Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue 3 - Evidence - Meeting of January 31, 2008
OTTAWA, Thursday, January 31, 2008
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 10:47 a.m. to examine issues relating to the federal government's new Science and Technology (S&T) Strategy: Mobilizing Science and Technology to Canada's Advantage.
Senator Art Eggleton (Chair) in the chair.
[Translation]
The Chair: Good morning and welcome to these hearings of the Standing Senate Committee on Social Affairs, Science and Technology. Today's meeting is the second at which we will examine issues relating to the government's science and technology strategy.
[English]
Science research and development underpin Canada's position in the knowledge economy where strength depends on capacity to innovate and to stay ahead of the technological curve. Over the past decade, federal government policies have aimed to foster world-class research programs in universities and research institutes and to encourage industrial investment in research and development. The 2007 strategy document, Mobilizing Science and Technology to Canada's Advantage reiterates these goals. It is it that document that we have before us at these two meetings.
I should like to inform members of the committee that beyond the witnesses that are appearing before the committee, we received some written submissions from the following organizations: Genome Canada, the Association of Canadian Academic Healthcare Organizations and the Canadian Federation for the Humanities and Social Sciences. Those are being distributed to you in English and French. If we receive any more submissions, we will do the same.
From our first panel we have Jean-Claude Gavrel, Associate Vice-President for the Networks of Centres of Excellence. The NCE program supports research networks linking researchers across Canada, including such high profile networks as ArcticNet and the Stem Cell Network. Dr. Pierre Coulombe is President of the National Research Council, a long-established institution in this country that consists of some 20 research institutes located across the country with 4,000 employees and over 1,000 guest workers performing research in a range of scientific disciplines.
[Translation]
Jean-Claude Gavrel, Associate Vice-President, Networks of Centres of Excellence: Mr Chair, let me begin by thanking you for this opportunity to speak to you about the Networks of Centers of Excellence program and our role within the government's science and technology strategy.
As you know, the prime minister launched the science and technology strategy in May 2007. The strategy is intended to guide the government's science and technology policies and decision-making.
A primary goal of the strategy is to encourage private sector investment in research and development (R&D) and advanced technologies.
My presentation will begin with an overview of the Networks of Centres of Excellence (NCE) program's mandate and history. I will then discuss how the NCEs are helping Canada gain the people, knowledge and entrepreneurial advantages it needs to thrive in the global economy, as stated in the science and technology strategy. I will also describe the expanded mandate of the NCE program, which includes the launch of three major new initiatives this year. And finally, I will summarize how the program embodies the four core principles outlined in the science and technology strategy: excellence, priorities, partnerships and accountability.
[English]
The Networks of Centres of Excellence program was launched in 1989 to mobilize research excellence for the benefit of all Canadians by bringing together partners from the academic, private, public and not-for-profit sectors. We have a partnership between Industry Canada and the three federal granting agencies: the Natural Sciences and Engineering Research Council, the Social Sciences and Humanities Research Council and the Canadian Institutes of Health Research.
The program currently funds 20 networks across the country. They operate in the areas of health, advanced technologies, the environment and natural resources, and engineering and manufacturing. These networks were selected over the years through both open and targeted competitions. The committee members have been provided with a complete list and description of all the current networks.
From the start, the NCE program has been about harnessing the collective brain power, economic clout and drive of the private and academic sectors. The networks have proven that they can take bright ideas and leverage the support of their partners to turn them into products, therapies, technologies and policies that benefit all Canadians.
[Translation]
The NCE program has considerable national and international scope. In 2006-2007, more than 2000 Canadian organizations were partners in the program, including universities, hospitals, companies and federal and provincial government departments and agencies. Of that number, nearly 700 partners were from the private sector. In the same years, the networks also reported partnerships with over 400 foreign organizations from 38 countries in all sectors.
Last year, the NCEs' nearly 1,600 affiliated researchers and 5,000 highly qualified personnel increased Canada's knowledge advantage by exploring solutions to some of our more pressing issues. More than 4,000 reference publications were produced as a result of their work.
The NCEs are also stimulating greater private sector investment in research, science and technology. In a typical seven-year cycle, the networks secure partner cash and in-kind investments of close to $500 million.
In 2006-2007, the networks filed well over 100 patents and licenses for new products, therapies and technologies. Since 1997, the networks have launched more than 80 spinoff companies, helping to give Canada a distinct entrepreneurial advantage.
[English]
Finally, the networks enhance Canada's people advantage by attracting and retaining highly qualified knowledge workers. The high level of involvement by the private sector provides training and employment opportunities for Canada's best and brightest students in the natural sciences, social sciences, engineering and health sciences. In 2006- 07, the 20 networks were providing approximately 5,000 highly qualified people, HQPs, with multidisciplinary and multi-sectoral training. About 84 per cent of network research trainees go on to find jobs in their sectors. This track record has earned the NCE program a key place in the government's Science and Technology Strategy.
Since Budget 2007, the government has announced nearly $250 million in new funding to expand the NCE mandate. Thanks to this new funding, the program now includes three major new components: the Centres of Excellence in Commercialization and Research, CECR; the Business-led NCEs; and a national industrial research and development internship program.
[Translation]
The CECR program's goal is to create world-class centers that will advance research and commercialization of technologies, products and services. Centers will be created in the priority areas identified in the science and technology strategy, namely health, information and communications technologies, the environment, and natural resources and energy.
The program will support the operating and commercialization costs of the centres. Research and infrastructure costs are expected to come out of existing federal or other programs, such as those administered by the Canada Foundation for Innovation and the granting agencies.
The first competition was for $165 million and was launched on June 26, 2007. The response from the community was overwhelmingly positive: 110 eligible letters of intent were received for the first phase of the competition. Twenty- five applicants were invited to submit full proposals, and we expect to announce the successful centers very shortly.
[English]
The $46-million competition for the business-led Networks of Centres of Excellence was launched in November. The goal is to create between four and five new networks in strategic areas where Canada is positioned to become a global leader. These networks will differ from the NCEs in that they will be led by the private sector and will be designed to respond to specific research priorities established and shared by specific industry sectors. The call for letters of intent closed just yesterday, and we look forward to reporting on the initial results in the coming weeks.
The industrial research and development internship program was inspired by a highly successful model developed by the MITACS NCE, our own mathematics network. The objective is to provide the private sector with access to the skills and talents of bright Canadian graduate and postgraduate students, while giving students the opportunity to conduct cutting-edge research in a business environment. The competition was launched in December. When running at full capacity, it is expected that this program will match up to 1,000 interns annually with private sector sponsors.
As you can see, the NCE program is already positioned as a leading instrument for advancing the government's science and technology strategy. The values under which we have always operated are in line with the four main principles outlined in the strategy.
[Translation]
First, we believe in excellence. Whether they are being set up for the first time, are undergoing a mid-term review or are applying for a second seven-year cycle of funding, all the networks undergo an extensive international peer review process. The reviewers will not hesitate to terminate funding to a network if it is felt that it is not meeting the program's standards of excellence.
[English]
Excellence can also be used to describe the network leaders. Our scientific directors are internationally recognized experts, pioneers, visionaries and giants in their fields. They are rewarded regularly with the highest national and international scientific and humanitarian honours. In the past year alone, two of our scientific directors were inducted to the Order of Canada.
[Translation]
Partnership is another key principle of the government's science and technology strategy. As we have demonstrated, the networks have always been about partnership. It is the cornerstone upon which they are built.
[English]
The science and technology strategy is also driven by priorities and focus. The roster of networks has always shown a healthy balance between building on our research strengths through open competitions and more targeted choices that arise from specific government priorities, such as genomics, Arctic sovereignty, prion disease, the automotive sector and water. The NCE competition, which we expect to launch in the coming weeks, will be in the government's current priority areas.
