.
In addition to the Main Estimates, there is also $15 million in new contributions for the Youth Employment Strategy. The Youth Employment Strategy is the Government of Canada's commitment to help young people, particularly those facing barriers in employment, get information, gain skills and abilities, and the work experience they need to make a successful transition into the labour market. This initiative is delivered through the NRC IRAP.
Economic Action Plan 2014 dedicated $40 million, over two years, for this program. NRC has been allocated $30 million of this amount, $15 million in fiscal year 2014-15 and $15 million in fiscal year 2015-16.
There is $10 million in contributions from Budget 2013 for the Business Innovation Access Program, which is known as BIAP. Economic Action Plan 2013 dedicated $20 million in funding, over three years, to NRC through a new pilot program to help small- and medium-sized enterprises access research and business development services through universities, colleges and other non-profit research institutions of their choice. This program is also being delivered by NRC's IRAP. This $25 million of additional adjustment to NRC's voted budgeting authorities will raise its total authorities, this fiscal year, to $921 million and will be reflected in Supplementary Estimates B, to be approved shortly.
Thank you. My colleagues and I will be pleased to answer your questions at your convenience.
The Chair: Thank you.
We will go on. For opening remarks, I have indicated here that Mr. McGurk, who is the Acting Vice-President, Programs and Partnerships Branch, will speak.
[Translation]
Stephen McGurk, Acting Vice President, Programs and Partnership Branch, International Development Research Centre: Honourable senators and members of the Standing Senate Committee on National Finance, I welcome the opportunity to discuss IDRC's Main Estimates for 2014-15.
[English]
I am the Acting Vice-President, Programs and Partnerships, at Canada's International Development Research Centre. I was also privileged to serve as the director of our Asia offices, from 2000 to 2013. I'm joined today by Sylvain Dufour, our Vice-President, Resources and Chief Financial Officer.
This hearing is an important opportunity to share with you IDRC's mandate and work, including the unique contribution we make to Canada's foreign policy and innovation agendas, as well as to this country's international leadership in improving lives and livelihoods in the developing world. I will briefly outline IDRC's current objectives and activities, and both Mr. Dufour and I will be pleased to respond to your questions.
IDRC funds research in developing countries to promote growth and development. Our programming develops solutions that help to advance Canadian foreign policy objectives. It responds to evolving priorities, through practical science and technology, that are fundamental to innovation and competitiveness, as well as to forging stronger international ties for Canada. Indeed, your colleagues at the Senate Foreign Affairs Committee drew these links regarding our work, as well as that of other Canadian organizations, in the 2012 report on Brazil, a key emerging market for Canada.
In carrying out our mandate, IDRC brings together leading experts from Canada and developing countries to find lasting solutions to pressing challenges. We work in three areas of programmatic focus: boosting agricultural productivity and adapting to environmental change; promoting economic growth and securing healthy livelihoods, including maternal, newborn and infant health;, and fostering innovation and leadership. Within these three areas, we focus on specific initiatives aligned with government priorities, while ensuring that our programming meets the needs of the developing world.
For example, the Canadian International Food Security Research Fund, launched in 2009, supports partnerships between Canadian and developing country research organizations to improve food security in 20 developing countries. This $124-million fund, with resources from the IDRC and the Department of Foreign Affairs, Trade and Development, has developed and piloted over 130 innovations, including the development of groundbreaking vaccines for livestock, which will reduce livestock loss that currently accounts for $300 million a year in Africa alone; the creation of cooperatives for women vegetable growers to enable them to access much more value-added opportunities in urban markets; and a revolutionary packaging system that uses state-of-the-art technologies to protect soft fruit in India and Sri Lanka, as well as in Southern Ontario. This partnership demonstrates Canada's commitment to build more productive and sustainable agricultural systems to address global hunger.
[Translation]
IDRC joins forces with international funding partners to multiply the impact of Canada's investments. They include like-minded governments such as the U.K., Australia and Norway, leading foundations such as the Bill and Melinda Gates Foundation, and private corporations such as Microsoft.
[English]
Last year, we were involved with 11 donors, through 28 contracts worth $411.4 million. We forecast that contributions to our 2014-15 programming, over and above our parliamentary appropriation, will be close to $70 million. That's $12 million more than this past year. This increase in partner contributions complements our parliamentary funding of about $188 million, which is critical to leverage these resources, as set out in the 2014-15 Main Estimates.
The growth in donor partnerships reflects the centre's reputation as a sound financial manager, delivering solutions that achieve results. It also allows us to maximize Canada's investment to develop innovative ideas and to test them. This sets the stage for these ideas to be taken further, with partners in the private and public sectors, to scale up successful innovations and, ultimately, improve more lives.
An essential element in all of our programming is to build leadership around the world and to bring the results of our work to scale. By supporting the efforts of exceptional individuals and organizations to spur social and economic progress in their own countries, IDRC builds networks of influence for Canada. We are proud to count Chile's Ricardo Lagos, India's M. S. Swaminathan, Bangladesh's Muhammad Yunus, Peru's Carolina Trivelli and South Africa's Trevor Manuel among IDRC's alumni.
Honourable senators, I hope you have found this brief overview informative. Copies of our last annual report have been provided to the clerk, should you be interested in learning more.
[Translation]
Thank you once again. Mr. Dufour and I would be happy to answer your questions.
[English]
The Chair: Mr. McGurk, thank you very much. Before I go to honourable senators who have expressed an interest in dialogue with you, was it 2000 to 2013 that you were responsible for the office in the Far East? Was that for 13 years?
Mr. McGurk: From 2000 to the end of 2012.
The Chair: Where were you located?
Mr. McGurk: I was in our Singapore Southeast Asia and East Asia office in from 2000 to 2006, and in our South Asia and China office from 2006 to the end of 2012.
The Chair: Where is it?
Mr. McGurk: In Delhi.
The Chair: Okay. Are there any other international offices that we should be aware of?
Mr. McGurk: We have four regional offices now, in Cairo, Nairobi, Montevideo and Delhi. In the 2012 SOR exercise, we consolidated our regional offices, closing our Dakar and Singapore offices and relocating our programmatic staff to Nairobi and Delhi respectively.
The Chair: Thank you. I'll start with Senator Eaton, a senator from Ontario.
Senator Eaton: Mr. Piché, on the agriculture and forestry committee, which I sat on for many years, when we were looking at the rebirth of the Canadian forestry industry, and also in some of our agricultural studies, we used to hear time and time again about the ''valley of death'' — the valley between good research and actually getting it to market as a product. I was thrilled to see that this is one of your main focuses now.
Mr. Piché: It's one of our focuses. We do have programs specifically geared to the forestry industry through the Industrial Biomaterials Flagship program, which works with companies like Domtar to try and provide value-added products to the market. On the agricultural side, we recently signed a multi-year agreement with the Canadian Wheat Alliance in Saskatchewan, another flagship program, which is an 11-year commitment that will result in $95 million of resources being expended over that time. Over the first five years, Agriculture Canada, University of Saskatchewan and NRC will each contribute $5 million to work on genomic research of the wheat products.
