THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Wednesday, May 3, 2023
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 4:15 p.m. [ET] to study matters relating to banking, trade and commerce generally; and the subject matter of those elements contained in Clauses 118 to 122 concerning cryptoasset mining in Part 2, and Divisions 1, 2, 6, 7, 26, 33 and 37 of Part 4 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Hello to everyone here in the room and joining us remotely. This is a meeting of the Standing Senate Committee on Banking, Commerce and the Economy. My name is Pamela Wallin, and I’m the chair of this committee.
I would like to introduce the members of the committee today: Senator Deacon, Senator Gignac, Senator Loffreda, Senator Marshall, Senator Marwah, Senator Massicotte and Senator Smith. Also joining us today are Senator Cardozo, Senator Galvez, and, perhaps a little later, Senator Duncan.
Let me explain what we’re doing. For the first portion of our meeting today — the first hour — we are going to continue our study on business investment. We have taken all our witnesses and condensed the time, so my apologies to the witnesses. I also request that my fellow members here keep everything concise and focused. We would appreciate that. In the second half of our meeting, we will be focusing on the budget and the Budget Implementation Act. The same rules will apply there, as we have something like 15 witnesses with us today.
For our first panel, we have the pleasure of welcoming in person Mr. Hendrik Brakel, Senior Director, Policy and Government Relations at the Canadian Venture Capital and Private Equity Association. Virtually joining us is Myra Tawfik, the Don Rodzik Family Chair in Law and Entrepreneurship and Distinguished University Professor in the Faculty of Law at the University of Windsor. Thank you both for joining us today. We’ll begin with an opening statement from Mr. Brakel, followed by Ms. Tawfik.
Hendrik Brakel, Senior Director, Policy and Government Relations, Canadian Venture Capital Private Equity Association: Thank you, Madame Chair and senators. It’s such an honour to be with you today on behalf of the Canadian Venture Capital and Private Equity Association.
Last year, our venture capital members invested $10 billion across 706 start-ups and high-growth SMEs to commercialize new technologies. Our larger private equity members invested another $10 billion in capital to grow 890 more mature businesses. As some of the top investors in Canada, our members are uniquely positioned to understand the challenges of business investment in our country. That is why we are so pleased about the study here. We see amazing opportunities.
Canada has some incredible advantages: one of the most skilled workforces in the world, superb research and development and proximity to the United States. However, we’re also facing some big challenges. As you are very aware, weak investment is Canada’s number one economic problem. Since 2015, the volume of business investment in Canada has fallen 17.6%. New business investment per worker is declining. A study by the C.D. Howe Institute said:
This weakness is both a likely effect of weak productivity growth in the present and a harbinger of weak productivity growth in the future.
As a result, the Organisation for Economic Co-operation and Development, or OECD, worries that Canada could be the worst performing advanced economy with weak per capita GDP growth from 2020 to 2030. More recently, Canada’s labour productivity growth has been negative in seven out of the last eight quarters.
To reverse this trend and get back on track, I think we really need a surge in business investment in Canada if we are going to maintain economic growth. We need a surge in productivity so that Canada can sustain real wage increases. For that reason, we think we really need a surge in private equity and venture capital and some of the investment that goes on there.
Essentially, the private equity industry is the funds that invest in and manage private companies before selling them. It’s kind of like a combination of boot camp and jet fuel for business. Private equity firms grow their companies by bringing in capital to invest in the best technology, the best systems, top management, experts in supply chains and multinational sales channels and so on. A study by PwC showed that capital spending shot up 75% for three years following a private equity, or PE, investment. At the same time, employment growth tripled so that the typical private equity backed company increased headcount by 24% in the three years post-investment. The reason these private equity firms are doing it is because they want to improve growth and hiring, performance and productivity.
We can do so much more. We’re kind of excited about private equity. The growth equity is actually the fastest growing segment of PE because it focuses on taking innovative companies that are developing new technologies and scaling them up to become — hopefully — global powerhouses. Right now, there are 6,000 mid-sized Canadian tech companies with revenues between $20 million and $50 million, hundreds of which have high-growth potential. We want to grow this segment massively. We also want to work with the government to make Canada an even more attractive place to invest. We hope we can double the private equity industry over the next five years if we improve our competitiveness by bringing down the cost of doing business and have no new taxes.
Finance Canada is considering a patent box to keep more technology companies in Canada, and that’s exactly the kind of innovative thinking we need. We need a dramatic regulatory reform to make it easier for entrepreneurs and lower the cost of doing business. Green incentives are enormously helpful. The 30% tax credit will be massive for Canada’s private equity industry. We also need continued support for Canada’s innovation programs. The Department of Finance Canada is currently reviewing the SR&ED program, and improving that program could be a game changer for Canada.
It’s time for Canada to get serious about economic growth. Our members have so much to offer, and we’d love to work with you. I’m happy to answer any questions.
The Chair: Thank you very much, Mr. Brakel. That’s great.
Myra Tawfik, Don Rodzik Family Chair in Law and Entrepreneurship and Distinguished University Professor, Faculty of Law, University of Windsor, as an individual: Thank you, Madam Chair, deputy chair and senators. I am grateful for this opportunity to speak with you today.
I am a law professor at the University of Windsor and the Don Rodzik Family Chair in Law and Entrepreneurship. I am an expert in intellectual property law, and I work on questions of capacity building in IP literacy. I was a member of the province of Ontario’s expert panel on the commercialization of IP, and I advised the province on IP education.
I know you have heard from many individuals, including Jim Balsillie and my colleague on the panel right now, about the essential conditions for success in the innovation economy. I’d like to build on their remarks, although my take will be somewhat different from the kinds of things you already heard.
It’s my view that, collectively, we have not really come to grips with the fact that the nature of IP has fundamentally changed over the last 30 years. The various forms of intellectual property began as incentive-based policy mechanisms for the dissemination of knowledge, but they have now become valuable business assets in their own right. We used to think that IP was exclusively within the purview of the law and lawyers, but IP assets require different skill sets, which brings me to the point that most worries me and which I would like to convey today: this question of skill sets.
No matter how solid our IP laws, policies and practices are, Canada will continue to falter because we simply do not have people with the right skills and knowledge to help businesses succeed in the innovation economy. These skills lie at the intersection of technical fields like science and engineering, along with business and law, and we currently don’t offer any educational programs to teach and train this new kind of professional. Most law schools, other than mine, don’t teach IP strategy. Business schools hardly touch the subject of intellectual property and innovation, let alone IP strategy. Science and engineering faculties might offer a course on patents, but the content is rudimentary.
What this economy needs are sophisticated IP strategists and innovation leaders who are comfortable working in multidisciplinary settings. Within the past decade, ad hoc IP education initiatives have been developed to try and fill the gap, and these programs do move the needle in a positive direction, but they are insufficient. What is required are sophisticated and rigorous certificate and graduate-level academic programs like those found in other jurisdictions, for example, the United States.
For those of us who are working in this area of IP and intangibles, the concern is about IP leakage and about valuable IP lying fallow. In addition to the various policy initiatives that the government has been undertaking to address these concerns, we must also accelerate the education and training of those who will be making the key strategic decisions around whether a particular idea, invention or creation is worth protecting in the first place and whether, and under what conditions, the IP should be sold to foreign interests. Right now, we simply don’t have enough of the right people to help Canadian innovators meet the challenges and opportunities of the innovation economy, and we don’t have any plan at all for building that capacity.
Thank you. I would be happy to take any questions.
The Chair: Thank you very much for those opening remarks from both of you.
Senator C. Deacon: Thank you for being with us.
I will start with Mr. Brakel. We have heard a lot that the foundation upon which business investment is made, increasingly, is an intellectual property and data execution plan and that you have got to have the IP and you have got to have the access to the data in order to lever and create the highest value opportunities. It seems a lot of government programs — I don’t want to ask your opinion — but a lot are focused on later, perhaps not the foundation but on the second or third floor. We have to get the foundation right first. Would you agree with that, Mr. Brakel? The foundation.
Mr. Brakel: We are seeing a boom now in early and seed stage investments, so really early technology. The challenge we have is the later stage where we’re trying to commercialize the technology and the cheque size suddenly becomes large. With an early stage entrepreneur with a cool new idea, it could be $2 million or $3 million to get that idea going and start working on it. With the later commercialization stages, suddenly it is $200 million or $300 million, and often those investments are coming from the States. We have to scale up Canada’s venture capital industry to be able to support those later stages.
Senator C. Deacon: The investment premise in general always is built on a strong IP foundation and the ability to execute on that foundation; is that correct?
Mr. Brakel: Yes.
Senator C. Deacon: Thank you very much.
Professor Tawfik, the lack of exceptional skills in this area is very concerning, be it in the law business, science and engineering or the public sector. Do you believe that we have the capacity to scale up, if it became a priority, to deliver the types of skills needed and the abilities and insights and capacity to start to manage this issue across our economy? What sort of effort is needed, and is it even possible?
Ms. Tawfik: Thank you for that question.
I believe it’s possible. I think we have all of the foundational pieces in place. We just don’t connect the dots very well. I’m going to speak from what I know in terms of the university sector. I could also speak to professional development programs and those as well, but let’s talk about it in the university sector.
We have very strong engineering and science faculties across the country. We have strong law schools. We have strong business schools. But we don’t work together well. We’re very siloed.
The challenge will be to find champions who would be able to bridge the disciplines and the disciplinary cultures and bring those groups together to build programs that actually speak to the needs of this new economy and develop the skills that are nimble and multidisciplinary, that can see opportunities and seize them as they arise and that understand the technical side. Really, we’re talking about business strategy. It’s nice to have the legal knowledge to understand how IP laws operate, but fundamentally, you’re talking about skills that lie at the heart of business and technical, STEM.