[Translation]
Finally, the science and technology strategy emphasizes accountability. As I mentioned, the networks are regularly reviewed on their performance and how well they are meeting their stated targets and objectives. In addition, they must file annual reports detailing their expenses and projects.
[English]
The program undergoes a complete evaluation every five years to ensure that we are providing the Canadian taxpayer with value for money. These evaluations have always been positive, and previous Auditor General reports cited the NCE as an example of a well-run program.
[Translation]
In closing, let me add that the NCE program is proud to be a part of the government's vision for a stronger Canada through research excellence. We look forward to the exciting new challenges that lie ahead and we are confident in our ability to help Canada become a powerhouse in the global knowledge market.
Dr. Pierre Coulombe, President, National Research Council Canada: Mr Chair, members of the committee, thank you for giving me this opportunity to describe to you the National Research Council Canada's activities that relate to the federal policy on science and technology.
[English]
For over 90 years, the National Research Council has successfully played a leadership role in providing scientific knowledge and innovation, meeting the constantly changing needs of Canadians.
[Translation]
The NRC has an exceptional record in scientific excellence and technological research.
[English]
The NRC's outstanding record has led to a long list of contributions, including environmentally-friendly plastics, 3- D laser scanners and advance fingerprinting technologies, as well the heart pacemaker and synthetic meningitis C vaccine.
In performing its day-to-day activities, the NRC helps to determine social and economic future and implements the Government of Canada's science and technology strategy — Mobilizing Science and Technology to Canada's Advantage. This strategy sets out a multi-year framework to create a competitive advantage for Canada through science and technology. It focuses on the principles of promoting world-class excellence, emphasizing priorities, fostering partnerships and enhancing accountability. It sets out a plan to cultivate three distinct science and technology advantages for Canada, the entrepreneurial, knowledge and people advantages.
NRC is enhancing Canada's entrepreneurial advantage by providing industry with targeted research and by proactively transferring its discoveries to the private sector.
Since 1995, NRC has spun off 68 companies that have become critical to Canada's innovation system. They account for approximately 600 high-skill, high-wage jobs, and roughly $437 million in cumulative private investment.
Each year, NRC's Industrial Research Assistance Programs offer technical and business-oriented expertise to more than 8,000 small-and medium-size technology- oriented firms, helping to develop and commercialize their innovations.
In the last eight years the Government of Canada, through NRC, has invested $598 million to establish industry clusters across the country. NRC currently spearheads 11 initiatives that have leveraged over $155 million from the private and public sectors.
In 2006-07, NRC signed 488 formal collaborative research agreements totalling $110 million, including 95 agreements with international partners.
[Translation]
In August 2007, NRC launched its new business plan and identified nine key sectors of vital importance to Canada's economic and social well-being.
[English]
Key sector plans, are being developed in consultation with business and industry stakeholders to align NRC competencies towards shared objectives and leverage private-sector investments.
NRC is supporting Canada's knowledge advantage by strategically contributing to the four research priority areas identified in the federal science and technology strategy.
[Translation]
To accomplish this, NRC is developing a series of national research programs scheduled for implementation early in the fiscal year 2008-2009.
[English]
These large-scale, multi-party projects that leverage multi-disciplinary competencies and mobilize collective strengths will create a critical mass in research capacity that will lead to substantial advances in knowledge development and application.
The first national program, co-led by NRC and Agriculture and Agri-Food Canada, will focus on bio-products; the second will focus on fuel cells. This program will build on the current successful NRC fuel cell program and will help to meet the critical demand for research and development from the Canadian fuel cell and hydrogen industry.
NRC is supporting Canada's people advantage by attracting and retaining the highly skilled people that Canada needs to thrive in the global economy. NRC is also active in training the next generation of Canadian researchers who will generate exciting and new ideas and innovations. In 2006-07, over 1,200 students worked on research teams at NRC institutes. In addition, NRC's Industrial Research Assistance Program provided 479 graduates with internship opportunities in more than 400 firms across the country.
[Translation]
Through its well-rounded national awareness and youth outreach programs, NRC is helping Canadians get excited about science and technology.
[English]
For example, the visitors' centre at the Herzberg Institute of Astrophysics in Victoria, British Columbia, was selected as one of the top 10 places for families to visit by the Victoria vacation guide.
In conclusion, since its inception NRC has excelled in putting Science at Work for Canada: advancing knowledge and generating technological solutions for Canadian industry, as well as generating wealth and improving the quality of life of Canadians and others around the world.
Widely acknowledged as a world-class research and development organization, NRC will continue to anticipate and perform research and development of an international calibre, bringing together key stakeholders to collectively address issues of national interest.
[Translation]
In the months and years to come, NRC will continue to strengthen Canada's national innovation system by helping to implement the Government of Canada's science and technology strategy.
[English]
The Chair: Mr. Gavrel, you talked about two competitions for which you received funding in 2007 — one at $165 million and 110 eligible letters of intent, and you are into the final stages of that process, I take it. In the other case, the $46 million competition for the business-lead Networks of Centres of Excellence, which was launched in November. You said the letters of intent closed yesterday.
These programs, I think, are key to the strategy that the government has brought forward. I want to get some idea of where you think they will be in a year from now and how you will measure their success.
Mr. Gavrel: These ventures are a bit longer than one year. The Centres of Excellence for Commercialization and Research, CECR, are being funded over a five-year period, and the business-led network centres are over a four-year period. Where will they be a year from now? I think they will be up and running. In the case of the CECR they will have been running for nine months or so. In the case of the business-led centres of excellence, the competition is starting now, and the first award will be made in the fall. A year from now they still will be in the early stages.
The NCE has, over the years, established a very rigorous tracking mechanism on the progress of its networks. We annually collect significant data on the productivity and impacts of our networks. Let me project then a few years down the road and were I would like to see these two programs in three to five years from now.
Through the CECR program, we expect that we will have created a few world-class centres that have put Canada on the map as being major research ventures that have turned into solutions for Canadians. We will have seen, from these centres, a mobilization of more university research capacity and we will have turned that into solutions for Canadians. As you know, the federal government funds $2.8 to $2.9 billion through these various agencies to university research — this program is there to further capitalize on that.
This business-led program is turning the existing NCE on its head and saying we have been successful by giving the research community a mechanism to drive collaborative research and engage the private sector. We want to see if the private sector is up to speed and able to take the lead on a lot of these. The program has been started small to be realistic and to limit the risk. I expect up to five — we will see exactly how many come through — in terms of the quality that we are looking for.
Key industrial sectors in Canada are coming together and looking at programs as diverse as environmental impact of certain sectors — of course, I cannot name any because we know some of the proposals coming in and I do not want to divulge anything. They are coming together to advance certain technology sectors in a way to help Canadian companies maintain a global lead or develop a competitive edge.
We will continue to measure in the way we have. We will measure in terms of the various economic impacts. We will measure in terms of the quality of the people that are generated. We will measure in terms of the additional investment in science and technology from the private sectors into these ventures as key indicators of the success.
The Chair: When there is a shift in focus in development of a new strategy, there is also concern for what gets left behind. I am told that a number of social science networks have had their funding cut. The Canadian Design Research Network, the Emerging Dynamic Economics Network were both cut and the Canadian Language & Literacy Research Network did not have its term renewed, to the point where I understand there are now no social science networks in the main NCE program.
Could you comment on that?
Mr. Gavrel: First, the peer review is something that has driven the program from day one, and the need for maintaining a level of excellence. I want to make a point on this that sometimes people do not understand. The fact that you no longer support it through an NCE does not mean that you are not doing excellent research. It simply means that you were not able to demonstrate additional value added through an NCE. The granting agencies' standard programs provide basic support for research. If you look at the numbers, our main NCE program is $82.4 million. Contrast that to the $2.8 million I mentioned earlier. If we are to have an impact, it has to be value-added. It has to be that the sum is greater than the parts. That is first in terms of why certain decisions are made and sometimes appear to be difficult. We understand that.