Senator Eaton: You mentioned the University of Saskatchewan. Do you deal with university research, per se? Do you have agreements with universities to support them, or are you the next step and it has to get a business?
Mr. Piché: Generally, we will not try to duplicate research performed at the university level.
Senator Eaton: Would you take university research and move it along? Do you wait until it has moved along to a business before you help that business?
Mr. Piché: We can. Normally, our focus is more on working directly with companies and helping them to develop their research into commercial products. But, as in the case with the wheat partnership program, we are working with a university in basic research to develop the knowledge that will ultimately provide for new products and services.
To answer your question, we can do it if it fits in with the goals of our programs, but we don't necessarily work with them unless it's part of fulfilling the objectives of our programs.
Senator Eaton: Could you tell me what your priorities are? Do you have one, two, three, four priorities you will cover this year over the next 10 years, whether it is agriculture or forestry? Can you give me four or five examples of where you are putting your focus?
Mr. Piché: Yes, we have essentially three key areas, three research disciplines that we concentrate on. One is engineering; the other one is —
Senator Eaton: Engineering. What would that mean?
Mr. Piché: Within engineering, we would work in the areas of aerospace, automotive and surface transportation; construction; energy, mining and environment; and ocean, coastal and river engineering.
Senator Eaton: When you say ''energy, mining and environment,'' it means you're looking at innovative ways. For instance, if I think of the oil sands and dealing with the tailings ponds, is that an example?
Mr. Piché: I will give you some examples. In terms of energy, mining and environment, we have four approved programs in bioenergy, in the energy storage grid security, in highly efficient mining activities, and in sustainable water in mining.
For each of these areas of specialty, we have specific programs that are subject to defined business plans and objectives to deliver on certain outcomes over a five- to-seven-year time frame. Everything ends up being program driven, working with industry or other government partners, including universities in some cases, to deliver on very specific research outcomes.
Senator Eaton: Can I go on the second round?
The Chair: Yes, you can. I will put you down on second round.
[Translation]
Senator Hervieux-Payette: Your presentations were very informative. I was going to start with the witness whose organization is the bigger spender, but actually, I want to commend Mr. McGurk and his organization for the simplicity of their brief. Whenever a government organization gives me a report containing 62 different colours and all kinds of fancy formatting, I get a bit angry because I think that money would be better spent on the organization's primary mission. I wish every organization could provide a report as well done as yours.
You mentioned that you partner with the private sector on development projects abroad. I am quite interested in that topic. We hear a lot of negative things about Canada's mining industry. Does the industry engage in any projects that are likely to improve the quality of life of people in developing countries?
Companies such as Noranda and other big businesses with money come to mind. Have any of these companies established partnerships that could genuinely help to improve the quality of life of people affected by the mining industry?
Sylvain Dufour, Vice President, Resources, and Chief Financial Officer, International Development Research Centre: I will try to answer your question. Last year, IDRC entered into contact with a prospectors association whose exact name I cannot recall. I believe it was the Prospectors and Developers Association of Canada or something to that effect. We are in discussions with them right now, not so much with respect to community involvement, as you described, but more in terms of creating a regulatory environment to facilitate the activities of mining companies.
Quite a while ago, research projects were carried out in the area of social sciences. Some mining development companies were involved in those projects, but mostly on a small scale, not at the corporate level as far as large mines go. Not many things are happening at this time. We have opened a dialogue with the Prospectors and Developers Association of Canada, headquartered in Toronto. A number of related projects are being discussed at the moment, but nothing formal has been worked out at this point. I am not sure whether my colleague Stephen has anything to add.
Senator Hervieux-Payette: You mentioned the Bill and Melinda Gates Foundation. These are not Canadian groups that are involved. I was curious to know whether any of Canada's large oil companies had undertaken any activities abroad. It seems to me that a synergy around exploration should exist.
I found a number of your projects interesting, including those that involve goat or sheep farming, crops, nutrition and more efficient water use. You seem to have expertise in those types of projects, which improve people's quality of life. Very often, companies engaged in industrial development have a responsibility to give something back to the local population.
Could Canada's oil companies or large corporations do the same thing that the Bill and Melinda Gates Foundation does? As far as your $80 million budget goes, I do not think it would hurt for you to receive $150 million. Perhaps you should turn to the private sector for the extra money.
[English]
Mr. McGurk: We're in the process of looking at exactly those kinds of partnerships. At this time, we do not have those kinds of partnerships in the oil and gas patch. We hope to develop those going forward. We're under discussion with a number of Canadian oil patch leaders with that in view. At this time, we do not have such partnerships.
We are active largely around issues of women's engagement in mining in the African Great Lakes region. This is a very difficult area in which to work. We have taken great care about the Canadian partners that we work with, as well as the Ugandan/DRC partners we work with in this regard to make sure that all the proper rigorous research can be done with due recognition of the difficult personal security issues for doing research in these areas.
More broadly, we're working with the Government of Uruguay on a program to help them develop the iron ore sector in Uruguay with training and internships in Canadian universities and firms. Who could have thought Uruguay, a lowland farming country, actually had significant iron ore, but they have. They have almost no background and almost no training, so they've asked for Canada's assistance and have co-funded with the IDRC a program to support Uruguayan mining engineers and other regulatory specializations in Canada. That includes with the prospectors and the development association in Canada.
[Translation]
Senator Hervieux-Payette: My question is for Mr. Piché. In terms of coordinating the funding for industrial research, be it with Industry Canada or other groups that receive research grants, is there some sort of central committee in charge of dividing up the work related to the research project?
You said earlier that you focus on basic research, pilot project research and development project research. You are involved at various stages of the research process. How does the coordination piece work, as far as you and all the other federal organizations are concerned?
Mr. Piché: Other federal organizations are, of course, involved in research. For instance, the Natural Sciences and Engineering Research Council of Canada deals primarily with university-based research.
I said that the NRC can be involved in basic research if it is within the context of an established program, but our main goal is focusing on applied research and supporting the commercial development of innovative ideas. That is our primary objective, which we achieve in various ways through partner collaboration. All of our research projects are partnership-based, either at the industry or government level, and address a specific problem. That is where the difference with basic research comes in; the idea is to solve a problem that will have an industry-wide impact.
We also provide clients with access to our various facilities and labs, which are unique in Canada and make it possible to carry out research in an environment that clients would otherwise have to go outside the country for. Take, for example, our wind tunnels at the Ottawa airport, which can be seen when arriving in the city. They are one-of-a-kind facilities in Canada that even support international companies.
In addition, a large portion of NRC's budget goes to grants for small- and medium-sized businesses to help them with their research activities, which, at the end of the day, account for a significant share of our budget. Our budget comes through the Industrial Research Assistance Program. It represents the bulk of our research involvement, which, once again, is aimed at commercializing a product or service.
Senator Hervieux-Payette: Thank you, but you did not answer my question on coordination.
Senator Chaput: No.
