THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, April 27, 2023
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 11:30 a.m. [ET] to study matters relating to banking and commerce generally.
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Hello to everyone with us in the room and sharing this process online. Welcome to this meeting of the Standing Senate Committee on Banking, Commerce and the Economy. My name is Pamela Wallin, and I am the chair of this committee.
We are continuing our discussion on business investment in Canada, or lack thereof, and I would like to introduce the rest of the members of the committee who will be asking some tough questions: Senator C. Deacon, Senator Loffreda, Senator Marshall, Senator Massicotte, Senator Smith, Senator Yussuff, Senator Galvez is in for Senator Ringuette today and Senator Cardozo is here for Senator Gignac. Welcome to you as well.
Let us begin with our first panel. We have the pleasure of welcoming in person — and we’re so excited about that, so just excuse us — Sachin Aggarwal, Chief Executive Officer of Think Research Corporation.
Thank you so much for joining us today, and we’re going to ask you to begin with your opening remarks.
Thank you.
Sachin Aggarwal, Chief Executive Officer, Think Research Corporation: Thank you, Madam Chair, deputy chair and senators, and thank you for the opportunity to speak today.
I’m the CEO of Think Research Corporation, a Toronto-based health care software company with more than 500 employees currently. As a consequence of our work for provincial governments in Canada and abroad, we hold millions of patient records, and we are also the inventor of several software patents. I am a Senior Fellow at the Munk School of Global Affairs and Public Policy, and I have been an investor, advisor and board member for numerous start-up and scale-up companies in the innovation sector. I also serve on the board of the Council of Canadian Innovators, which you may know through its founder and chairperson Jim Balsillie. I was also recently appointed to advise the Province of Ontario on data governance and use.
Canadians and Canadian governments are sleepwalking into a new reality, one that has been successfully exploited by today’s multinationals and megafirms — Google, Facebook, Amazon, Uber and others — for about two decades. For most, if not all commercial firms, intellectual property, or IP, and data are the critical assets and input to today’s economy.
While tangible assets like factories and jobs remain important, intangible assets such as IP and data have become critical in today’s corporate landscape. These assets now account for more than 90% of corporate value, making them the primary drivers of economic value. Neglecting these intangible assets means missing out on the majority of economic value.
The U.S., China, Europe and other savvy countries shifted decades ago to intangible asset capture. To multinational firms, IP and data are the fuel on which they operate. Canada has not prioritized owning and commercializing IP or understanding the value of data as an asset.
Today, I will focus on data as a critical intangible asset, and I will go a little bit specifically into health care, as that’s an area I know well.
Just to note, in 2020, each Canadian citizen generated almost two megabytes of data per second. Per second.
With data comes the insight for basic research and then innovation and commercialization — noting research and then innovation and commercialization. New products, solutions and, in some cases, the algorithms and artificial intelligence, or AI, are generated thereafter. Governments, companies and people then use those products and services, and that leads to a huge amount of new data being generated, which leads to, again, further intellectual property development and ownership, investment, productivity and ultimately wealth.
All commercial firms and all governments — directly or indirectly — will win or lose depending on how they utilize data, but there are gaps and barriers that make it very difficult for public sector organizations, communities, researchers and businesses to get the high-quality data they need to support better health, social, security and economic outcomes.
Unfortunately, for the last 35 years, I don’t think that’s something that we truly understand in Canada. We don’t teach or train for it, so it is absent in our public sector. As a consequence, we don’t understand it and we don’t govern for it.
Then, what we do is we pay huge sums of money — we don’t have the wrong amount of money here; it’s just in the wrong places. We pay huge sums of money for basic research for it, but we don’t pay for or incentivize commercialization or innovation. Basic research, yes; commercialization and innovation, no. So we don’t capture or own the IP or the data generated from that research. The IP to generate and capture data then goes to foreign firms. They then create the products and services that we consume.
That is bad enough, but get this: Worst of all, governments, Canadian companies and citizens then pay for it again. You have paid for it once. It is owned by someone else, and you pay for it again when you buy the data software, solutions and technology products that those same multinationals create. And because we don’t understand the value of the data that’s generated from the use of those solutions — and, by the way, that data tends to be in proprietary formats, in proprietary data models intended to make it difficult for us to be able to use that data.
So what do we do? We buy those products and services, and we give away the data when we make those purchases. Then those foreign multinationals generate more IP and new IP from our use of the data that we’ve now paid for twice. And the cycle repeats itself.
By focusing on jobs at any cost and as our only priority, and by spending on basic research as our only innovation policy, we’re not understanding that IP ownership and control of data will create more jobs as well as better-paying jobs. Importantly, it will repatriate economic rents from the rest of the world back to Canada. That’s what IP ownership and data control do.
Really importantly, governments stand to reap the same economic benefits as commercial firms, plus more. In the data-driven economy, our collective ability to collect and then effectively use government and citizen-generated data will determine whether we can provide affordable and effective social services, health care and national security in addition to those high-paying jobs.
In the data-driven economy, firms and nations vie, ultimately, for a winner-takes-all position. Unfortunately, Canada has been absent in that race, blindly paying rents to others. That must change and change quickly to secure our future productivity and prosperity.
Thank you.
The Chair: Thank you very much. I will start at the end for a moment, if I could, because we have heard this message repeated time and again.
I just want to ask you what your theory is as to why we can’t see what appears to be so blindingly obvious.
Mr. Aggarwal: Jobs are a political winner. If you pay for them up front, if you just put the dollars against the jobs, you get something you can announce. That’s political party agnostic.
The Chair: I think that’s a very good context to give us for this discussion. I might come back to that later, but right now we will go to Senator Deacon.
Senator C. Deacon: Thank you so much for being here, Mr. Aggarwal. Your comments have resonated profoundly with this committee, I think, because we have been hearing similar comments. You’re showing a path forward that relates to an area where Canada is really struggling right now — health care — where we can turn a problem into a huge opportunity for this country, not just to deliver better health care to Canadians but to sell services around the world. Our diverse population and our breadth of services that are publicly funded must give us data that is as powerful as any in the world in the delivery of health care. And we’re trusted.
If you prioritize data and IP protection as being crucial to achieving this end in the health care sector and beyond, can you speak to other priorities? I’m looking at a paper that you were part of producing a couple years ago, and the first point is the ability to drive policy and standards for procurement. That is certainly something that resonates for me as a former entrepreneur and the fact we get that so wrong. We think that we’re enriching Canadians, so we’d better just go for the best price, not give Canadians a chance to do something interesting. It’s a biased approach, but could you speak to that or other policy options?
Mr. Aggarwal: I’ve got a number of them. You can also direct me on timing.
I think everything, first and foremost, needs to start with a new social contract with Canadians. If we don’t have the trust of Canadians, they won’t trust us to use their data, even if it’s for social benefit. Our privacy laws, both at the federal and provincial levels, are out of date. There are many jurisdictions, such as Europe, California and others, that are moving at lightning speed ahead of us, so we need to catch up in respect of those. It’s an entry-level requirement to making anything happen, and I’m happy to go into detail as to what some of those things might look like.
We definitely need to update our industrial and our research and development, or R&D, policies. That’s number two. And that means actually focusing on innovation, not just basic research. We do a good job at basic research, we really do. It’s not that the money is wrong — there’s lots of money there — it’s just the focus of the money. That includes IP ownership, control, management and the use of data. That’s scientific research and experimental development, or SR&ED, and the National Research Council of Canada Industrial Research Assistance Program, or NRC IRAP.
If we go into health care, that means the Canadian Institute for Health Information, or CIHI, the Canadian Institutes of Health Research, or CIHR, and Canada Health Infoway. Those are organizations funding bodies that can start to focus on innovation, not just basic research and not just adoption.
We definitely have to raise our game. Number three is raise our game in terms of teaching and training, and that means across the public sector. Just by having more people who know what they are talking about and who really understand the importance of the intangible economy, that will be critical.
We have to create purchasing power. Look at federal government purchasing power. In health care, it’s awesome. Even though you may not directly have control over health care, you do have direct control over several sectors of health care and your indirect partnerships with the provinces will make a huge difference there.