I want to stress that the social science community is very much engaged in our networks. The fact that a network may not be classified as a social science humanities network does not mean that the community is not actively engaged. Consider the Stem Cell Network and the social science work that is being supported through that network to ensure that the research done meets the needs of Canadians and respects our values and ethics. Look at the AUTO21 Network that is looking at many of the social impacts of the auto economy, as well as the way drivers behave and the like. We tend to look at our program as a whole rather than a collection of small parts.
While the three granting agencies are at the table, they are not expecting to see, networks in their domain, but rather how their domain can contribute to stronger networks. All of our networks are multidisciplinary, and a great number of them transcend the boundaries of particular granting agencies.
The Chair: Dr. Coulombe, there has been a task force set up to identify non-regulatory laboratories that could benefit from alternate management structure outside of federal government. What do you see as the advantages and disadvantages of that kind of program?
Dr. Coulombe: First, one must say that NRC has maintained a lot of interaction with the university community across the country. We made this committee aware of successful initiatives that are ongoing across the country. To name a few, we have Nutrisciences and Health initiative in P.E.I. where, with the University of P.E.I., Agriculture and Agri-food Canada and the NRC, we are developing common and joint research programs to advance the field of nutraceuticals for the benefit of Canadians. That is a good example of collaboration between communities and other government departments.
Since 2002, we have been developing with the University of Alberta, the National Institute for Nanotechnology, which was co-funded by the province and by the federal government.
In Vancouver, our Institute for Fuel Cell Innovation is building on the capacity of the University of British Columbia, Victoria, and Simon Fraser. The Canada Research Chairs at these various institutions are co-managing our research programs. We are already very much involved in partnership with universities.
You may appreciate that regarding the nature of the report, one does not yet know the conclusion of that report. It has not been made public, so it is difficult for me to say what will come out of that report. We could say that National Capital Region Research Council is very much committed to partnerships with universities. In addition to that, more than 500 or 600 of NRC scientists hold joint professorships in various Canadian universities.
Senator Keon: I have a long-standing association with NRC. I was an active researcher. I thought one of the great strengths of NRC and one of the great services that it provided to the university sector was its flexibility. Scientists and universities that did not have the resources, for example, the engineering resources to get something done that was holding up their overall project or laboratory endeavour could approach NRC who had the flexibility to help them out.
I am wondering if you have been able to maintain that flexibility, the way life is tightening everything up, in the era of proposals for everything and the 1.5-year delay while it is peer-reviewed and that kind of thing. Do you still have the flexibility to step in and help investigators in universities?
Mr. Coulombe: Thank you for that important question. NRC is working with universities in various capacities. Here in Ottawa, on Monday we renewed the Canadian Photonics Fabrication Centre, which is a collaboration between Carleton University and NRC. In this particular case, Carleton is training people, and we welcome those students into the CPFC to provide them with training in the photonics area so after the training they can find a job in the industry.
On behalf of the University of Ottawa, we manage a large MRI capacity on the NRC campus. The university was unable to provide 24/7 maintenance and upkeep, so today such a facility is not only used by Ottawa scientists but it is also used real-time by all scientists across Canada. Canadian scientists can send their samples to NRC, and manage that remotely from the Internet thereby giving them real-time access to these initiatives.
In the field of astronomy and astrophysics, NRC has in its act the management of a large telescope allowing Canadian astronomers to participate in access to worldwide facilities that are built around international collaboration. NRC provides access to the scientific industry as well as Canadian scientific community. These are a few examples of how NRC can support the university community by providing access on a continuous basis to the facility we have.
Senator Keon: Mr. Gavrel, I am a great admirer of the Centres of Excellence program. It is a wonderful initiative. It keeps getting better and better. However, I mentioned yesterday to the witnesses — and I will be mentioning it to the minister this morning — that we have a king-sized headache in Canada in that when it comes to venture capital; we are just too small. Despite all the wonderful initiatives to stimulate commercialization of our scientific findings, to stimulate the formation of spinoff companies, and facilitate patents for scientists and the training programs that are in place, in my experience, we still have a number of companies going south, when they run out of venture capital.
My feeling is that we have to get closer to the ground at the university with the concept of knowledge translation and commercialization. We have to get right into the labs with indoctrination of the young scientists so that they find a way to collaborate with their business associates and really get good at that as well as good at their science.
You mentioned you founded 80 spinoff companies in the last few years. How many have gone south, how many have gone east to Europe, and how many have gone west to Asia?
Mr. Gavrel: Thank you for the excellent question. I do not have a ready answer. I can certainly look into the specifics for you. We track companies as they are formed, and we do not now have the capacity to track them fully in the long term, but it is something we can easily do.
I will answer your question slightly differently. Yes, there is the issue of how you create a knowledge economy based on a country of 30-odd million people in contrast with the larger economies. We have to realize that we are in a global world. We will see companies that will continue to move and become international.
We need the support. I agree with you on that point. We need to put all of our capacity together and see where we can make a difference. Earlier this week, I was invited to participate in the Alberta ingenuity review of one of their programs, their competitions of centres. We exchanged views on our different programs and agreed that we need to focus on key areas of priorities in Canada. There are certain sectors where we have to be realistic. We need to be aware of them. We need to develop that research capacity, but we may not, in the long term, be able to sustain certain companies. This is where the priority approach makes sense. We have to focus in areas where we can truly make a difference.
Yes, we need to bring about more education and more connection between our business schools and our networks. That is something that we do. I know that you are part of a network that has been successful in creating a new model for commercialization, Aggregate Therapeutics Inc., so I will not preach to the converted, but we know we have the capacity in Canada to be creative. I believe that we also realize that we need to make more connections.
I suspect that yesterday, in answer to that question, someone should have mentioned to you collaboration between NSERC, NRC and the Business Development Bank of Canada to try to address some of the issues of funding and sustaining companies through NRC's Industrial Research Assistance Program.
No one has a perfect answer, but collectively, through focus, and through sustaining and putting the pieces together, if NSERC is at the front end supporting the basic research, a network comes in later on. We involve the government labs through NRC to be part of the process, add the components we have in terms of supporting small companies through the IRAP, and we put the BDC in it. If we are clear on our priorities, we can build a lot of value out of our investment in research, and we will see strong success stories.
I will mention just one example. Genome genetics has been a spinoff that went through these different phases, at one point supported by the NCE, and it is still in Canada and still doing well.
Senator Munson: You were talking about finances and investment. We all hold the NRC dear to our hearts, and what it has done in the past and all the accomplishments that you listed are great. Under present funding and present government approach, is the NRC up to the task of keeping pace with the Indias and Chinas of the world? Are we able to compete in this new scientific world? We always seem to be going to places like China and India for new, interesting and innovative things. Are you satisfied that the National Research Council can compete in this brave new world?
Dr. Coulombe: My answer to your question would be ``yes.'' I mentioned in my remarks that NRC already entertained a great deal of collaboration with international partners, including China, and maybe potentially in the future including India as well. Perhaps more importantly, we are working at par with all developed countries, the G7 countries. We have memorandum of understanding with France, Japan, United States, U.K., Italy and Germany. When we are discussing science and technology with our counterparts, we are basically working at par. It is not that Germany is here and Canada is over there. We are at par in these scientific collaborations.
China is another good example. China will seek Canadian scientists and will see NRC as key partners. They would like to use our expertise in science and technology. As you know, Canada has signed a treaty in science and technology with China. I happen to be the co-chair of the Canadian steering committee. We would like to use science and technology to open up doors for Canadian companies to get access to the huge Chinese market.
I would say yes, we are at par with those other countries. Compared to India and China, I would qualify us as ahead of the curve.
Senator Munson: Politics comes into play in dealing with China. I assume it comes into play in dealing with science. Is there a cool chill from China?
Dr. Coulombe: Not that I am aware of.