Senator Bellemare: Thank you all for being here today. This has been a very interesting discussion. The research field is always a bit of a mystery, depending on how it is presented.
Last week, or perhaps a week and a half ago, we had witnesses from the Canadian Institutes of Health Research. They talked a lot about their virtual research centre and the way in which they allocated funding.
I would like to hear from both of you. Senator Eaton and Senator Hervieux-Payette raised some issues that I would like to discuss further: the relationship between you, Mr. Piché, at NRC, and the Natural Sciences and Engineering Research Council of Canada. At this point, we see that you have funding that you spend and we understand your priorities. But it is hard for us to understand how you spend the funding. Who benefits? You mentioned small- and medium-sized businesses, but how do you go about choosing which ones?
You have a research centre and research facilities, but you work with small- and medium-sized businesses to help them take ownership of the research. You probably also work with university researchers occasionally. At the same time, you manage programs that support youth employment and other efforts that, at first glance, do not seem to fit with your organization's mandate. Your plans are very complex, and it is very tough to understand how the money is being spent and determine what the results are.
As for you, Mr. McGurk, I have a better sense of what you do; you work with the Minister of Foreign Affairs. Everyone is aware that the area was significantly restructured. I would like to know how that restructuring affected you and what kind of relationship you have with CIDA.
We know that you are involved in research and that you have ties to foreign affairs. But do you interact with CIDA? And if so, how? Or do you operate in a silo?
The Chair: Do you mind going first, Mr. Piché?
Mr. Piché: To be sure, it may seem complicated at first glance given that we are active in most scientific disciplines, ranging from engineering and health sciences to emerging science.
To give you an overall idea of what we do, one half of NRC deals mainly with contributions for small- and medium-sized businesses, and that includes economic programs that may be delivered from time to time such as youth programs. That accounts for roughly $260 million of our budget. Basically, that means contributions to small- and medium-sized businesses including the delivery of various services to help them access the resources they need to innovate and improve their products and services. Mr. Ciobanu is responsible for that half of NRC's activities, and he could speak to it in greater detail if you like.
The other half of NRC focuses on specific programs aimed at fixing a problem within a particular sector, in partnership with both government and private sector clients. Normally, these programs are approved only when a client requests help in order to find a solution to a given scientific problem, or research assistance to facilitate the commercialization of a product or service or enhance the competitiveness of Canada's industrial sector.
Altogether, these programs represent about $250 million, in either contributions or direct costs. They are targeted programs in response to needs expressed by companies in specific sectors, with the goal of helping them innovate or improve their products.
Senator Bellemare: Can you give me an example without naming any names? A small- or medium-sized business who knows you exist.
Mr. Piché: Yes.
Senator Bellemare: Who contacts you looking for help? Is that how it works? I would like you to help me understand the process since you are a senior executive who supports small- and medium-sized businesses. Give me an example without naming the company's name, if you would.
Mr. Piché: Mr. Ciobanu, could you give us an example?
Bogdan Ciobanu, Vice President, Industrial Research Assistance Program, National Research Council of Canada: The Industrial Research Assistance Program works like this. We have 240 industrial technology advisors across the country; they are each responsible for a given geographic area and work closely with clients. Each geographic area has about 400 to 500 small- and medium-sized businesses.
All of the advisers come from the private sector. And before joining NRC's Industrial Research Assistance Program team, they were entrepreneurs or held management positions in small- and medium-sized businesses. In addition to their experience in industry, they all have engineering or scientific training. Their role is to advise their business clients with the objective of helping them grow through technological innovation.
Senator Bellemare: Now I understand better.
Mr. Ciobanu: We have a number of tools, including the youth employment program, which you mentioned earlier. From the business's standpoint, it is straightforward. We have a toolbox and we provide the help the business needs. But the main component is really the support our advisors give and the linkages we establish with research organizations such as universities, colleges, enterprise incubators and accelerators in Canada, existing research centres in Canada and investors groups.
That is how we bridge the gap between our business clients and these organizations including, obviously, NRC's research group.
Senator Bellemare: Where are the industrial technology advisors based? In local development agencies?
Mr. Ciobanu: They are based in local development agencies, universities, colleges and provincial government research centres. They are everywhere.
Senator Bellemare: Are they paid by the federal government?
Mr. Ciobanu: They are NRC employees who work in these locations and whose primary role is to help businesses with the will and capacity to grow through technological innovation. The advisers are also responsible for building relationships with the organizations, in the locations they are in.
Senator Bellemare: I would think these services are in high demand given how many small businesses there are. If a decision needs to be made in terms of allocating funding to one business over another, are the advisers themselves authorized to make that decision? Or does some sort of board review applications and allocate funding?
Mr. Ciobanu: First, it is important to mention that around 30 per cent of our clients receive financial support. And although 70 per cent do not, they do receive advice. For example, we help them prepare funding requests to angel investor groups and venture capital firms. We maintain close ties with partners in Europe, so we can also set clients up with partners there through the EUREKA program. Furthermore, we can provide clients with market research, competitive analyses and patent examinations.
All of these services are available to businesses free of charge and do not require a financial contribution of any sort. A minority of businesses who meet all of the necessary conditions must grow more quickly in order to develop a technology, product or service. Those companies receive financial assistance, with some 3,000 businesses receiving financial support every year.
Senator Bellemare: The NRCC comes under Minister James Moore?
Mr. Ciobanu: Yes, Minister James Moore, Minister of Industry, as well as Ed Holder, Minister of State for Science and Technology.
Senator Bellemare: I understand better, thank you.
[English]
Senator Wells: Thank you very much, panel. I have a question for Mr. Piché. Can you tell me about the working relationship that you have with the federal funding agencies in the regions, such as ACOA, CEDQ, FedNor, and WED, and how that works? Tell me about the working relationship.
Mr. Piché: We don't really have much of a working relationship with those funding agencies. They are kept primarily at arm's length from the NRC and we kind of operate in different environments for different purposes and we don't really have a very close working relationship.
It may happen that some of our clients will get funding from one of those agencies, in which case we will work with our client, but there is no direct link between those funds and the work that we do.
Senator Wells: Can you talk a little bit about the stacking provisions? Obviously, the NRC is a federal agency. Can you tell me about the stacking provisions or rules around that?
Mr. Piché: In terms of the NRC research group, excluding IRAP, we don't really receive funding from those agencies to support our programs. For the IRAP clients, they do have stacking rules that they have to apply, and Mr. Ciobanu can talk about that.
Mr. Ciobanu: If you will allow me, I can answer the first part of your question and then the second one. The first one was related to our interaction with federal regional development agencies, and then to the stacking rule.
IRAP works very closely with all the regional development agencies across Canada and, depending on their specific programs — because they are quite different from the eastern part of the country, southern Ontario, and Quebec, to the West, as you well know — we try to adapt so our programs and theirs are complementary and provide support to the client over the duration of a project, or over the duration of other initiatives that we want to support.