Senator C. Deacon: Do you see any examples of that in Canada right now, or do we have to look elsewhere?
Ms. Tawfik: I have been watching this for a while now, and there aren’t any examples in Canada of the kinds of programs I’m thinking about. There is one program in particular that I follow that exists in the United States, and in my written remarks, I have given you a screenshot of this. The Chicago-Kent College Law School and the Illinois Institute of Technology have a graduate program that they call a master in intellectual property management and markets. They also offer a one-year certificate for those who don’t want to undertake the master’s program, which is intended to be multidisciplinary. Their marketing material is about generating this new IP professional who can help companies navigate markets in the era of intangibles.
The Chair: Thank you. We’ll follow up on that, for sure.
Senator Smith: Thank you both for being with us today.
Maybe I could ask Ms. Tawfik a question. Reading your notes, it was interesting to read:
For those of us working in the area of IP and intangibles, the concern is primarily about IP leakage and about the valuable IP lying fallow or not being commercialized in Canada.
If you were in a position of making a global plan now to assist the development of the intangible skills required, what would be the two or three basis points that you would use as your starting point for this development and evolution?
Ms. Tawfik: If I understand correctly, what would be the skills that would be required?
Senator Smith: Well, you are working in the field. You have assessed the strengths and weaknesses and wrote down in your introduction to us. I wonder whether they are tied to the sort of evolution of business that Mr. Brakel talked about that. Then we go right into the IP in terms of the intangible economy where everyone says this is the biggest opportunity for all of us, but we just don’t have the ability to do it right now. Then when you talk to some of the venture capital players, the big players who are highly successful will usually tell you that we need to have a higher state of entry from the entry-level people because they are not big enough to scale up. So this whole idea of having a development process becomes problematic. When do you start the development process to get these people up to commercialization? I’m wondering what you would do if you had to take two or three steps to start the process.
Ms. Tawfik: The first thing I would do is provide some infrastructure to help those early-stage ideas. We rely on universities to generate our ideas. Businesses don’t tend to spend a lot on innovating within, so we’re looking at universities. They have faculty and students developing all kinds of ideas and things. We don’t have an effective way of taking what is being done on university campuses and pulling it through the pipeline to commercialization and the capture of the IP. There isn’t enough money for prototyping. There isn’t enough money. Universities aren’t equipped to make decisions about whether or not an idea is particularly valuable, and they don’t have the knowledge to be able to go out and speak to investors in a way that resonates. They don’t have the capacity to negotiate agreements that enable the IP to be retained in Canada, and they have grants or funders who come from elsewhere. They don’t have the sophisticated knowledge to be able to say, “Give us this lab, and we will provide the expertise, generate the innovation and generate the idea. Maybe you will own the IP, but we have to retain some capacity to benefit our economy.” Those are negotiations. Those are contractual negotiations. Those things are not happening.
Senator Smith: Is there a way to put the big investors together with the educators and create an actual work plan to bring these very infantile-stage people to that level of commercialization? That seems to be a challenge.
Ms. Tawfik: I believe that would be one way.
Senator Smith: Where do governments fall into that?
Ms. Tawfik: I think the government is very important to this. The government can convene these kinds of interactions or collisions so that you bring the right people to the table. The hardest part of getting people to the table is getting them to speak the same language and getting them to understand.
Mr. Brakel: I would agree it is a challenge because what we have heard from entrepreneurs is that every university is a little different in their approach. Some of the big medical schools focus very much on licensing, so there is a licensing agreement. Waterloo has a different approach where the IP remains the property of the student and the researchers who do it. Stanford has a technology transfer office where their task is, “How much technology can we transfer? How do we move it out as quickly as possible?” Every university has a different approach. It’s difficult to say to the universities, “Here is the best model,” or, “Here is a different model and you should do it.” I think that is a challenge, but I think it is getting better and we are getting some great ideas out of our universities.
The Chair: Thank you.
Senator Gignac: Welcome to our witnesses.
My question is for Mr. Brakel. You mentioned that $10 billion was invested in the last year, more than 700 deals — this is on your website. I want to know more about Canadian pension funds and their role, because they have a private equity division. How active are the Canadian pension funds when it’s time to finance a company? It is not at their early stages, but they come in at some point. I’m curious to see if you have any data you want to share with us regarding the role of your members. You have 300 members. I’m curious about the pension funds and what they are doing.
Mr. Brakel: The big pension funds do absolutely invest in venture capital. I would say the Canadian pensions are very cautious. They have some small investments in venture capital. A lot of the Canadian industry venture capital is fairly new. It’s only 10 years old. They don’t have the same lengthy track record, so there is not as much Canadian pension investment in Canadian venture and Canadian venture capital. It’s getting better, but in other countries, you see pension funds are a lot more aggressive in venture capital.
Senator Gignac: I’m trying to understand. We need foreign capital at some point at this stage. There seems to be a gap. That is the reason I’m curious.
My second question is a shift of topic. I have been privileged to serve my province, Quebec, as Minister of Innovation. From coast to coast, do you see differences between the provinces in terms of best practices or initiatives in terms of capital that is available? Are some provinces more aggressive than the others? Do you have any thoughts regarding that?
Mr. Brakel: A month ago, I came from the Réseau Capital Convention in Montreal. It’s amazing to see some of the technology and start-ups that are going on. It’s growing really fast in Quebec, so we’re excited about it.
One of the big trends that we’re most excited about is that venture capital used to be a Toronto-Montreal-Vancouver thing, but now it’s getting into all regions of the country, and ag tech is booming. That’s from coast-to-coast and not just stuck in the big cities. What we’re really excited about is regional diffusion of IP, venture capital and new companies outside of the big cities getting out into the rural areas.
Quebec has been a leader in private equity. They have the largest number of private equity transactions. There is a really aggressive, very smart private equity industry in Quebec. I think we’re seeing growth right across the board, but Quebec has done really well.
The Chair: Thank you.
Senator Galvez: My question is for Professor Tawfik. I will use my own experience to illustrate my question, but what I’m explaining is happening every day in every university. My team developed a process to recuperate precious metals from mining residues using a certain type of fungus that will reduce agriculture waste to grow. We scaled it up to five tonnes, and we did a pilot in a South American mine. I went and learned everything about filing a patent in Canada and the U.S.. My university said that I had to come up with a $100,000 contribution in order to buy this patent. Who should have paid, and who should have helped the researchers file the patent? What is this combination of tech, science plus business law program that you think will come and solve the issue? Thank you.
Ms. Tawfik: Thank you for the question.
Your example is a very common example of what happens routinely. I am not suggesting that my combination of skill sets or what I’m talking about in terms of this new IP professional would necessarily help resolve that. Part of the problem, of course, is who bears the cost of the patent. Universities are risk averse, they don’t have the funds to do it, and more often than not, they turn to the inventor or the researcher to try to fill the gap. That’s a problem. There are so many problems along this chain.
However, if there were, for example, this kind of multidisciplinary IP professional at a university — for example, in a tech transfer office — who actually understands the technology and the potential and has the network and the ability to speak the languages of investment, engineering, law and business, would they have more opportunities to be able to find money to pursue the invention that you are talking about in the patent? Then the next question would be, would there be a receptor at the other end to be able to take that invention, the product and the technology, and scale it?
There are lots of issues along the chain. I’m focused just on the fact that there aren’t enough people with the right skills in universities or in companies, but I take your point. Your example is something that happens routinely.
Senator Loffreda: Thank you to our panellists for being here today.
My question is for Ms. Tawfik. You do mention that Canada will continue to falter because we simply do not have people with the right skills and knowledge to help businesses succeed in the innovation economy. You’ve discussed our universities, and we do have world-renowned universities. What is the solution? How do we get our universities to engage and start forming these individuals and these senior leaders? Is immigration a solution? Do we have to modify the immigration strategy given that we don’t have the skilled leaders to grow?
Ms. Tawfik: I suppose immigration is one way. We’re looking for particular skills. It wouldn’t just be a sort of an engineer. It has to be someone who has experience working in a tech or an innovative company, working with patent portfolios and working on developing IP strategies. That is one way.
I thank you for the question because I’ve been trying for years to figure out how to bring the right people together to build that momentum. That momentum has to happen on the ground here. We have the people who can bring the pieces together. We need some intervention to force the issue so that the right people come to the table. I speak in disciplines, but, basically, finding the right people to sit at the table and develop the right kind of content is really what matters. Right now, it’s either lawyers doing their law thing or it’s engineers doing the technical stuff, and it’s business people sort of turning around the subject but not really rolling up their sleeves and understanding.
Senator Duncan: Thank you to the witnesses who have appeared before us today.
I would just like to encourage you. You’ve spoken of regional innovation and bringing people together regionally. I would encourage you to indicate — perhaps in writing because we’re short on time — what your reach and your contact are with Northern Canada. I’m thinking of Yukonstruct, an innovation hub. I’m thinking of First Nation development corporations that are spread throughout this country. They have investment dollars. How much content and work are you, is Canada, doing with them? How can we help encourage that? Could you could provide a suggestion?
The Chair: Great request. We’ll follow up on that.
Senator C. Deacon: Thank you, witnesses.