Senator Munson: On the other issue of identifying non-regulatory laboratories that would benefit from alternative management structure outside of the federal government, I understand that labs are being transferred outside of the federal government, and there are also labs co-located with universities, such as the Plant Biotechnology Institute in Saskatoon. What will be the effect on the National Research Council as a whole if it loses control of some of its research institutes?
Dr. Coulombe: First, no lab has been transferred yet. As I mentioned in answering a previous question, we do not know the content of the report that was tasked to study or investigate this question. The report is in the hands of the Treasury Board Secretariat and will be discussed later on. It is difficult for me to comment on the main recommendation coming out of that report.
As you have mentioned, close to 50 per cent of NRC institutes today are located on university campuses. The reason for that is clear. NRC is an organization that teams up with university researchers, and it makes a lot of sense for us if we establish an institute somewhere in Canada. It is better to do that and rather than going a far distance from the knowledge side, we try to locate on the university campuses because we can build strong ties with the university community, while moving them into participation in our projects.
The NRC research programs are targeted research programs. We are not doing knowledge-based development for the sake of it. We try to identify scientific activities that fit the needs of industry and develop the knowledge to go to commercialization. Therefore, in our longer-term research program, we would like to team up with university professors because they are complementary to what we have to offer.
Senator Callbeck: You mentioned in your presentation, Dr. Gavrel, that in the year 2006-07, networks filed over 100 patents. Is that a good year? Roughly, how many patents have been filed in the last five years?
Mr. Gavrel: This is relatively representative data. I can obtain complete information for you later.
Our networks focus on turning the research into specific applications. That is basically the strength of the model. We empower groups to self-manage through boards of directors that have a high number of private sector individuals; they are giving that direction to the researchers.
One has to realize that these patents come from the research that has been supported for many years by NSERC and others. Therefore, yes, productivity is high in the program.
Senator Callbeck: If we had roughly 500 patents in the last five years, what is an approximate percentage of those that have been applied or put into production?
Mr. Gavrel: That is a question that I would have to research for you. We publish the number of licences in our annual report, which would answer your question. I think we may have provided that report to you. On a yearly basis, it is between 50 and 80 licences.
Senator Callbeck: It is that high.
The chair asked this, but I want to be clear. The strategy highlights four specific areas. What does that mean for future applications for research? Is it likely that highly qualified applications in areas outside of those four might be excluded?
Mr. Gavrel: The program has always operated in two dimensions: a strategic dimension targeting certain competitions and the other dimension seeks the best research in the community. The program is there to support the government strategy.
At this point, the next competition will be in those areas. We include the four plus one because the budget in 2007 introduced the business management finance element to the Social Sciences and Humanities Research Council. We include this one in the competition to ensure addressing coverage of all the sectors.
The steering committee is composed of the presidents of each of the granting agencies and the Deputy Minister of Industry Canada. It looks at the balance in the portfolio. I expect that we will continue to provide the balance and the support for groups that will significantly contribute to the objectives.
Senator Trenholme Counsell: I have a regional question. When the Fathers of Confederation created the Senate, they did it to provide strong regional representation in Ottawa. Those of us from Atlantic Canada all feel that way.
I am not happy when I see the amount of funding that is going to Atlantic Canada. The Centres of Excellence list of currently funded networks does not include one from Atlantic Canada.
As I go through the Networks of Centres of Excellence, there is an inequitable and unfair representation of our Atlantic universities. I look particularly at forestry, where New Brunswick, Newfoundland and Labrador and Nova Scotia do have some research activity happening. In the four provinces, we have 34 out of 273 positions for graduate students or other personnel compared to Alberta which has 100. That is the most glaring example of inequity. Forestry is very important in Atlantic Canada, particularly in New Brunswick. I do not think it is that important in Alberta, but it seems to have the overwhelming number of people working in this research area.
I went through each one of these and some have nothing in Atlantic Canada. I think the largest number is in forestry, but still I do not find it adequate. The one example of leadership is with the Advanced Foods & Materials Network, where I noticed that Saint Francis Xavier University is the lead investigator on this project.
Do you have some explanation for this? In addition, how many of the members of the private sector advisory board are from Atlantic Canada?
Mr. Gavrel: The program has regularly been scrutinized for these various distributions, whether it is by research area, by university, by region, et cetera. One has to go back to the criteria of the program. The criteria are clearly mobilizing the best talents in support of key priorities.
Mobilization is subject to the criteria of excellence through peer review. Through the peer review, we pick the projects with the strongest members. If you look at the overall distribution of the NCE, it is not unlike that of the granting agencies with regard to Canada Research Chairs and others. These again are based on similar principles.
We are trying to stimulate some of these deficiencies. For example, the MITACS Network spends a great deal of time in the Atlantic provinces developing partnerships between industry and researchers and finding positions for students. Should you expect NCEs to be perfectly distributed? That is a much tougher question for which we currently have no clear answer.
Representation on the private sector advisory board has not been made public. It will be announced at the time as the results of the first CECR competition. However, in answer to your question, there was Atlantic representation.
Senator Trenholme Counsell: Atlantic Canada has always been known as an exporter of brains and we are consistent in our quality universities, particularly at the undergraduate level. I realize that we do not have as many graduate programs; however, I hope that in the spirit of this federation that special consideration is given to our Atlantic Canadian universities in view of what we have revealed here today in the Senate.
Senator Cochrane: What is your relationship with the universities in trying to improve on the PhD programs and in continuing to enrol more students into those programs? Also, how do we get the private sector involved in providing funding for students?
Dr. Coulombe: The National Research Council is not responsible for providing direct funding to universities. Through collaboration with universities, we welcome graduate and post-graduate students to our labs. Obviously, we interact quite a bit with the industry. One focus that we have when we welcome such students is to see their time in our labs, which can be a couple of years, as a transition into the private sector. One must realize that when a graduate or post-doctoral student is leaving the university, he might not be seen by the industry as adding a lot of value relevant to the salary he must be paid. Therefore, by transitioning students into a NRC lab, he or she is involved in research programs that target the needs of industry. The student might gain some experience as to what is needed to contribute rapidly to the success of a company. We see students who spend a couple of years with the NRC in locations across the country transitioning effectively to the private sector. There are many examples of the activities, such as the area of fuel cells at the institute in Vancouver. Canadian researchers supervise the students and teach them about the needs of the industry. In the fuel cells institute, they have an opportunity to interact and become known to the industry. The transition to industry is effective. The NRC can contribute to the commercialization of industry or knowledge moving from the university to the private sector by acquainting students with the private sector so they can learn what is needed from an industrial perspective in order to contribute. I mentioned that close to 1,500 of those students transition from our labs every year.
Senator Brown: I note the NRC's priorities. You listed environment, science and technology, natural resources and energy, health and related life sciences, and information and communications technology. The last two, health and related sciences, and information and communications technologies, are the best areas for research with respect to value to human life and to world communications.
I am concerned about producing biodiesel from plant oils. I have a relative who did some pioneering work in that area. We ended up patenting the valve system that allows diesel engines to switch from regular diesel to biodiesel. I believe he still owns the patents on it.
The difficulty of that technology in North America and in Britain is that the feedstock is limited. They have built some huge plants in the United States for ethanol production from corn but a few months ago, I believe, the corn crop cap came off in the United States. They are producing an artificial shortage of corn because they are converting so many acres to ethanol production that they are creating a market shortage in corn for animals and people. That provoked a report to the British government about 10 days ago that they should no longer support biodiesel because it was costing more energy to produce the product than the product was producing for transportation.
Is anyone doing research on the economics of that switch to those products? Over the last few months, the issue has become alarming in both Britain and the United States. Are we moving down a road that has great promise? Theoretically it is sustainable because every year you can have more crops but is it sustainable from an economic standpoint in that you are creating one shortage in a new area in order to overcome a shortage in another area. Is any research being done on the economic impact or on the shortage of feedstock?
