Proceedings of the Standing Senate Committee on
National Finance
Issue 30 - Evidence - May 5, 2015
OTTAWA, Tuesday May 5, 2015
The Standing Senate Committee on National Finance met this day at 9:30 a. m. to consider the expenditures set out in the main estimates for the fiscal year ending March 31, 2016.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this morning we will continue our consideration of the Main Estimates for 2015- 16.
[English]
In our first hour we are pleased to welcome officials from Industry Canada. Appearing this morning are Mr. David Enns, Chief Financial Officer; Mr. Mitch Davies, Assistant Deputy Minister, Strategic Policy Sector; and Mr. Lawrence Hanson, Assistant Deputy Minister, Science and Innovation Sector.
As honourable senators will remember, back in February this year the committee heard from representatives of various economic development agencies. The one area that we were not able to hear from at that time was the Federal Economic Development Initiative for Northern Ontario, sometimes referred to as FedNor, which falls within Industry Canada's portfolio.
Accordingly, to round out our research in relation to these various regional development agencies, we are pleased to welcome FedNor here today. I believe, Mr. Enns, you have some brief introductory remarks and then we will proceed with the usual discussion following that. You have the floor, sir.
David Enns, Chief Financial Officer, Industry Canada: Good morning, everyone. Thank you for that welcome. As you mentioned, joining me today are my colleagues, Mitch Davies, from the Strategic Policy Sector; and Lawrence Hanson, Science and Innovation Sector. We are pleased to be here this morning to provide you with an overview of our Main Estimates for 2015-16.
Industry Canada's objective is to foster a growing, competitive, knowledge-based Canadian economy. To achieve this end, several priorities were outlined in the recently tabled Report on Plans and Priorities. Specifically these are: Auctioning spectrum in the 2,500-megahertz band to support increasing demand for new wireless technologies and services; collaborating with federal, provincial and territorial counterparts to reduce or eliminate barriers to the free movement of people, goods and services and investment within Canada; ensuring effective and efficient regulatory framework and sound digital infrastructure; aligning Canadian intellectual property laws with international administrative practices; implementing the science, technology and innovation strategy; extending and enhancing access to broadband services in the rural and northern communities throughout Canada through our Connecting Canadians program; supporting Canadian industry by helping attract and retain business research and manufacturing and increase participation in global value chains; maximize the industrial benefits arising from federal defence and major Coast Guard procurements; working collaboratively with partners to expand the BizPaL service; and continuing to improve the efficient and effective delivery of programs and operations.
[Translation]
Although these priorities were established prior to the last federal budget, they all remain on the priority work plan for the department this year. The amounts set out in the Main Estimates reflect these priorities as well as the department's ongoing activities in support of an innovative Canadian economy.
As you know, the Main Estimates reflect our spending authorities of $1.2 billion. Transfer payments represent 68 per cent of that total, 27 per cent is for operating and capital, and the remaining 5 per cent is for other statutory expenditures.
[English]
You will note in these estimates that there is an overall increase of $92.8 million compared to the 2014-15 Main Estimates. The majority of this increase relates to new funding stemming from Budget 2012. I will list a new initiatives: $79.3 million for the new Connecting Canadians program to extend and enhance access to high-speed broadband networks for up to an additional 280,000 Canadian households; $7.9 million for the Computers for Schools Program and its youth component, to provide refurbished computer equipment to learning organizations all across the country and to provide young Canadians with practical experience in the field of information and communications technology; $5 million to support the Institute for Quantum Computing's strategic plan to carry out and commercialize leading- edge research in quantum technologies; another $5 million to Mitacs to expand the support for industrial research and training of postdoctoral fellows; and $900,000 to help reduce barriers on internal trade and to make it easier for businesses to operate anywhere in the country.
[Translation]
Funding for three programs has also ended in 2014-15: for Canarie Inc., the Canadian Youth Business Foundation, and Technology Partnerships Canada. The end of this funding results in a total decrease of $36 million in these Main Estimates.
However, following Budget 2015 two weeks ago, funding for Canarie and the Canadian Youth Business Foundation, now known as the Futurpreneur, was renewed and Industry Canada will access these new funds during the year, through the next supplementary estimates exercise.
[English]
You will also note in these Main Estimates variations in other transfer payments as a result of changes in their approved cash flow requirements. For instance, there's an increase of $17 million under the technology demonstration program and $8.8 million under the strategic aerospace defence initiative for investments in projects in the aerospace industry, an increase of $8.9 million under the Canada Foundation for Innovation to support advanced research infrastructure; and a decrease of $7.9 million in funding to Genome Canada, an organization that invests in large-scale genomic research projects.
These are not decreases and increases per se but reflect the cash flow requirements of the organizations and this is normal in Industry Canada's estimates.
These Main Estimates also include $51 million for FedNor to promote economic development and diversification, job creation and sustainable self-reliant communities in northern Ontario. This is achieved by providing financial support through transfer payments to small- and medium-sized enterprises, not-for-profit organizations, official language minority communities, community development organizations and research institutions. These recipients in turn support community economic development, business growth and competitiveness and innovation. FedNor administers three programs: Northern Ontario Development program, the Community Futures program and the Economic Development Initiative of the Roadmap for Canada's Official Languages 2013-18.
In 2015, key FedNor initiatives include the community investment initiative for northern Ontario, the targeted manufacturing initiative for northern Ontario, private sector youth internships through Community Futures Development Corporations and investments in broadband deployment projects to address gaps in service. The department will assist in the development of Ring of Fire mineral deposits.
[Translation]
In sum, the changes you see between last year's Main Estimates for Industry Canada and this year's are largely due to increases and decreases in funding approved for our transfer payments in the form of grants and contributions. These fluctuations are completely normal for Industry Canada. In all other respect, the department's financial situation is stable.
[English]
This concludes my introductory remarks. My colleagues and I would be pleased to answer any questions you may have.
The Chair: Mr. Enns, thank you very much. Could I ask you to focus on the Northern Ontario FedNor development? Do they operate out of a separate office from Industry Canada or are they just a different desk within Industry Canada?
Mr. Enns: They form part of the department. They share the same programs, like Community Futures Development Corporation, like the other regional development agencies do, but it is a part of the department, a separate office within.
The Chair: If I went to Industry Canada would I be able to find FedNor?
Mr. Enns: If you went to Sudbury.
The Chair: That is what I was getting at. They have a separate operating office in Sudbury or is it Industry Canada in Sudbury?
Mr. Enns: It is an Industry Canada office, but it is FedNor activities that are housed there.
The Chair: As you have indicated, Community Futures is a national program.
Mr. Enns: Yes.
The Chair: And each of the development agencies cross Canada have a piece of that to operate?
Mr. Enns: Yes, each of them does, including FedNor.
The Chair: Is that the Economic Development Initiative of the Roadmap for Canada's Official Languages? Is that the same situation?
Mr. Enns: Yes.
Senator Eaton: Thank you for coming this morning. Interprovincial trade barriers are something that goes on and on. Is there a game plan or a strategy that will slowly knock down the obstacles?
Do you have plans to go to each province in turn? How are we finally going to rid ourselves of these barriers that really hurt Canadian inter-trade amongst provinces?
Mitch Davies, Assistant Deputy Minister, Strategic Policy Sector, Industry Canada: The government — Minister Moore — released, in August of 2014, a comprehensive plan to create one Canada, one economy.
Senator Eaton: Can you give us the steps of the plan?
Mr. Davies: The approach that was offered in the plan is twofold, one of which was a targeted approach to seek change in the areas where there were specific priorities that could be advanced, in particular apprenticeships in an area where there are challenges in terms of moving people that are in the trades and in their training phase across the country to create an 0-1 labour market. The other approach was a comprehensive renegotiation, modernization of the Agreement on Internal Trade. Last summer, the premiers, at the Council of the Federation, agreed and adopted the modernization of the internal trade agreement as the path forward, outlined a number of priorities and established a four-premier working group to advance the work.
Given the plan that was laid out and the position the minister has taken, he put in a considerable amount of effort going coast to coast, meeting with stakeholders, chambers of commerce, business associations over the last summer. There was quite a considerable amount of movement and advancement on the part of governments to get at this issue.
The key pivot that the minister referenced also is the trade agreement that Canada has established with Europe, in some areas creating benchmarks, for example, access to procurement opportunities from various agencies, Crown corporations in Canada, that need to be reflected in our own internal trade arrangements. In effect, no foreign jurisdiction or competitor would have better access to the Canadian market than we would to one another's markets, particularly in government procurement, for example. This work is actually well under way. Your question is well taken in that regard.
Senator Eaton: I hope you don't think I'm being rude, but we have been hearing about this for years. There hasn't been a game plan, perhaps. Have you established a deadline or objectives you must hit at a certain date? It is kind of shaming that we are now going into the TPP, the Trans-Pacific Partnership and yet don't have free trade amongst ourselves.
Mr. Davies: Again, your point is well taken, in particular around the urgency from a point of view of having a competitive platform in Canada for us to actually go global. The contest is not only a matter of competing among provinces to establish your enterprise but actually competing against the world.