I think it’s fair to say that the Strategic Innovation Fund has a $2.6 billion budget and program objectives that align entirely with the areas you have identified. Our previous witnesses, Professor Tawfik, have also identified real weaknesses within the Canadian economy in the capacity to do the work and to make sure the assets are protected so that we have something to invest in which can build a global business. Have you seen any evidence within the Strategic Investment Fund investments that is moving us in that direction so far? That’s to Professor Tawfik.
Ms. Tawfik: I do, senator. I see a lot of initiatives — the national Intellectual Property Strategy in 2018, the strategies — all of these are pushing things in the right direction. What I’m saying is we need to ramp up even further — this idea that we can’t do all these policy initiatives without making sure we have people on the ground who can actually move our businesses forward.
Senator C. Deacon: Thank you very much.
The Chair: My apologies to our witnesses; we’ve just had to condense this. Our thanks to Hendrik Brakel, Senior Director, Policy and Government Relations at Canadian Venture Capital Private Equity Association, and Myra Tawfik, Don Rodzik Family Chair in Law and Entrepreneurship, University of Windsor. Thank you both.
We’re going to carry on with our discussion here. We have the pleasure of welcoming the co-chairs of the Coalition for a Better Future. Their presence here has been recommended by a couple of other witnesses who want to learn about their process. Joining us virtually is the Honourable Lisa Raitt, and the Honourable Anne McLellan is joining us here in person. We’re going to start with an opening statement by Ms. McLellan.
[Translation]
Hon. Anne McLellan, P.C., Co-chair, Coalition for a Better Future: Thank you, Madam Chair. Thank you for inviting the Coalition for a Better Future and for hearing our views on this important study.
[English]
The Coalition for a Better Future represents a diverse and growing community of business leaders, community and civic organizations, social policy advocates, youth, Indigenous groups and environmental NGOs. We each bring to the table a unique perspective, but we are united in our belief that economic growth is a necessary precondition for job creation, rising incomes, a cleaner environment and a better quality of life for everyone.
We have three key areas of focus: How can Canada win globally? How can we grow sustainably? How can we live better?
We have a score card; I’m not sure if you have it in front of you? Ah, voilà. We have a score card of 21 internationally recognized metrics that track Canada’s progress in these areas, with an aspirational target for 2030. We just launched our first report in March to show how Canada is doing on key indicators such as GDP per capita, business investment in R&D, GHG emissions per unit of GDP and youth not in education, employment and training. Those are just examples. We believe aspiring to meet the score card’s ambitious targets will lead to making the country more competitive and prosperous by working towards achieving those targets, as I mentioned.
Lisa, I think you’re going to talk specifically about some of our targets and the metrics, more appropriately, on the score card.
Hon. Lisa Raitt, Co-chair, Coalition for a Better Future: Thanks very much for the invitation to be here, everyone.
Anne spoke about the score card, which you can also find on our website, which is CanadaCoalition.ca.
We think this is a really important tool for governments to see where we are as a country on some really important policy areas and where we need to go. We believe that if we meet these targets by 2030, Canada will be one of the most competitive, inclusive and sustainable economies in the world.
Where are we today? I’m sure you’ve heard this already, senators, but Canada’s economy is facing many headwinds, including an aging population, weak business investment and poor productivity. The pandemic created new challenges for us, disproportionately impacting lower-income Canadians and driving up public debt levels.
Our score card shows we’re moving in the right direction on some fronts but not fast enough. For example, as we know, GDP per capita remains below pre-pandemic levels. The score card also shows business spending on research and development continues to stagnate, and we’re actually lagging behind our peers. As a share of GDP, business R&D has hovered at just under 0.7% over the past 15 years and is showing no signs of hitting our target of 1.8% by 2030. That’s well below our peers in the United States, which suggests that Canada’s weak private‑sector contribution to innovation is actually threatening our ability to build a competitive advantage. It’s the same story for investment in intellectual property, which we’ve just heard about from the panel, and that struggle to break beyond the 2%‑of‑GDP threshold. There’s little change from where it was two decades ago.
There is some good news, however. The number of private tech start-ups with billion-dollar valuations has surged to 21 from 4, already surpassing the target that we set for 2030 of 17. Another robust indicator is the broad cross-section of Canadian business that’s actually benefitting from exports. The average export value per small- and medium-sized enterprise has grown to about $5,300, and that puts us on track for $8,000 by 2030.
All this to say that Canada can do much better, especially in the face of what we’re seeing in the United States with regard to their industrial transformation.
Ms. McLellan: In relation to what is going on in the United States, that focuses all our members in areas such as business investments in the clean-tech sector and the green economy more generally.
Also, one of our metrics shows that the number of Canadian companies in the top 10 of their industries globally has increased marginally to about 20 on our scorecard; but that is still only half of our target of 40 by 2030. We believe there is scope to double the number of global leaders by scaling up in the areas of bioscience, advanced manufacturing, clean tech and agri-food.
As we look at ways to enhance business investment, we have to keep in mind the impacts on the living standards of Canadians. Making our country more productive will produce higher wages and incomes, yet we continue to fall short on this front. It is worth noting that Canadians are working more but not producing more for the hours worked.
It is also important to understand how Indigenous Canadians’ lives are impacted. Our findings show that the labour participation rate for the Indigenous population has surpassed the non-Indigenous rate for the first time ever. Take that on board, ladies and gentlemen. The share of senior management positions held by Indigenous Canadians rose to 2.7%, but that is just half of our target of 5%. In rural communities, education levels remain low, particularly among Indigenous women. As policies and projects are put into place, we need to make sure that Indigenous communities are part of the equation.
To get where we need to go — we appreciate the fact that you run a tight ship.
The Chair: We lost our time, so we’ll keep going.
I did want a quick comment from Lisa. We’ve heard from many witnesses that we have lots of private start-up tech companies, but they sell too early and don’t maintain control over their IP. Are you following up on that in your report so that we have some numbers?
Ms. Raitt: We’re measuring to see how they’re doing, but we also rely upon our organizations to dig deep on that as to why. We talk to governments across this country about the importance of intellectual property. We bring the data with us, and we expect them to come up with the public policy response.
The Chair: That’s great. We’ll be following that.
Senator C. Deacon: Thank you both sincerely for being here. You are great Canadian parliamentarians, and I’m glad to see you both in our presence.
I want to focus on the scale through innovation. I love the targets you’ve put in place and the three areas of focus, but I want to focus on the area that I think is the weakest single sector of your pie chart. It’s the area that will create wealth and enable us to meet our targets on green transition because we need to have the technology to help us succeed. Under your three areas of investment of IP per worker, investment in tangible assets, business investment in R&D, what are the big lessons learned and places where you would like to see our recommendations to help move the needle very far on those items? Do you have some examples and suggestions for us? We want to do what’s necessary in our report.
Ms. McLellan: Let me start. This is a long-standing problem. I was around this table between 1993 and 2006 as a minister in the governments with Mr. Chrétien and Mr. Martin. We spent an awful lot of time talking about what this country needs to do to be more innovative. We have some of the most generous R&D credits in the world for the private sector. The question is, why isn’t the private sector taking up that tax space? Or are they? That’s an important question. Are they currently, in fact, properly constructed to encourage that investment?
I think as well that Canadian business has to have confidence that the rules are not going to change on them so they know what the rules are and what the framework is for economic growth and so we know what the plan is and can count on our governments to help execute on those plans. It is an ongoing challenge.
I asked a major player in Canadian business — you would all know this person — why, in fact, we aren’t doing better in areas such as you’ve mentioned. This person looked at me and said, “Anne, complacency.” In fact, we’re just good enough to live a good quality of life, and that makes us complacent because we’re not hungry enough to go out and take the risks, make the investments and find the capital.
Ms. Raitt: I’ll focus on the back half, which I think your question asks: Once we get them started, how do we make sure we keep them here in Canada? That is also something that we have to take a look at. Keeping industry, clean tech and people in Canada comes down to other things, such as how we are on immigration, how we are on health and how we are on education. Those are the things that keep businesses here and growing. Otherwise, you have entrepreneurs out there who get to a certain level — $5 million probably — and then say, “Okay, who’s going to buy us?” Or someone comes along and wants to acquire them or their intellectual property. Encouraging them to stay and build in Canada has a lot to do with the soft things as well as tax credits and incentives that we have for start-ups.
Senator Cardozo: Welcome, Ms. McLellan. It’s always good to see you, Ms. Raitt. I’m glad to see we can keep dragging you back to Parliament. You play a special role in terms of connecting the business world to the political world and having these discussions.
I want to follow up on the discussion with Senator Deacon. What do you think are the arguments we need to be making as a society to enhance business investment? What is it that they’re not hearing? What is it we’re saying that’s not enticing, therefore making them complacent, as you mentioned? The ESG — or Environmental, Social and Governance — issue, does that help give people a framework, or does it scare them away?
Ms. McLellan: The ESG is part of a framework. Maybe it’s around entrepreneurship. Are we producing? Why are we not driven entrepreneurially the way some other jurisdictions are around the world? Certainly, we have entrepreneurs in this country, but nobody would define Canada as a particularly entrepreneurial jurisdiction. Why is that? I think it’s cultural. There’s potentially a certain degree of complacency. We live a good life, and maybe that determines how many risks we’re willing to take with that good life.
I do think, however, that part of this is about government having a plan — not one level of government but governments working together. The one thing Lisa and I hear everywhere we go is about the importance of collaboration and levels of government working together to develop a long-term plan for economic growth which people can then invest in with confidence.
Ms. Raitt: I would say that there has to be a concerted effort to work together on it, including the sector that has to do with not-for-profits. As well, business has to be told that they cannot expect the government to train everybody to work for them. We excel in AI in this country. We really should be taking that on as our next ability to move productivity along.