Moreover, we work so close to these agencies that we even provide due diligence for some of them with which we have a memorandum of understanding. Our industrial technology advisers have a very good understanding not only of the technology but of the sector, too, the business of the companies. We provide this type of service to some of the regional development agencies to help them with their programs. There is a close relationship.
Going to the second part of your question, the stacking rules, we make sure that the stacking rules apply not only to regional development agencies and IRAP contributions, but all other provincial, municipal or federal programs. In our due diligence process, we have embedded a way of identifying the total amount of contributions the company may get. We also have a process whereby, month after month until the end of the project and afterward, the company will report to us on additional funds that may come from other government organizations.
Senator Wells: In the IRAP program, what's the requirement for the company? Is that all federal dollars for the company to contribute to a project?
Mr. Ciobanu: Typically, IRAP supports about 40 per cent of the cost of the project, on average.
Senator Wells: So can they use federal funds for any of the other 60 per cent?
Mr. Ciobanu: They can use federal, provincial, municipal funds — whatever funds are available — up to a maximum of 75 per cent of the total cost of the project. The company must contribute 25 per cent under any circumstance.
Senator Wells: I have one final question. Can you talk to me about intellectual property and the rights of that in projects that are partnered with the NRC?
Mr. Piché: Just to confirm, honourable senator, on your previous comment, the stacking provision in relationship with other regional agencies applies mostly to IRAP customers. For the NRC research program, it can happen but not directly; it would be part of the funding that our client receives, which then participates in our program. So there is a distinction.
Now, in terms of intellectual property, we deal with it in two ways. If we provide our clients with what we consider more technical services, where we charge the client full market price, in that particular situation any intellectual property that is discovered belongs to the client.
If we do strategic collaborative research with our client, the NRC will maintain the rights of the intellectual property and may provide clients with access to the technology under specific terms that are usually negotiated, depending on the type of agreement.
If the client pays the total cost and the margin, essentially they keep the intellectual property.
Senator Wells: Fee-for-service.
Mr. Piché: Fee-for-service. If it involves government money, then the federal government maintains ownership of the intellectual property.
The Chair: Mr. Ciobanu, you indicated that you do your due diligence in terms of your contribution to a small- and medium-sized enterprise or any business out there. You must have a list of all the sources of revenue, provincially and federally, that you could provide to us so we have a complete list of all of those various granting agencies and sources of public funds. That is what we're looking for. Could you provide that to us?
Mr. Ciobanu: I will try. I'm not sure I will be able to provide an exhaustive and complete list, but I will try to provide you with a list of all the granting agencies, contributions and organizations we're aware of across Canada.
The Chair: I think that would be helpful for us.
[Translation]
Senator Maltais: First, I see that your budget was increased by almost 10 per cent. That is an interesting increase if one compares it to certain other research organizations. This could silence those who complain that the government is not generous enough in funding research.
My questions are on two research sectors that interest me particularly. Mr. Dufour and I are from the same area, by the way.
We are all aware that the golden years for paper mills are a thing of the past. The future of forestry depends on the development of forest products. You work in Africa and Asia thanks to free trade agreements, and perhaps also in Europe, soon. How can the research sector position itself in Canada?
As I said, the future of forestry in all of Canada depends on new markets and on our forestry projects. The products we are familiar with now may not necessarily be products we can sell. Within 25 years, the market for paper will have disappeared. How do you see this? Is there anyone in your organization who is looking at that? Have you received requests from certain businesses that do forestry research? How can you bring all of that together?
Senator Hervieux-Payette: I think that in 25 years there will be even more paper.
Senator Maltais: We will see.
Mr. Dufour: The International Development Research Centre, IDRC, does not work in the forestry sector very much. We left that sector over 20 years ago when strategic planning was done at that time. This is expertise we do not have in-house, so we cannot answer your question, unfortunately.
Senator Maltais: You are in the energy field. Geothermics are of great interest to Canadians. Is any research being done on that? Are you in contact with researchers, universities or businesses that are studying the use of that energy source?
Mr. Dufour: The IDRC does not have technical expertise in the energy field either. Any projects involving energy would have concerned policies around the use of that energy. Given my responsibilities I am not very well aware of these projects, but I do not think there have been many over the past five years. We worked a great deal in that field in the 1980s when the government had given us a research envelope to look at energy use in developing countries. That envelope was for a period of five to seven years — I do not remember exactly, it was at the end of the 1980s and the beginning of the 1990s — but since the end of that, the IDRC no longer has any expertise in that field.
Senator Maltais: Very well. I am going to try another way; I am not going to give up. There is an area that interests the people on the Gulf coasts, or the Atlantic region, and that is fisheries. Do you do anything in that field?
Mr. Dufour: Yes.
[English]
Mr. McGurk: Most of our work on fisheries has focused on how small-scale and coastal fishers can improve their lives through a mix of capture fisheries and aquaculture, particularly a range of mariculture and other caged fisheries. We've also supported work to look at how the economics and the business of small-scale fisheries can be better oriented towards the livelihoods. Much of the fisheries science development in developing countries has focused on technical research around how fish grow in different kinds of farmed fishing and has not focused on the actual economics.
The disease part of small-scale fisheries is extremely important, particularly for farmed fish. There is a strong need to focus on the fisheries science element, but without the business part of this, small-scale fisheries are extremely difficult to maintain and sustain. We found, particularly in our work in Asia, that the critical link is small-scale hatcheries and how to maintain a good business program for them.
[Translation]
Senator Maltais: You have opened the door wide. As a passionate advocate for Atlantic salmon, I can tell you that it is almost disappearing. In Canada, we are more concerned with elephants in Rwanda than with Atlantic salmon.
We have a devastating product known as ''the seal'' that lives in our waters. We do not know what to do with it anymore, because everyone calls us murderers. Since Atlantic salmon is endangered, do researchers know the causes of its disappearance, and do they have any solutions in sight for that problem?
Mr. Dufour: Over the past few years, IDRC research was more focused on aquaculture, as my colleague was saying earlier, and not on the wild environment. In any case, wild Atlantic salmon is not found on the coasts of the target countries.
Perhaps on the southwest coast of Chile, but Chile is not really a developing country anymore, which means that the IDRC is much less active there than it once was. Briefly, all I can say is that the IDRC has not supported any research program involving Atlantic salmon in wild fishing environments.
Senator Maltais: If you were to receive a request from a Canadian group doing research on that, who wanted to find a long-term solution, might you consider accepting such a request?
Mr. Dufour: To the extent that we can establish a link with development issues, research that could generate results we could use with our target clientele and for the purposes and objectives of the IDRC, yes, we would accept such a proposal.
Senator Maltais: Suppose a group of academics asked for help to find a solution for the coastal provinces, would you look at that closely?
Mr. Dufour: Canadian groups have sometimes submitted issues to us. They established contacts with colleagues in Asia, Africa or many other places in the world, and we examined their requests. We even funded some of these projects in the past.
Mr. McGurk: There is a big international program at the ICAR institutes in that area.
Senator Maltais: Thank you very much. What a lovely open door.