The premiers, in the Council of Federation statement on modernizing the internal trade agreement, established March 2016 — so next spring — as the milestone to achieve a new agreement.
Senator Eaton: Perhaps next year, when you come back, that won't be amongst your priorities.
Mr. Davies: I would very much hope to be able to report back.
Senator Eaton: May I ask one more question?
The Chair: Absolutely.
We will look forward to your visit.
Senator Eaton: You are talking about military spinoffs in your speech. Is there a strategy to capitalize on:
[Translation]
To maximize the industrial benefits flowing from the purchase of military equipment and significant purchases by the Canadian Coast Guard.
[English]
Is it Mr. Hanson or Mr. Enns? Do we have a strategy in place, or what are the steps, for instance, to maximize? Can you take me through it?
Mr. Davies: This is a shared priority among Industry Canada, the Department of National Defence and Public Works and Government Services, all three of which have a role in procurement. There is a defence procurement strategy in the government, which, in fact, is aimed very much at maximizing the significant amount of procurement that will take place over the ensuing years to improve and increase indigenous technological capabilities, enhance the ability of Canadian companies to meet these needs and move up the value chain. In fact, there's been a reformulation of the industrial technology benefit strategy of the department, which will actually push to the front of making choices in terms of procurement the matter of what Canadian capabilities really develop via procurement. That is a very significant undertaking.
There was an announcement in Budget 2015 to support a defence analysis capability, to enhance that in our department, with new funding.
Senator Eaton: It is a wonderful answer, but say, for instance, that we put in an order to replace the CF-18s or anything — you can pick armoured vehicles. What is the first thing that happens? We're going to place armoured vehicles. How do you take the spin-off from the armoured vehicles or the CF-18s or the new planes, whatever it is? How do you actually put it into Canadian industries, or do Canadian industries come to you and say, "We're interested in bidding or learning?" How does it work?
Mr. Davies: Briefly, the key in this is, in fact, for the government to have put out a very clear plan for its forecast procurement over multiple years, and you would probably want to have officials from the Department of National Defence brief you in more detail on that. That's really the opportunity.
And providing more clarity over a number of years.
Senator Eaton: How do you benefit from it?
Mr. Davies: Industry Canada can take that information, a forward plan that is robust and clear, and then work on assessing where Canadian firms may have opportunity that exists or could be grown to then contribute, on a forward basis, to that overall strategy. Then, if you can find credible companies that have the ability to offer services to actually secure, or subcontract part of that procurement, that can then factor into the choice as to how one will go about a procurement plan. I'm oversimplifying. It is very complicated. There are a variety of trade-offs involved in terms of meeting capabilities, time, budget and so forth. Definitely, the intention is to deepen the Canadian participation, to expand it. Part of it has to do with having an overall forward plan. The other is the actual policy change to bring those decisions into the choice of how you are going to proceed in terms of procurement.
The Chair: In answer to a request for proposal on some procurement equipment, would we expect to see in the proposal industrial benefit proposals by the bidding company?
Mr. Davies: Definitely there would be an articulation of those. That would be part of the overall value proposition that they would be presenting, and they'd have to obviously take that well into account. In fact, the department has been everywhere across the country, over the last number of months, to roll out this new strategy plan, engage with industry. There's a lot of interest around it, and it also extends broadly into our knowledge institutions, our research institutions, really to create an overall mobilization around this in Canada to be able to maximize benefit in the country as we procure a significant amount of new military hardware.
If there were further detailed questions, I would probably have colleagues from the department, the industry sector, address them, and I would also recommend, in terms of the procurement plan, having folks from the Department of National Defence to address that if you had more interest.
The Chair: Thank you. We may take you up on that another time.
Senator L. Smith: Just to follow up on the FedNor issue — the Northern Ontario Development Program, the Community Futures Program, the Federal Economic Development Initiative for Northern Ontario — the amount is $50 million, broken into three categories. Is there a focus on the Aboriginal community in that? We recognize that the budget for Aboriginal or Indian Affairs — whatever the new name is; I don't think they've adopted the new name yet — is massive. But as to Industry Canada's implication — and I understand the broadband and the distribution of technology in the North — can you give us specific examples of what you are trying to achieve, aside from sort of general Northern Ontario Development Program community and economic development? I would like to hear of specific initiatives that will actually help the community. Is $50 million enough? Northern Ontario is a fairly large area, with minerals and opportunity. Is that enough? Can you give us specifics, just examples of specifics in each of these categories?
Mr. Davies: I will take the question on the specifics, particularly in dealing with First Nations communities, and I will link it to Ring of Fire, which I think is quite important. It was in David's opening comments.
Minister Rickford and Minister Gravel, from the Province of Ontario, announced, a number of months ago, a project with First Nations in the Ring of Fire Area, which will be led by Webequie First Nation, conceived and delivered by them. The project will provide over $700,000, combined between the province and the federal government, to do a very comprehensive east-west corridor study on transportation, broadband and power linkage that can be brought up from Pickle Lake, which is where the provincial highway system ends, into these communities which now are only served by air and winter roads.
This is the sort of project that on the ground, in the communities, is really relevant to their prospects from a huge mineral development in their midst, actually bringing community economic development into their midst to connect them to the rest of the world and to transportation and infrastructure.
For me that's a perfect example of the kind of intervention. It's not really a matter of a lot of money, but money sensibly spent with the right partner, with partnership of the province, which was well recognized as an important step to facilitating the vision for community economic development that the Ring of Fire, in the order of a $50-billion mineral opportunity over many years, can bring to those communities.
There will be other examples through the NODP that FedNor has had long-standing, where we had many of those projects of that nature in First Nations communities and it's actually a priority for activity.
I'll just mention that we have 93 people who work in FedNor. They're proudly part of Industry Canada but they're also proudly FedNor. Across northern Ontario they would be known for being FedNor, they're in the communities and we have an office in Thunder Bay. That would be the office that principally works with the communities in the Ring of Fire area. They're really there on the front line and in the community. That's the way the program has run and continues to run.
As far as the amount of money, I wouldn't get into a question of policy. I think this is always a matter of priority and debate. We take it as our job to take the funds that the government provides and do the absolute best to maximize them by picking the best projects, bringing them forward to the minister for endorsement and building results in that way.
Senator L. Smith: You have given us an example. Over time, in your plans and priorities, and your review of results, what has actually been delivered versus what is supposed to be delivered? Do you have a balance sheet of what you've actually accomplished, and can you give us concrete examples of what you have accomplished with this FedNor plan?
How many people would be affected by that? You can get lost in the numbers when what you want to see is the implications on people.
Mr. Davies: To be complete, I would really like to have the opportunity to provide, particularly in the area of First Nations, information on where our programming over the last number of years has funded projects and the results achieved. In fact, for every project, I've got a scorecard of what was intended and what was achieved.
For example, we have First Nations projects to bring broadband or bring wireless capability into their communities. In one case, in northern Ontario, to get a wireless phone signal, FedNor partly funded a project in cooperation with Aboriginal First Nation business. Those are actual people that are actually able to get a service that wouldn't have otherwise been in their hands if they didn't have the support from the program. I could give a number of examples of that nature, either in First Nations or in the other communities in northern Ontario, but I would probably be more complete if I could file that after with the committee, if that would be satisfactory.
Senator L. Smith: Could we ask for that?
Mr. Davies: Yes.
Senator L. Smith: No matter what government is in place, there's always complaints that not enough is being done. Being able to show results and numbers would be very helpful in terms of discourse.
The Chair: If you could provide that fairly expeditiously; I expect our report will be coming out within the month.
Mr. Davies: Certainly.
The Chair: Thank you, and to clarify the record, could you explain the meaning of the term "Ring of Fire"?
Mr. Davies: I wasn't there when the term was coined, but a very smart developer decided to brand the major chromite find in northern Ontario the "Ring of Fire," which is well known and perhaps still spreading out. Obviously this find rivals the find in Sudbury, where you have a large amount of minerals, over $50 billion in estimated value in chromite, as well as nickel and other minerals in that find. It is in a remote area of the northern part of the province, with no access at this time to the kind of infrastructure and support facilities needed, but there are companies that have claims there that have the intention in years to come to bring those claims to production.
Again, it's in a part of the province where there are many First Nations communities that see this as an opportunity to advance their economic development.
FedNor is not, with its budget, moving forward a $50-million mining project. That will be financed by the private sector, by private companies, but what we can do is help create a maximum opportunity for the communities to get a lift, have opportunities for jobs for their citizens and improvements in their quality of life as a consequence.
The Chair: Thank you. That's very helpful.
[Translation]
Senator Rivard: I have two questions for you. The Computers for Schools Program and its youth component have a budget of $8 million to provide refurbished computer equipment to youth organizations.
I understand that education is the responsibility of the provinces. Is this $8 million transferred to the provinces that have asked to receive computers? Are we talking about learning institutions that are the responsibility of the federal government? It is one or the other. It is either a transfer to the provinces or appropriations that are paid directly to the centre, because this involves education.
[English]
Lawrence Hanson, Assistant Deputy Minister, Science and Innovation Sector, Industry Canada: Computers for Schools is delivered largely through contribution agreements with third party organizations involved in refurbishing and distributing the computers. Generally speaking, it's an actual formal agreement with provincial and territorial governments.