Senator Loffreda: Thank you, Anne and Lisa, for being here. The Coalition for a Better Future is doing great work. Congratulations. I’ve read Canada at a Turning Point.
In the interest of time, I’m going to keep it macro and not dive deep into the micro. We talked about complacency in detail. How do we correct complacency? Is it policy or education? I’d like to say that we perform fairly well with respect to foreigners investing in Canada — and we can go through those numbers — but domestically we don’t. What are foreigners seeing in Canada that we’re not seeing domestically? Why don’t we see that complacency with the foreigners? Are we missing something here in Canada? We talked about education with the previous panel. We don’t have the skilled workers and our universities should maybe do a lot more. The corporations with the most resources, those that have the most IPs, are the ones that are doing the most. How do we get them to do more? They are already doing so much.
Ms. Raitt: It’s a great question, senator, and I really appreciate it.
The reality is that in order to get people to not be complacent anymore and to move along in terms of investment, there is equal parts of incentives and, quite frankly, blaming and shaming. I’m not saying that we’re here to blame and shame, but at least what the coalition is doing is measuring. What we would like to be able to do is communicate to Canadians through bodies like this — through yourselves — that it’s really important to look at these things. We should be asking questions of our corporate friends, our not-for-profits and our governments as well. What are you doing with respect to productivity?
Productivity has a bad connotation. Some people think it seems to be all about whether or not people work hard. It’s not about that at all. It just has to do with the fact that our quality of life will continue to suffer and we will not have as much disposable income if we don’t figure out some of these things.
Sticks are important and carrots are important, but it’s the combination of the two. Having the ability to measure is, I think, the most important piece. That’s the new thing we bring to the table.
Senator Loffreda: Thank you.
Senator Marwah: Thank you, ministers, for being here. To me, you will always be ministers — both of you.
I just want to talk specifically about private-sector investment. We have spoken about it here. You mentioned that part of the culprit is anemic private-sector investment. That’s evident in all the reports I have seen from virtually everybody. So the problem is business — I don’t mean to pick on business or government — not spending enough capital. Also, as you identify, there are problems in government where there is no real emphasis on long-term thinking. So we’ll try to solve that.
What are the policy alternatives? We have tried everything. As you said, we have the most generous R&D credits. We have great free trade agreements, yet notwithstanding free trade agreements, our imports have increased more than exports. We are not really leveraging those. Do you have any other policy alternatives we should do better?
The main one I want to talk about is excessive regulation. I keep hearing about excessive regulation from everybody I speak to, but we don’t try to address that. It’s something that is so easily done by any government, whether it’s liberal or conservative. We can cut that back.
Ms. McLellan: Lisa and I were very heartened in the Fall Economic Statement to see the Minister of Finance devote $1.3 billion to taking a look at one part — and an important part — of the regulatory regime, which was environmental assessment processes. We hear about them all the time in terms of the fact that if you’re going to have a value chain that starts with critical minerals, you have to build the mine, right? So on and so forth. That’s only one example. Again, the minister followed up with that in the March budget, talking again about consultations around regulatory streamlining, efficiency and reform, at least as it relates to the environmental impact assessment process.
That’s only one set of regulatory actions, but I think it does give Lisa and me some hope that the government is starting to focus on the fact that layering on more regulations without taking a look at what is there, what has or hasn’t worked, how many of them are barriers to risk taking and financing and so on is a problem. We see some focus in this area, and we see some focus in this area in the provinces as well. This isn’t just an issue for one level of government. This is for all three levels of government, and we talk to all three. Your point is a very good one. We see some movement, but yes, I think there is a lot more work to be done.
The Chair: Thank you for that.
Senator Galvez: Thank you very much to our witnesses for being here.
Hopefully, you heard previous witnesses, many of whom said that Canadian investors are overcautious and are risk averse. In particular, pension plans have been mentioned. We seem to be in this vicious cycle where domestic investors don’t invest enough in order to scale up Canadian innovation so that we cannot attract big foreign investment to grow business in order to export. Should the government break this vicious cycle, and how? What is the extent of the role of the government in at least telling us to align investment with the key areas you have mentioned around, for example, sustainable business and industry?
Ms. Raitt: Thank you very much, senator.
I don’t know if I’m going to have my coalition hat on for this one. What I’m going to say is this, and I don’t think I’m going to be controversial. At least I hope not. If Anne starts shaking her head vehemently, let me know.
I think the one thing we have to remember is that perhaps the reason we have so much regulation in this country is, quite frankly, that we don’t have a lot of competition. Competition is what will drive business investment. When you have these very large — especially federal — businesses that have pretty much the playing field for themselves, there is not a great incentive for them to compete with one another by being more efficient, investing in their companies and training their people better for better customer service. I think we need to look more competitive inwardly as a country. One of the things we do talk about from a competitive point of view is free trade among our provinces.
The Chair: Yes, we have heard that one before. That is for sure.
[Translation]
Senator Gignac: Welcome to our honourable witnesses. My question is on what the government is doing. I believe that the private sector and entrepreneurs create wealth, not the government.
[English]
However, the government can create the ecosystem.
Do you believe that what we see in the budget — creating a new Canada Innovation Corporation, having an innovation fund and this kind of thing — is the right approach? Is it the right approach for the federal government to create such Crown corporations, or do we have other approaches that the government should have taken? I don’t know if creating some corporations like that will fix our problem in Canada.
Ms. McLellan: I think that particular fund is modelled on an example they saw somewhere else. The Government of Canada has put a lot of money out there, whether it’s the growth fund, the innovation fund, the Strategic Innovation Fund, or SIF — all sorts. I think part of the challenge that Lisa and I hear from our members is that it doesn’t have a framework around it. Right? People wanting to access those funds have to figure out whether they can even apply for those funds. They find it hard. When we talk to ministers in the Government of Canada, one of the things we say is, “Look, you have got all this money. Maybe the problem isn’t a lack of funding. A problem is that you have got, in a sense, confusion among people as to what all these funds are and what are the outcomes you want from these funds so we can deliver those outcomes on behalf of Canadians?” I think our members see value in the funds that the government has created. What they would like is some kind of long-term plan built around those funds so they know where they fit and how they can access the money — again, with confidence and certainty — to then achieve their objectives.
The Chair: I think you have just summarized our report for us. That’s what we have been hearing for four months now, so thank you very much.
Senator Massicotte: Thank you to both of you for being with us. It is much appreciated.
I want to get the facts straight, because we heard all kinds of things about the R&D. We heard for years that the Canadian government is very generous with the R&D program. However, in last two months, we heard witnesses say this is not the case and we’re actually below average and should be doing more. What is the bottom line? Where are we at?
Ms. McLellan: At least when I was in government — and Lisa, you can speak to this because you have been there more recently — yes, we were told that indeed, those tax credits where some of the most generous in the world. But they weren’t being used, or when I was in politics, they were being abused and not achieving the purposes they were put in place to achieve. I think there is actually a review that is going to happen in relation to what those tax credits currently are because I think it’s pretty clear they are not achieving their purpose.
Lisa and I are not experts in terms of what those credits should actually look like to move the private sector around research and development. But, one point Lisa made that I think is really important is that competition is what moves that bar. If you know you have to invest and be smarter to stay in business and get more market share because your competitors are out there pushing you, that probably will, in fact, stimulate investment, and people will make appropriate use of whatever credits are available.
Senator Massicotte: I understand if you take away the R&D from the oil and gas sector, then you’re really far behind, because 70% of all R&D is from the oil sector. So —
Ms. McLellan: Yes.
Senator Massicotte: Well, we have a major problem when you look at that factor.
Ms. McLellan: Yes, that is right. Although the oil and gas sector gets no credit for the research they do.
Senator Massicotte: I agree.
Ms. McLellan: Just let me make that comment, as an Albertan.
The Chair: Yes, and they have been doing it for years.
Senator Marshall: I want to pick up on your complacency comments. I don’t really see that as an issue, but you do. Canadian businesses all want to move south. It’s not that they don’t want to invest; they don’t want to invest in Canada. They want to invest in the United States. They are investing in Europe. They are investing in Ireland. They just don’t want to invest in Canada.
The government has created all these funds — well, take the Canada Infrastructure Bank saying that they want to leverage, and the government will put in 10% and then the private sector will come in at 90%. The private sector doesn’t want to come to the table with the Canadian government. I’m not — any Canadian government. So there is an issue there. Are you looking at that? A lot of big businesses do not want to deal with the Canadian government. They just see them as all over the place, and regulatory reform is a problem. Are you looking at that aspect?
Ms. Raitt: I would love to answer this one, actually. Thank you very much, senator.
You are correct. There is no question that when we compete at boardroom tables for investment in Canada for these big, worldwide corporations, it’s a hard sell for our CEOs. A lot of it has to do with regulation.
I will offer one more observation that Anne and I hear over and over again. The fact is that we’ve got to build something, folks. We’re not building anything. We say we will invest, and we make a lot of announcements, but we’re still not to the point where we can show the world that what we say we’re going to do is actually what we’re going to do. This government has to focus, specifically federally, on showing that they can do a project from bricks and mortar. They have to be able to show that so the investment comes back to Canada.
Senator Marshall: It goes back to what Senator Marwah was saying about the regulatory regime in Canada. For anybody wanting build something or do something, the regulatory regime is so restrictive, and that is one of the reasons why they are shying away from Canada.
