INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 21, 1999

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): Call to order. Pursuant to Standing Order 108(2), this is a study on a document entitled Sustaining Canada as an Innovative Society: An Action Agenda.

I'm very pleased to welcome this afternoon four witnesses who are here to discuss biotechnology research. Just so the committee members know, we have two sets of witnesses this afternoon, one from 3.30 to 4.30 approximately, and then our second group from 4.30 to 5.30. I warn members that there's the possibility of a vote at any time, so we'll be going and coming if that does happen.

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I'm very pleased to welcome Dr. Barry McLennan, chair of the Coalition for Biomedical and Health Research; Dr. Paul Hough, vice-president of BIOTECanada; Dr. Tom Hudson, assistant professor, departments of medicine and human genetics, McGill University; and Dr. Jim Friesen, professor and chair, Banting and Best department of medical research, faculty of medicine, University of Toronto.

I will turn it over to our witnesses to begin. Is Dr. McLennan going first?

Dr. Barry D. McLennan (Chair, Coalition for Biomedical and Health Research): Thank you, Madam Chair.

CBHR is very pleased to have an opportunity to present a brief to your committee on the importance of biotechnology to Canada. Copies of our brief are available in both languages for members.

Biotechnology is rapidly emerging as one of the most important technologies of this century and is expected to have a major impact on our daily lives for the next several decades. Canada has the potential to become a world leader in this biotechnology revolution.

Biotechnology is what is referred to as a strategic technology. It cuts across many sectors of industry, including health care and agriculture. It's interesting to note that in absolute numbers, Canada ranks second only to the U.S.A. in the number of companies using biotechnology.

The recent BIOTECanada report—and I'm sure Dr. Hough will elaborate on that report—confirms that the health sector dominates activity in all aspects of biotechnology, comprising 46% of the companies, 87% of the R and D investment, and over two-thirds of the employment in that sector.

Last February's federal budget launched Canada on a bold new initiative to establish a virtual network of research centres, the Canadian Institutes for Health Research. The Government of Canada is to be commended for launching this initiative. As Minister Rock stated on February 17:

These investments will pay long-term dividends in the quality of life of Canadians.

Many issues facing biomedical, clinical, and health researchers are germane to the biotechnology sector. I'd like to speak briefly to some of these.

The first issue is global R and D investment. Foreign direct investment has always and will continue to play an important role in Canada's economic development. In 1996 the Conference Board of Canada report indicated that Canada's ranking in world FDI inflow to this country fell from third to eighth during the period 1988 to 1994.

Two critical factors are involved in attracting global biotechnology investment to Canada: number one, establishing and maintaining a competitive regulatory environment; and number two, having a cadre of qualified biomedical scientists available to do research in Canada. There's a change here. What is important in this sector is the availability and skill of human resources, rather than the traditional capital and production costs. This is a whole new environment.

To create a favourable environment for biotechnology in Canada, CBHR recommends: number one, that a separate agency outside the Health Protection Branch be established to undertake approval reviews for biotechnology products; and number two, that the Patent Act be revisited with respect to harmonization with the intellectual property laws of our international competitors and the introduction of patent term restoration mechanisms similar to what's employed by our competition in the European Union, the United States, and Japan.

To ensure that there's a cadre of qualified scientists in this country, we must turn brain drain into brain gain. I submit that the establishment of CIHR, as announced by the government in February, will help us accomplish this goal.

To me it's absolutely sobering to realize that the churning cost of the brain drain in this country is estimated to be $560 million a year. If we could reverse the brain drain in this country, that one item alone would pay for CIHR in its entirety per year. It's absolutely amazing.

I'm confident that the establishment of CIHR will help reverse the brain drain. But we must do more than that. We must make sure we're training an adequate number of biomedical scientists in this country and keeping them in Canada.

The next point is the commercialization of our biotechnology. As you know, Canada is a major consumer of medical biotechnology. Where appropriate, therefore, we must commercialize the products of health research and move them into the marketplace.

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In the budget, Minister Martin announced enhanced funding for Technology Partnerships Canada; I think it was $150 million over the next three years. He emphasized, and I quote:

This investment will help to keep Canada at the forefront of technological innovation.

TPC, or Technology Partnerships Canada, was designed of course to support enabling technologies. In the last three years, TPC has supported 70 projects, and this is good news. However, only two of them are in the biotechnology sector, and since this sector is now dominating this area, it's important that this oversight be addressed.

