QUESTION PERIOD — Banking, Commerce and the Economy
Business of the Committee
May 3, 2023
My question is for the Chair of the Standing Senate Committee on Banking, Commerce and the Economy.
Senator Wallin, last month, I had the opportunity to speak at the Global Parliamentary Forum of the World Bank and International Monetary Fund, or IMF, in Washington where the buzz was all about the opportunities around the race to net zero.
The U.S. Inflation Reduction Act, or IRA, has turbocharged both business investment and emissions reduction south of the border. I understand your committee is undertaking a study on business investment in Canada. Witnesses for this study have spoken both about how the U.S. IRA impacts us and about the opportunities associated with the transition to a low-carbon economy, which include technological and business innovation in renewables, energy efficiency, electric vehicles, agriculture and sustainable finance broadly. Investing in these areas cannot only help reduce greenhouse gas emissions and mitigate climate change, but also can provide a competitive advantage and financial return for investors. This is happening in developing nations all over.
Considering the importance and relevance of these topics to business investment in Canada, does your committee plan to hear witnesses who specialize in these key areas? If yes, can you elaborate? Thank you.
Thank you very much, Senator Galvez.
I appreciate the question. I’m glad that you are taking notice of our work, and we were glad to have you there last week sitting in at committee.
We are, indeed, looking at why Canada, with one of the largest energy-based economies in the world, is seriously lagging other countries in attracting investment. We are hearing repeatedly from private Canadian companies why they are not investing here — too much politics, too much red tape. The same concern is coming from foreign capital, making it reluctant to invest unless the government offers up millions or in some cases billions in incentives.
The problem with the subsidy approach for us, regardless of what sector you are looking at, is that it is costly and it too often offers only short-term gain.
One of our witnesses, James Hinton, an intellectual property lawyer and part of Own Innovation, explained:
You can’t just fund your way into economic prosperity. For example, in clean technology, we own less than 1% of the global intellectual property. So unless you recognize the existing position of Canadian firms and intentionally ensure that Canadian-owned IP and data assets are part of the clean-tech value chain, you are initiating a generational wealth transfer out of the country because 99% of the foundation is already owned.
We see similar examples with Volkswagen and Ericsson — billions in subsidies without any assurances that the IP stays in Canada. Jobs are created, but what we’ve also heard from witnesses is that the jobs model — and this has been referred to frequently — is not one that incentivizes the private sector to come to the table and invest in Canadian companies as partners sharing IP.
The jobs model secures activity in the country, and it may even help shift activity toward renewables, but it is not an investment strategy that will work in the future.
The U.S. IRA strategy is putting billions into clean growth, repatriating production that was offshored. Ottawa’s approach is, “Well, frankly it is hard to compete with big spenders and with countries that have no carbon tax.”
Many of our witnesses have talked about an attitudinal issue — and I think that this troubles us all — that we tend to be risk‑averse in this country. That too must change. Our start-ups are more likely to sell than grow, so they do not even look to secure their own IP.
Whether it is green technology, clean technology, agricultural technology, communications technology or even artificial intelligence, or AI, we need to have a strategy that will do more than create branch-plant jobs.