Ms. Raitt: I don’t disagree with you, senator. I submit it’s also bureaucratic in nature. We have suggested that the government put four deputies on one project, give it a short timeline, all the resources they need and push it through the regulatory process, as it now stands. I believe it can be done. I think that it’s just a matter of putting focus on one particular project and building it and using that as a showcase and a testament that we can get stuff done.
Ms. McLellan: Can I follow up? I would question whether people don’t want to invest in Canada. People in the trade world have been in China and South Korea. They are dying to invest in Canada. The problem is the one you have identified. The question they ask is, “Can you actually build anything?” Right? They have money. They have got tens of billions — hundreds of billions of dollars in Asia especially that they would like to invest in Canada. I’m not talking about China. But the question is, “Can you get it built?”
Senator Marshall: When you get the clearance, the regulatory clearance, once you start the project, government imposes more regulations, so businesses are shying away.
Ms. McLellan: I think it’s a proof point. As Lisa says, let’s build something.
The Chair: Well, that was pretty spectacular. You got an hour’s worth of material in half an hour. So thank you, and all credit to you for doing that. To the Honourable Lisa Raitt and the Honourable Anne McLellan, thank you very much.
Ladies and gentlemen, senators, we will now switch our focus to the Budget Implementation Act. As I have said repeatedly today, please take note that we need to be short and sweet. We are going to be looking at Part 2 of the budget, treatment of the mining of cryptoassets; Part 4, Division 1, on the Bank Act, handling external complaints on the banks; Part 4, Division 2, strengthening the pension framework; Part 4, Division 6, Bank of Canada negative equity, and this involves the Bank of Canada Act; Part 4, Division 7, legislation to establish the Canada Innovation Corporation; Part 4, Division 26, amendments to the Patent Act; Part 4, Division 33, modernizing the financial sector; and Part 4, Division 37, the Deposit Insurance Corporation Act and some changes there. Not bad for the hour that we’ll have here today.
We have the pleasure of welcoming officials from the Department of Finance and Innovation, Science and Economic Development Canada. We welcome all of you. The room is full. We welcome particularly Manuel Dussault, Acting Director General, Department of Finance Canada, and Samir Chhabra, Director General, Innovation, Science and Economic Development Canada. They will deliver opening remarks from their respective departments.
[Translation]
Manuel Dussault, Acting Director General, Financial Institutions Division, Department of Finance Canada: Good evening, and thank you for the invitation to appear before you today.
My name is Manuel Dussault and I am the Acting Director General, Financial Institutions Division at the Department of Finance Canada.
I am joined today by several colleagues from the department to discuss clauses 118 to 122 of Part 2 and Divisions 1, 2, 6, 7, 33, 37 of Part 4 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.
My colleagues and I would be happy to answer any questions from committee members on these elements of the bill.
[English]
Samir Chhabra, Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada: Thank you, senators. I am here with my colleague from the Department of Innovation, Science and Economic Development Canada to speak to Part 4, Division 26, which is amendments to the Patent Act. I have no further opening remarks.
The Chair: That’s great. We’ll jump right into our questioning, then.
Senator Marshall: My questions will be for Mr. Dussault. I’m going to start with Division 7, the Canada Innovation Corporation Act. Are you able to answer questions on that?
Mr. Dussault: I would be pleased to answer. We will have to do some musical chairs.
The Chair: You can direct that for us, Mr. Dussault, and that person can introduce themselves. We can’t deal with the numbers.
Senator Marshall: I’ll carry on.
The Chair: He is on remote. Pose your question, and then whoever answers, we will see it on the screen.
Senator Marshall: This is a very interesting piece of legislation, and the particular section I’m focusing on is section 7 of the bill that says it’s not a Crown agent. It goes through all of these things that make it sound like it’s a Crown agent, but then it comes to this section that says it’s not an agent in these four cases. What benefits did that confer on the corporation? I’m just trying to compare the characteristics of that corporation being a Crown corporation versus not being a Crown corporation. Can somebody please elaborate on that? Is it just for those four specific things? Is there something else to it? Can you explain that?
Greg Reade, Director General, Resource Policy Analysis, Department of Finance Canada: My name is Greg Reade. I’m joining you virtually. I’m a Director General at the Department of Finance. Thank you very much for the question.
The corporation will be structured as a non-agent in respect to its day-to-day core operations, meaning that when it interacts with businesses to provide financial support and advice, it does so in its own right. It’s a non-agent of the government at arm’s‑length. The legislation does outline a few specific instances where it can act as an agent of the government, meaning similar to a core department. In that respect, when it offers advice and when it carries out these functions, it represents the government, and those with whom it interacts have a legal ability, for example, to go all the way through to the government. It’s very purposefully, for its core functions, described as a non-agent. Does that answer your question?
Senator Marshall: Almost. One follow-up question: Can it borrow on its own? If it borrows, does it form part of the Borrowing Authority Act? Does it come under the Borrowing Authority Act?
Mr. Reade: The Canada innovation corporation will not borrow on its own.
Senator Marshall: It cannot borrow.
Mr. Reade: It will be appropriated through statutory appropriations, which is in a section later in the bill that outlines its annual funding from the government.
Senator Marshall: You say that is statutory.
Mr. Reade: Yes.
Senator Marshall: Okay.
My other question is about the Canada Deposit Insurance Corporation Act, Division 37. That one was a little bit frightening when I read it. Why is that amendment in there this year but not last year? What has happened in the past year? I’m very concerned about the banking sector. We have a lot of discussions about it in the Banking Committee, and now it seems to indicate that the government is also concerned about the stability of the banking sector.
Rachel Grasham, Senior Director, Housing Finance, Department of Finance Canada: Thank you for the question. I’m Rachel Grasham, Senior Director of Housing Finance in the Financial Sector Policy Branch at the Department of Finance. I’m moonlighting for someone else right now.
Canada’s banks are very well regulated, they are very resilient, they are robust, but there has been some turmoil in the U.S., and the minister thought it would be prudent to have a temporary measure put in place. The deposit insurance limit is not being changed. It is a temporary measure to allow the minister to increase the deposit insurance limit for a time-limited period should the need arise. We’re talking about something fairly significant having to happen in order to have her pursue that. The authority will expire on April 30, 2024, and there are a lot of governance measures put in place.
Senator Marshall: The concern that I have is that it sends a message to the Canadian public that the government must also be wary about what is happening in the banking sector. Has there been any assessment or analysis that this section rests on? Are there any projections? I’m thinking that we came through the pandemic, and the Bank of Canada bought a lot of government bonds. Has that been thought through, or is this just something parachuted in and there will be some thought given to it later?
Ms. Grasham: There was a very similar temporary measure put in place during COVID that had a limit and it expired and was not used. Similarly, given what had happened in the U.S. and elsewhere in terms of banking turmoil, there was an opportunity to pursue this as a temporary measure. Should the minister implement it, there will be a monthly reporting requirement, and then there would be a review. Regardless of what happens, there will be a review at the end of it, yes.
The Chair: Thank you.
Senator C. Deacon: Thank you to our witnesses. I think you will find you’re bouncing around a lot through these sections as we go through this.
I’d like to talk about the Canada innovation corporation specifically and ask a question about that. I’m not too sure who this is for, but I would love it if you would speak about the analysis that you have done to understand what hasn’t worked in previous efforts — the superclusters, infrastructure bank, other initiatives — and how what you’re doing through the innovation corporation requires a whole separate entity and an alignment. Tell us what has not worked in the past, what has worked in the past and the analysis you have done that demonstrates this is the right way to go.
Mr. Reade: Thanks very much for the question.
There was a lot of work completed in the run up to the first announcement of the intention to create was then called an agency in Budget 2022 and further analysis throughout the rest of the year, including consultations domestically but also interacting with similar type agencies around the globe. On the international front, we learned a number of things that we’re drawing on in terms of the construction of this corporation.
With the mandate of the corporation, as you will have noted in the legislation, its purpose is to specifically target on business expenditures and research and development. This is a well known and often cited global indicator that has strong links with the innovative capacity of the businesses in the country, and therefore to productivity and innovation.
What we learned when we looked at the domestic landscape and what is working and what isn’t is that we had a successful program, the Industrial Research Assistance Program. It was good at the narrow focus that it was focused on, which was taking companies that had identified a propensity to undertake this activity, research and development, and helping them through the process and growing.
We learned internationally that if we added and layered on a few other features, for example, to give an arm’s-length structured independent body the ability to experiment with its programs, to adapt frequently based on its learnings from the results of its programming, but also building an in-house expertise to monitor industrial and technological trends, bundling those features together was deemed to be the way to further improve research and development amongst Canadian businesses.
The last feature is having a proactive approach to reach out and nudge businesses that have the ability to conduct research and development but maybe aren’t undertaking it for whatever reason and to connect them with other innovative Canadian companies, for example.
Senator C. Deacon: Thanks for that, but it still didn’t touch on what hasn’t worked in the past from the government’s perspective in past programs. I would love it if you could follow up with us — we have limited this time, sadly, as always at this time of year with the BIA — with what hasn’t worked in the past that you’re fixing this time around, because there are program delivery decisions there. It’s not just the private sector; it’s how the government has delivered programs. What have you learned that you’re not going to repeat? Thank you.
The Chair: We have been told specifically, for example, on superclusters that it was a good idea but it’s not working, so is that back on the drawing board, Mr. Reade?
Mr. Reade: No, that’s not back on the drawing board. I’m not an expert in the superclusters, but I can certainly take the question back and get you more information.
The Chair: Great. Thank you.
Senator Loffreda: Thank you to all the panellists for being here today. I’m the sponsor of the bill to amend the Bankruptcy and Insolvency Act, so I’ve seen many of you before. You’ve done great work in briefing me on the provisions and answering all the questions I’ve asked, but I do have a few macro questions today.