[Translation]
Senator Rivard: Thank you. Following a study carried out by a Senate committee — I believe it was either the Standing Senate Committee on National Finance or the Standing Senate Committee on Banking and Commerce — we understood that there were price gaps between the United States and Canada. You made reference to delivering on commitments. Obviously, there were many proposals.
Which of them have already been implemented and which are about to be? As for the price gap between Canadian cars that are sold for more in Canada than in the United States, where are we in terms of fulfilment of these commitments?
[English]
Mr. Davies: On this matter, the government tabled in the house a price transparency bill to deliver on its commitment to address unjustified or unexplained price differences between Canada and the U.S. It is proposed in that bill that the Commissioner of Competition be provided with additional authorities to conduct in-depth studies. In fact, I know in its work the Senate identified a number of areas and products — car tires being one that I recall. Again, the commissioner, under that new authority, would have the ability to go in and examine records, make findings and make that public in the course of the investigation, and would have legal authority to do so.
That bill is on the books for debate and will move through the system in due course.
[Translation]
Senator Hervieux-Payette: I note that operations represent $300 million out of a $1.1 billion budget. Is it standard operating procedure within all of the departments that 30 per cent of operating expenses serve to implement programs and policies?
I find that is a very big difference. Could you give us more detail?
[English]
Mr. Enns: Included in operating expenditures are a number of different things. There are the costs of running the department, including its HR and legal services, that kind of thing. Industry Canada has a significant regulatory mandate — Measurement Canada — which monitors weights and measures, for example, the price of gas at the pump, that kind of thing. That is direct program delivery paid out of operating dollars. It's a combination of those kinds of things that take up a large chunk of our activities related to that regulatory function, those are expressed in terms of operating dollars.
[Translation]
Senator Hervieux-Payette: First of all, I would like to have more details on the number of people responsible for the enforcement of regulations and on those in charge of managing departmental programs.
Second, can you explain what the heading "Marketplace Competition Investments, $47 million" means? I have no idea what program that involves. Is it to promote exports? How is this money spent? Is it spent in our embassies using commercial funds? It is in the 2015-16 Main Estimates, $47,089,170, under the heading "Marketplace Competition Investments."
[English]
Mr. Enns: That is under our program alignment architecture. "Marketplace competition investments" refers to the work of the Competition Bureau and our investment review function. The Competition Bureau undertakes studies to ensure fair competitive practices among Canadian businesses and investment review is responsible for assessing and reviewing potential takeovers. My colleague can tell you more about that in a moment. Those two activities are encompassed in the program that's titled "Marketplace Competition and Investments." You'll notice that the funding level is relatively stable in that area.
[Translation]
Senator Hervieux-Payette: I see that, in the $79 million envelope allocated for high-speed broadband service, there are 290,000 people in northern Ontario. Is this strictly for the budget allocated for broadening access to high-speed signals? Is it only for Ontario? There are other areas in Canada, such as the Gaspé in Quebec, and even not far from Montreal, where high-speed Internet is not yet available. Is that all we are spending in 2015-16 for all of Canada? Will the entire amount be allocated for northern Ontario, and is there more funding for other regions?
[English]
Mr. Davies: The reference is to the Connecting Canadians program and funding for a national initiative to extend broadband service to Canadians in the order of well over 200,000 additional households to get to 5 megabits per second, which is the band width you need to use the popular services that people are now calling for and to extend that out to rural areas across the country, including Quebec, northern Ontario, northern B.C., northern Manitoba, all provinces. At the moment, that has received applications from across the country. The department will be assessing these applications and there will be announcements forthcoming to demonstrate the commitment to improve broadband coverage across Canada.
Northern Ontario is included in that, but that is a national program that will cover all Canadians.
[Translation]
Senator Hervieux-Payette: So the amount would be $79 million for all of Canada, or $79 million for Ontario?
[English]
Mr. Davies: That would be a national number and only one multi-year program as well. That's only the funding forecast for the upcoming fiscal year but it's actually a multi-year initiative.
[Translation]
Senator Hervieux-Payette: It is therefore in the form of a subsidy to companies so they can achieve a reasonable price for consumers. Industry Canada will not be installing the system; it would be companies already working in the area?
[English]
Mr. Davies: It is to provide support for the private sector to extend its service. The evaluation, which is complex, has defined a point at which our subsidy can maximize the overall coverage and offer services to customers at a reasonable price that the market will carry and the most attractive options from the proposals that we receive. It's like a request for proposals with different offers to serve Canada and then we have to make a choice as to which of those proposals will maximize the dollars of the program to get the most coverage at a reasonable price for Canadians. It will ultimately be the private sector that delivers the service and rolls out the infrastructure, and so forth.
[Translation]
Senator Hervieux-Payette: What will the percentage be once the coverage exists in Canada for all Canadians?
[English]
Mr. Davies: I will allow my colleagues to correct me. I believe we're seeking 98 per cent at 5 megabits per second at the end of this program.
Mr. Enns: To clarify as well, this is being provided to private sector partners in the form of a contribution, not a grant. That permits a set condition —
[Translation]
Senator Hervieux-Payette: I understood that. That is why I was asking if private companies are the ones who are in charge of the installation, because it costs more than the normal price.
[English]
The Chair: Senator Smith (Saurel) has a point of clarification.
Senator L. Smith: On one of your priorities, Mr. Enns, our esteemed chair led a study addressing the Canada-U.S. price gap. Two things came out of it: reductions on tariffs for children's wear and sporting goods. You have in your priorities "delivering on consumer commitments in Budget 2014 related to addressing the Canada-U.S. price gap and implementing made in Canada consumer awareness program."
Could you comment on what you've been able to achieve since your first steps were taken? Where do you go now in terms of trying to reduce more tariffs? Have you targeted specific areas? What are they? When can we expect results?
Mr. Davies: With respect to tariffs, that's the responsibility of the Department of Finance. If there was a question or follow-up, I know there were budget measures taken with respect to tariffs on a number of goods, I think those that were of interest, but that would be something you would want to seek further detail on from Finance.
On the overall issue, though, the department was well engaged with Justice in preparing the bill to move forward the commitment on price transparency, the price transparency act that I mentioned previously. It is really to put the Commissioner of Competition in the position to get at the heart of the matter, to report and give account to Canadians as well as find a way to balance this with the ability to have due process for going into companies, looking at their records and coming up with the facts if there are unjustified price differences between Canada and the United States. That legislation is now before the house.
Senator L. Smith: There are a lot of priorities here. What would your top three priorities be? There are probably 12, just so you can clarify the focus of Industry. I know there has been a big push with the broadband sale, et cetera, which is well documented publicly, but could you give us a summary of your top three priorities.
Mr. Enns: It's difficult to pick three. Perhaps I can pick more like four or five. I think what we're talking about is internal trade, which we've mentioned before, and Connecting Canadians. We also provide support to the automotive industry. There is a push on for the space program, which is delivered primarily through the Canadian Space Agency. The fifth one that I might mention is spectrum and the auctions that are upcoming.
Senator L. Smith: Would the auctions upcoming be fifth or would they be first in terms of prioritizing, just to see where the focus is because this is a lot of money. There are a lot of people involved. There is a huge administrative cost in delivering the services. In your mind, is the auction number one or is it number four or five?
Mr. Enns: That's a difficult question to answer. They're all important. I would hesitate to pick between which one is more important than the other.
The mandate of the department is very broad. We have a policy mandate, the regulatory mandate. It's because of those differences that it's difficult to say that one specific area is more important than another. These programs and services are delivered by different areas of the department and they take charge of them. We're managing a suite or portfolio of priorities in that manner.
Senator L. Smith: I guess another way of asking the question is what do you think is the biggest need of our country in terms of the services that you offer or administer? That ties into your prioritization. I'm just trying to get a sense of the thought process that goes on. I'm an outsider. I'm not trying to pin you down, but trying to see strategically how it works inside your operations.
Mr. Davies: At that level, the very top level, the most significant issue is Canada's long-term competitiveness and to position the economy to be able to maintain a standard of living that Canadians enjoy, which goes back to the issues that have been explored in some depth in terms of our productivity and our ability to incent research and development in the country to extend the knowledge economy to be able to put our Canadian businesses in a position where they are offering services that have high value in the world, that can lead to further exports and wealth for Canada.
We'll grow by our ability to grow our share of world markets and to participate in world markets. Our department has that domestic focus on the state of competitiveness inside of Canada and the positioning of our firms where they need to be globally. You'll see that expressed. For example, the focus on the auto industry definitely has that at its heart. The focus on space. In large measure, there are a number of very important space firms that are exporting as well. That's definitely at its heart. The minister's DC 150 strategy to essentially drive improvement and growth in the digital economy, which is really the underpinning of future growth if you look across all industries. I'd even link it in some ways to the automotive industry which is being disrupted now by the advance of information technology. The attributes of the car that are important and relevant are based on computer technology and information technology. In fact, we're talking about cars that will drive themselves and be automated, cars more of a service. All that sort of singular focus on the digital world is a significant part of the department's work.