Look at the other sectors of the economy. In terms of national security, our purchasing power there is significant. Our ability to negotiate with major municipal jurisdictions for the built infrastructure to speed up the delivery of housing, for example. These are areas where the federal government really can make a difference using its massive purchasing power. That means updating procurement guidelines to really incorporate innovation, intellectual property capture and data capture.
We should create an agency. Provinces are starting to think about this, and other jurisdictions are already doing it — a board-governed, federal data agency with responsibilities for modern data governance for federal data assets. You directly collect huge amounts of data that can be used to improve social services, national security, health care and so on. Indirectly, you procure companies to deliver services, and you’re not capturing the data. Directly within government departments and indirectly through procurement, we have to create an agency that enables the effective, fair and ethical use of that data for social benefit.
Lastly, standards. We have to get in the standards game. Data is useless if it’s highly proprietary and no one can access it, understand it or use it. We have to get into the standards game. We are one of the lowest spenders relative to some of our peers in terms of standards. We’ve got to compete in that area.
The Chair: That is a very good list.
Senator Smith: Thank you again for being here. It’s great to meet you.
You argued in a 2018 article about health data for the Centre for International Governance Innovation that the Canadian government’s conservative approach to data governance is a hindrance to innovation and growth. You made the point that instead of using data as an economic opportunity, we focus more on privacy and security. Your opening comments reinforce that.
It has been well over five years since you authored the article. To do a little comparison, is there any progress that has been made with respect to the concerns? You’ve said we’re in a weak position. Has anything changed since 2018 for you? And if so, what?
Mr. Aggarwal: I would say that the opportunity is really crystallizing for me, particularly in the case of health care data. Ontario now has 14 million people. Other provinces are desperately in need of health care providers. We have a real shortage and demographic challenges that will be facing us. Unless we get health care right in this moment, we are not going to be able to deliver services anymore, and our health care systems will break down.
If we want a publicly funded health care system that is fashioned by the Canada Health Act, then we need to act very quickly. I’d say the finest point is urgency. Five years ago, it was a looming problem. Today, it is going to break health systems.
Senator Smith: How do we balance commercialization of Canadian data versus the privacy and security of Canadians?
Mr. Aggarwal: They are no longer in opposition. My view has changed on that. These things are highly complementary. We need the trust of citizens in order to be able to use their data effectively, but very importantly, there have been some very clear examples around the world that have shown us that when we get that trust, when we allow citizens to participate willingly, they will participate.
Senator Smith: If you had a magic wand and you could make a big move now to strengthen our health care, what would it be?
Mr. Aggarwal: Number one, it has to start with an update on privacy legislation. Number two, we need federal and provincial data authorities and data agencies that start to consolidate our assets.
Until we do that, and we create standards across those assets, the data is useless.
Senator Smith: How do you develop that level of consciousness within governments federally and provincially?
The Chair: We’ll come back to that question for sure because that’s where I started.
Senator Loffreda: Thank you, Mr. Aggarwal, for being here this morning. You made a few interesting statements and we’re having an interesting, insightful discussion. You said a new social contract with Canadians has to be made and trust is the currency of every relationship, but that’s a huge challenge. You stress urgency, and that can take a long time. You also said all governments will win or lose on how they capitalize on the use of data. I think many Canadians don’t understand how it drives our economy or could drive innovation and growth.
What would you prioritize? Would you prioritize education, policy or communication? You did get into the data agency, if you can elaborate further. Once again, you do stress the urgency and you mentioned that globally there are some countries that are doing it right. What are they doing differently that we should be doing in Canada?
Mr. Aggarwal: I don’t think you can pick one of these pieces, I’m afraid, senator. This is a whole-of-government effort. Health care is an example of what can be done in the rest of government. I think for far too long we have thought of intellectual property and data as being the purview of almost a side ministry or a side project. That’s something we have to satisfy innovators. It’s not; it’s everything. So this needs to move out of Innovation, Science and Economic Development Canada, or ISED, and move into everybody’s priority. That means moving in parallel on certain things like the new social contract and new privacy legislation at the same time that we set up data authorities, at the same time that we start to meaningfully fund data standards and so on. These things can be done in parallel. It’s not like you are overlapping the members of the public service. We have that capacity if we prioritize.
Senator Loffreda: Thank you.
Senator Marshall: Thank you very much for your remarks. We keep hearing the same thing over and over from our guests.
We’ve also spoken to the people in the bureaucracy about this, and I don’t think they get it because quite often when we ask questions, we either don’t get an answer or we get a blank look. They’re the ones advising the minister, so we’re kind of stuck.
It’s almost overwhelming what you’re saying has to change. We need new privacy legislation, new procurement policies, standards, this, that and something else. I don’t have a whole lot of confidence in governments to move ahead. I know you said you are doing work for the provincial government of Ontario.
In the absence of governments moving ahead as you would like to see them move ahead, how can we get to where we would like to go? Because it seems to me we’re depending on people like yourself to drag us there because I don’t think you’re going to see government become very aggressive and start moving. I just don’t have the confidence. Tell us, in reality, where do you think we are going? Where are you going?
Mr. Aggarwal: With respect, I will disagree a little with the premise you’ve stated. We actually do see governments recognizing the problem and moving very aggressively. Senator Deacon’s home province, the province of Ontario, we’re starting to see some really remarkable, innovative movement going on in these jurisdictions and in others we’re having discussions with. We’re having discussions with Alberta and with other eastern Canadian provinces. So I think the recognition is now there because their health systems are going to crumble.
The urgency is there and they’re starting to think about putting in place the infrastructure.
Senator Marshall: You mentioned in your remarks that the system will crumble. It’s not that the system will crumble, the system has crumbled. I’m sorry, keep going. I had to make that remark.
Mr. Aggarwal: Thank you for that. What I will say is that — because of our 35-year history on misunderstanding intellectual property and our 15- to 20-year history of misunderstanding the value of data — unfortunately, there are scant number of firms that are at scale in this country today. So if we are relying on the private sector alone, unfortunately, it’s not going to happen. With companies like ours — and you will speak to Mr. McBride later — there are 100-odd companies in the Council of Canadian Innovators. Many of them get it, but it’s not enough and we’re too small.
Senator Marshall: You have had some experience now with various governments — and it’s probably an awkward question to ask you — but do you think they’re moving at the speed that you think they should be moving at? My feeling is that the bureaucracy doesn’t get and the government doesn’t get it, but do you get a different feeling?
Mr. Aggarwal: In certain provinces, yes, senator. I would say that’s not across the board and, unfortunately, we don’t see the movement at the federal government.
Senator Cardozo: Thank you, Mr. Aggarwal, for being here. I’ve known of your work, both as you were in the company you are working with and as a thinker and writer on these issues. Thank you for being here, and I’m lucky to be here this morning because I’m sitting in for somebody else but very fortunate that I get to be here to have this discussion.
First, I have a question. Help me understand the point you were making about governments and jobs. You said it’s more attractive for governments to spend money on things that create jobs, but wouldn’t the collection of data also be creating jobs? Why isn’t that as attractive as manufacturing, for example?
Mr. Aggarwal: That’s exactly right, senator. It not only creates jobs, it creates higher-paying jobs. Those jobs are then linked to intellectual property and data assets that are owned in Canada. As a consequence, you not only get the high-paying jobs but you then are able to charge economic rents to clients and customers in other countries and repatriate those rents. By focusing on jobs first and only on jobs, what we do is we allow someone else to own the intellectual property and data, and so their home country is charging us the rent. We get the jobs, but the profits leave. We want to get the jobs, we want to own intellectual property and data, get the higher-quality jobs, higher-paying jobs and then have the economic rents come in.
This is a misunderstanding of the value chain and the way the value chain works. You can pay for quick hits on jobs; of course you can. It’s expensive and it’s not sustainable.
Senator Cardozo: I think we just have to make that argument a bit clearer for governments to understand the connection in terms of jobs.
My other question is looking at it from a larger point of view. One of the issues that I’m focusing on a bit is polarization in our society. Is there an aspect here which causes an unequal ownership of data and therefore information that affects our society in terms of haves and have-nots of data and information that could lead to polarization in so many other ways, whether it’s what’s happening on the internet, the online world, social media and all that?
Mr. Aggarwal: Yes, 100% correct. We do have to be sensitive as we move forward quickly. We have to recognize that there will be advantaged and disadvantaged groups.