In amending the Bank of Canada Act, where the Bank of Canada has to remit its surpluses to the government if its retained earnings exceed zero in order to cover the losses from the Government of Canada Bond Purchase Program, do you feel there is any concern that it will affect the operations of the Bank of Canada? If so, how would it affect those operations? Were any alternative solutions examined that are used by other countries around the world? I assume that many are in the same situation.
Gloria Wong, Director, Crowns Corporations and Currency, Department of Finance Canada: Thank you for the question.
In response to the question in terms of whether the measure would have any impact on the operations of the Bank of Canada, the answer is no. It is a technical measure that aims to get the bank out of negative equity resulting from activities undertaken during the COVID period. It’s a very time-limited period which will not have any impact on the operation or the monetary policy decisions of the Bank of Canada.
In terms of other measures that have been examined, the main reason this measure was selected is that it is very similar to the one taken by the Reserve Bank of Australia. The Governor of the Reserve Bank of Australia has secured the support of the Treasurer to allow it to withhold remittances going forward in order to also get them out of negative equity resulting from quantitative easing activity undertaken during COVID.
Senator Loffreda: Thank you. So other measures were considered, and you’ve looked at best practices around the world. With respect to the management, I do agree that it shouldn’t affect their operations — not the management, anyway. Their main concern is fighting inflation and the economy per se.
With respect to the Canada Innovation Corporation Act, just share with us in a macro view why the corporation was created and what its intentions are going forward. I know that Senator Deacon did ask the question about how to correct what we’ve done wrong in the past. What was the main reason behind the creation of this corporation?
Mr. Reade: Thank you very much for the question.
Following up on the discussion that the senators just had on Canada’s performance in respect of investment — in this case, business investment in research and development — we know the trends are heading down and have been for quite some time. The creation of the corporation, based on best practices internationally and looking domestically at our best-performing programs, is intended to contribute towards reversing that trend. We think that businesses undertaking additional research and development across the economy — so not just focusing on high‑tech firms but rather dispersing this activity more broadly within Canadian companies — will have a positive impact in terms of broader innovation metrics and in respect of Canadian companies’ ability to interact with technologies. That was sort of the reason. We needed to keep trying something new, and this is the objective.
The Chair: Thank you for that answer.
[Translation]
Senator Gignac: Welcome to the witnesses.
My question is for Mr. Dussault or one of his colleagues.
There are provisions in this bill that give the Minister of Finance much more power. Clause 37, which deals with deposit insurance, was mentioned earlier. Clause 33 says that the Minister of Finance could order the Office of the Superintendent of Financial Institutions, or OSFI, to take control of a financial institution for national security reasons.
Can you tell us in what context this would apply? I sit on the National Security and Intelligence Committee of Parliamentarians. When the banks were asked to freeze the accounts of truckers, was that an example of national security, that you could take over a bank? Can you explain this concept of national security to me?
Mr. Dussault: Thank you for the question. The measures in clause 33 are intended to reassure Canadians about the integrity and security of the financial sector and financial institutions. Under the financial institutions legislation, powers are already granted to the minister and the superintendent with respect to national security. These measures will strengthen the integrity of financial institutions.
You gave the example of the minister asking the superintendent to take control of a financial institution. There are, if you will, safeguards around the exercise of that power.
The bill says that the minister has an obligation to notify the National Security and Intelligence Committee of Parliamentarians and the National Security and Intelligence Review Agency in the event that she needs to exercise these powers. Of course, there is also a review of the legal provisions related to the exercise of these powers.
Senator Gignac: The Minister of Finance has to notify them 30 days after it happens. My question is about getting prior approval. On deposit insurance, the U.S. Congress, for example, has to sign off before Ms. Yellen does anything like that. We’re talking about the superintendents of financial institutions, but I want to know about the independence of financial institutions from political powers. I find that the minister is giving herself a lot of power for national security reasons in terms of controlling financial institutions. What message does this send? Is there legislation of this kind in OECD countries? Can you give us an example of why the minister would give herself such power?
You can send us your response in writing.
Mr. Dussault: My colleague could talk more about the deposit insurance system. These powers are on the leading edge for Canada. These powers are designed to ensure the protection of financial institutions and the assets of Canadians. Safeguards exist in the legislation. The exercise of national security is already provided for in the Financial Institutions Act.
[English]
Senator Gignac: My question would be, can you find a country in the OECD where the finance minister has the power to take control of financial institutions without preapproval by Parliament? That’s my point.
The Chair: Could you get that answer to us very quickly? As you know, we don’t have much time to do this. That’s great. Thank you.
Senator Marwah: Thank you to the officials for being here.
My question is really more to the Tax Policy Branch. It’s a fairly specific question. It covers proposed section 188.2. If a company in Canada is providing computer services to a non‑resident mining pool and that payment between them is on an FPPS basis, which is a “full pay-per-share” basis which is defined in the act, could you confirm that the intent of the legislation is that the Canadian company would not be viewed as sharing the revenues? If they’re not viewed as sharing in the revenues, then they can deduct the import tax credits on their own expenses.
Amanda Riddell, Director, Real Property and Financial Institutions, Department of Finance Canada: I’m sorry. We were shuffling chairs, and I’m not sure I caught everything that you asked. Could you repeat it?
Senator Marwah: If a company in Canada agreed to provide services to a non-Canadian or non-resident mining pool and that is done on an FPPS basis, which is “full pay-per-share” basis, which is arm’s-length, I just want to make sure that the intent of the legislation is that the Canadian company that is providing services to the non-resident pool is able to deduct its expense or is viewed as not sharing in the revenue. Hence, if you’re not sharing the revenue, you can get input tax credits for the expenses that the service provider is providing to the non‑resident pool. Can the Canadian company get the input tax credits for the services, for its own expenses?
Ms. Riddell: I can’t speak to that particular type of contract because all the contracts are very specific in terms of their terms and conditions. Even though it might be the type of contract that you’ve described, it might have other terms and conditions that change the nature of the contract. Generally speaking, the legislation has an exception whereby if there’s an arm’s-length recipient and the person providing the computing services is not sharing in the rewards with that recipient, GST would apply in the normal fashion. They would charge GST. If it’s an offshore recipient, it would be 0% and they would be able to recover ITCs.
Senator Marwah: That’s all I needed clarification on. Thank you.
The Chair: While you two are at the table, is one of you the crypto expert who can answer the question as to what that issue is about? Mr. Light, treatment of mining of cryptoassets under GST.
Warren Light, Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance Canada: It is dealing with crypto mining, which is basically a transaction service of processing crypto mining transactions. What’s unique about it is that there’s no recipient. The rewards are provided by a software protocol, and it can also be transaction seized, but the miner does not know the identity. Normally, the miner would charge tax in order to claim ITCs; but because they don’t know the person or the jurisdiction, it’s not possible to charge the correct amount of tax. As a result, the amendment provides that this relieves the miner from charging tax, but it provides that the miner would not be able to claim input tax credits — with the exception of when you’re providing it to someone else and you’re not sharing rewards.
The Chair: Is this part of some other rethink about dealing with crypto and the transactions that surround it? There’s a lot of anonymity within the whole field.
Mr. Light: It’s independent of regulation of crypto mining. It’s simply dealing with a specific GST issue.
Senator Massicotte: I just want to comment for the record that I find the process to be quite unfortunate. These are important matters, and we’re being forced to do this very quickly. I don’t know if we’re really doing our job. I just want to go on the record to say that.
The Chair: I could not agree more. We’ve been given a very tight timeline by the government. They want a reporting back, and we’re in the midst of a study.
Senator Massicotte: If that’s the case, I would line up to say that we’ll be late.
[Translation]
I have a question about research and development. We are going to create a new corporation. The minister announced this not long ago, saying that we would have to entirely review how we do research and development, as well as our subsidies, because the system is not working very well. This has just been announced, but the bill has already been introduced and the government is saying what it intends to do.
I thought a committee was formed recently to study this issue and come back with solutions. In the end, a solution will be imposed. For 20 or 30 years, we have been using programs that don’t work very well. Now, we’re going to quickly try something else which may not have been well thought out. In other words, I’m a bit cynical. Why take this approach? Why is the government moving so quickly right now?
[English]
We’ve had an R&D program for over 20 years, and we’re now saying it’s not working. Recently the minister set it up that we’re going to look at that and come back with recommendations as to how we should operate, and now we come up with legislation and here’s how it’s going to happen. We have looked at it, but have we looked at it seriously? Have we thought it over this time? We had a program that didn’t work for 20 years, yet we spent a lot of Canadian tax dollars. Why are you so confident that it’s going to work this time?
Mr. Reade: I think what you’re referring to is the review of the Scientific Research and Experimental Development tax credit that was announced in Budget 2022. It was announced at the same time as a bundle of issues, one of which was the creation of the innovation agency, which is now the Canada innovation corporation, which I’m here to speak to. There were also other issues around modernizing the National Research Council and the review of the granting councils. Those formed four innovation-related initiatives. You will find in this budget three of those four. I believe the review of the SR&ED tax credit is still ongoing. I don’t have any information with respect of that, but just to note that those are separate things, albeit with linkages and interrelated in the same innovation space. I hope that helps. I’m sure we can follow up with a status update of the specific review that you’re referring to.
Senator Massicotte: I hope it’s well-thought-out, because we have spent a lot of money getting here. I hope this time it works and allows us to be more competitive throughout the whole world.