David has enumerated the priorities that the minister has expressed and how he's directed the department. We have to have enough bandwidth to do more than just one at a time, I would say as well.
Senator L. Smith: Thank you for distinguishing between a vision statement, which you did earlier in your dissertation, and some of the operational issues. I was looking at operational issues because I saw these as priorities from an operational perspective, not from a visionary perspective, just to understand that. My experience in business is that, when I see more than four or five major operational priorities, I get a little nervous because I wonder what the focus is.
One of the issues we have in Canada, of course, is the whole issue of people in the North, especially our Aboriginal communities. You talked about the Ring of Fire and access to it. It's great to talk about $50 billion worth of opportunity, but, if you can't extract it from the earth, it's just a pipe dream. So the issue is: How can we focus on some of the priorities to execute? That's what I'm trying to understand.
[Translation]
Senator Bellemare: I am very happy that you are with us today to discuss these important issues. I will continue along the same lines as my predecessor, Senator Smith.
In terms of the means, what are you going to do to optimize your expenditures? As my colleagues have stated here, a significant percentage of your expenditures are due to operations. You have provided a reply; you said that you have objectives and an interesting theoretical vision. In your highlights, you say that your mandates are based on three strategic objectives: an effective and competitive Canadian market; progress in the areas of science, technology, knowledge and innovation to strengthen the economy; and competitive businesses and communities. Unfortunately, that all appears quite abstract. It is interesting, and the words are nice.
Moreover, examining the estimates shows that a significant portion of expenditures are earmarked for development agencies across the country which are, clearly, linked to Industry Canada.
My specific question is this: Do you have links with all of the Canadian development agencies? How do you establish these links to strengthen your action locally in terms of productivity and economic development of the regions? Do they each work in isolation or is there a joint action plan with the territorial agencies?
[English]
Mr. Davies: Thank you for the question. The department, through FedNor, which reports directly to us on northern Ontario, would work in cooperation with all the other regional development agencies on a number of matters, one of the more important of which is to adopt common systems so that they're not duplicating the work to actually deliver their core mandate. For example, the information technology to run a grants and contributions program, track expenditures, collect applications is something they work on in common. The also work when we evaluate programs such as the Community Futures Program, which operates across the country on common evaluation processes, to know how the program is working in northern Ontario, in Quebec, in Western Canada and so forth and to be able to compare those results and take action inside their own operation.
There was a time when, in the structure of departments, the agencies were part of the portfolio of Industry Canada, but that was changed, which has us in the circumstance now where, in legal terms, the Federal Economic Development Initiative for Northern Ontario is part of the department. In the department, the deputy minister is our deputy minister and reports to Minister Rickford in that regard. There's also FedDev Ontario for Southern Ontario, which reports to Minister Goodyear and has its own deputy minister.
As a matter of day-to-day practice, all the regional development agencies would work together on many common projects because they deliver similar programs but, in fact, each addresses different regional realities. That's where the common plan has some reconciliation with what's needed in northern Ontario with the vast territory, very diverse, many communities, smaller sized municipalities. It's very different from the kind of development activities in Southern Ontario, where FedDev is funding knowledge institutions, where you have denser city areas and so forth. You can't operate the same strategy in each part of the country because you have to tailor it to the clusters and the economy and that kind of thing.
[Translation]
Senator Bellemare: What is the total budget for Industry Canada? If we add up the budget for all of the agencies and Industry Canada, how many billions of dollars does that make in total?
[English]
Mr. Enns: The budget for the department is $1.2 billion.
[Translation]
Senator Bellemare: Yes, but what is the total linked to the economic development mission, which includes all of the agencies? I did not add them up, maybe you have an idea? Each regional agency has a budget.
[English]
Mr. Davies: You can't find that number from our estimates. If you've taken testimony from the other regional development agencies, you'd have to add up their main estimates and then add in the component from FedNor to get the total. Apologies, but I don't know offhand the total amount. That's something that could be asked for.
The Chair: You're saying all of the development agencies do not report through Industry Canada?
Mr. Davies: That's exactly right.
Mr. Enns: Only FedNor.
[Translation]
Senator Bellemare: If I may, I have another question, Mr. Chair. Canada is facing several economic development problems — because the country is so vast and the problems are so different — but one of the major problems is entrepreneurship. You said that Canarie had been renewed, but how do you think you will fulfil your mission of encouraging entrepreneurship, support among young people and immigrants, among others? What is your plan?
[English]
Mr. Enns: Maybe I'll start, and my colleagues can perhaps chime in at the appropriate times. We do have a number of programs and activities under way to support exactly what you're saying. I mentioned the new Futurpreneur Program. This was formerly the Canadian Youth Business Foundation. This is a not-for-profit organization that provides support for young people who are seeking to start their own businesses. They offer services to them, including mentoring to help them learn how to start up a business. We have invested $75.5 million, since 2002, in that, and, as I mentioned, this was just renewed in Budget 2015. We'll be seeking the resources in the subsequent supplementary estimates.
[Translation]
Senator Bellemare: Based on my understanding, the main way of encouraging entrepreneurship in Canada is through mentoring programs, is it not?
[English]
Mr. Enns: I think that's one of the tools that we use.
[Translation]
Senator Bellemare: Is it the main tool?
[English]
Mr. Davies: Mr. Chair, I would add to my colleague's answer. It's in the Industry portfolio, but I would reference specifically the Business Development Bank of Canada with respect to entrepreneurship. It's actually a bank for entrepreneurs.
They provide the kind of funding essential for entrepreneurs. They approach projects of higher risk that may not be taken on by a bank, and that's exactly where the BDC places its investments. BDC does a good job and is actually a profitable business working in that area. That's a large-scale effort that's available across Canada. That extends beyond the Department of Industry proper, but it's part of our overall portfolio and I think it would be a key part of what I referenced for you in terms of the government's support for entrepreneurship.
I think you would also extend that into the National Research Council which, again, is not as our department but part of our portfolio with the IRAP program, which is well known and provides that kind of start-up, non-diluted type of capital that can get an entrepreneur up and running and also support them. Industrial technology advisers at NRC across the country are well known and have been referenced by many important entrepreneurs. Mihal Lazaridis, in one of his books about the start of RIM, talked about interaction with NRC IRAP advisers as being key in the early days of that firm. That is a significant program that has been enhanced over a number of budgets to offer more services to those start-ups that are trying something more high risk and need help in terms of linkages and access to knowledge networks that are key to get them up and running. I would raise the BDC and IRAP as being very significant investments in terms of entrepreneurship.
[Translation]
Senator Bellemare: Thank you; I will have a second question.
[English]
Mr. Hanson: I would add an additional one to my colleagues, which is the Canada Accelerator Incubator Program, which is part of the Venture Capital Action Fund. This now, over a total of two budgets, is $100 million. This is designed to provide support to accelerators and incubators across the country to provide research and technical services and advice on access to capital financing. So far 15 contribution agreements have been signed across the country for the implementation of that program.
[Translation]
Senator Chaput: I have some supplementary questions. My first deals with your Connecting Canadians program, especially as regards extending high speed Internet access to all Canadians.
In answer to the question put my colleague Senator Hervieux-Payette, you said that there are currently, or there will be, 98 per cent of Canadian households that will be connected. Is that scheduled for now or next year? Does that include the 280,000 households that you set as an objective?
[English]
Mr. Davies: The answer is yes, the 98 per cent is directly related to the 280,000 households number. That's the number of households to extend the service at 5 megabits per second that would allow us to achieve a 98 per cent goal.
[Translation]
Senator Chaput: In terms of the timeframe, is that for next year, 2016?
[English]
Mr. Davies: I will ask my colleagues if we can find that. I don't run the program directly.
Mr. Enns: It would be a two-year program.
[Translation]
Senator Chaput: How many Canadian households does the 2 per cent of households that will not or are not connected represent? Is that for all of Canada?
I am asking the question, because I live in a rural region of Manitoba, and I do not always have access to high speed Internet at home. How many Canadian households are included in that 2 per cent who will not have access to high speed Internet?
[English]
Mr. Davies: I'd probably want to provide more precise details to the distribution of where would that last 2 per cent lie in the country. I'll give you a general answer. I think you would find that to achieve the 100 per cent, which might be the implication — what would it take to get to 100 per cent — you would be talking about a significant investment, likely also in the Far North of Canada where you'd have communities with 100 households and so on. To actually connect them to high speed per household is a very high cost.
[Translation]
Senator Chaput: Because there is no critical mass or too few people.
[English]
Mr. Davies: It's that issue of having enough critical mass or changes in technology, which is the other thing in this regard. Technology does evolve and change. There are people who speak about extending satellites in lower orbit across the whole earth to be able to have Internet everywhere. The Internet entrepreneurs in the United States have that vision in mind. At some point perhaps the technology cost will no longer be the main constraint, but to lay fibre optics in the Far North of Canada is an expensive proposition.
[Translation]
Senator Chaput: That is very important, especially for our entrepreneurs. I have a second question.
[English]
Mr. Enns: I misspoke before. It's not two years; it's over five years that the funding is provided for connecting Canadians.