Let’s take two very clear examples. You are going to have Métis and First Nations persons who may have a different level of trust with those who are collecting and using data. We really have to have a nation-to-nation discussion to build up that trust or give them the tools and work with them to enable those communities to then be able to collect and use the data effectively on their own terms. That’s example number one.
Here is an example. I have a two-year-old son. I dread when he gets access to the internet and the consequences of that as people try to take advantage of young people. These are companies, but also individuals. Nefarious individuals try to take advantage of young people. This will affect his mental health and his ability to succeed and survive in our society. So there are two giant groups. But there are many small groups that will either be haves or have-nots, and we need to acknowledge that. Part of that is why we need a new social contract, giving individuals rights.
Senator Cardozo: In terms of industry, is there a sense that — and I’m going by stereotypes — there are more men than women in the industry?
Mr. Aggarwal: Yes, for sure, in technology today. I would say it’s changing pretty quickly. Our staff today, I think, is on balance. We have more women than men. Not quite more software developers as women, but I would say it’s changing very quickly. If you were to look at the university graduates, I think that most of the places we recruit from now have more women graduates than men. It’s changing. Not fast enough, but it is changing.
The Chair: I want to follow up quickly on Senator Cardozo’s first point. I’m assuming, given your comments, that you think the Volkswagen deal is exactly the wrong way to go about this?
Mr. Aggarwal: I don’t want to comment on any particular initiative. But I’ll reiterate that I don’t think jobs first is the way to go. I think intellectual property and data first are the way to go.
Senator Massicotte: Thank you for being with us today. I have two comments and then a question. From a communication point of view, I suggest strongly that you find a better way to use the words IT or data. Most people would say, “What is that?” I think you have to use simpler language. The other observation is that I think something like 10 or 15 years ago, we had lunch or dinner with many senior bureaucrats — and I also remember around 20 years ago, David Dodge complaining about how the public is not prepared to trust the bureaucrats or the leaders of this world, and I hope it gets there. I know that in Quebec we spent over a billion dollars on this medical card and they got nowhere. Same thing with the federal. I wish you luck. I really do, but it’s been a tough hill to climb for many.
You mentioned the volume of data and the amount of information that we have to store, and also that we have to change our privacy laws. But how will you compete against China? China has a lot of density of information, a lot of stuff out there. It’s very important. Secrecy law, privacy law. It’s very flexible. And you have to compete with that. How can we compete with that? How can North America compete with that when you have this bus load of information coming out every hour? How do you compete?
Mr. Aggarwal: Thanks for the comment, and I will try to adjust my language.
In terms of competition, we have some pretty remarkable things going for us. I’ll speak just to health care. We have a remarkable and diverse population, and that leads to higher quality data that is more generalizable than other populations, like China, for example. We have got heterogeneity, which plays in our favour. We have evidence-based health care systems that are respected around the world. When we produce knowledge and insights from that data, our ability to commercialize that — and I have travelled to dozens of countries around the world talking about health care, and I can tell you that they respect Canadian health care. So we have some of these things going for us. We have a single payer system, which also allows us to aggregate large amounts of data over large populations. We also have trusted health systems as it relates to research, our ethics boards and so forth are well-respected. Bringing researchers, drug developers and medical device developers here, if we get these pieces right and we get them together, we have competitive advantages.
Senator Yussuff: Thank you, Mr. Aggarwal, for being here. You are asking Canadians to give up a lot. Too often on the question of data, they believe that the people who currently have access to their data, we have seen breach after breach in many cases. They make people reluctant, and people ask, “Why should we trust you anymore?” Those companies that have had breaches have never come to terms with the fact that it is a fundamental violation of the trust between them and the individuals who give them that data.
If we’re going to have a new paradigm in this country, there has to be some penalty for the people who don’t take care of the data we give them, and we haven’t seen much of that in the context of the regulator. Regulator has been either in lapse or asleep at the switch. They acknowledge the reality, but do absolutely nothing about it. If you want to get Canadians to do more of this, I don’t think we have built a foundation to give the trust. Trust is an important thing, especially with data because they are very private matters.
The government does collect a lot of data on health care, you are absolutely right. I’m not sure what we do with it, but I know we do collect it. Your point is acknowledged. We have an aging population and that is not likely to reverse. It’s going to continue to age, and we will have to provide greater services for them. We’re learning that we’re not doing a good job of helping our aging seniors in this country. How do we break the log jam in the context of this new paradigm of requiring trust? Because without trust, we’re not going to go very far. Politicians are not going to risk their political career unless they can get the public on side.
Mr. Aggarwal: I completely agree with you on everything you said, senator. A new social contract needs to start with giving rights first. Other jurisdictions have done this. The right to control your data, the right to be forgotten, the right for your data to be deleted — these things need to be given to citizens to increase that trust so that they have an element of control over their own data. We have to move to the point where they have the right to consent when their data is used for a particular purpose. By the way, firms will tell you this is very expensive. Maybe today it’s expensive because we haven’t invested in it. Tomorrow it won’t be that expensive. Firms will catch up to enable these sorts of things.
Firms also need to be required to disclose the secondary use of data. What are we using it for? We need to be required to do that. There must be real, genuine penalties for breaches, and that has to go not just to the firm, but to their executive teams and their boards of directors. Just like we put liability on boards of directors for other fundamental breaches, there has to be consequences for not having governance in place over data. These are some of the moves that we make to build trust.
To put a really fine point on the demographic challenge, let’s really think about what’s going to happen over the next five, ten or twenty years in health care. The number of doctors that are going to retire and not be replaced, the increased competition from the rest of the world — huge swaths of the rest of the world are moving into the middle class and consuming more health care. If we think we’re all of a sudden going to be able to fix our recruitment problem by going to the rest of the world, the competition is going to get more fierce. There is just going to be a shortage of health care workers. That means we have to solve it in other ways. So using data to direct things like self-care to better enable personal support workers, nurses, pharmacists and others to fill in the gap, that’s where we need to move, and that is a data-driven exercise.
Senator Yussuff: Given the reality that those who have been arguing that we need to take a different approach — and for many of you and your colleagues, talking with yourselves hasn’t solved the problem. In a sense, you have a vision about what you think it should look like, but the reality is this is a national conversation. We have been having some of that here to be fair, but the reality is that the country is not having a national conversation.
Unless we are able to generate a national conversation — going back to my colleague, Senator Massicotte, you guys speak a language that nobody understands. If we can’t simplify it to the point where the population can understand it, you are not going to build public sympathy to move this paradigm. We’re going to be stuck exactly where we are.
So I recognize what you are saying. I understand the need for us to commercialize this and recognize the importance of it. But if we don’t get the public on side, our political leadership will not move in that direction. This is not anything new. You know this more so than me because you are trying, in your own way, to figure out how to get Ontario to move, and there is a recognition, but they have to build public trust. If they can’t build public trust — unless we have some national conversation — we are not going to succeed at this.
Mr. Aggarwal: Thank you, senator. I would say that in degrees we are succeeding and provinces are moving, but I would also say yes on national conversation. In the meanwhile, there are so many things that the federal government can do on its own, without the need for a big summit or an agreement between provinces, to move this issue forward. They are real, practical things that are very achievable in a short time frame.
Senator Yussuff: What are two things you would recommend? I hate to put you on the spot, but —
The Chair: You started with this list. You can pick the top two off your list.
Mr. Aggarwal: Yes, exactly. The top two? Federal privacy laws, it is an easy one — and by the way, popular. Citizens will love it. So you can move fast on that.
Number two is update our industrial R&D policies to really focus on commercialization, innovation and ownership of IP and data, not just basic research. Two big things.
An Hon. Senator: [Technical difficulties]
Mr. Aggarwal: Negative? No, listen, it’s —
An Hon. Senator: Everything is complicated.
Mr. Aggarwal: Yeah.
Senator Galvez: Thank you so much for this interesting conversation. Actually, it reminds me of a conversation I had at the engineering faculty at Laval University in Quebec City, where we were talking about big data, data mining, quantum computing within the data-driven economy, the care economy and the low-carbon economy. In order for you to sell what you are trying to sell, you have to integrate it with the whole knowledge economy.