[English]
The Chair: Senator Maltais talked about two or three industries. Senator Mockler would be interested in knowing about the aquaculture research centre in St. Andrews, New Brunswick. Is that under Fisheries and Oceans, or are either of your agencies involved in that work?
Mr. Piché: The NRC is not involved in this area.
Mr. McGurk: We are quite involved in aquaculture, as I mentioned earlier, and will continue to be active.
I should also say that we support an international consortium of agricultural research institutions that look at the death of the seas and the broader issues of acidification of the oceans and the death of captured fisheries in the wild. Our focus has been a combination of cutting-edge fisheries science with business and economics to understand how small-scale farming of fish can be an economic development strategy.
The Chair: Mr. McGurk, are you involved in the funding of the St. Andrew's Biological Station in New Brunswick?
Mr. McGurk: Not currently.
The Chair: How about agriculture research and making potatoes for processing near Fredericton, New Brunswick? Senator Mockler is very interested in potato research.
Mr. McGurk: We support research on potatoes, particularly in Colombia in the Andes mountains, where varieties of potatoes in higher regions have always struggled and where varietal research on potatoes together with down-stream research looking at the storage and processing of potatoes can improve livelihoods overall for a much larger set of people and can create employment. We're hopeful that, should a visit be made by the Governor General perhaps to Colombia in the not too distant future, we would feature some of our work on potato research there.
Our work with Canadians in this area on agricultural research, food science, field sciences and business is competitive — open calls. We've had very positive responses from universities and research organizations across Canada. Every province is involved in this work. Currently, the work on potatoes is not being done by a New Brunswick institution, I'm sorry to say.
[Translation]
Senator Mockler: Which sectors? What countries would be responsible for the development of that potato?
Mr. McGurk: The Agriculture and Food Security Program. It is a global program. We put the emphasis on poor countries, and work with Canadian researchers who specialize in development with countries that want to propose good, innovative ideas.
Senator Mockler: One of the best-respected research centres in the world is the Potato Research Centre in Fredericton. I would like to make another comment I feel is important, Mr. Chair, and that is that the potato king is McCain in New Brunswick, Canada. There are undoubtedly other companies in other countries, but the entire world recognizes that McCain is a superstar.
[English]
The Chair: As well, Senator Mockler would have mentioned Cavendish Farms, in New Brunswick and Prince Edward Island, which competes with McCain.
[Translation]
Senator Chaput: My questions are for the National Research Council of Canada. I would have some additional questions to ask about SMEs. I believe that aspect is extremely important given that the SMEs are responsible for economic prosperity in Canada.
To a question put by Senator Bellemare, you replied that there were $260 million in the budget. Is that per year, or over several years?
Mr. Piché: Yearly.
Senator Chaput: Yearly. In your presentation, you said that the Industrial Research Program of the National Research Council of Canada had for a long time been providing assistance to SMEs. How long has that program been in existence?
Mr. Ciobanu: Since 1947, in another incarnation, and since 1961, the program has had a budget to fund businesses. Before 1961, we only provided advice.
Senator Chaput: You mentioned that 240 industrial advisers throughout Canada advise businesses, and that you have a budget of $260 million a year. What part of that budget is devoted to remunerating the 240 advisers, and what part is directly granted to SMEs to support them? What is the breakdown?
Mr. Piché: The breakdown of the operational budget for the IRAP program. . .give me 30 seconds, please.
Senator Chaput: Very well.
Mr. Piché: The total payroll for the IRAP program, including all of the other operational costs, is $66 million out of a $260 million budget. A large part of that payroll goes to the provision of services, technical or other, to small and medium enterprises. As Mr. Ciobanu said earlier, a large part of the activities of that program are for the purpose of helping and advising small and medium businesses; so, this is not only a granting organization, and that is to some extent why the operating budget seems a little high.
Senator Chaput: I understand, but I am trying to see, with regard to the financial assistance, what sums of money are directly granted to our small and medium businesses for their research projects.
Mr. Ciobanu: With your permission, I will respond. This year, from the 2014-15 budget, a total of $225 million was allocated to funding granted to SMEs.
Senator Chaput: And how many SMEs will receive such funding?
Mr. Ciobanu: Between 300 and 3,100 SMEs will receive financial contributions until the end of the year. Also, approximately 7,000 additional businesses will not receive financial assistance, but will receive other services provided by our advisers, as well as approximately 100 organizations with which we have a collaboration agreement.
Senator Chaput: Thank you. Do the small and medium businesses that receive funding have to make matching contributions? Must they also contribute money?
Mr. Ciobanu: Yes, on the average our financial contribution covers approximately 40 per cent of the costs of the projects we support. The business or other sources of financing contribute the rest.
Senator Chaput: So it is the responsibility of the business to go and get the rest of the money?
Mr. Ciobanu: Indeed, it is the business's responsibility. However, often, our advisers help the business to look for other sources of funding. We also have the Concierge Service. That service helps the IRAP clients, but also all of the Canadian SMEs in general to apply to government programs. It is a service that establishes a link with existing programs.
Senator Chaput: Do you evaluate the economic impacts of the projects these SMEs complete? Is any kind of assessment made?
Mr. Ciobanu: Yes, there is an evaluation at the end of the project and one every year, for a five-year period. At the end of the project we assess the technical aspect to see whether the technology, product or service was developed in line with initial objectives. Afterwards, for five years, we assess the economic impact, that is to say the sales of those products or services that were generated with our support.
Senator Chaput: In general, would you say the evaluations are positive? Can you tell whether the project is a success, and whether it is contributing to Canada's economy?
Mr. Ciobanu: According to the most recent evaluation of the IRAP program, on the average we see $10 in sales for each dollar that was contributed to the IRAP program.
[English]
The Chair: While we're looking at the National Research Council estimates, I was looking for the figure you mentioned, $225 million and I don't see that split out. That's part of something else in here, is it?
Gail E. McLellan, Deputy Chief Financial Officer and Director General, Finance Branch, National Research Council of Canada: The 225 is adding in the Supplementary Estimates (A), which is funding that was received, as well as CAIP, which is coming up in the supplementary. That's an additional seven, so that brings the mains up to the 225 that was referenced.
The Chair: You're including Supplementary Estimates (A), which I don't have in front of me.
Ms. McLellan: Yes, unfortunately. You don't have Sup B either.
The Chair: Sup B, which we will be seeing very soon.
Ms. McLellan: That's correct. That's where the 225 comes from.
The Chair: Okay, thank you.
Ms. McLellan: Can I go back? Originally, we were going back in a question in terms of the total budgetary in terms of the mains. I just want to make one correction. I didn't give Mr. Piché the correct amount.
On the R&D side, our total, because we changed our strategic outcomes, is 431. So IRAP was the 260. On the R&D side, it's 431 million out of the mains. We were referencing 260, because there was one strategic outcome that had not necessarily been added in.
The Chair: Strategic outcomes that we'd see in your plans and priorities?