[Translation]
Senator Chaput: So it is for 2020.
Senator Hervieux-Payette: So it is not $79 million. It will be $79 million divided by 5.
Senator Chaput: That is not very much, is it?
[English]
Mr. Enns: It's $305 million over five years.
[Translation]
Senator Chaput: The Computers for Schools Program — my colleague already asked a question about it — has already existed for several years. At the time, computers were put in community spaces so the public could use them. You used public libraries linked to schools or cultural communities who had space in a school.
Is that still the case? Can community groups have access to free computers that they can make available to the public?
[English]
Mr. Enns: If you will have noticed in Budget 2015, there is a commitment to expand the Computers for Schools program to provide refurbished equipment for broader uses to non-profit organizations such as those that support low-income Canadians, seniors, that kind of thing.
The former CAP program, Community Access Program, has ended. The portion that remains is the youth internship portion, which provided opportunities for young people to acquire skills in manipulating the equipment and getting technical experience. That remains but the actual Community Access Program would have been "sunseted."
[Translation]
Senator Chaput: I will not ask my last question, given the time.
The Chair: On the second round please?
Senator Chaput: Okay.
The Chair: We do not have much time left.
[English]
Senator Gerstein: My first question, Mr. Enns, is a technical question. What is the difference between a grant and a contribution?
Mr. Enns: A grant is provided automatically to anyone who is eligible. The eligibility criteria are established up front. It would be a grant, for example, to upgrade your furnace. If you meet the eligibility requirement, that's made available to you. Essentially, there are no conditions attached. A contribution is negotiated with the recipient and there are conditions attached to it. They are given the money to achieve a joint negotiated result with us and the recipient.
Senator Gerstein: Thank you for that clarification.
Mr. Chair, in relation to my second question, I want to disclose to the committee and the panel beforehand that I was a director for the Canadian Institute for Advanced Research, to which I'm going to direct my question.
The institute, as you well know, was founded by Dr. Fraser Mustard a number of years ago. The group might be interested to know that he was succeeded by our current Governor General, David Johnston, who was succeeded by Chaviva Hošek, whom many of you may know, and is currently under the brilliant leadership of Dr. Alan Bernstein.
This being an institution recognized on a global basis, I see that there are contributions being made of $5 million a year. This book indicates starting in 2014 through 2016. I assume that the $5 million is part of a commitment, which may be over five years, 10 years, I don't know. If that is the case, what year are we in of the grants or the contributions being made?
Mr. Hanson: I believe there are two years remaining in the existing —
Senator Gerstein: Two years after what is indicated here?
Mr. Hanson: Yes. I think their funding currently goes until 2017.
Senator Wallace: Mr. Davies, I'd like to come back to your comments about the efforts of Industry Canada to eliminate or reduce interprovincial trade barriers. Would you agree that for the most part those barriers exist at the provincial level and fall within provincial authority as opposed to federal authority?
Mr. Davies: It remains a national project in that, if one looks at a definition which is keeping a product, person or service moving from one jurisdiction to another, you have to look at all the activities of government that may impose some regulation or standard that could apply and that could make it more difficult to scale up your operation and move product across jurisdictions. It has been flagged in a number of areas that there might be areas in terms of food products. For example, meat processing standards, where you have standards at the federal level and standards at the provincial level which may well involve restriction in terms of movement of products.
I don't think it is exclusively a matter of provincial and territorial interest; it is also a matter where the federal government has to play a role. Under the previous budget, we launched a project that is now under way with Ernst & Young to create an internal trade barriers index for the country which is a significant effort to shine a light on or highlight the differences between jurisdictions, at what level and to what extent. Actually, it is a way to weight and score where we are. This is modelled on a project of the OECD services to establish the trade restrictive index that they adopted in Europe. That work is under way with Ernst & Young. They're doing a detailed review of different standards and regulations, jurisdiction to jurisdiction, and comparing to find the differences and the effect they might have on trade. That work is a significant part of the strategy and effort that was mentioned earlier in terms of advancing it, which is really just getting the information you need to figure out where you need to go to fix the issue. That is, not simply operate on the basis of an anecdote but have facts you can take to a regulator to pursue a solution.
Senator Wallace: It makes sense to take that approach, but would you not agree, though, that when it really comes down to it, it is the provinces that are going to have to have an attitudinal change and have less of a protectionist attitude as to what goes on within their own boundaries? Isn't that the most significant issue? I realize there are issues where it falls into a joint jurisdiction, but isn't going to involve an attitudinal change?
I say that coming from a Maritime province. We have three very small provinces. At times it seems we spend more time competing with each other and protecting ourselves from each other instead of working cooperatively to the extent I think necessary to move the region forward. Would you not agree that that's a major barrier? If there's anything your department can do to reduce or eliminate barriers, would it be to change that provincial protectionist attitude?
Mr. Davies: Again, from the department's and the officials point of view of what we can do, the kind of project I described on the index is really key because if you shine light on these things, add the evidence and make it public to get the debate going, you are actually contributing to changing the mindset ultimately.
You need to be able to make a competing offer to actually point out where these rigidities and resistance points are between provinces and get a sense of well, what are we losing? Often the part that isn't well represented is what is losing out, which can often be the small entrepreneur who doesn't get going and who doesn't scale up their business and expand their trade across the country.
It is heartening that there is the sense of movement and discussion at the provincial and territorial level independent of our project to offer the overall project to renew the internal trade agreement. For example, Nova Scotia and New Brunswick have recently announced — and this is something they can probably speak to in more depth — an initiative between them to look at differences in regulations, and so forth, and how they can improve the competitiveness of their economy.
It is a matter of encouraging and supporting these efforts. Seeing them move forward, advance and accelerate is in our interest. That is why the minister put out the policy paper and raised this issue. He has put a lot of time into it. He's been quite public on it. He has testified to it. He has spoken to it across the country. He held events in Atlantic Canada as part of his summer tour last year to raise the profile of the issue, and in many ways I think that was well received in the business community. We have a lot of support to continue pressing on it and to get that mindset change, which is something we can all do with a dose of at the end of the day.
Senator Wallace: Yes. It requires a mindset change.
The Chair: Unfortunately, we have run out of time. I have a number of senators who wish to proceed to a second round but we don't have the time. However, the fact that there is that list is an indication of the interest that this Senate committee has in the work that you are doing, Mr. Enns, Mr. Davies and Mr. Hanson, particularly explaining to us the role of FedNor within Industry Canada. That will help round out our report in relation to regional development agencies.
I have no doubt we will be seeing you again. We appreciate you taking the time to be with us here today.
[Translation]
We will continue our consideration of the Main Estimates for the fiscal year ending March 31, 2016.
[English]
From Social Sciences and Humanities Research Council of Canada, we are pleased to welcome Mr. Brent Herbert- Copley, Executive Vice President; from Natural Sciences and Engineering Research Council of Canada, we are pleased to welcome Alfred Tsang, Chief Financial Officer and Vice President, Common Administrative Services Directorate. We will about that directorate, the two agencies. And we have Janet Walden, Chief Operating Officer.
Ms. Walden, I will start with you and then go to Mr. Brent Herbert-Copley following that. Then we will get into a discussion.
Janet Walden, Chief Operating Officer, Natural Sciences and Engineering Research Council of Canada: Good morning, and thank you, Mr. Chair, for your very warm welcome. Thank you also to the members of the committee for the invitation to speak before you today.
I am pleased to be here to present information on the Main Estimates and to, of course, answer any questions that you may have.
[Translation]
The Natural Sciences and Engineering Research Council of Canada's vision is to help make Canada a country of discoverers and innovators for the benefit of all Canadians. To achieve this vision, NSERC invests in people, discovery and innovation to increase Canada's scientific and technological capabilities for the benefit of all Canadians.
We invest in people by supporting postsecondary students and postdoctoral fellows in their advanced studies.
We promote discovery by funding research conducted by postsecondary professors; and we foster innovation by encouraging Canadian companies to participate and invest in postsecondary research and training.
[English]
These investments are backed by a highly robust and reliable system of peer review that ensures that only the very best research proposals are supported.
This volunteer peer review system has kept NSERC's operating budget at a lean 4.7 per cent. For example, slightly over 10,000 volunteer experts provided reviews in 2014-15 alone.
[Translation]
The mission of NSERC focuses on discovery and innovation. These two concepts are deeply connected with discovery research, providing the foundation on which innovation builds. It is impossible to unleash game-changing technologies and to achieve innovation without having a firm footing in discovery.
[English]
We have created a flexible and integrated national suite of programs that stimulate and enable creative discoveries and drive innovation through productive industry-partnered research. Through these industry-academic partnerships, researchers gain an understanding of industry needs and challenges and students gain access to important experiential learning. Companies have the chance to access specialized expertise and new ideas as well as potential new employees, factors important to their global competitiveness.
Enabling companies, researchers and students to work together in this shared innovation space, NSERC adds value and reduces the overall risks of innovation. NSERC maximizes the impact of its investments in research and training.
[Translation]
NSERC funding supports the research of 11,300 professors working across all fields of science and engineering. We mobilize an incredibly productive, world-class workforce that consistently delivers discoveries.