You started by talking about social trust, and, yes, Quebec tried to use the health data from Quebecers and tried to monetize it and sell it, and it was not successful. And so we at the university, we are equipped with all these fantastic things, but couldn’t use it. Why? Because Quebecers didn’t want us to use it.
At the time, we discussed data governance, what the challenges were and other things. You have talked about the social trust, risk, the right to be forgotten, the right to consent, but if you can talk about three other things: preserving the boundaries between private and social; the governing rights of intangibles; and competition regulations. So you pick your first one.
Mr. Aggarwal: Okay. So the first one, I’m sorry — the second one was intangibles and third one was —
Senator Galvez: Preserving boundaries, private and social; governing rights and intangibles; and the competition regulations.
Mr. Aggarwal: The first one is an easy answer, and that’s because you don’t need to commercialize. You don’t need to sell the data. You need to use it, first and foremost — pick the easy use cases. The trust-building use cases where you are just delivering better outcomes for existing social services by using the data. Don’t sell the data. That can be a future problem. Just improve social services. Just lower the cost of social services. There are an infinite number of use cases that you can use right there. I don’t need to buy your data, right, and I shouldn’t, frankly, because that’s trust destroying, not trust building.
Senator Galvez: Thank you for that. Thank you for saying that.
Mr. Aggarwal: My pleasure.
The other two are more complex. Competition is probably a couple more sessions just like this, but I will strongly agree that we need a review of our competition laws, and we need to more strongly enable the Commissioner of Competition to be able to deliver better results for Canadians.
The Chair: I’m sure you can count on us to make that a recommendation. We have heard it so many times.
Is there — you are done your answer? Thank you.
Senator C. Deacon: Thank you, Mr. Aggarwal. Your insights are very helpful. I want to go back to that data point for a second because, every day, Canadians press “I accept” on something, and when they press “I accept,” they give away their data, and they don’t know what it’s being used for. They don’t know where it’s being stored. They don’t know — I often say Canadians are at the wrong end of a data vacuum. As you articulated in your opening comments, those data then are being sold back to Canada at a — we gave it away.
The amount of data in health care is growing faster than just about any other sector in the world, a 36% annual growth rate, or something like that, according to the RBC report. When you look at that, the privacy law points you have made are hugely important, but can you just outline — you mentioned a few of them — the key guardrails that when I press “I accept,” it is delivering to me a difference immediately in the trust that I have in what’s happening to those data because I think that can be part of our public education process.
Mr. Aggarwal: Thank you, senator. There is going to be a long list of these things. The good news is other people have done it well, so we can rip it off from the General Data Protection Regulation, or GDPR, we can rip it off from California legislation and others that are considered to be world leading in these areas.
But you should be able to accept and then unaccept.
Senator C. Deacon: Yes.
Mr. Aggarwal: Right. There should also be transparency in respect — and this should be mandated — of what your data is being used for. You should be able to audit that data. And there are some firms that are now starting to do this, but you should be able to reach into any of these firms and say, “What data do you have on me, and what are you using it for?”
Senator C. Deacon: Right now, Canadians have no idea — they don’t have enough information about themselves to know what other companies know about them. Probably the company is better informed about me than I am.
Mr. Aggarwal: Yes. Totally right.
One more thing, though. We have got to start teaching people when they are children.
Senator C. Deacon: Yes.
Mr. Aggarwal: So the reason that the literacy is so low is because we leave it to people to learn themselves. We have got to teach data literacy from when people are young.
Senator C. Deacon: One last point, just to finish off on this, the value of our data as Canadians — you touched on this a few times — we had a point made to us very early on in this study about how the differentiated value of Canadian data versus data in homogenous societies like China and Japan, that our data is much richer, much more valuable and much more useful in terms of deriving benefit. Can you speak to that because that’s a key advantage that we have just totally ignored.
Mr. Aggarwal: Yes. The fact that we are a public-payer system in health care allows us to aggregate, at least at a provincial level, if not in certain cases at a federal level because of other organizations like CIHI, CIHR and so on, even Canada Health Infoway. We have both federal and provincial levers in health care from a data perspective.
We have a remarkably diverse population, arguably top one or two in the world. From a regional perspective, in your home province, Nova Scotia, where we have genetic advantages where there are rare diseases that are associated with these jurisdictions, we have got to be able to take advantage of that for the benefit of those citizens. These are just a few of them, and that’s just talking about health care.
We don’t have to solve every problem on day one. We can pick those sectors and those use cases. Go to your home province and we look at oil and gas. We look at farming for much of the country. These are areas where we can have a strategic benefit.
What a problem housing will be for us. If that’s a national priority, shouldn’t that be an area where we prioritize from the perspective of data access?
The Chair: Just in terms of what Senator Massicotte was saying, which was kind of good luck with this, I was at a committee yesterday where we’re studying Bill C-18, legislation that comes out under heritage. It’s communications legislation — the Broadcasting Act. There is every focus on taking money from big tech and giving it to industries that are in trouble, but not a word about the data that is collected by big tech from us and how it’s used, not a word on supposedly modernizing broadcasting in Canada.
It’s to this point: How do we get people to start even thinking about this? They are so siloed. Today’s problem is let’s try and save this failing industry or that failing industry, let’s throw money at it, without ever putting it in the context of where we are in the world. We’re going to write this report and we’re going to say what many of you have told us repeatedly. But what else? I know you are knocking on doors, but this is about changing people’s mindset. It’s a tough call.
Mr. Aggarwal: Start with the social contract, as you are, but then move into use cases that Canadians can get behind that are real, strategic use cases for us as a society, not tactical ones. The ones that they can really get behind — that could be children and youth; it could be strategic industries like oil and gas, health care, housing. By picking the right ones to get started, that’s how you will also continue to build trust.
The Chair: Thank you very much. This has been a nice end to a lot of the testimony we have heard over the last few weeks, and we appreciate your clarity and your direction. We’re just going to take that list and work on it. Sachin Aggarwal, Chief Executive Officer of Think Research Corporation, with some pretty pointed and strategic advice for us. Thank you again.
We will proceed today as we look at business investment in Canada and some of the issues surrounding that.
We have the pleasure of welcoming from Dallas, Texas, Mr. Kurtis McBride, Chief Executive Officer, Miovision. We appreciate you joining us today. You can begin with your opening statement and then we will have questions for you. Thank you.
Kurtis McBride, Chief Executive Officer, Miovision: Thank you very much for the opportunity to speak to the committee. I’m calling in from Dallas. I apologize that I couldn’t be there in person. I was going to wear my cowboy hat that I got down here, but decided not to.
The Chair: You want to look good.
Mr. McBride: Yes. I went to the University of Waterloo and built the company in Kitchener. I’m a very proud Canadian. I have two young kids and really want them to grow up with the same opportunities that I did, and that my parents did before. A lot of my comments today are sort of coming from that perspective. I’m just really trying to share insights that hopefully can inform policy that can continue to build this great country that we’re all part of.
Miovision sells software and hardware to cities all around the world that helps them to understand and optimize the flow of traffic through intersection networks. If you can imagine, we put a camera way up in the air that can turn video into traffic data about cars, trucks, buses and cyclists, and then we improve and mitigate congestion and help cities improve safety.
In that work, I have an opportunity to travel all over the world, sell in different markets and ultimately see how various countries do innovation policy.
In Canada, we generally have an innovation policy that focuses on operating expenses for companies or invests in primary research through universities. The philosophy is if we build great products, then commercialization will follow. In many other jurisdictions — I’ll use our friends south of the border as an example, but it’s true in Germany, it’s true in South Korea — the focus is very much — not to say that they don’t support R&D and fundamental research — on a more direct approach to commercialization.
They don’t do that necessarily by directly supporting individual companies, but they’ll do it through regulation, procurement and standards to basically invest in growing markets where they have companies that have competitive advantages that can export globally. Rather than funding the R&D, they go out and procure, strategically, relative to a company that they want to see grow. They’ll build the market around that company, let the company compete against other companies and use that as a way to drive innovation policy.
I’m sure this committee has heard other examples of that from other folks over time. But I wanted to provide one such example that traffic is a world I know well, and I wanted to illustrate the point with one example that hopefully will resonate.