The Chair: If there was an answer that we could seek out, but is there a timeline? Is there anything, Senator Massicotte, that we can —
Senator Massicotte: I’m not sure. We’re getting some comfort, but.
The Chair: We’ll move along.
[Translation]
Senator Galvez: Thank you to our witnesses.
[English]
I want to continue along the same lines as my colleague Senator Gignac with respect to Part 4, Division 33. It says that these amendments are for oversight and to address emerging risks. It’s true that we need more explanation about the last amendment concerning the powers of the Minister of Finance, but in general, we need more explanation of the previous amendments. What are these emerging risks? Are you talking about the cost-of-living crisis, climate change, natural disasters or cybersecurity? You’re talking about “integrity or security,” not “integrity and security.” What are your scenarios for each of these? Thank you.
Mr. Dussault: Thank you for the question.
It’s very focused on security or integrity risk, including foreign interference by hostile states. It’s mostly about protecting the confidence of Canadians in their financial institutions — that they remain managed securely, that owners act with integrity and that they have systems and procedures in place to ensure that the institution is managed in a manner that will protect its integrity or security. For example, some of the measures include adding an object to the mandate of the Office of the Superintendent of Financial Institutions, namely, to determine whether financial institutions have adequate procedures to protect their integrity or security, including foreign interference. It also builds upon the tools that the superintendent and the minister have to address issues in financial institutions.
If you look at the Office of the Superintendent of Financial Institutions Act and the financial institutions acts, it’s mostly focused on financial stability. This expands it to security and integrity issues, building on what we have in the financial institutions acts, to ensure that we are at the forefront of issues and able to address evolving risks. These are emerging risks. They’ve been underlined by our national security agencies, for example, as being emerging risks.
Senator Galvez: Is this amendment changing the mission of OSFI, for example?
Mr. Dussault: We are adding an object to its mandate. OSFI is already looking at cybersecurity risk, for example, and we’re adding this object to its mandate. It will still do everything else it’s doing, but we’re adding integrity and security to its mandate.
Senator Cardozo: My question is with regard to Part 4, Division 26, on amending the Patent Act. Mr. Chhabra, I’d like to ask you about the purpose of this section. Generally, how long does it take to issue a patent? I ask that question in the context of, on the one hand, people feeling that we don’t obtain enough patents for our IP in Canada, and on the other hand, people say to me that too many patents are not good for the innovation world. Where do you situate that, and what are you trying to do here?
Mr. Chhabra: Thank you very much for the question.
I’ll start by saying that the changes proposed by the BIA are really about the efficiency and effectiveness of the overall patent framework and how it is being delivered. Under CUSMA, Canada committed to make best efforts to process patent applications in an efficient and timely manner with a view to avoiding unreasonable delays in the system. If there is an unreasonable delay, what this change means is that Canada must provide a means to extend the patent term to compensate for those delays. CUSMA considers it unreasonable when there’s a delay of more than five years from filing or three years from the request for examination, whichever is later for the patent issued.
Now, in 2021, CIPO, Canadian Intellectual Property Office, processed about 31,000 patent applications, on average done in less than three years. Thirty-one months, I think it was. In most cases, we’re not over that limit, but the U.S. considered it important, as part of the CUSMA negotiations, to have a system that was similar to the one that they have in the United States, and therefore Canada and Mexico also agreed to implement similar measures to ensure that when there is an unreasonable delay, there’s an opportunity for the patent applicant to have and enjoy extended patent term on their products.
Senator Cardozo: What are your thoughts about whether issuing too many patents stifles innovation?
Mr. Chhabra: That’s a more detailed question that we can certainly endeavour to get back to you on. I don’t know that this effort, in terms of modernizing the way the patent process works and ensuring there are appropriate mechanisms for redress when there is a delay, would touch on the total volume of patents. It’s more about those that do come forward seeking patents would have access to a system that is well functioning, efficient and reasonable in the way it’s operating.
Senator Cardozo: Basically, this is following up on what CUSMA requires us to do. Is that right?
Mr. Chhabra: That’s right. In fact, CUSMA stipulated that Canada has until January 1, 2025, to put these measures in place. What happens via the Budget Implementation Act, if it receives Royal Assent, is the Canadian Intellectual Property Office as well as our department will work together to develop regulations to spell out the detail of how this is going to work in practice.
Senator Cardozo: Thanks.
The Chair: Thank you for that.
Senator C. Deacon: I’m just going to keep building on that, if I could, Mr. Chhabra. There’s no other analysis around the importance of patents or Canada’s strategic role as it relates to patents that has gone into this from ISED, other than basically adhering to an agreement under CUSMA?
Mr. Chhabra: Thank you for the question.
I’d say that the government has taken on a significant amount of work in the innovation and patent and intellectual property space over the last number of years, including the Intellectual Property Strategy that was launched in 2018. You may have seen new programs launched, including ElevateIP and IP Assist, IP Legal Clinics Programs, all designed to help build capacity in Canada around intellectual property and build business savvy and understanding of the importance of having a sound intellectual property strategy.
This particular measure is a very narrow and specific one. It doesn’t necessarily relate to our overall innovation capacity, as my colleagues from the Department of Finance are talking about regarding the CIC and other programs that I just mentioned that are designed to support businesses and innovators. This is really about aligning with a specific measure that was agreed to under CUSMA.
Senator Marwah: I’m not sure who I should address this to, but it is in regards to the CDIC changes that are proposed here. It’s not as specific as the last one. I understand the legislative requirements that are in the bill and that we are going to give the Minister of Finance authority to increase the limit with JIC approval over the next couple of years.
I have two questions. Why a two-year limit? Why only until April 2024? Why not make this permanent? Somehow I didn’t understand why this is going to be two years.
The second question: Was any consideration given as to increasing the limit? It was last increased in 2005. The U.S. is at 250. Why is there no consideration being given to increasing it on a permanent basis from 100 to whatever number the government views appropriate?
Ms. Grasham: In terms of your first question, it’s a temporary period, as you noted, expiring April 30, 2024. I think it’s just being put forward as a precaution. As I noted before, our banks are very well regulated. They’re very robust. There are a lot of different measures the government can bring to bear to support financial stability and public consumer confidence, but there has been some turmoil globally, so this was thought as a prudent measure, precautionary to put forward.
Part of the legislation is the requirement for the minister to undertake a review, which could include any different issue associated with deposit insurance, following the expiry of this temporary authority. There have been reviews in terms of the limit. You’re correct; it was last increased in 2005. There was a review undertaken in 2018, and the decision was taken that the limit was sufficient and met the needs of the system. In terms of increasing the limit overall, these are things considered from time to time. It does mean, then, that financial institutions are assessed at a higher level, and that might add cost to the system, et cetera. We think it’s a very robust system right now, and 97% of deposits are fully insured.
I’m sorry. Your second question?
Senator Marwah: Is an increase from 100,000 on the table, or are you saying it will be part of the review?
Ms. Grasham: I would say the minister will be able to include whatever she wishes in the review. Certainly, that could be a factor that’s looked into.
As I had noted before, under the emergency legislation passed by Parliament at the beginning of COVID, there was a similar authority for the minister to increase the limit on a temporary basis. That authority expired and was never used, and that would certainly be our hope in this case as well. It’s a precautionary measure.
Senator Marwah: Thank you.
Senator Gignac: I have a question, but just before that, could you repeat your sentence? There were 97% of deposits?
Ms. Grasham: I said 97% of depositors are fully insured.
Senator Gignac: Okay. That’s a significant difference between the two numbers, okay, because I was struck by your figure.
[Translation]
My question relates to Part 4, Division 1, which talks about setting up an external complaints body for the banking industry. Doesn’t the Commissioner of the Financial Consumer Agency have enough power already? Do we need to create another body? Can you tell me why we need to do this?
[English]
Mark Radley, Acting Director, Consumer Affairs, Department of Finance Canada: Thank you for the question. My name is Mark Radley. I’m the Acting Director of the Consumer Affairs Section in the Financial Sector Policy Branch at the Department of Finance.
To clarify something, currently, there are two external complaints bodies. There is OBSI and ADR Chambers. The policy changes that are being proposed here are to create a system where there’s only one external complaints body. It won’t necessarily be a merge, but the Financial Consumer Agency of Canada will do a selection process to identify an external complaints body, which will be recommended to the Minister of Finance, and the minister will make a designation.
Senator Gignac: You refer in your documentation that they will have additional new powers.
Mr. Radley: Yes, that’s right.
Senator Gignac: Correct me if I am wrong. What kind of additional new powers do they need?
Mr. Radley: Yes, no problem. One example is that the external complaints body will now be required to assist consumers in preparing their complaints. That is something that is not currently part of the system right now. The external complaints body will also be required to meet with the commissioner of the FCAC quarterly and stakeholders annually. It will also require that external complaint body’s policies and procedures are satisfactory to the commissioner.
The Chair: Thank you.
Senator Marshall: To go back to the Canada innovation corporation act, I’m the critic for the bill, so I’m very suspicious. What about the reporting? We just ran into a problem with the Volkswagen deal where parliamentarians couldn’t get information with regard to the money that is going into that factory. Because it’s not going to be an agency of the Crown anymore, are we going to be stalled from getting information? Will we still be able to access information, or is this putting up a wall with regard to getting information?
Mr. Reade: Thanks very much for the question.
I’ll draw your attention to provisions 23 and 24, which speak to public facing and then annual reports to Parliament.
In the first instance, there will be quarterly reports that outline every company with whom the corporation does business and the amount of funding that is provided. This is consistent with disclosure practices amongst like programs within the government.