In addition, our investments support over 30,000 students and trainees at the undergraduate, graduate and postgraduate levels — our next generation of discoverers and innovators.
And in 2014-2015, NSERC's partnership programs attracted over 3,000 companies to partner with this postsecondary research resource. This is what the 2015-16 Main Estimates enable NSERC to deliver.
[English]
In accordance with the Main Estimates, you will see that NSERC's spending is aligned with each of the points that I have just touched on — the ability to invest in discovery research, the ability to invest in partnership-building opportunities and the ability to invest in human capital to make the entire process work.
In its 2015-16 Main Estimates, NSERC anticipates total budgetary expenditures of approximately $1.1 billion, which require approval by Parliament. There is also $5.2 million representing statutory forecasts that do not require additional approval and are provided for information.
Our operating expenditures remained stable from 2013-14 to 2014-15, with only a slight increase in 2014-15 as the result of new funding announced in Budget 2014.
The variance between the 2015-16 Main Estimates and the 2014-15 Main Estimates demonstrates a net increase of $23.4 million or 2.2 per cent in planned spending.
To draw your attention to expenditures by strategic outcome and program area, I would highlight the following figures: For discovery, we have allocated $403.2 million in support in 2015-16. The increase between 2014-15 and 2015- 16 Main Estimates is due to the new funding for advanced research announced in Budget 2014.
For innovation through our research partnerships, we have allocated $371.9 million in support. This amount is essentially stable from 2013-14 through to 2015-16.
For people, we have allocated $287.2 million. The increase between 2014-15 and 2015-16 Main Estimates is due to the allocation of some of the new funding provided to NSERC in Budget 2014 and the allocation within the Canada Excellence Research Chairs.
For internal services, we have allocated $24.1 million. I would like to stress here that spending on internal services has remained stable at just 2.2 per cent of our total budget allocation, despite an increase in the amount of grants managed by the council.
As NSERC's Chief Operating Officer, I am fully confident in the ability of this agency to meet our goal of helping Canada to become a country of discoverers and innovators for the benefit of all Canadians and continuing to deliver on our mission. Thank you.
Brent Herbert-Copley, Executive Vice President, Social Sciences and Humanities Research Council of Canada: Good morning. Mr. Chair, on behalf of the Social Sciences and Humanities Research Council of Canada, let me thank you for this opportunity to appear before you today with respect to the 2014-15 Main Estimates and the Report on Plans and Priorities.
[Translation]
Let me open with a brief introduction to the Social Sciences and Humanities Research Council, the SSHRC, and its key role within Canada's knowledge economy and innovation agenda. Created by an act of Parliament in 1977, the SSHRC is one of Canada's, and the world's, leading research funding bodies. Through its comprehensive, streamlined programming, SSHRC funds Canada's best, brightest and most promising students, researchers and research institutions.
[English]
It won't surprise you, I'm sure, to know that I believe that social sciences and humanities are critical to Canada's economic and social success.
Our research community comprises 23,300 full-time university professors, 19,400 doctoral students and 42,000 masters students, not counting the hundreds of thousands of undergraduate and diploma students engaged in research at universities, colleges and polytechnic institutions across the country.
These individuals contribute to Canada's success not only with their own cutting-edge research but also by providing skills that the country needs, in innovative thinking, policy formulation, critical analysis, complex decision- making and in all forms of creative exploration.
As we at SSRHC reach the final stages of a three-year strategic plan, in 2015-16 we will be continuing to work on some of our priority initiatives.
[Translation]
SSHRC is further expanding its leadership role as it takes on the management of the $1.5 billion Canada First Research Excellence Fund, which the Prime Minister launched in December 2014. Our first awards will likely be announced this summer.
[English]
SSRHC will also be continuing to work closely with the other federal research funders to ensure that Canada has the kind of robust digital infrastructure necessary to maximize the benefits of publicly funded research. This includes implementing policies on open access and on research data management, improving processes for more efficient program delivery and promoting talent development and knowledge mobilization to help Canada meet the challenges that lie ahead.
[Translation]
I would now like to turn to some of the highlights from the Main Estimates with a focus on year-over-year changes.
[English]
In our 2015-16 Main Estimates SSRHC anticipates total budgetary expenditures of $717.1 million. Overall our operating expenditures have remained stable from 2013-14 to 2014-15. The variance between the 2015-16 Main Estimates and those from 2014-15 demonstrate a net increase of $25.3 million or 3.7 per cent in planned spending.
[Translation]
This primarily reflects the following increases.
[English]
First, an increase of $9 million for the Research Support Fund to ensure that federally funded research projects are conducted in world-class facilities with the best equipment and administrative support available. That was announced in Budget 2014.
[Translation]
An increase of $7 million in the Grants and Scholarships program to support advanced research in the social sciences and humanities — Budget 2014.
[English]
An increase of $5 million for a pilot program to support social innovation research at colleges and polytechnics is also from Budget 2014.
[Translation]
An increase of $4 million for the Centres of Excellence for Commercialization and Research, a tri-agency initiative, to create a more effective and efficient way to identify commercialization opportunities.
[English]
More detailed information on the agency's spending plans can be found in the Report on Plans and Priorities and these priorities align with the federal government's outcome area — an innovative and knowledge-based economy.
I hope this short presentation demonstrates how SSRHC continues to meet the high standards of excellence that researchers and Canadians expect from us in terms of efficiency, accountability and transparency.
[Translation]
SSHRC-funded research plays a vital economic role, translating knowledge into new and productive solutions, establishing pathways for the commercialization of invention and encouraging an innovation-friendly culture to drive enterprise.
[English]
The work we support in social sciences and humanities has never been more valuable or needed, whether that work leads to insights into economic, demographic and social trends in our society, whether it offers a better understanding of our history or engages in production and analysis of the various forms of human expression.
Over the coming years, our priorities at SSRHC are threefold: First, to enhance accessibility for researchers and students to SSRHC programs and processes in terms of that user experience of dealing with us as a granting agency; second, to expand funding opportunities for researchers, particularly through leveraging new partnerships, both domestically and internationally; and finally to help ensure effective funding pathways for the full range of innovative research that SSRHC funds, both discipline-based but also interdisciplinary research.
[Translation]
Thank you for the opportunity to speak before you today. I welcome any questions the committee may have. Thank you.
[English]
The Chair: Mr. Herbert-Copley, I have one point of clarification. You indicated in your remarks an increase of $4 million for centres of excellence for commercialization and research being a tri-agency initiative. Can you tell us the names of the three agencies?
Mr. Herbert-Copley: The three granting councils are the Social Sciences and Humanities Research Council of Canada, our colleagues at the Natural Sciences and Engineering Research Council of Canada and the Canadian Institutes of Health Research. That program is actually managed by a secretariat that is based at NSERC, but all three agencies contribute to the costs.
The Chair: You are indicating that the Social Sciences and Humanities Research Council of Canada is managing the $4 million but at NSERC we find the secretariat for this group?
Mr. Herbert-Copley: That's right. In the case of the various tri-council programs there are also the Canada Research Chairs, the Vanier and Banting scholarships. Each secretariat is based at one of the granting councils but funds flow through the budgets of all three. In our case we make contributions through our budget to some of the projects that are then managed by the secretariat for these; in this case the Centres of Excellence for Commercialization and Research.
The Chair: Is $4 million the total amount for this particular initiative or is that one third of it?
Mr. Herbert-Copley: That's a portion of it. That's SSRHC's contribution to that.
The Chair: Would there be more?
Mr. Herbert-Copley: There would be more.
The Chair: Understood. Honourable senators should understand your relationship with the National Research Council, each of your agencies, if any.
Mr. Herbert-Copley: Janet could talk a little bit here. She has a closer relationship.
Ms. Walden: In 1978, the Natural Sciences and Engineering Research Council of Canada was part of the National Research Council. It broke apart in 1978 because there was a view that supporting internal research and supporting external research could result in a conflict of interest. Therefore, since 1978, the Natural Sciences and Engineering Research Council of Canada has been a separate departmental corporation of the federal government.
We of course work closely with the National Research Council and more recently with the mandate of the National Research Council to launch, for example, a concierge service. NSERC is working closely with that because of the resource that we provide through the access to the post-secondary research community, as well as the number of company partners that we're working with.
We are working with them closely on the concierge service. We're also looking at and have done historically an aligning of priorities in terms of research because, again, the resources within the National Research Council, the science and engineering resources, the equipment, et cetera, is very complementary to what we find in our universities and colleges. Having them work together is only going to be an advantage for Canada.
The Chair: Did you have anything to add to that?
Mr. Herbert-Copley: No, thank you.
The Chair: Mr. Tsang, you can add something too if you wish. We appreciate your comments on that background.
[Translation]
Senator Hervieux-Payette: No one here will deny the fact that you do excellent work. The only thing here that is not excellent is the fact that you do not have enough money, a situation for which you are not to blame.
How does Canada compare to other OECD countries with regard to patents filed after this kind of research? What would the number or percentage be? I find it depressing that smaller countries like Israel produce more patents.