Ms. McLellan: That's right. In the Main Estimates, when you see the budgetary expenditures, the strategic outcomes and the programs, that's the division. There is a division between two strategic outcomes, which are R&D and our IRAP, and then there are internal services. My apologies that I did not give you the right amount.
The Chair: That's helpful. You can talk to us about Sup As, because we've already looked at those, although we don't have them in front of us. We're also following your plans and priorities for the year, and we're anticipating Sup Bs in the next very short while. We will be looking at those. This committee looks at all of those items.
I'm at page 211 in the Main Estimates, and I noticed something under the heading of ''total statutory.'' Statutory we tend not to break down here, but it would still be helpful, even though we don't vote on that. There's a rather significant increase. Is that because of a transfer of a program from another department?
Ms. McLellan: The statutory is made up of two elements. Mr. Piché addressed that in his opening. It has to do with employee benefit plans, so there is the charge over and above on the salary component. That's one component of it.
The other amount has to do with our statutory revenues that we bring in. On the R&D side, we have revenues, and there was a sizeable increase that was brought forward for this year because of our new strategy. In the opening address, it does break it down. The 241 is what you see in the mains. The 197.3 was spending relating to statutory revenues, and 43.9 was the employee benefits. On the R&D side, whether we deliver the technical service or the collaborative research service, the statutory revenue flows in as revenue and we spend against revenues.
The Chair: That was helpful and I appreciate that.
I will now go on to the deputy chair of the committee from Montreal, Senator Smith.
Senator L. Smith: In listening to some of the issues that small businesses deal with, the Industrial Research Assistance Program and the Canada Accelerator Incubator Program, with those amounts of money, would these organizations perceive your operation as a type of venture capital situation for these particular issues? Venture capital is a very sensitive subject in our country. We're risk-aversion-type folks and we may not have invested enough into developing our small- and medium-sized businesses. It would appear there are elements in these two programs that could be perceived that way. Does that make any sense to you?
Mr. Piché: It's an interesting comparison. I have to agree that the work that we undertake through IRAP and NRC R&D is definitely probably more risky than not. From that perspective, it's a higher level of risk.
The difference with venture capital is that, for the most part, our clients will keep the benefits, apart from the intellectual property. If it's a collaborative research, the federal government will maintain ownership of the intellectual property.
For IRAP, I will let my colleague speak to how that compares to venture capital.
From the NRC R&D perspective, it's truly about getting our client to become successful in creating economic activity. If we're successful in what we do, our clients will be successful and they will create jobs. That's the main goal. I'm not sure whether venture capitals are interested in that sort of outcome, but that is our purpose.
I will let Mr. Ciobanu talk about it from IRAP's perspective.
Mr. Ciobanu: Thank you. IRAP's contributions are not equity, so they are non-repayable contributions. It's another word for grants. When they get a contribution and once the company signs a contract with IRAP, the company and IRAP have mutual obligations. One of the obligations of the company is to undertake the project and to commercialize the results.
If the project is going on according to the initial contract, the contribution goes on until the end of the project, without any obligation from the firm to pay it back. It's not equity and it's not a loan.
Senator L. Smith: When I was representing some of our ministers, I've had some situations giving out research grants. We've talked about measurements and results. We've given lots of money to major research within universities. Do you have a tracking mechanism? Would you be able to tell us that if you gave $100 million, $200 million, or $400 million — whatever the number is — to research and then how would that be translated into jobs? How do you measure it?
You mentioned that you have 240 consultants working with people in businesses across the country. What are these folks like? How are they aligned and coordinated? We've seen a number of areas that they focus on, but I'm not sure if we've discussed the results issue enough.
Mr. Ciobanu: If you're referring specifically to IRAP, for some years, there has been very thorough analysis and there's a performance measurement system that has been put in place. Every single project is assessed in terms of business opportunity for the company, technical challenges, the company's capacity to undertake the project and the ability to commercialize the results. This is the assessment prior to approving the final contribution.
During the project, at least once a month, our advisers are there to make sure that the project is advancing according to the initial objective or if there are amendments to be made. At the end, there is an assessment of the technical and commercial results.
The main purpose of IRAP is the growth of small- and medium-sized businesses through technology and innovation. It's growth in terms of the company's sales and profitability. We track very thoroughly the sales of the company specific to the product or services developed with IRAP and also the company's overall growth, over five years.
Senator L. Smith: You and Mr. Piché mentioned examples of success stories, which is great, if you have five or six names. Do you have stats that the public could see? If you have x millions of dollars invested, then what were the results through some of your programs? Did you have a 5, 10, or 50 percent success rate? The taxpayers could then understand what the real implications of those successes were.
Mr. Ciobanu: We have an arm's-length evaluation and I would be very pleased to provide you with all the details of this evaluation. This evaluation talks about impact, success, economic benefits, growth of companies, jobs created and so on.
Senator L. Smith: Is that part of the plans and priorities?
Mr. Ciobanu: It is not. I will make sure that you receive it.
Senator L. Smith: Could you get that to us?
Mr. Ciobanu: I would be pleased to provide copies.
Senator L. Smith: When we go to the universities and we give $20 million or $30 million to Concordia or McGill Science Departments over x period of time, we see all these researchers who are working so hard in their little areas to develop products and concepts. Of that money, it would be interesting to see how many projects actually come to fruition and create jobs. The taxpayer and the public would then have a better understanding of the returns. If you don't have it, this would be a great tool for you to sell yourselves and show all the great work that you're doing.
Mr. Piché: I want to add to my colleague's comments.
NRC R&D has made the transition to program-based activities. In the last couple of years, we have approved 46 programs that have a duration period of five to seven years. So, they're fairly new. For each of these programs, they have very specific deliverables and outcomes.
Every three years, we do an assessment to see if they are on track and progressing. If they are not, we decide whether they should continue. We will try to cut off all the ones that are not going to be successful as early as we can so that we don't continue to invest money in areas that will not produce the benefits that we want. Similarly to IRAP, after five years, we are going to have external evaluations of each of these programs to assess the outcomes and the economic development that it has created. Unfortunately, we don't have those now because we are at the early stage of our transformation. We intend to follow a similar evaluation plan.
I agree with you. If we can't assess the economic impact, then it's difficult to see whether we're doing the right things.
Senator L. Smith: Hopefully, most of us will still be around, so we'd love to see that information if you can send it to us when the time comes.
The Chair: Thank you. Anything you can provide for us in that regard would be helpful.
Before going to round two, I'd like to focus on the International Development Research Centre. The financial statements have a term in here, and I'm looking at a year ago, 2012-13 actual. First, we look at what Parliament had approved, and that's us as part of the approval process, and it was $241 million, but you had $83 million blocked. Can you explain to us what that means and what that was all about, this blocking term? Then the net results of operation for 2012-13 were a minus $91 million. Who covered the minus $91 million for you?
Mr. Dufour: I'll start with the second part of your question.
Back in 2009 — I think it was fiscal year 2009-10 — the government approved a new program called the Development Innovation Fund. There was a schedule of appropriations associated with that program and, as it turned out — and this is explained also in the annual report — the withdrawals or the drawdown on the appropriation turned out to be faster than the expenditures.