As well, consistent with the Financial Administration Act, the corporation, through the responsible minister, will lay in front of Parliament an annual report. It also has all the same obligations to table corporate planning as well as corporate reports to the Treasury Board Secretariat, which then flows into an annual report for Parliament. There are some robust reporting obligations through this legislation.
Senator Marshall: I still can’t get a handle on section 7. What is the benefit to the corporation of having those exceptions?
Mr. Reade: If you think about it from the government perspective, it can access the corporation’s expertise and ability in a couple of respects. One, it can ask it to run programs. The government might have an initiative in the future that it deems the corporation might be well placed to run for the government. There is an analogy that currently exists. For example, Global Affairs Canada asks the National Research Council, where the Industrial Research Assistance Program resides, to run a program called CanExport. It’s just an ability for the government to be able to use this arm’s-length tool when it needs to. Another example is to sit at a table at an international body for a related issue around promoting research and development for Canadian companies, allowing the corporation to make collaborations amongst Canadian companies and international companies.
Senator Marshall: On the other hand, the minister can have a real role running the corporation. It seems like that section is contradictory to everything else that is in the bill.
The other point I want to make about this sort of relates to something Senator Deacon and Senator Massicotte were saying. You’re setting up another fund — well, I consider it a fund, even though it’s a corporation. The government has all these funds all over the place, and as far as I know, there has been no evaluation of these various funds. They really don’t know what works and what doesn’t work. It seems like this fund is being set up, and the government is going to do the same thing all over again. The other funds weren’t successful, so they are doing the same thing again hoping for a different result, but they are not going to get a different result because they are doing the same thing. They will get the same result. When you are talking to us, I’m not optimistic about that.
The last question or point I want to make is that for both sections 33 and 37 — you have had some questions on that — it really hasn’t been explained to us why we are seeing those amendments now. Something has happened that the minister has put these sections in the Budget Implementation Act. It hasn’t all been fleshed out yet, but it looks like somebody knows there is some trouble coming somewhere, but we’re not told what precipitated sections 33 and 37.
Mr. Reade: Would you like me to respond to your questions on the innovation corporation just quickly while someone else is coming to the table?
The Industrial Research Assistance Program exists and will join the Canada innovation corporation. It’s not a completely new fund. There is some additional new funding, for sure, so I’ll take that point, but be aware that the bulk of the funding that has been announced for this corporation to date exists. It’s not new.
I’ll quickly highlight a couple of new features for you that don’t exist. This arm’s-length approach is a new institutional structure within the government’s toolkit. Funding will be allocated by a roster of technical experts. Research and development is not done by government bureaucrats but by experts that will be drawn upon who understand the research and development so that we have a good understanding of whether that research and development will result in actual economic outcomes in the economy. Those are the objectives: productivity and economic growth. There is strategic capacity, this understanding of the economic and technological trends in the economy, so that funding can be allocated and targeted in respect of those trends. This is foresighting that guidance that the funding will be allocated against. That’s new. That’s additive to the economy.
Finally, and importantly, because of the structure, the board of directors will be able to quickly experiment, change and adjust programming so that it sees what works well with businesses against this purpose of increasing research and development and can adapt and move quickly. That’s a very new and powerful feature in the ecosystem.
Senator Marshall: I have visions of the Canada Infrastructure Bank, but it’s okay. Yes.
The Chair: Ms. Grasham, do you have any comments on that?
Senator Marshall: No, not on that. I am just concerned. I feel like we don’t have the whole story on divisions 33 and 37. Why now?
Ms. Grasham: I don’t really have a lot to add to what I was saying before. We have a well regulated and robust system.
Senator Marshall: So why are we seeing these amendments?
Ms. Grasham: You can look to what has happened recently in the United States with the failure of three banks. There wasn’t an impact in Canada, but it’s a question of having a precautionary tool. Financial markets are very global in nature, our banks are global in nature, and things can happen very quickly. It’s a question of having another tool in the toolkit to allow the minister or the government to act quickly and to help ensure stability and public confidence.
Senator Marshall: All right.
Senator Loffreda: My question is on Division 26, amending the Patent Act. Once again, on a macro level, we talked a lot about IP and business investment in Canada and how we can improve that. What is the current delay in the issuance of patents in Canada, and how do we compare to other jurisdictions? Why would the patentee be required to apply for an additional term instead of the additional term being granted automatically? Was there a reasoning behind that? On the average time between an applicant filing a patent and the patent issuance by the Canadian Intellectual Property Office, were there other solutions explored in order to improve that?
Mr. Chhabra: Thank you for the question, senator.
Some of the details you’re asking about would be better responded to by the Canadian Intellectual Property Office themselves, but we’d be very happy to work with them and come back to you with a more fulsome response. At the moment, what I can tell you is that, of the applications they receive, the average processing time is about 31 months, as of 2021. That is well within the framework that has been agreed to with the United States and Mexico under CUSMA.
I apologize, senator. Could you repeat the second element of your question?
Senator Loffreda: Do we compare to other jurisdictions where other solutions —
Mr. Chhabra: It’s a very interesting —
Senator Loffreda: Why not just include the term? Why the additional application?
Mr. Chhabra: There are a couple of elements there that I would like to respond to. The first is that each jurisdiction manages patent applications quite differently. In the United States, for example, patent term adjustment happens on about half of the applications they receive. I think the average is about 180 days of extension on each patent application, on about half of what they process. So it kind of depends on how the systems operate.
You did ask a question as well about what the Canadian Intellectual Property Office is doing. I can say that on a general level, and I can get you more details on this as a follow-up, they have taken several steps toward streamlining and improving their internal processes in order to get ready for this such that they would not be in a situation where any applicant would experience an unreasonable delay. Those steps are already being taken by CIPO.
I apologize again, senator. Was there a follow-up?
The Chair: Did you get your answer?
Senator Loffreda: Yes, thank you.
Senator Cardozo: I want to follow up on Senator Loffreda’s comment and my earlier question. You said an average of 31 months. How does that length of time compare to other G7 or OECD countries?
Mr. Chhabra: That is a great question.
It is a bit difficult to compare. I wanted to raise this point earlier in response to Senator Loffreda’s question as well. In Canada, we have a system wherein patent applicants can file and then request an examination. What that means is that when you initially file, your patent processing does not begin immediately. This is in respect to the fact that many patent files come to Canada as a second or third jurisdiction of choice. Often even Canadian companies will file here after the fact. By filing in Canada, they maintain their ability to activate that patent or push forward with the application as and when they see fit. It is a little difficult to compare systems across different countries in terms of how they work because a lot of what happens in a patent application process is decisions going back and forth and requests for information going back and forth between the applicant and the patent office. Doing a one-for-one comparison is rather difficult, but I can say that in Canada we’re well within the average time processing that CUSMA is calling for.
Senator Massicotte: I must comment before I ask my question. Some of us have been around here quite some time, and I’m one of those. The way you answered the patent question is the same answer we got four or five years ago, how much it’s going to help and we have to make changes. I just want to make that comment.
The other issue I have is relative to reporting. You mentioned that the reporting from the Canada Infrastructure Bank or the Innovation Fund will be the same as other government departments, but would it include a fair market value assessment like you’re asking the banks to provide on the RSPs? Will the report give us any sense of the value?
The Chair: Have we got an expert somewhere? Okay. We’ll put that question on the record as well.
Senator C. Deacon: Mr. Reade, one of my concerns is the strategic investment fund has been used to fund intellectual property branch plants for foreign entities. We helped them fund a research facility in Canada, and that IP by definition leaves the country. The objective of the program is to build the ability of Canadian businesses to compete in the knowledge economy. I just want to get confidence from you that how we are designing this new entity, the CIC, is going to be done in a way that really helps to build the elements that are necessary for Canadian businesses to succeed into the future. I don’t put all the blame on Canadian businesses that they are not doing the right investments. We need stronger competition. There are a lot of things we need to do. I really want to understand what the government will be doing differently through this agency to move the needle in this space. If you could be clear in your responses and show us what you have analyzed that hasn’t worked in the past and what lessons you’re taking specifically from what countries as to why this will work. Thank you.
The Chair: It would be helpful to get that for two reasons. Obviously it’s here, but it’s also the core of our study here on business investment. Senator Marshall’s point was that you keep doing the same thing over and over again and it doesn’t work. That’s one thing to follow up on.
Senator Gignac: This question is technical. It’s about the definition of financial services. I think it’s regarding GST, because they have a court decision recently that forced them to redefine the financial services. Is it true that the Canadian Bankers Association sent an email to the Finance Department complaining about the retroactive approach of the Finance Department regarding that measure? And what will be your position? Are there any amendment to come?
It could be a written answer, chair.
The Chair: We need a 30-second answer to that, or you can give a written response. We’re out of time. You have about 30 seconds, Ms. Riddell.
Ms. Riddell: Your question is — just say it as quickly as you can. I think I heard most of it.
Senator Gignac: It’s okay. It’s about the definition of financial services at Part 2. I think following a court decision, you now have to create an amendment regarding the definition, and I think the Canadian Bankers Association has some complaint about the retroactive approach of the amendment. Is there a new position, or are you sticking with your original position?
Ms. Riddell: We have had conversations with them. They have expressed displeasure with the amendment, but as far as I’m aware, there are no changes being contemplated.
Senator Gignac: Thank you.
Ms. Riddell: You’re welcome.
The Chair: Thank you all very much. I know it was a complicated process, but these are the cards we’re dealt. Thank you all very much for being here today.
That wraps up our meeting. We’ll see you all again tomorrow.
(The committee adjourned.)