Mr. Coulombe: That is an interesting question. You might be referring to the national program on bio-products currently under development with Agriculture and Agri-Food Canada. We are not targeting corn in this particular program because we believe that the reasons you mentioned are real. We would rather look at other municipal and animal wastes and lignocellulose from forestry waste, which will become a huge source of carbon in the future. Many different technologies can be moved into the biodiesel areas. With this particular program we will not target corn precisely because of the issue that you raised in your question. We will target other residual waste, primarily lignocellulose, which is seen as a huge source of biodiesel and a tremendous problem for the environment.
Senator Brown: I should have formed my question differently. Is anyone looking at the total amount of feedstock? The U.S. government said it wanted 15 per cent of alternate fuels, which is a huge amount when you consider the energy consumption of the United States, and Canada's government has said that it wants 5 per cent within a certain number of years. Has everyone tried to add up what it would take in total with all the different agriculture waste products to actually make it happen? Is it possible not only economically but also with feedstock?
Brasilia, for example, is self-sufficient in its fuel consumption by utilizing vast quantities of sugar cane. This technology obviously works but is it sustainable from those two perspectives?
Dr. Coulombe: This is part of the investigation that will be conducted in the course of the definition of the national program on bio-products. Among other things, we will look at the best technologies for a cost-benefit effect and how we can use technology to move these activities forward, understanding that this is a complex question.
The Chair: I thank the witnesses for their presentations and for the good work that both organizations are continuing to do.
At this meeting and yesterday's meeting, the many witnesses we have heard from have made their presentations with the focus on science and technology, the last two words in the title of our committee. They witness have spoken specifically on the government policy that was unveiled in May of last year.
We are now pleased to complete our two-day examination of this issue by welcoming the Honourable Jim Prentice, Minister of Industry. Minister Prentice is responsible for the implementation of the policy. He is here with officials from the department.
Hon. Jim Prentice, P.C., M.P., Minister of Industry: Thank you, Mr. Chairman. I am accompanied by Mr. Richard Dicerni, Deputy Minister of Industry, and as well by Mr. Iain Stewart, who is very senior in the science and technology portion of the department.
Ladies and gentlemen, I would like to thank the committee for the invitation to appear today to discuss Canada's science and technology strategy. It is a major part of my responsibility, as the Minister of Industry, and it is something that I am very excited about and honoured to be part of in this portfolio.
[Translation]
First, let me give you an overview of our science and technology strategy and what we have accomplished so far. Then I will discuss the way in which Canada must build on this strategy in order to further define our reputation as a global leader in science and technology by showcasing our country's academic and commercial excellence.
Our government's investments in science and technology will strengthen Canada's competitive capability, will help Canadians to seize opportunities as they arise and will allow us to build an even stronger country.
[English]
To me, the facts are clear: countries that invest aggressively in innovation have high standards of living and high quality of life. The government's mobilizing science and technology strategy is an essential part of our future as a nation. Yet, according to some commentators, Canada must make substantial improvements if we are to succeed in this. Last year, Guy Stanley, an academic, noted that:
Canada's national innovation system has many strengths, but it is crippled by three glaring weaknesses: there is a near fatal disconnect between the national science capacity and the national ability to commercialize the research; Canada's traditional value chains are not evolving rapidly enough to ensure future prosperity growth; and the inducements or automatic regulators that would enable the system to heal itself without significant change are almost entirely absent.
I emphasize that I do not necessarily embrace this criticism, but it is noteworthy that industry leaders, scientific and academic commentators believe there is important work to be done within the framework of Canada's new science and technology policy.
That is why, on May 17 of last year, the Prime Minister released this science and technology strategy entitled Mobilizing Science and Technology to Canada's Advantage. It is a bold and forward-looking, multi-year plan to build a national competitive advantage based on science and technology.
The science and technology strategy seeks to encourage firms to be innovators, to keep Canadians at the forefront of research and discovery, and to help Canadians acquire the skills they need to participate in the knowledge-based economy.
Our strategy articulates a comprehensive vision of how the government can create a more productive and competitive economy through work being done by government departments, through our expenditures and through our policies.
Over the past five months, considerable progress has been made turning the high-level policy framework contained in the strategy itself into concrete action to ensure that the approximately $9.7 billion of annual federal expenditures on science and technology builds a competitive advantage for Canada.
The strategy is based on fostering three particular advantages: The people advantage, the knowledge advantage and the entrepreneurial advantage.
We have been guided by four core principles, which included: Promoting world-class excellence; focusing on priorities; encouraging partnerships; and ensuring accountability.
So far, work on the people advantage has focused on increasing the support for Canada Graduate Scholarships and offering young Canadians the chance to hone their research skills in applied settings through launching the industrial research and development internship program.
We are encouraging a knowledge advantage for Canada through revitalizing funding for the important research that takes place at Canada's many excellent universities and colleges.
New funding as well for the granting councils has been targeted on the science and technology strategy's four priority research areas: the environment; natural resources and energy; health and life sciences; and the important area of information and communication technology, so-called ICT.
Over the past many months, we have made substantial investments in the Canada Foundation for Innovation, CFI, Genome Canada and the Canadian Institute for Advanced Research.
[Translation]
In summary, we are cultivating an entrepreneurial advantage for Canadian companies. The establishment of a study group on competition policy and a study of the tax credit for scientific research and experimental development both offer excellent possibilities for improving the strategic frameworks that are essential for private sector innovation.
By establishing the Centres of Excellence in Commercialization and Research, the Business-led Networks of Centres of Excellence and the College and Community Innovation Program, we have created mechanisms that will make it easier to form public-private partnerships in research that will benefit Canadian business.
Although there is solid support for our high-level strategic framework, we must do more in order to obtain the results that we expect.
[English]
Although I am confident that these actions are laying a foundation of long-term research capacity for Canada, the science and technology strategy will continue to enhance accountability for achieving results through improved governance and reporting practices. Relationships with some of the very organizations that I have mentioned — that you have met with earlier today and yesterday — require continued modernization. We will do this by benchmarking success and outcomes from such organizations against the strategy, as all stakeholders of the strategy must be working in a coordinated effort. It is a challenge of focus.
[Translation]
The strategy uses a more modern approach to science and technology councils. In the future, the new Science, Technology and Innovation Council will function as a single external agency, providing integrated, independent advice on questions related to science, technology and innovation. The council brings together some of the best minds from academia and from industry and will offer its views and advice on the next steps in the strategy.
I have had the opportunity to meet the Science, Technology and Innovation Council twice already and I look forward to this group of exceptional Canadians providing me with the results of their work.
[English]
I have specifically tasked the council to provide advice by identifying how the government should advance the commitment made in the strategy to focus more of its research energies and resources on four priority areas: environment science and technologies; natural resources and energy; health and related life sciences; and technologies relating to information and communication technologies. Second, I have asked the council to provide advice on specific barriers to Canada's ability to achieve a comparative advantage in the priority areas and identify potential tools to overcome these barriers. Third, I have asked the council how to improve the benefit to Canada from international science and technology developments and industrial research and development. Fourth, I have asked them to advise us of challenges to research commercialization focussed on knowledge and experience of members. It is important to note that by the end of 2008, they will provide us with a state of the nation report benchmarking Canada's science and technology strategy and performance against international standards.
Since the inaugural meeting of the Science Technology and Innovation Council on December 18, 2007, members chose to address the policy issues that I have just referred to and identified via a series of working groups defining research sub-priority areas for federal science and technology investments, government procurement, international S&T, and industrial research and development. These working groups are at work at this point in time.
Fundamentally, I see the way forward focused in three areas: first, positioning Canada to become a magnet for leading research talent, attracting and retaining the brightest minds within our country and abroad; funding the most cutting-edge research, facilitating that research with the tools and resources that are required; and, third, commercializing the intellectual property, fostering Canadian champions.
We must place emphasis on practical applications and commercial outcomes from public investments in research, through research aligned with the innovation needs of business.