Canada has signed up to global targets to reduce emissions. Roughly 40% of all the emissions that come from cities, from urban centres, come from transportation. In Canada, we have approximately 40,000 intersections — roughly 1,000 to 1 if you think of population to intersections — across the country. When products like Miovision, not that we’re the only ones, which is essentially a smart intersection technology go into an intersection, let cities start to measure the performance of those intersections and make active and real-time improvements to the flow of traffic, we generally see anywhere from 50 to 200 tonnes of emission reduction at the intersection. If you do the math, let’s say it’s 100 tonnes and 40,000 intersections, that’s roughly four megatonnes of carbon reduction that could be achieved through optimization of traffic flow as a national imperative.
In our view, we have a publicly stated national imperative to hit our climate emission reduction targets. We have a national imperative to grow the economy, strengthen domestic companies and enable them to export and create jobs. I hope this doesn’t come across as a bias, it’s more that I know this world well, but here is an example where standardization, regulation and procurement could be used strategically to achieve a national objective or at least contribute significantly to a national objective of emission reduction while also growing and expanding a market that Miovision operates within, which isn’t to say that all that business that would flow from a decision to create an imperative like this would flow to Miovision. We would have to compete in an open market with domestic and foreign companies. But we believe we have one of the best solutions in the world to do this. We believe we would win 8 out of 10 of the procurements. This is an example of where a focus less on fundamental research and investment in R&D and more of a focus on using regulation, procurement and standards can not only achieve the goal of growing domestic companies, creating jobs and expanding the tax base, but can also help the country achieve some of its national imperatives.
I’ve spent a lot of time with my peers — Mr. Aggarwal just spoke, I know him well. I have other peers in energy, in medicine, in agriculture, and we all have examples of where little tweaks in regulation, procurement and standardization could really supercharge our businesses but also help the country achieve its strategic objectives.
So again, I’m happy to take questions on that, but I wanted to provide that as a basis for conversation.
The Chair: I want to thank you for your common sense. People living in Toronto and Vancouver are dealing with bike lanes which are supposed to be helping the environment, but what you see is cars lined up for miles idling because they have reduced the road to one lane. It’s really counterproductive and coordinating lights is such a simple thing to make a real contribution. This is very helpful.
Senator C. Deacon: Mr. McBride, thank you very much for being with us today. I am grateful to be able to hear from your company. I was thrilled to see the financing round that was reported in Betakit 10 days ago. We’re studying business investment. You’re an IP and data company focused on a very important public policy area that really affects citizens as it’s dealing with climate-related issues. You’re doing it with private business investment, and this is what our focus is.
For me, this is a great alignment: public priority, strong business investment in a down market, related to data and IP. Clearly, how we manage data and how we manage intellectual property is crucial, and I’m happy for you to speak to those more in terms of specific recommendations. But what I would love to know, you touched on regulations, standards and procurement. Those are so important to catalyzing the growth of these opportunities, like Miovision. Could you go into some detail about those three? I don’t want to stop you from speaking about data and IP, but I would love to get advice from somebody who has built such a success story. You work with 17,000 municipalities, and you’re seeing different regulations, different standards and different procurement processes around the globe. Give us the best practices in those areas.
Mr. McBride: Absolutely, and I can probably leave your two comments together, senator. I sat on the digital strategy advisory panel for Waterfront Toronto during the City of Toronto’s Sidewalk Labs project. What that demonstrated is that in the consumer internet, we have all given over our personal information to the large technology companies in exchange for free cat videos. We get services back for providing them with our data. The consumer internet is built up around that business model. That ship has sailed. There is not much we can do to put the genie back in the bottle. But what the Sidewalk Labs project showed us was that there is a different internet that applies to civic data — built form data — and civil society rightfully had concerns about how that data would be used, monetized and who would benefit from the monetization. I think, fundamentally, the civic data internet needs to have a strong social licence component. It can’t be purely about providing data monopolies with an economic advantage in exchange for free services. There is a significant social licence aspect when it comes to data that comes off the built form. I suspect that is probably true for health data as well.
To answer your question about procurement, standardization and regulations, I think if we have a national strategy around the data that comes off the built form and we accept that needs to have a social licence aspect to it, my world is software and technology. If we’re intentional about our social policy, which is we want that data to be governed in a way that both creates economic opportunity and respects social licence, there are things we need to do from a standards and ultimately from a technology implementation perspective that assures that outcome. There is a direct correlation between the policy and the technology we use to implement the policy.
The way that governments can assure — at scale across lots of different vendors, municipalities and use cases — that policy is implemented in a way that respects social licence is through defining standards, using those standards to create regulations and then linking the procurement of the technology to those regulations and standards.
If we allow private enterprise, technologists like Miovision as an example, to define the standards around how data is governed, stored and utilized, the risk is that you’re leaving it in private hands who ultimately are responsible for shareholders, and we will make decisions relative to what’s good for our shareholders, not necessarily what’s good and compatible with social licence and democratic principles.
It’s counterintuitive that a private company would be sitting here saying, “Please help to define those regulations, create the standards and drive procurement around it.” What the Sidewalk Labs project showed us is that if left to its own devices, you will see significant public backlash, which will ultimately impair the growth of this technology in society.
These concepts can be abstract, maybe even esoteric, in nature, but I commend the committee for striking this and having this conversation because it is really important.
Senator C. Deacon: I want to say thank you. It is really important advice that the path to be able to get good data and yield really good social benefits out of those data must start with making sure that citizens feel protected and served through the use of those data.
Mr. McBride: Absolutely.
Senator Loffreda: Thank you, Mr. McBride, for being here with us.
I’d like to continue on that and maybe dive a little deeper into how urgent it is in developing a national data strategy. We’re studying business investment in Canada. How would that help, and how important is it to increasing investment in Canada? We all know by now that data is a driver of economic growth and innovation. We all agree with that.
You’ve talked and discussed civil data — trust and social contract with Canadians. But we see leaks at the highest levels. We’ve seen the leak of classified U.S. intelligence documents, and the regular Canadian sees that privacy is such a huge concern. Do you have any insights or thoughts on how we can build and develop that trust? How realistic is it to get there? If other countries are doing it, what are they doing correctly that we should be doing?
Mr. McBride: Thank you for the questions, senator.
I will share two thoughts that are interrelated. One is that we have a lot of precedent in the management of natural resources in Canada, and while that’s not directly applicable, the analogies are transposable. If you are pulling oil out of the ground, oil is a very valuable resource. It has lots of utility and can be used to improve the lives of citizens all over the world, but it’s also risky to transport it. There are environmental considerations. You don’t want to have an oil spill in a wetland.
We developed regulations, policies and standards enforcement mechanisms to ensure we responsibly move oil from point A to point B to get it to market where it can create the advantage.
Data is no different. It’s a natural resource. It’s got certain attributes that make it different than things like oil, but it is fundamentally a natural resource. It can be used for good, if it’s used, licenced and governed properly. But like oil, it can be used for nefarious purposes as well.
Thinking about it in that way, it’s not good or bad. It’s the use of it, the appropriate stewardship of it and respecting things like social licence that we really have to get right. That’s the right framework to think about it.
Part of your question was around urgency. I can share that 10 years ago, give or take, data used to be sort of the by-product of intellectual property. So you had a patent, wrote some software around it, it generated data and the data was the output of that, but the IP was the valuable piece.
Then this thing called deep learning, known more commonly as artificial intelligence, or AI, came to the scene. After that, you used data to write software. You used to use smart people to write software, but increasingly, you train artificial intelligence algorithms using data.
Data used to be a waste product of intellectual property, and then it all of a sudden became the most valuable part of the technology industry because whoever has the data can train the AI, which is the true value driver of the technology economy.
That started to be true 10 years ago. I’m sure you have all seen or played with ChatGPT. It has reached a crescendo point now. The urgency comes from technologies like ChatGPT or some of the technologies in the pipeline that will launch shortly, such as Auto-GPT — and I won’t get into all the details — but if ChatGPT was the first mammal, Auto-GPT is the first human.
The urgency is that these technologies will transform not just the way we are productive, but they will transform the very fabric of society over the next two decades. To put this in context, I read an academic paper recently that noted that during the Industrial Revolution, there was roughly a 20% increase in productivity in the global economy as a function of the invention of the steam engine. The estimates now are that artificial general intelligence, or AGI, as it starts to come online and spread itself out through the economy over the next two to three decades will result in us seeing a 40% to 50% increase in productivity across the global economy.