The other issue is the percentage of your budget. I would therefore like to come back to the sum that is allocated to you and your partners. For example, what would the percentage of the national budget be compared to the situation in America and in Germany, two countries with a brilliant record with regard to research, and obviously, export and international trade? What percentage do they spend compared to what we spend here in Canada? You do good work, but if we want to be on the same playing field as those countries, by how much should we increase the research budget?
Ms. Walden: It is not easy to answer that question. First of all, regarding the issue of patents, given that we have a different economy, it is difficult to compare ourselves to other countries. Our economy is generally based on natural resources of course, though we also have communications and IT systems. That being said, Canada's economy is mostly reliant on natural resources. This is not the case for Israel, for example.
Also, patents are not a good metric. One could have patents and never use them. As an example, in the field of defence and for other reasons, we may keep patents. The most significant metric would be the use of the aforementioned patents.
[English]
Do we have an innovation gap? Yes, we do. One only has to look at the Conference Board, the Council of Canadian Academies and note that our industry is a little slower at picking up on some of the new innovations. From that perspective, the poll by our industry is something that we are still lacking.
[Translation]
Even if we do compare American and German budgets with regard to research and researchers, we must bear in mind that every country has a different system. For example researchers in Canada have access to research subsidies. There are not very big, but they do support research programs for at least five years.
What is more, research funds in Canada do not cover researchers' salaries. The funds are solely allocated to direct research and direct costs linked to the research. In the United States, one must pay a third of the salary during summer, for example, and research funds are used to pay such sums. It is therefore difficult to compare systems from different countries.
Mr. Herbert-Copley: I share my colleague's view. With regard to patents, there are fewer patents that are created as a result of social sciences research. On the other hand, there are no doubt research-based companies that have been created by professors and their colleagues. That is another way to transfer knowledge to the market.
[English]
I would just add that gross expenditure on research and development is lower in Canada than in some of our competitor countries. I think a lot of the studies indicate that the big gap is not so much around university-based research but around the innovation end of the spectrum.
Ms. Walden: If I could add one further comment, we have more start-ups than you'll see in the U.S. or Germany but fewer patents, partly because of the structure of our own economy.
[Translation]
Senator Hervieux-Payette: I had hoped for a better answer. Could you continue regarding the history of the private sector and its role in innovation? At the end of the day, if there is no private sector to follow through with your investments, not much will have been done. What measures do you take to make sure that there is a follow-through and that research does in fact lead to business opportunities?
Ms. Walden: A third of our budget, $370 million, is allocated to support research involving companies and researchers in universities.
[English]
This sort of relationship does two things. One, as I said, it strengthens the understanding in the research community and helps to make the problems they're addressing more relevant to business, but it also helps business by augmenting the experience base, as well as the expertise base within our industry sector. By stimulating these kinds of partnerships, we also stimulate industry to look at the future as opposed to the next quarter and to invest in its future.
Again, our challenge is with an economy based heavily on small business. It's difficult for small business to move outside of looking at the next quarter or looking at the next round of paying their staff. We've implemented, through our partnership strategy, a series of grant types that make it easy for small business to tap into the expertise in our universities and colleges through a quick turnaround, low administrative burden type of grant as soon as we connect the two. We do a lot of events through our regional offices that help to connect our researchers with the more local business community as well. We're trying to open doors to increase the connection between our academics and students who are generating these ideas and the future employers in the business community. Obviously, as you know, it is the companies that will create the wealth that will allow our economy to afford the research that we're undertaking.
Senator Eaton: I'm glad my colleague asked that question because on the forestry committee we kept hearing about the black hole between university innovation and industry getting a product to market.
You say there is a strategy to deal with that black hole. Is that right?
Ms. Walden: There are many strategies trying to deal with that black hole.
Senator Eaton: I'll give you a black hole that you might consider. Senator Mockler chaired a very interesting study on the revitalization of the forestry industry. One of the things we heard over and over again for a year is that building codes have not kept up with the development of forestry, but more interestingly, all the major universities — and this is to do with your chairs — such as the University of Toronto, UBC and the University of Alberta do not study the use of wooden construction in their engineering faculties. The concrete industry and the steel industry give the students free seminars on how to use their product, but if you look at architecture at U of T, no chair in this country studies the use of wooden construction. Yet other countries, like Norway and England, are building 20-storey buildings out of wood. Senator Mockler and I have been trying to encourage chairs of various universities to deal with construction in wood because the wood and forestry industry is a huge industry in Canada.
Do faculties have to come to you or do you look at industry sometimes and say "You know what? We need this for the automobile industry or perhaps the pharma industry needs more innovation in antibiotics." Do you look? Are you proactive? Or do you wait for people to apply to you?
Ms. Walden: There are a number of factors here. First on the forestry side, we support five networks.
Senator Eaton: Do any deal with construction in wood?
Ms. Walden: We work closely with FP Innovations and under FP Innovations is the wood products centre. Again, we're working with them. Forestry has a lot of different facets, everything from forest management to the final products coming out in wood products. We are working with them.
Generally speaking, though, we do take a lead in terms of proactively identifying larger areas. However, our research funding is all based on national competition, so it is going to be the top research that succeeds. Within that, a percentage of our budget is in strategic partnerships, which means that it is very much aligned with the new strategy for science, technology and innovation. Those areas are where we are aligned. We also take direction, of course, from federal budgets. In federal Budget 2008, we were asked to put money into fisheries, forestry, manufacturing and automotive. We did invest there, which resulted in the creation of the five networks we have under the forestry umbrella right now. The goal there was essentially not to continue to have dedicated funding on a long term but to bring the research effort into alignment between the industry sector and the researchers and to up the game there. Once the game or the capacity has been increased, then to put it back into a competitive mode because we do have programs that are aligning, as I said earlier, business with the research community where business invests.
We are demand-driven, but demand-driven in certain areas where we identify those target areas.
The Chair: We have 20 minutes left in this session, and we have four senators. That's five minutes for questions and answers for each senator.
[Translation]
Senator Bellemare: Thank you for being here today. This subject is particularly important to me because I used to teach at the university level. I know the Social Sciences and Humanities Research Council well. How are subsidies and allocations for research divided amongst the provinces and amongst different universities? I want to know if the situation is better in certain provinces compared to others. We know that fund allocation is based on a project's merit. Can we help certain universities that obtain fewer allocations so that this research can have positive economic repercussions on their region? I would like to hear from you both on the matter to know whether the allocations are done on a per capita basis or if there are significant differences between universities, and therefore different provinces.
Mr. Herbert-Copley: I could start. For our part, the allocation of subsidies varies with the number and size of each region's institutions. The success rate varies very little. For any institution, there could be an increase or a decrease from one year to the next.
It is clear that smaller institutions sometimes find it harder to make their mark. However, the means do exist to help them. We have staff that can communicate with universities and explain the process to them. We have a representative assigned to each university who helps communicate information on our competitions in order to develop the skills of the establishment. That is, in general, the situation. Differences do exist between provinces. This is more or less due to the number and size of institutions.
Senator Bellemare: Has this data been released publicly?
Mr. Herbert-Copley: Yes. You can find all this information on our website.
Senator Bellemare: You wanted to add something?
Ms. Walden: The same is true for NSERC. All of the information can be found on our website. We have noted an infinitesimal difference between small universities and bigger ones.
We have just launched a pilot project that seeks to increase subsidies to small universities. We also offer a program for colleges throughout the country. It is easy to forge ties between communities and postsecondary institutions. Moncton is one of the five regional offices that serve the whole country.
[English]
We have a good rapport with our researchers at a very local level and with the communities at a local level.
[Translation]
Senator Bellemare: My last question is on basic research compared to business research. My question is mainly for Ms. Walden. You stated that approximatively $70 million is allocated to business research, which represents approximatively 7 per cent of your total budget. Is this right? What is your budget for basic research?
The Chair: Can you answer briefly?
Ms. Walden: It is $370,000.
Senator Bellemare: So $370,000 is allocated to industrial research.
Ms. Walden: It is not industrial. All NSERC funding goes to research at Canada's universities and colleges. It is not within industry. That reduces the risks for industry because we have a sponsorship system.
Senator Chaput: An answer was given to my first question, which was asked in part by Senator Eaton. I wanted to understand the relationship between the direction of research and real needs, in other words who makes the decision. We do not have time to go into detail. I will therefore ask my second question. How many research councils like yours are there in Canada? Do these research councils work together? For example, what are the exchanges or the partnerships between the two councils that you represent today? Do you work together or in silos?
Mr. Herbert-Copley: For the second question, yes. Our two councils, as well as the Canadian Institutes of Health Research and provincial institutions, work together. We work closely with federal institutions. We manage some of these programs together. We are also regularly in touch with the presidents, the executive and employees. We work together very closely.
Senator Chaput: Professors and students work for you. When it comes time to develop eligibility criteria, do you work together or are your decisions based on your own criteria?
Mr. Herbert-Copley: Criteria vary from one council to another, but in most cases it is the evaluation by an expert in that field of research that is the main factor in the decision process.
Senator Mockler: Ms. Walden, you say that our economy is based on natural resources.