[Translation]
Our initiatives encourage the establishment of research partnerships. The aims of our new programs and our new governance initiatives are to improve responsibility and versatility, and to strengthen the accountability required for federal research and development funds.
[English]
We need to focus on turning innovative ideas and technologies into commercial successes, turning patents into products, and turning investments into profits.
We live in a world where the future and our prosperity will be determined by the brilliance of our young scientific minds and where new ideas are transformed into commercial products very quickly.
Looking forward, we need to ensure that science and technology strategy is well positioned to contribute to economic growth and long-term prosperity.
The S&T strategy has provided the framework to address these challenges and guide government decisions. Going forward, we will continue to deepen our efforts to enhance our country's competitiveness and our prosperity through science and technology.
The Chair: Thank you, minister, for your opening comments.
Colleagues, the minister must leave on time because he has another meeting across the street at 1o'clock. You will have five minutes each, including both the question and the answer. That will give us enough time to get through the entire list. Let me start off and see how I can do in five minutes. Please time me.
Minister, we have heard from a number of organizations in the last two days. Generally, they indicate support for this policy and seem anxious to be part of its implementation. However, they did raise some issues, and I have three quick questions. Let me start with the scientific research and development tax credit. It was specifically raised by BIOTECanada. They have three concerns about it.
Their first concern deals with the refundable component. They say that in many cases, if there were not a tax to be paid, they really would prefer a refundable component versus a non-refundable component. They think that would be more valuable. They are not saying that it is entirely not advantageous to some companies, but it is a concern for many others.
Second, they are concerned about the limit on expenditures set at $2 million and the fact it was set in 1985 and has not changed. They say $10 million is more realistic to update it to today.
The third component is the Canadian controlled private corporations, the CCPC restriction. They are saying they do not think the origin of country of ownership is particularly relevant. What is important is that the research be done in Canada. They would like to see that particular provision removed.
Could you comment on the scientific research and experimental development tax credit and how you feel about these issues and where it should go?
Mr. Prentice: Budget 2007 and the science and technology strategy signal a willingness on the part of the government to examine the scientific research and experimental development, or SR&ED, program. The Minister of Finance has initiated that process and it is underway. I understand that they have finished the public consultations and have heard from both business and academic stakeholders on the three issues that you have indicated.
It is fair to say that the overall message from the business community has been that this program is an important one and it is very positive. I know that some of the submissions that have been received wished to see an expansion of the program in terms of the thresholds, which is one of the issues to which you have referred.
The Minister of Finance spoke to this on January 21. At that time, he put forward a suggestion, a proposal really, to extend the carry forward period for unused portions of the credit for a 20-year period as opposed to the existing 10- year period. That proposal has been put forward for discussion.
The questions relating to the threshold are ones that are before the Department of Finance and will have to be examined.
The questions relating to Canadian-controlled corporations are important. It is critical that the research of which we speak be done in Canada. As well, one thing I have been struck by in the time that I have been the minister is the focus on the importance of commercialization in Canada. That is not to say this research that is undertaken in Canada cannot be commercialized elsewhere and there cannot be benefits for Canadians in that, but certainly a preference would be to see research undertaken and commercialized here in Canada. I think the policy needs to continue to promote and encourage that and some of the other actions that the government undertakes need to focus on that.
I bring it very much back to the question of all of the efforts that were undertaken on the science and technology policy which really hone in on three things that we need to do as a nation. The first step is to get the brightest young minds into our universities and colleges. A minimum threshold would be the brightest young minds in Canada, but beyond that, we need to become a country that recruits bright, talented people from all over the world. The second step is to ensure proper funding for the work that is being done at our colleges and universities, and that there is private participation in that as well. The third step is commercialization. That is an area where we need to focus some attention.
Senator Keon: I will ask you the same question that I have asked everyone who has appeared before us. I am not sure anyone has an answer, but I want to ask it anyway because it must be given some thought.
The document is very good and your presentation was excellent. The government is to be commended for the way it is funding science and technology in Canada and the organizations it is funding are very good. We have a truly superb scientific platform in Canada. However, we have a giant headache in that we do not have the venture capital to keep our companies alive once we form them. We are competing with people to the east, west and particularly to the south. The latest example is the sale of MDA to ATK. MDA, MacDonald, Dettwiler and Associates, produces the Canadarm and RADARSAT and for $1.3 billion will move south. How will we ever overcome this problem?
In the short term, how will you explain to the Canadian taxpayer how it is justified to spend money on the development of the Canadarm and RADARSAT and then see the company go into foreign hands?
Mr. Prentice: Let me deal first with MDA. There has been a great deal said about this in the media. This is a good opportunity to ensure that the facts are clear.
The proposed transaction which I have read about in the newspaper is one that concerns the Minister of Industry in a number of ways. First, under the Investment Canada Act, the transaction will require the approval of the Minister of Industry in concurrence with the net benefit test that is set out in the legislation.
I need to be careful, given my statutory obligations as the Minister of Industry, but I can confirm that as of today there is no application before me. Therefore, it is clear that obligation to evaluate the proposed transaction still needs to be done.
Beyond that, the Minister of Industry has responsibilities pursuant to the technology partnership agreements that have been entered into in the past by MDA. There are at least five transactions where the Government of Canada provided funding to MDA pursuant to the former Technology Partnerships Canada program and its predecessor. Each of those agreements has an assignment — a consent provision — that requires MDA to seek the consent of the Minister of Industry. At this point in time, those consents have neither been sought nor granted. They are necessary.
Further to that, under a framework agreement relating to RADARSAT —, which, as I recall, was dated in 1998 — there, is a master agreement governing the funding that was provided by the Government of Canada into the RADARSAT-2 program. This has been discussed publicly and is in the range of $435 million. Again, the Minister of Industry will be required to grant consent pursuant to the assignment clauses. That consent has neither been sought nor granted at this point in time.
I wish to be clear that pursuant to those authorities under the partnership agreements, the master agreement and the Canadian Space Agency responsibility, I intend to be diligent in pursuing and protecting the interests of Canadian taxpayers.
With respect to venture capital, I have been struck during the time I have been the minister that this is a repeated criticism of the circumstances that exist in Canada. We have bright, talented young people at our universities and colleges who are doing good research, but we have not been successful as a nation in commercializing that research. Part of the failure is the inadequacy of the venture capital mechanisms. This is something I have had extensive discussions with the Business Development Bank of Canada and with others about, and it is something that we are working on. I agree that it is a problem that needs to be addressed.
[Translation]
Senator Pépin: My question is about funding. In a presentation yesterday, witnesses told us about difficulties related to direct and indirect costs. One of them, Mr. Robert Best, representing universities in Canada, expressed a wish for indirect research costs to represent 40 per cent of the direct costs. The proposed strategy shows an increase of $15 million annually in the indirect costs program. The witnesses stated that this is not enough.
Does your department plan on making adjustments in order to accommodate the request from the universities?
The other part of my question concerns tax reductions. The text of the strategy mentions that the tax credit program for scientific research and experimental development is the most beneficial arrangement in the industrialized world for stimulating research among businesses.
However, the president of Biotech Canada asked that the tax be modernized to reflect the research environment of the twenty-first century. Do you think you will be able to make adjustments to these two approaches?
Mr. Prentice: With your permission, I will answer the question in English.
[English]
We have excellence in our Canadian universities. It is something of which we should be justifiably proud. Across Canada, our young people have access to high-quality universities.
The subject of the indirect costs of research has been an important one to which we have turned our attention. Since 2001, the federal government's contribution to the cost of indirect research has increased from $200 million to $315 million. In each of the last budgets brought forward by Minister Flaherty, there have been significant increases to try to address the concerns about which you are speaking.
We appreciate that the indirect costs are significant in those universities where important research is being undertaken. We are trying to ensure that our fiscal policies — our science and technology funding — allow that to be covered. There is a sliding scale by which these costs are covered. There is a rolling average that tries to equalize it.