If you think not just about the economic implications but the social and political implications of that, it’s going to be more profound than the Industrial Revolution. As a technologist, I have a front-row seat to that transformation that is coming, but it’s really important that policy-making starts to reflect what’s coming. Otherwise, it will be on us faster than we know, and we won’t be able to respond.
Senator Loffreda: Thank you.
The Chair: Thank you very much.
Senator Massicotte: I have many questions. I appreciate your summary — what happened in the last few hundred years relative to technology.
You referred to ChatGPT. When you deal with that issue, as you know there are over 1,000 scientists — highly reputed people in artificial intelligence — who have recommended we freeze that. What are your comments? It’s scary when you read it. Those 1,000 people are smart, and they think we need to put it on pause.
Mr. McBride: I’m an entrepreneur, so I see the world as glass half full. I see opportunity in abundance when I look at the future.
But the more that I understand about what’s coming online with artificial intelligence, the question of whether we even could pause it if we wanted to is a question, but I’ve never seen anything coming online as fast with as profound of an impact.
I don’t want to use all the clock here, but I will share a brief story of an experience I had last week. There is a technology called Auto-GPT. It’s being developed by the same people who developed ChatGPT, OpenAI. Auto-GPT is essentially a workflow technology. For example, I told it to write a Wikipedia page about Kurtis McBride and publish it to Wikipedia. It goes away and thinks about how it will do that, and it comes back and says these are the steps: I will go to Google, research Kurtis McBride, research what it takes to put that information into Wikipedia, write the article and publish it. It asks if it can go do that, and you say, “Yes.”
It goes through those steps. It searches Google for you, pulls fundamental research down, turns that into a Wikipedia page, asks you for your username and password to post it and that all took eight minutes. Otherwise, it might have taken someone who didn’t know anything about Kurtis McBride their entire day to create that article.
The implications of that are huge for all kinds of different things. You can start to manifest intention using software. That’s profound.
I’m a technologist; I’m not in policy-making. I don’t know what the answer is. Do we slow it down? Do we build capacity in the government to think about it? But I would say that I’ve never seen anything like what’s coming online, and I think there are both great opportunities in it to create new wealth for the country, but there is also risk in it if we don’t actively manage it.
The Chair: I’ve had two or three friends of mine give that exact same instruction to do a bio. Was yours accurate? Because theirs was not.
Mr. McBride: I would say it had errors in it for sure, but the errors weren’t necessarily greater than the errors that would have been in it if some random person had written the Wikipedia article. I did take it down.
The Chair: That are in Wikipedia anyway.
Senator Massicotte: With a couple of months of greater experience, I suppose those errors will disappear, from my understanding of the software.
A couple of years ago, when artificial intelligence took place so much, there was a significant group of people who thought that for all this stuff, there should be a switch — forget the pause — to put it off because militarily, and so on, it could get very difficult. Any comments on that?
Mr. McBride: Again, I’m a technologist, so I will be cautious about weighing into the specific public policy, but I do think that, at the very least, you want to be able to unplug it. Essentially, all the data is out there. Increasingly, the ability to actuate outcomes is digital and data-driven. Essentially what happens with technologies like Auto-GPT is the more you start to plug into the AGI, the more control you are giving it. That’s not to say it will necessarily turn out badly. It could drive a world of abundance, create economic activity and new types of jobs. It will not necessarily come online in a bad way.
But I think the message I would leave is not that dissimilar to the message that I shared earlier about the importance of being intentional with standards, regulations and procurement. This is coming. Change is going to happen, and it will either happen to us or through us. I think the message is, “Let’s be intentional about it.” Let’s make sure we use this technology in ways that are compatible with Canadian values and drive the strategic imperatives we have as a country. Because if we don’t do it, then someone else’s imperatives or values will be built into these technologies, and we will be on the receiving side of those.
Senator Galvez: Thank you very much to our guest and for the interesting conversation. For me, smart cities are at the intersection between the data-driven economy, the well-being or care economy and the low-carbon economy. If we can go in that direction of creating more smart cities, that will be fantastic. You are right that there are many examples around the world in South Korea, Japan and Europe.
The big issue is we need investment, and this is what my colleagues are worried about: how we generate investment that goes in that direction. You pointed out three issues: procurement, regulation and growing markets.
In Canada, we have had a policy on green procurement since 2018. We are now moving. So that was not enough.
Can you comment on how to influence this increase in investment if we go into a data governance policy and into aligning our finances with climate goals?
Mr. McBride: Thank you, senator. I love this question.
I will give you one example that we have been thinking about and about which we have had some preliminary conversations with parts of the government.
One of the things that happens when you optimize the flow of traffic through a city is you reduce emissions, so we use the 100 tonnes per intersection average in my opening remarks. Cities have limited budgets, inflation is hitting them just as hard and supply chain issues are hitting them just as hard. The municipalities are not always in the best position to make those investments, even if they want to. One of the things we have been trying to provide leadership on in our industry is around the development of a linkage between the emission reductions that happen through products like mine and my competitors’ and the carbon markets.
Canada just created a federal registry. There are voluntary registries as well where if you can demonstrate a verifiable reduction in carbon emissions, you can turn it into a carbon credit and you can monetize that as an asset. Our view is it’s the city’s infrastructure. The city should own that carbon asset. We will try to create the methodology. We would love it to be in the Canadian registry. If not, it will be in one of the voluntary registries. But by creating that linkage between the emission reductions we are generating in the market anyways, albeit at a slower rate because there is not as much money as there needs to be to drive that transformation, and creating that linkage to the carbon markets, all of a sudden, there is a new source of revenue for the city to enable them to move to a smarter city.
But this is an example where Miovision is trying to do its part to provide leadership on this, talk about it, educate and encourage it to happen, but it has been a challenge, to be perfectly honest, to get parts of the Canadian bureaucracy to think about it in that way — that this is really using free market economics as a way to accelerate decarbonization and accelerate towards smart cities.
If there was a small tweak to the way that we think about that carbon registry and try to link it to both environmental outcomes and also economic outcomes, I think the opportunity there is tremendous.
Senator Marshall: Thank you very much for the information you’re giving us.
You said early on, or maybe the chair did, that you trained at the University of Waterloo but you’re in Texas now, so I don’t know if we should read something into that. I would be interested in your views. You probably had experience — well, you would in Canada, the U.S. and maybe other countries — what stands out for you with regard to comparisons? Where are we in relation to other countries? I’m not looking for just the negative, but also the positive. I know we’re behind the eight ball, and it is overwhelming, but if you see any positive aspects, could you talk about those? I am interested in how we compare, and am very sensitive to people moving south of the border and also to other countries.
Mr. McBride: To be clear, I live in Kitchener, I’m a very proud Canadian and I’m only here for five days at a trade show trying to sell Canadian technology to Americans.
One of our national pastimes as Canadians is to criticize ourselves on all the things we need to do better. We absolutely do lots of things well. One of the global competitive advantages we have in this data economy is that Canada’s brand is very trusted around the world. When I travel and talk about how the company is from Canada, that opens up doors in foreign jurisdictions because my company can be trusted because Canada is trusted.
In the data economy, trust is fundamental. It’s the underpinning of all of it. We talked about social licence. If you are going to build a smart city, and we made a reference to Sidewalk Labs earlier, but do you trust Google to build your smart city? Or do you trust a Canadian company that operates in a regulatory environment that ensures the data will be properly stewarded, social licence will be applied and privacy will be respected? I think the culture and the values we have are actually quite compatible with the data economy that needs to get built up around the civic data as opposed to the consumer internet business models and values.
If we could get organized around linking those values to policies that created intellectual property and built businesses around them, there’s a massive export opportunity there. There are lots of other things that are great about Canada, but that one, with respect to this conversation at least, is the one that comes to mind.
Senator Marshall: All we hear is that it’s government regulation that is slowing down a lot of progress within the country, and you did mention that area earlier. Is that where you see our biggest problem? If there was one thing that you would like that we could change which would make a big inroad, what would it be?
Would it be the regulatory regime?