In 2012-13 we were ahead by some $72 million, if I recall correctly, on the drawdown, and that was spent in 2012-13 when we did not draw down anything for that program. We actually asked that it be re-profiled from the point of view of appropriations. The deficit was covered by an earlier drawdown in the previous fiscal year. If you go back to 2011-12, there had been a lot of accumulated equity that was used to cover that drawdown.
The Chair: Was that drawdown based on some schedule that tended to be more ambitious than you intended?
Mr. Dufour: It turned out to be far more ambitious. The Development Innovation Fund doesn't explain the entire amount.
As to the other portion of the amount, if you remember that Budget 2012-13 was tabled on March 29. This is also the date at which the Supplementary Estimates (C) were voted on that year. There was an amount, if I recall correctly, of $27.5 million for the fast-start climate financing in the sups, which was actually on March 31 a receivable to IDRC. So we had not and did not want to engage contractually any money that we had not received and that was actually spent during the year 2012-13.
Hence, there were two sources of accumulated funds being carried over, first because of the development innovation fund in the order of $70 million or $72 million, and then $27.5 million which was a receivable. From an accrual perspective, we had to show it as earned, but it was not cashed in until later in the 2012-13 year.
The Chair: Thank you.
Mr. McGurk: Senator, if I might add, the Development Innovation Fund, a fancy name that basically supports Grand Challenges Canada.
The Chair: Another fancy name.
Mr. McGurk: Another fancy name. That program exists to try to test and scale medical technologies for the greater good. This organization was only created by a set of University of Toronto health philanthropists in 2010. It was a very adolescent organization that proved not capable of putting as many sources as it had originally anticipated it could to strong ideas in medical technology that could be linked with venture capital and angel investors as quickly as originally anticipated.
We re-profiled that so that the program would have more time to mature and become more effective. That's worked very well. They are now at a more mature stage and are spending as profiled, with a number of very promising new technologies on the market. Last year, in fact, as part of that Development Innovation Fund, we made an investment of $10 million in a global health investment fund with high net worth individuals of J.P. Morgan, with the entire fund guaranteed by the Gates Foundation and the Swedish government.
The Chair: How many actual scientists, research or engineers, do you have employed?
Mr. McGurk: We have 80 senior scientists on staff in a range of fields from agriculture to business and social sciences.
The Chair: Have you got a figure for the National Research Council?
Mr. Dufour: Perhaps while they search for the answer to your question, the second part of your initial question was about the blocked amount or the frozen allotment amount. This was also in relation to the re-profiling of the appropriation for the Development Innovation Fund. The amount had originally been approved in the Main Estimates of that year, but we had resolved not to draw it down because of the re-profiling of the Development Innovation Fund initiative over a seven-year period as opposed to the original five-year period. It's basically a deferral and we're actually in the process of using that deferred money now.
The Chair: Our committee expert on re-profiling is Senator Gerstein. He's been taking copious notes as you describe that.
Mr. Piché: To answer your question, we will have to do a bit of math. We had 3,708 employees as of September 30, 2014. Out of those, 20 per cent of the workforce were considered research officers; 19 per cent were research council officers, which is a different classification but essentially doing similar work; and 27 per cent were technical officers who work more on the engineering side maintaining facilities and providing technical services.
The Chair: Thank you. That will be good for our report to have that information involved.
We have about 20 minutes left and I have five senators on my list for round two. These are follow-up questions or questions that they didn't get a chance to ask the first time. If your response is going to be extended, maybe you could provide us with a written reply and that would be fine as well, but if you can answer them quickly that would be great.
Senator Eaton: Just to follow up on Senator Smith's question, where does productivity fit in to your new realignment? We're always getting blasted about Canada's low productivity. Where does that figure into your equation when you're assessing a business as to whether you give it research or consultation or money? Where does that come into it, or does it come into it at all?
Mr. Ciobanu: It certainly does come into the assessment. It's part of the work our field staff do with companies to identify the best ways of supporting the companies. Productivity can be in the manufacturing part of the company, but there is also an important part of productivity that's looked into in terms of internal processes, for example, the way the company does the marketing.
Senator Eaton: Do they help them buy machinery, for instance?
Mr. Ciobanu: We do not fund equipment and machinery, but we advise the companies on the best equipment and machinery to buy, if necessary. A lot of times it's only a matter of a second opinion on the layout of the plant, for example. Without major investment, there is a lot of productivity to be gained there, or a change in methods, improving the way that the warehouse works, or some pieces of software. There is a lot of low-hanging fruit that can increase a company's productivity overall.
Of course, if there is a matter of purchasing automation equipment, robotics or machinery, we often work with our colleagues at the BDC and they have different financial tools for this kind of acquisition.
Senator Eaton: Do I have another minute?
The Chair: Go ahead.
Senator Eaton: Mr. Piché, you said you had $15 million for the Youth Employment Strategy. How successful have you been in helping young people?
Mr. Piché: It's a fairly new program.
Mr. Ciobanu: If you will allow me, Michel, I will take this question. This is the first year that the Youth Employment Strategy was increased by $15 million. Up to this fiscal year, the Youth Employment Strategy was a $5-million program and the funds come from the Human Resources Development Department.
Senator Eaton: Do you go into universities? Do you pick them off the street? How does it work?
Mr. Ciobanu: The program is dedicated to helping companies acquire talents coming from colleges and universities.
Senator Eaton: So, an apprenticeship program?
Mr. Ciobanu: No, they are graduates from colleges and universities. We look to this program from the point of view of the company, where the company's needs are, and then we work with colleges and universities. They can find their own staff and we support them financially.
To give you an answer as to how successful this program is, because we always help companies hire these people in direct respect to their own needs and their future growth, the last numbers I have show that 78 per cent of young graduates we support under this program stay with the company, which is significant.
[Translation]
Senator Bellemare: Mr. Piché, I would have another brief question in the same vein.
Have the provinces that have labour and youth strategy programs objected to the youth employment program?
Mr. Ciobanu: I have not heard any objections from the regions, but I can tell you that we always work in cooperation with provincial programs in everything we do, including youth programs. There are some in some regions, especially in the maritime provinces.
Senator Bellemare: There are some in Quebec as well.
Mr. Ciobanu: We work in cooperation with them, and we try to offer a broader range of support to business, so that these programs are complementary rather than competitive.
Senator Bellemare: Mr. McGurk, I had asked a first question, but you did not have time to answer it. I would like to hear your reply.
Mr. Dufour: I am going to answer for my colleague. I think your question was about our contacts with CIDA and whether we work together.
Senator Bellemare: Yes, it was.
Mr. Dufour: If you look at our annual reports since 1971, since the very beginning of the IDRC, you will see that we have always worked very closely with CIDA and with the Department of Foreign Affairs, which is our department.