When I travel, I try to get to the universities and I have heard the concerns expressed by university presidents. It is something that we are looking at.
Senator Munson: First, a public service announcement. We know the government is developing a multi-million dollar strategy to invest in science that will result in new products — pharmaceuticals from trees, bio-based feedstock for cattle, and grow-your-own replacement organs.
Would it not be good policy to insist that a percentage of the budget for this kind of research go into studying the ethical, environmental, economic, social and legal implications of this technology? I would like to have that on the record.
I am troubled by the business with MacDonald, Dettwiler and Associates Ltd. The company best known for developing the distinctive Canadarm space shuttle technology announced the sale of the company on January 9. This company is one of the last symbols of this country that we seem to have to be proud of. The proposed sale is to Alliant Techsystems Inc., a U.S. company with military contracts. Some employees are extremely upset by the prospect of the sale. For example, Trevor Williams has quit his job because he says it makes him feel uncomfortable and puts him in a moral dilemma. At the end of the day, is the Canadarm for sale?
Mr. Prentice: The proposed transaction, I would emphasize, requires approval under the Investment Canada Act by the Minister of Industry. That has been neither granted nor sought. There are a number of consent assignment agreements where the consent of the Minister of Industry is required. My general understanding of the transaction has been acquired on the same basis as your understanding — through what I have been able to read about it. My understanding is that the Canadarm property actually passed to NASA a number of years ago. The critical aspect in this transaction is RADARSAT-2 and its ownership. The satellite was launched only a few months ago.
Senator Munson: What about the optics of this for you? Canadians looking at these kinds of transactions and seeing another Canadian company head south is a difficult thing to understand. At the end of the day, we pride ourselves on our technology and then we seem to sell it away.
Mr. Prentice: MDA is an important company. As I recall, it has close to 1,500 employees. The work that the company has undertaken with respect to the RADARSAT-2 satellite is very important. Canada has been on the cutting edge of satellites, robotics and optics. This is something that we have been very good at in Canada.
I cannot comment on the specifics of the application under the Investment Canada Act because no application before me. This is a proposed transaction only; it is speculative at this time. I have not approved it as the Minister of Industry, and I, as the Minister of Industry, have not granted approval under the consent provisions under at least 10 different agreements. The Minister of Industry's consent is required under those agreements.
Senator Trenholme Counsell: With your permission, I will ask the same question that I asked before. Let me preface my remarks, after which I have an appeal and a question for the minister. The validity of the Senate is questioned at times by some people and I feel today, as I have felt many times since I came to Ottawa four years ago, that the Senate is valuable, particularly in its representation of the regions.
I asked the witnesses from the Networks of Centres of Excellence and the National Research Council this same question based on a bit of research that I have done on the materials presented to us. For example, we were given two pages of currently funded networks and not one of those centres is located in Atlantic Canada. Around this table today we have five Atlantic senators so I expect they share my concern about this given that one of the purposes of the Senate is to represent the regions of this country.
Some of the other regions might feel equally ill done by when they look at the locations of these networks because there are 11 in Ontario, four in Quebec, two in British Columbia, one in Manitoba, one in Alberta and none in Atlantic Canada.
Minister, I ask you to look into this in the hope that the situation will change. We will neither forget the matter nor remain silent on it.
Regarding the networks, I was pleased to see that one of them is led by St. Francis Xavier, one of our leading undergraduate universities in Atlantic Canada, indeed in Canada. Even there, only one eighth of the university researchers are from Atlantic Canada. Although forestry is exceeding in Atlantic Canada, in particular in New Brunswick, the vast majority of researchers are from the province of Alberta. I could go through all of these networks and show how inequitable it is with respect to Atlantic Canada. I would like your comment.
The second part of my question is a follow-up. We were told this morning that a private sector advisory board has been named for the NCE. You referred to a council, which might be the same thing. However, the representatives here from the NCE and the NRC said they could not give us the names of the persons on that council. I would like to ask you who from Atlantic Canada is on the council and what percentage of the members of that council or advisory board are from Atlantic Canada?
Mr. Prentice: That is a long question.
Senator Trenholme Counsell: I hope it does not take you long to make it all right.
Mr. Prentice: I was just in Atlantic Canada last week where I met with the president of Dalhousie University and another university president as well. The president of Dalhousie spoke about challenges for Atlantic Canadian universities to have funding equity with other universities across Canada. He spoke about how the Atlantic universities receive many students from across Canada. I offered myself at that time as exhibit A because I was educated in part at Dalhousie University and I take great pride in that because it is a great Canadian institution. We spoke about that issue.
In terms of the Centres of Excellence that you mentioned, we announced recently $105 million in support for seven such centres contained in the last budget. One of those is in Atlantic Canada, in Halifax. There is one in Vancouver, Edmonton, Toronto, Ottawa, Montreal, Quebec City and Halifax.
Senator Trenholme Counsell: It is not on the list of currently funded networks that we were given this morning.
Mr. Prentice: I am not sure what information you have before you but the initiative in Halifax is important because we recognize the issue.
I would also say that over the course of the last week, I travelled across the country dealing with issues in the aerospace industry. I mention this because when you talk about science and technology, the underlying purpose of all of this is to ensure that we are cutting-edge and competitive in Canada. There is no better litmus test for that than the aerospace industry. Close to 50 per cent of the high-tech jobs in Canada are in the aerospace industry. If you look at Atlantic Canada and specifically the area in and around Halifax, you will note the demonstrated excellence. Many of the investments made in Canada are being made in Atlantic Canada in the field of aerospace. We are doing the right things in many instances.
You have asked about two committees. One is the Perrin Beatty committee, which is responsible for reviewing the Centres of Excellence and for providing their advice to government. I can provide the committee with a list of the individuals who sit on Mr. Beatty's committee.
The second one is the Science Technology and Innovation Council, which is extremely important and has representation from across Canada. We can speak more about that in some of the other questions. I am happy to provide the committee with a list of the individuals who sit on that committee as well.
Senator Cochrane: Thank you, Minister Prentice, for giving us your time. I want to talk about this council. I would like you to elaborate a little more on it, and give us an understanding of the purpose of the advisory body, how they report and their accountability structure.
Could you please elaborate on what issues we are having with recruiting and retaining students studying in fields related to science and technology? We are having a problem in recruiting and retaining them.
We heard from a host of witnesses yesterday, as the chair stated, and they are all in favour of this new strategy, but it is just a start. Do you have long-range plans? What are they?
Mr. Prentice: Perhaps I will begin with the Science Technology and Innovation Council. You will sometimes see this referred to as STIC. This is a commitment set out in the science and technology strategy to create an advisory council reporting to the Minister of Industry. The council will fulfill certain functions formerly fulfilled by Dr. Carty, as our National Science Advisor. Dr. Carty retires effective March 31, and he has made a significant contribution in our country, formerly with the NRC and in other areas over the past years.
Under the science and technology strategy, the emphasis of what we are trying to do is to increase the focus, the funding, and the importance of science and technology in our country. The Science Technology and Innovation Council is an extremely important organization with a chair and 17 members who are drawn from across the country. It is a remarkably fine group of Canadians. We should all take pride in the quality of individuals who have come forward and offered themselves for public service by serving on this committee.
I will highlight some of the names. It is chaired by Mr. Howard Alper, an officer of the Order of Canada, one of the most respected scientists in our country, and an individual who has assisted other nations, including Australia, in focusing their science and technology strategy and dollars. It includes other individuals, such as Peter MacKinnon, the president of the University of Saskatchewan; Terry Matthews, who is the driving force and CEO of Mitel; David O'Brien, chairman of the board of EnCana and chairman of the Royal Bank of Canada; Rob Prichard, the president of Torstar; Dr. Harvey Weingarten, president of the University of Calgary.