Mr. McBride: It’s nuanced. The short answer maybe is yes, but the nuanced answer is linking the strategic imperatives we have as a country to the regulatory regimes and then ultimately to the funding flows, whether it’s procurement or funding flows down to the provinces and cities. It’s that entire continuum that we need to think about.
If we only fix one part of it, it may just move the bottleneck to somewhere else. But really what are the pillars that we are saying are important to the country? Health care, protecting our kids, getting to a zero-carbon economy. I think we do a pretty good job of articulating those strategic comparatives that we hold dear that link to Canadian values.
Where I think we fall down is then linking those imperatives to the regulations, the standards and the procurement flows to actually assure that those outcomes are occurring. So, yes, I guess with the asterisk that there is a lot of nuance in how we do that, but it’s really that end-to-end workflow, process flow that we need to make sure that we’re constantly looking at, asking if all the dots are connected here.
There was a program that was created called Accelerated Growth Service, or AGS, a second three-letter acronym relative to this conversation. But Accelerated Growth Service was an attempt to pull together all the grant programs and all the equity and debt funding programs into one interface. So now as a company, I can come and have a conversation with an AGS representative and I can access the Business Development Bank of Canada, or BDC, Export Development Canada, or EDC, the Industrial Research Assistance Program or the Federal Economic Development Agency for Southern Ontario, or FedDev Ontario. It was a great program, but it only dealt with operating expenditure and balance sheet. It didn’t deal with revenue.
If it could be expanded to include having the ability to have a strategic conversation about regulations, about standards, about procurement policy in addition to grants and capital, all of a sudden now you have a single place that cuts across the whole of government so that a company can come in and have a strategic conversation with the federal government about what would grow the market around that company in a holistic way.
Senator Marshall: I have never heard of that service, and we deal with all the government departments. Where is it housed?
Mr. McBride: It’s a good question. I would speculate it comes out of ISED, but I can do some digging and follow-up. But Accelerated Growth Service is the name of the program.
The Chair: We will find out where they live.
Senator Yussuff: Thank you for taking the time to chat with us.
You said some interesting things in the context of facing this challenge. Of course, living in Toronto, I watched the polarizing debate we had about Sidewalk Labs and its subsequent failure. Again, it speaks to the distrust that citizens have of big companies getting access to very lucrative data, and nobody had any confidence despite their political class and didn’t really understand why that was so pronounced.
You have a different take, and I think this is unique for somebody in your field to actually have some confidence that public good is what should be paramount in what we are doing here. Given our municipality challenge in the context of not having enough resources to do the things for citizens — and this is right across the country because of how we fund them — I think there is a real opportunity for us to think through how this question can be solved because municipalities do collect enormous amounts of data. They are the closest government to their citizens, and more importantly, they are the ones trying to figure out how to best serve their citizens in the long-term.
Given the challenge we have with the provinces, municipalities and their responsibilities; the federal government should have nothing to do with that. Second, procurement has always been stymied in the context of international trade regulation. We don’t do anything because we don’t want to violate World Trade Organization, or WTO, rules or what have you. How do we bridge this gap in the context of trying to get the country to seize an opportunity to be much more forceful in regard to how we do procurement to help Canadian companies grow and develop but equally make sure the benefits stay here?
How do we build the confidence of our citizens to show that you can actually harvest data without having to worry the data will be compromised in a way that Torontonians were very adamant about? They didn’t want Google to have anything to do with their data.
Mr. McBride: There is a lot in your question. First on the Sidewalk Labs example, social licence can’t flow from a private company. I can’t say I grant social licence. It has to come from the public sector because that is where the trust lives. So a lot of times things come down to organizing principles.
I’ll give you an example. In Ontario, where I’m from, there are 400 municipalities. Each one of them, plus the province, has an open data mandate. They are all investing. They all have staff working in open data departments. But there are 400 different strategies of what that means, 400 different standardizations of data. If you think about traffic data, we have 400 different ways to organize and distribute traffic data. The way data works is that it’s not a particularly valuable asset when you have 400 different ways because it’s very hard to ingest it and make use of it.
As an organizing principle, if you took all of the spend that is happening across all 400 of those municipalities and you tried to organize it in a way that tended towards standardization and mixed in governance around social licence of that data — how it can be used, by whom, for what purpose, for how long, what happens when you are done with it — you could take the existing spend and you could drive 10 or 100 times the outcomes if we just spent the time designing the system better.
I’m close to some work that’s happening in the Ontario government right now where there is a consideration to try to stand up a data utility or authority that would try to do some of this work. I think it’s a great example of how government can take a role in it. But, yes, there is a lot in your question.
Fundamentally, the role of the government isn’t necessarily to build the technology, sensors or databases, but it’s really to think about that social licence layer, provide the leadership — even if it’s private companies coming in and providing their perspectives — but provide the convening role to ensure that we’re doing that. Ultimately, I have built lots of relationships with folks inside civil society that came out of the Sidewalk Labs project, and there is generally a lot more alignment between folks like me on the one side and folks in the civil society world than might be obvious because we both want the same things — a better future for our kids and a better economy to drive the country. There is a way to do both.
Senator Yussuff: If I may, how do we deepen this conversation with our citizens? To a larger extent, if we don’t get them on side, the challenge will remain quite daunting to break the barrier and achieve the greater outcome that our municipalities are struggling with. Every day you can hear the call for the fact that they are struggling with not having enough resources, but yet there are other opportunities for them to gain resources from the incredible data they have of their citizens and their community, and, of course, it is not seized upon right now.
Mr. McBride: Again, I am a technologist, so I don’t want to wade too much into the public policy question, but I think it’s really use cases. When I buy something on Amazon, I don’t talk about the TCP/IP exchange that underpins that transaction. I’m not talking about the protocols on the internet that enable me to buy something from Amazon. I focus on the use case of getting my package the next day.
With citizens, the conversation is often about the data, the privacy aspects and the economic value, and it’s not to say that those are not valuable conversations, but they go against what the citizen really wants, which is to live in a safer, cleaner, more economically productive or advantaged locality. If we can focus the conversation on how doing all this other stuff properly — with social licence, with standards, with intent — can create fewer deaths on the road or less carbon in the atmosphere or more economic opportunity for start-up companies, I would like to believe that the citizens will get excited about that stuff, provided that they trust the institutions that are governing the underlying principles on which this stuff can be built.
The Chair: Thank you very much.
Senator Cardozo: My question is about ChatGPT. I apologize that I missed your opening statement. I stepped out for a few minutes, so you may have covered this.
First, can you tell us a little more about Auto-GPT and what is entailed there? But in terms of ChatGPT, there is sense out there — I heard the phrase “humanity to cross the Rubicon” a couple months ago. You talked about this being more profound than the Industrial Revolution. Can you tell us a bit more about why it is so profound and why we don’t seem to be aware of it? But some of the things I think of is that this technology throws the entire education and research system into chaos because why would a student spend days and months researching a paper when they can ask ChatGPT to do it in eight minutes, as you point out. What else is there happening?
Right now, it seems to be fairly benign and neutral, but I’m sure it can be manipulated easily by all sorts of political forces. It can deepen and inflame polarization, political agendas, chaos and all that kind of stuff. Am I being too pessimistic about that?
Mr. McBride: Honestly, I don’t know. I would love to tell you that you are, but I don’t know. Like all technology, like all tools, they can be used for good and for bad.
To your question about Auto-GPT, let me try to paint a picture, okay? There is ChatGPT and there is Auto-GPT. They are related to each other. ChatGPT is a step in a workflow, okay? So let’s say, for example, Miovision wanted to increase the size of our social media audience as a way to drive increased business volumes. I want to double the number of the eyeballs that are looking at my marketing content.
Traditionally, I would hire a bunch of smart people who were good at coming up with content, good at using the tools, good at evaluating the results of an attempt to use the tools and then we would iterate until we learned how to grow the audience. ChatGPT comes along, and it can do the content creation steps. So I can instruct ChatGPT to write me a blog post, to write me a LinkedIn article, to go find the 17 different personas that I should be targeting on LinkedIn. But, ultimately, a person is still putting the steps together. The person is saying, “First I’m going to research the personas, then I’m going to write this article, then I’m going to generate this video content, then I’m going to post it, then I’m going to look at the outcome and see if it worked and then I’m going to iterate.”