[English]
Certainly, when I look at the millions of jobs created in the agricultural sector and when we look at the many millions of jobs created from coast to coast, south to north, in forestry, it's certainly who we are as Canadians.
I want to follow up on the questions by Senator Eaton and Senator Chaput.
When I look at FPInnovations, I and many Canadians believe that we do not do enough research when it comes to using wood in non-residential construction. By accident, when I was at the airport last week, I bumped into employees of FPInnovations, and I asked them how their budgets were doing and where we were going when we talk about chairs in sensitizing the construction industry to use more wood. There is one section of Canada — not to say both ends of Canada — and we've seen it with the oval building at the last Olympics, where we used it in this immense structure. It represents what Canada is about and the new products we can use in pre-engineered and engineered wood.
What percentage of your budget is linked directly to FPInnovations? Have you seen any changes? I know there is one MLB, which stands for Maritime Lumber Bureau. The CEO, Ms. Diana Blenkhorn, informed the committee that in Atlantic Canada since 2008 and in the last construction year, we have increased, depending on the province, by 15 to 20 per cent in using more wood in non-residential construction.
Do you feel that we have enough chairs when we look at helping Canadians use more wood in non-residential construction?
Second, can you provide us with a snapshot of agriculture research done vis-à-vis helping identify new products coming from innovation in the agricultural industry that we can use in the aerospace and automobile industry? Maybe you could provide the chair with additional information on exactly what has happened in the last four years when we had those challenges in forestry and agriculture.
Ms. Walden: First of all, on the use of wood in the construction industry, of course, there are the standards committees. That takes a lot of background work. We're upstream from that. The reality is that the products we're developing within our universities and colleges still have to go through that system of validation to ensure that the safety is there in the longer term. It's an area outside of the purview of our colleges and universities. They do the earlier background work.
Our investments in forestry, pulp and paper and wood products have increased from around $19 million to almost $27 million in the last seven years, so we've seen quite a significant increase in our budgets.
There are the traditional uses of wood but there are also the non-traditional uses of wood, where we are also investing in things like nanocrystal and cellulose. This is where the potential for new materials comes in, and areas like aerospace and automotive may use those new materials in their lighter weight construction.
Was there more that you were asking about?
Senator Mockler: You have touched on it. To implement or take advantage of those emerging markets, also in the textile industry with cellulose, is it possible for you to provide the committee with specific information? I believe that we do not have enough research done. FPInnovations is a leader and I accept that, but from your sector, I think that we should have more research done on those emerging markets coming from wood products from the forestry and agricultural industries. In order to make that happen, we need additional chairs.
Ms. Walden: We could certainly provide you with some examples where we're supporting work in those areas. We can follow up with a submission on that.
The Chair: Please send it to our clerk. That will get circulated to all members, and we're all interested in this. In fact, we'd like to have it so we can put it in our report.
Ms. Walden: Again, the mandate is on the upstream side of this, and we have Agriculture Canada and Natural Resources Canada who will be pursuing where those emerging markets are in greater depth than we will.
The Chair: Thank you.
[Translation]
Senator Rivard: Thanks to the Canada First Fund, how many researchers have been attracted and retained? What is the rate of retention? Do 99 per cent of people stay?
Mr. Herbert-Copley: Regarding the Canada First Fund, the first competition was just launched.
Senator Rivard: How many researchers do you hope to attract?
Mr. Herbert-Copley: I do not know how many researchers, but the total amount that will be allocated in the first competition will be $300 million, and proposals have already been received. About 36 proposals have been received. These requests will be evaluated in June of this year. We are looking forward to the results of this process.
Senator Rivard: I have a general question. In institutes like yours, when researchers leave the institution, is the main reason more often that they are going to the private sector or that they are starting their own company to develop the fruits of their research? The second possibility is that they are leaving the country for better conditions, and the third reason, generally, is retirement or death. Can we say that the majority of researchers who leave to go work in the private sector to create — In Quebec City, for example, the National Optics Institute has researchers. The main reason they lose a researcher is a departure to a private company to commercially develop their research. Can we say, generally speaking, that people leave to join the private sector and develop the results of their research?
Mr. Herbert-Copley: That is a very good question. Personally, I do not have any data on the reasons why researchers would leave an institution or leave the country. What I could say, however, is that we have, here in Canada, programs that are geared — I am going to speak English, sorry.
[English]
We have programs in Canada that are geared specifically toward attracting highly qualified experts to Canada. The Canada Research Chairs Program and, certainly, the Canada Excellence Research Chairs have been attracting major international research superstars to our country. Then, at the level of students, there are the Vanier and Banting scholarships, which are in part geared toward encouraging international students to come and undertake either their doctoral or post-doctoral research in the country. All of those are good news in terms of being able to attract people.
There is no doubt that research is a very international business, so scholars do move. They move to pursue opportunities. They move to other countries. We think we can create the conditions where those highly qualified people will also want to come to this country, both Canadians who have spent time abroad but also people from other regions of this country.
The Chair: I would like to make a comment. I find an awful lot of these programs have similar sounding names, and I confuse the names. I'm thinking if I were industry and looking for a program that might help me advance my work, who helps with the directory of all these different programs that sound very similar to one another?
Ms. Walden: What an amazing segue into some of the changes we're making.
Certainly, since the Jenkins report looked at exactly that question, namely, that for business facing programs there is a huge number. We've got them across our regional development agencies. We have them in our own organizations. The concierge service that the NSERC has been mandated to run is going to be one of the mechanisms that small businesses will be directed to, which will then direct them out to the one related to their problem.
As of April 1, we have revamped our website completely, so we don't expect our business side to understand our programs, rather simply to determine, am I looking for a connection? Am I looking for collaboration? What am I looking for? Then our program staff will guide them quickly to what is the best opportunity for them.
The Chair: I am looking at your Report on Plans and Priorities at page 16 for social sciences, humanities and research, the Canada First Research Excellence Fund. Is the Canada First Defence Strategy tied to defence, or was it just a convenient choice of "Canada First" at the front end of this?
Mr. Herbert-Copley: No, there's no connection. We're using the same words in slightly different orders. You will find "Canada" and "research" and "excellence" in a lot of the titles.
The Chair: So this is a program that was launched in December of last year. You don't know how much money you are going to need, but you will be back to see us for supplementary estimates on this particular program sometime this year. Is this going to impact the balancing of the budget? How much are you looking for?
Mr. Herbert-Copley: That's true, we will be back. The announcement that was made in the budget committed to $1.5 billion over a 10-year period. That would start with $50 million in fiscal year 2015-16. That wasn't included in the mains because of the timing of the competitive process. Alfred could speak more to that if you wanted to know the details.
The Chair: In the Main Estimates, Mr. Herbert-Copley, at page 2-256, for the Centre of Excellence in Communications Research, which is something different from what we have been looking at, you had a significantly less amount allocated in the fiscal year that just ended, but you bounced back up again. In 2013-14 you were at $6 million. Then you went down to less than $2 million and now you are back up to $6 million. What was going on there?
Mr. Herbert-Copley: This is the program that I mentioned, one of these tri-agency programs that are managed jointly among the three councils. There are a number of the Centres of Excellence for Commercialization and Research that are funded. Our contributions vary from year to year, depending on which particular centres are successful in the competition.
The Chair: Last year there was not too much success, but you are anticipating quite a bit more next year. Is that right?
Mr. Herbert-Copley: Yes. The results of the competition —
The Chair: In terms of competitions.
Mr. Herbert-Copley: That's right.
The Chair: That's the way I would read that. Okay. Under "grants," the Research Support Fund is about half and then all the rest are down here.
What is included in the Research Support Fund? Is that the main fund that we would be expecting you to help industry with?
Mr. Herbert-Copley: The Research Support Fund was formerly known as the indirect costs of research program. It was recently renamed.
This is the means by which the federal government contributes to some of the indirect costs associated with federally funded research. It is allocated in relation to the total amount of funding that each institution receives through the competitive grant processes through each of the granting councils. They then receive an amount for the indirect cost. That covers things like libraries, research offices, intellectual property and research facilities of various kinds. It is to make sure, again, that there's that research environment at the institutional level to allow the projects to be successful.
The Chair: It's a pretty significant amount of your total granting portion.
Mr. Herbert-Copley: Yes. We administer that on behalf of all three of the granting agencies. That's why it is such a large percentage of our budget.
The Chair: There was another program that I think Ms. Walden mentioned, and that was also indirect costs to make these state-of-the-art labs. That would be an indirect cost. Are you familiar with that particular program?
Ms. Walden: There's only the one indirect cost program, which is a tri-agency program.
The Chair: That's the one we just looked at?
Ms. Walden: Yes.
The Chair: Okay. I thought I had seen another one, but I could be mistaken. Unfortunately, I don't have time to look for it now.
Ms. Walden: If you have further questions, we're available.
The Chair: That's good to know. You never know when we might ask you to help us out again, either in writing or having you appear here.
Ms. Walden: Of course.
The Chair: We find it easier to delve into questions when you are here, and we appreciate you taking the time to be with us.
Ms. Walden: Thank you.
The Chair: The meeting is now concluded.
(The committee adjourned.)