Recently, CIDA and the department were fused, and so coordination and contacts are just as intense and frequent as they were before. We did a lot of joint design and investments with CIDA. We each have our respective areas of expertise. The IDRC was much more involved in research and innovation, and CIDA in technical assistance and on-the-ground development, and so we had a lot of success over the years, such as our efforts to prevent and eliminate dengue fever, and chagas disease, among others, in certain areas of the world.
Currently, the IDRC manages fairly important programs through joint investment and joint management with its colleagues from the development wing of Foreign Affairs, Trade and Development Canada. For instance, there is the Food Security Research Fund, a $124 million fund which is in its second phase. There will be another five-year period of investment in agriculture. There is also a program on maternal health and the health of newborns that was launched recently. That is a joint investment program with the Department of Foreign Affairs and the Health Research Institutes of Canada. So, through our regional offices, regional directors have a large number of contacts with chefs de mission, ambassadors, and development advisers in the various embassies and high commissions of Canada.
In short, we do not work in isolation. We do not work in silos, and the IDRC tries to discharge its mandate well, and that is, of course, to be an instrument of Canadian foreign policy.
Senator Maltais: I will be brief. I looked at the areas in which you operate in Canada and I did not see nanotechnology. Does that interest you? Have you had any requests related to that new technology?
Mr. McGurk: Yes, we work in the fields of nanotechnology and biotechnology, especially in the development of food security and maternal and newborn health.
In connection with food security, I referred to one example of innovation where a natural product, hexanol, is used in the delivery of fruit and vegetables to the market. This is a nanotechnology that is used on fruit still on trees and also in the crates in the trucks, to ensure that fruit such as mangos in India and Sri Lanka, or peaches in Ontario, are fresh by the time they get to market.
Senator Maltais: You opened the door, earlier, when you talked about assisting aquaculture in certain countries. That is not your field, but your work consists in helping those countries to arrive at domestic consumption or exports with aquaculture.
If the products are exported to Canada, is there some type of monitoring, either by Health Canada or other bodies, to ensure that the products from the countries where you provided development aid are in compliance with Health Canada and Agriculture and Agri-Food Canada standards?
Mr. McGurk: Yes, of course. We help researchers in countries such as Sri Lanka, Indonesia or Senegal, so that they can prosper with small fisheries.
As for operations, all of the countries have national regulations, including Canada. That is not an element that we control. We are a research aid agency. The regulations that govern small businesses are not under our purview.
Mr. Piché: I would like to add an answer to your question. The NRCC has a research centre it operates jointly with the University of Alberta in Edmonton, and it focuses mainly on nanotechnology sciences. That centre has been in existence for a number of years. It works with people from the university and also from industry.
[English]
Senator Gerstein: I want to draw to the attention of the committee — and I say this as a compliment — that Mr. McGurk was somewhat understated and reserved in the recognition of Grand Challenges Canada on a global basis. It very ably chaired by Mr. Joseph Rotman and the CEO is Dr. Peter Singer. This entity is a jewel in Canada's support of global funding around the world. I know it had a great impact on the Gates Foundation and the approach they take to funding, and was very well recognized by then Secretary of State, Hillary Clinton.
Mr. McGurk: I was indeed understated. I was in Seattle two weeks ago with Grand Challenges Canada. I must say that they play both a foundational and a catalytic role in the family of Grand Challenges, which now includes Israel, Peru, South Africa and soon India and China.
The Chair: Who's recruiting these other nations into the Grand Challenges?
Mr. McGurk: They put together their own funding for their own Grand Challenges program in their respective countries with their own researchers. In fact, Grand Challenges Canada and the Development Innovation Fund, the consortium that runs Grand Challenges, have played a catalytic role in getting these countries to organize their funds and for us to co-fund with them.
The Chair: Is there an agreement among all members to exchange technology that might be developed?
Mr. McGurk: Not only do we exchange technology, but also funding. When we have pipelines of innovations, we fund each other's innovations. If Canada, through Grand Challenges Canada, cannot fund certain kinds of technologies, the U.S. or Israel may be interested in funding them; and there it is.
The Chair: We would want our report to reflect on this initiative and its success. Do you have anything in writing that you want to send to us that would help us to understand it better?
Mr. McGurk: A formative evaluation was done about 18 months ago and was shared with the minister about a year ago. A summative evaluation wrapping up the seven-year program is currently under design. We expect to have the results of that summative evaluation to present by the end of August 2015.
The Chair: Our report will be out before that, so we'll put a little teaser in our report to say what might be coming.
Senator Mockler: The NRC has 12 portfolios. Of those 12, what percentage of your nanotechnology research would be on agriculture and forestry? If you cannot provide that to me now, maybe we could have that information through the clerk of the committee.
Mr. Piché: Yes, this question will require a bit more research.
Senator Mockler: Related to that, of your researchers and/or the companies that are part of the NRC, what percentage of them works with the space laboratory when it comes to new products? You can also provide that information in writing later.
Mr. Piché: Are you referring to the Canadian Space Agency?
Senator Mockler: Yes.
Mr. Piché: I will research that question also. I can tell you that most of our work in the past was based on the Webb telescope and also other aspects; but I'll get back to you on that.
Senator Mockler: We're trying to find out if, eventually, as a comment, we might find a scientist who can invent and engineer the square tree for sawmills.
The Chair: Like the square potatoes for French fries, right?
Senator Wells: Does the NRC have any self-generated projects, or are they all client-driven?
Mr. Piché: We have self-generated projects that fall under the emerging technologies division. That division essentially looks at coming technologies or areas of interest to industry in Canada. Initially, they try to develop the basic building blocks of these new scientific areas so that we can see if there is an interest.
If I may, I'll give you an example. They are working in areas of quantum photonic sensing and security, and security materials technologies. These are very much state-of-the-art areas that haven't been clearly defined yet from an industrial perspective.
Senator Wells: Assuming some of the NRC-retained intellectual property has commercial application, what happens to it?
Mr. Piché: At this time, we use our inventory of intellectual properties as we negotiate collaborative agreements with clients. If required, we dig into our inventory of intellectual properties and use what's applicable. We also respond to requests from clients to license our technologies. It happens frequently where our clients will contact us to see about licensing some of our technologies. There are different avenues to access those intellectual properties for commercial purposes or as part of our strategic research with clients.
Senator Wells: Of course, I'd hate to see anything that has commercial application tucked inside some virtual warehouse that wouldn't be accessible to Canadian or other companies.
The Chair: Is it possible to do a database search? If I were to say that I'd like to start a new business, would it be possible to search what patents you might have that could help me to get going?
Mr. Piché: Internally, we have access to a database. From a client perspective, I'd have to get back to you as to how the process works.
The Chair: If you could, that would be helpful.
Thank you to the National Research Council and the International Development Research Centre. We very much appreciate the work you're doing and we thank you for being here to help us understand more about this important initiative in Canada.
This meeting is concluded, but we will start on the subject matter of Bill C-43 this afternoon in Room 160-S, 15 minutes after the Senate convenes. It will be our first meeting on the bill.
(The committee adjourned.)