Auto-GPT is the person who is doing the steps. With Auto-GPT, I just tell it to double the size of my audience on social media, and it will go and think about what the best practices are that would get me there, and it might come to a more advanced conclusion than my smart team of people came to about what the right steps are. Then it will go and use ChatGPT to do the steps. All of a sudden, the skilled worker of tomorrow isn’t the one who is really good at doing each of those steps. It’s the person who can imagine the intent, who can come up with the objective that we want the AI to go and do. That’s not Auto-GPT’s ability today, but I bet you within 12 months, the vast majority of digital marketing is done using tools like Auto-GPT.
The implications for it are profound, if you imagine, “Hey, Auto-GPT, double my net worth.” Or “Hey, Auto-GPT, create this public policy.” How we use those tools can be used for great, positive outcomes in society, but it could also be used for negative outcomes. If you think about social media today and the impact it’s having — say, the impact tools like TikTok are having — on our children, instead of human-designed behavioural engineering, imagine now constantly improving Auto-GPT-driven behavioural engineering in social media. These things could get out of control if we don’t think about the regulation around it.
So are you being pessimistic about it? I hope not. I hope the future is more like Star Trek than Star Wars, but time will tell.
The Chair: Okay. We’re just trying to keep focus here on business investment.
Senator C. Deacon: Mr. McBride, thank you again very much for being with us. Your comments have been so helpful.
I want to focus in on how we can turn the tide, and the image I use is that we’re at the wrong end of the data vacuum. How can we turn that around and get to the right end here in Canada where Canadians are seeing their data being used for the benefit of our collective society and ourselves, not necessarily a foreign entity using it for their benefit? Data portability is a really important part of that, and also, I would think, the right to be forgotten.
If we start to see organizations losing the source of free data that they have had, that they haven’t had to deliver as much value to consumers as they might and consumers choosing to be forgotten by those organizations and moving towards organizations that are delivering social trust and are viewing consumers’ privacy as paramount, I can see a fairly rapid transition to where we are choosing to deal with organizations that we truly trust and that those organizations are growing quite rapidly in Canada from Canada.
Can you spell that out from your perspective? Is that a reasonable belief system? Is that achievable? Am I just too optimistic?
Mr. McBride: No, not at all. Again, everything is about the organizing principles and being intentional with the organizing principles.
One of the things that you are touching on there is the concept of data sovereignty. As an individual, the question is really around am I granting an ownership right over my data, which is kind of the current paradigm, right? So when I use Facebook, Google, Netflix, when I click “yes” on the user licence agreement, I’m basically saying, “You own my data, okay? I will give you my data in exchange for access to your services. And then you are going to do whatever you are going to do with it, within the bounds of the law, and I have no further claim to that data.”
The alternative would be a licence right to my data. If we think about data sovereignty as I always own my data. Google can never own my data. Facebook can never own my data. I will always own my data. I am free to grant a licence right to my data under certain criteria. Some of those criteria might be inscribed in law in ways you are suggesting. Some of them might be my choice, and maybe I can change the licence agreement that I have over time.
As an example, I’m happy to licence you my data, but I want a revenue share from my data. So if you use my data, I want 30% of all the revenue that you ever generate from my data. I want that to accrue back to me. Or I’m happy to grant you a licence to my data, but these are the allowable use cases that I’m going to allow you to use it for. You can’t use it to target me with marketing, but you can use it to improve the services that you provide to me.
Today, we don’t, as citizens, have sovereignty over our data. We click “yes” on the licence agreement as if we could have any capacity to negotiate it, and then whatever is going to happen with that data, happens with the data.
Frankly, I don’t want the right to be forgotten, I want the right to benefit from my data. If you make it so that I am forgotten, I don’t get to benefit from improved services. I don’t get to benefit from the monetization of the data. It’s a very blunt instrument to achieve an objective. I would much rather have sovereignty over it and be able to benefit from its use.
Senator C. Deacon: Really important insights. If I were to put this back to the business investment side of things, those organizations that honour my sovereignty over my data are going to be the organizations in the future that are going to, from my standpoint, attract the most investment because they are attracting the most engagement and the most opportunity. Is that a fair assumption?
Mr. McBride: Absolutely. If we write the regulation, the standards and the procurement around that principle. It’s one thing that we have the principle, but then we have to go and create the market dynamics that make it true that the companies that follow those principles are more profitable, grow faster, have more user impact than the ones who decide to continue to run the predatory data monopoly business model. Because today what’s true is that those business models are structurally more profitable than the business model you are talking about, but that is a function of policy regulation and the standards, not necessarily a truism.
Senator C. Deacon: Thank you very much.
Senator Massicotte: Tell us the options you have. Maybe I’ll negotiate 35%, but I presume you are just joking. You are not going to call Netflix and say, “I want to speak to the president because before I use this film, I want to negotiate a better deal.” I presume it’s all hypothetical; it doesn’t occur in real life.
Mr. McBride: It would be impossible for me as Mr. McBride to phone Netflix and say, “I want 35%.” They would just say not to use their service and go away, right?
However, as a national imperative, through regulation and legislation, if we said that all video content companies need to reflect the value of the data that they generate from their users in a way that looks like an economic return that shall be no less than X relative to the use of that data, all of a sudden you change the market dynamic. You change the competitive bases, right? Now Amazon Prime versus Netflix are forced into a situation where they have to compete on an economic sharing model as opposed to just on a content model.
I can’t do that as an individual citizen, but if 35 million of us showed up and did it, we certainly could.
Senator Loffreda: I’m convinced at this point of the importance of data, data sharing, growing our economy and driving business investment — and I’m almost certain my colleagues are — but how do we take it to the next level?
Are Canada’s privacy laws sufficient to ensure and protect the personal information of Canadians? There’s always a privacy concern among Canadians and citizens, and we have talked about data sharing and social trust being so important. Legislating genuine penalties for breaches to firms, employees and boards, would that increase the confidence level and increase data sharing?
We have discussed rights first to citizens, the right to consent, firms must disclose usage — many different ways we can improve legislation going forward. Where would you put your priorities?
Mr. McBride: Privacy is super important. I think there is a need to modernize our privacy legislation in the country, but we have to think about this more comprehensively. Privacy is one aspect of social licence; it’s not the only aspect.
We don’t want to create an environment where Canada becomes less — it’s a big world. People can develop IP in lots of places. You can use GDPR as an example. A lot of the data and AI companies are not coming out of Europe because they took a particular viewpoint on data that made it not competitive anymore to build data companies in Europe. You are seeing them now being built in the U.S. and China.
That’s not to say that the U.S. and China are doing this right either. In Canada, if we focused, in my view, more on trust as the overall imperative as opposed to privacy specifically, we might get a more comprehensive view.
Privacy is a very important piece of this. We have to modernize our privacy laws. I would stress that privacy is only one aspect of social licence. Striking that balance between economic opportunity and trust is the real win here.
The Chair: I want to come back to your reference to dealing with ISED, EDC or BDC, or whatever it may be, and you said what’s lacking, while there is helpfulness, is that there is not an ability to have a strategic conversation about whether it’s protecting data, protecting IP or growing markets. Is there any part of the federal government you think has their head around this?
Mr. McBride: I have been super impressed with how EDC is showing up in the world these days. It may be the only place that’s really got it figured out.
If I could wave my magic wand and only have one thing come out of this discussion, it’s very difficult for a private company — or 440 people, but in the grand scheme of things, we’re very small — to activate the whole of government.
In order to coordinate a program like I’m talking about — creating a strategic initiative around modernizing traffic signals — I bounce around between ISED because I’m a technology company, between the ministry of the environment because this is an environmental piece and between transportation because it’s going to touch on intersections. The truth is all of them need to be involved and bought in, but it’s very difficult for me to get that activated.
If I had a way to interface horizontally with government or if I had a way to interface vertically with government where I could sit down and have a strategic, objective-based conversation, and then the government had capacities to go in — if it decided that was something that it cared about and wanted to do — and activate the various parts of government, that would be game changing not just for me but for many of my contemporaries.
The Chair: One-stop shopping?
Mr. McBride: Would be amazing.
The Chair: Thank you very much, Mr. McBride. This has been very helpful and insightful.
Mr. McBride: Thank you.
(The committee adjourned.)