Those are some of the names. I think you can see that this is an extraordinarily fine group of people. I met with them at their most recent meeting. They had their first meeting in November, which I participated in by conference call, and I spent a full evening with them about two weeks ago.
They have taken on the responsibility of focusing our efforts under the science and technology strategy. It is about focus and ensuring that the dollars we are spending and the public policies we have put forward are being translated into excellence. These are the areas they are working on, and they are doing first-class work. I am honoured that they have agreed to work with us.
In terms of your second question relating to students, the strategy does stress the importance of encouraging graduate students. As I said in my comments earlier, I do not come to this as a scientist, but as a parliamentarian who has been a businessperson and a lawyer. To me, it begins with getting the brightest minds in our country into our universities and colleges; and second, ensuring that while they are there, we support them.
I have seen enough in my time as Minister of Industry to believe that if we do that, we also attract the brightest minds from elsewhere in the world, and there is proper stewardship while they are at our universities and colleges, much of the rest will take care of itself. Budget 2007 set out 1,000 new scholarships. We have the research chair program as well, which attracts good people, international students, and produces excellence.
Senator Cochrane: That program also keeps them here.
Mr. Prentice: Keeping them here is of obvious importance, absolutely.
Senator Callbeck: Thank you, Minister, and officials, for coming today.
I share the concern of Senator Trenholme Counsell. You all know, we have top-notch universities in Atlantic Canada, and certainly, the minister knows full well, having gone to Dalhousie.
I am happy that you are seriously looking at the indirect costs for universities, because that does put them at a disadvantage, as was outlined yesterday by the witness from the Association of Universities and Colleges of Canada. He indicated that the indirect costs are 40 per cent of the direct. They are getting about 25 per cent from the federal government, so there is a gap there of 15 per cent. He mentioned in the United States, where they are getting roughly 50 percent. There is no question they are at a disadvantage. I am happy to hear you are looking at that.
One of my questions is on targets, about the amount of dollars actually spent on research. If you look at the ratio between GERD, the gross expenditure of research and development, and the gross domestic product, we are behind other OECD countries. I recognize the problem with the amount of money from the business and public sector; certain business and public sectors are lagging behind.
This ratio has been around 2 per cent for the past five years. That is what I read in the notes. Do you feel that is adequate, or do you want to see that increased? Do you have any target?
You spoke about the aerospace industry and the jobs it creates. Under your strategy, you have four main priority areas. Where does aerospace fit in?
Mr. Prentice: You have obviously read quite a bit about this subject. Just to make sure that the facts are clear: We have been excellent in Canada in terms of the public dollars that go into science and technology. We hold first place in the G7 in terms of the number of public dollars that are put into science and technology. The challenge, as you say, in part, is that we lag in terms of private-sector investment in research and development
The policy, at page 25, points out that 54 per cent of research and development is performed by business, which is well below the OECD average of 68 per cent. This is something that we speak with business leaders about. It is something that we need to improve upon as a nation. I challenge business leaders, wherever I go, to do that. It is one of the reasons that many of the initiatives that have been put forward, such as the Centres of Excellence, the technology transfer to colleges, the business-led NCEs and the internship programs, are based on partnering. We are trying to ensure that the $9.7 billion which the Government of Canada spends annually on science and technology is appropriately levered and that we see commensurate private-sector investment. For your information, that $9.7 billion breaks down roughly as follows: $3.6 billion on related science activity and $6.1 billion on research and development. Of that $6.1 billion, $2.6 billion is on academic research and development through things like the granting councils and other science and technology funding; $2.3 billion is on intramural research and development — organizations such as the National Research Council; $.737 million is on business research and development and $.436 million is on government. That is how you arrive at the overall envelope.
We provide extensive funding through my department, Industry Canada. The annual funding to NSERC is $900 million; the annual funding to what is called SSHRC is $619 million; and the annual funding to the CIHR is $870 million. As you can see, we are spending large sums of taxpayer money on this strategy. It is about expanding that amount through private sector contributions.
I think the record of this government in terms of increasing the research and development dollars is excellent. However, it is also about focus and ensuring that the dollars we are spending are doing the things that I described earlier — attracting the brightest minds, funding the research and commercializing it. If we do that, we will be a global competitor in the future. If we do not, we will lag behind.
Senator Cordy: The Auditor General has expressed concerns about the lack of accountability of arm's length foundations for government funds. I am not saying that they have not spent their funding correctly, but the point is that there is not always the best accountability.
Comments in the science and technology strategy regarding the need for improving the government's value for money, including funding for the research council, were not extended to foundations. How will your department ensure accountability for foundations?
My second question also deals with the document, which is a good document but, again, the devil is always in the details. You talk about credential recognition. I agree wholeheartedly that we have to do something about credential recognition. We have a lot of new immigrants, and some immigrants who have actually been here for a long period of time, who are not able to work in their field. Instead, they are sweeping floors, working in fields that do not require the skill set that they have.
Credential recognition is a provincial responsibility. As the federal government, what steps will ensure that a process is in place for immigrants who come to our country with the understanding that they will get jobs in their field?
Discussions with provincial governments have been going on for a long time. Beyond telling me that you will discuss this with the provinces and territories, what steps can you put in place?
Mr. Prentice: The focus of your first question is really accountability under the science and technology strategy. There perhaps is no public policy document that I have dealt with where it is truer that the devil is in the details.
The science and technology dollars that the Government of Canada invests are done so through a number of respected, independent and quasi-independent bodies; the National Research Council, the Canada Space Agency, NSERC, SSHRC, CIHR, the Canadian Foundation for Innovation, Genome Canada, the Pierre Elliot Trudeau Foundation, the Canadian Institute for Advanced Research are some of them.
The real challenge for the Minister of Industry implementing the science and technology policy is to ensure that we are all rowing in the same direction. I do not mean that in a critical way, but this is Canada's national science policy. We will only achieve excellence and the desired outcomes if, through all of the arm's length instruments that we have, everyone is fulfilling the objectives of the policy. That is what we are trying to do.
That, obviously, will be a work in progress as we go forward. It is one of the reasons that the STIC, the technology innovation council to which I referred, will publish a report card. I understand it will be produced in December 2008. For the first time, we will have a national report card published in Canada by a group of eminent Canadians who will be looking at all of the efforts that are being done.
Senator Cordy: Will that include the foundations?
Mr. Prentice: It will include all of the dollars that we spend, including the foundations. It will essentially assess the progress that we are making under the science and technology policy to make this country a cutting edge country in terms of science and technology, research and development and global competitiveness.
That is a hallmark of the philosophy that underlines the policy. Obviously, as the minister, I have responsibilities as well. We have been filling all the vacancies on any of the agencies for which I am responsible — NSERC, SSHRC and so on — and searching out high-quality Canadians who will take on these positions of stewardship.
The diffuse way in which these funds are administered reflects the complicated nature of different areas of science and technology. We need good people with the requisite scientific and academic expertise and we are getting them.
Senator Cordy: In the document, when you talked about improving the governance of the research councils, was there a reason that foundations were excluded? Was that intentional or an oversight?
Mr. Prentice: Foundations are arm's length, but they are certainly accountable to the Parliament of Canada and the people of Canada through different ministries. They will be part of the national report card.
Senator Cordy: What about credentials?
The Chair: Unfortunately, we have run out of time. We have a lot more questions, I know. I can only suggest at this point, colleagues, that we put any questions that we want to have the minister answer in writing and submit them, if that is all right with you, minister?
Mr. Prentice: Yes, absolutely.
The Chair: As we wind up this session of our meeting, I want to thank Minister Prentice for coming today, giving his thoughts on the policy and answering our questions. You used two words that are important here. You said you are excited about the policy and want to aggressively pursue innovation, and we want you to do that. We have come to the conclusion that it is a part of our government's policy and we all want you to succeed in that.
Mr. Prentice: Thank you very much, Mr. Chair.
The committee continued in camera.