This leads me to my next recommendation, which is that TPC realign its scope of activities to include biotechnology projects. We must move quickly on this front to capture our fair share of the action in the global marketplace. Biotechnology should no longer be regarded as an immature industry.

The final topic is productivity growth. Last October, The Economic and Fiscal Update identified the improvement of productivity growth as the key challenge for Canada. Innovation drives productivity, and one of the most important assets we have in Canada for supporting innovation is our public research investment.

The last two federal budgets have started Canada happily on the road to recovery, on the road to restoring an internationally competitive level of funding for biomedical, clinical, and health research. This funding must be sustained.

Increased productivity is research-based. Investment in health research, including biotechnology, offers a double-bang for the buck. Firstly, we get the increased productivity in health industries; and secondly and most importantly, we decrease productivity losses, resulting from the fact that Canadian workers will be healthier. They'll be healthier through health research, because that reduces the economic burden of illness.

In conclusion, we must set the stage for Canada to become a world leader in biotechnology. CBHR has identified several issues that must addressed, and I respectfully bring them to the attention of the industry committee.

Thank you.

The Chair: Thank you very much, Dr. McLennan.

We're now going to call on Dr. Hough.

Dr. Paul T. Hough (Vice-President, BIOTECanada): Thank you very much, Madam Chair. I'm delighted to be here. My name is Paul Hough. I'm a vice-president with BIOTECanada.

I would like to do three things as briefly as I can. I'd like to give you a very short synopsis of what BIOTECanada is; then I'll introduce our recent report, released yesterday actually, on the state of the biotechnology industry in this country; and then I'll conclude with a few comments related to the research base upon which our biotechnology industry is supported.

First of all, BIOTECanada is a technology association representing the biotechnology industry and research community. I've provided each of you with a one-page overview that I hope has been handed out.

Members of BIOTECanada are mainly biotechnology companies in health care, agriculture, environment, and other areas, as well as all the regional associations, several universities, companies that work with the biotech sector, and professional societies.

Our objective is to provide a unified voice to foster an environment that responds to the needs of the biotech industry and research community, both nationally and internationally. I can go into more detail in questions, if you would like.

Another item that was handed out to you is essentially the executive summary of our state of the industry report. Recognizing that biotechnology is an extremely important activity in this country, we felt it was very important to highlight this fact, because while we may know it, not a lot of people are aware of it.

So in 1998 BIOTECanada coordinated quite a large study to produce a comprehensive report describing the Canadian biotech industry. This report was undertaken with Statistics Canada, which undertook the actual survey itself; Industry Canada, which provided a lot of assistance in identifying the people and validating the coding of the data; Ernst & Young, the company that had produced the previous reports on biotechnology in this country; KPMG, a comparable company; Contact Canada, a company that has produced annual reports or directories of organizations; and a few other groups that provided substantial financial assistance. All of them acted as an editorial board in the production of this report.

It was a very effective collaboration, with substantive interaction among all those groups. But our objective was really to characterize the industry in a somewhat different manner from what had been done in previous reports. We wanted to determine the activity directly related to biotechnology in each company. So we actually focused with each respondent to identify the level of employment, R and D investment, etc., that they felt was biotechnology-related.

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The executive summary you have in front of you provides a number of charts and graphs, but I'd simply like to highlight a couple of points that came out in our report.

As Dr. McLennan has said, Canada has the second-largest number of biotechnology companies in the world after the United States. That's without taking into account any fudge factor based on population. It's 282 companies by our count, and that was at the end of 1997; it's probably close to 300 now. I'd like to point out that does not include a lot of early start-ups or the incubator groups that have been spun off from universities and other research institutions.

Just under 10,000 people are directly employed in biotechnology, with Ontario and Quebec having approximately two-thirds of that number, but there is significant activity across the country, in B.C., Saskatchewan, Alberta, and Nova Scotia in particular. Over 70% of the industry is composed of small companies—defined as having between one and 50 employees—and many of these are R-and-D-intensive; they do not have products yet on the marketplace.

The total revenues to biotechnology companies totalled $1.1 billion in 1997 alone, and these companies devoted close to $600 million to research and development. That's in addition to the $400 million the various levels of government devoted to it. However, only five firms in this country account for close to 60% of the biotech sales, and 50 firms account for virtually all of them.

It's somewhat simplistic to talk about a biotechnology industry, since the related technologies are essential for several different sectors. Health care has by far the most activity, as Dr. McLennan has pointed out, in terms of companies, people, and R and D investment. However, agriculture, environment, food processing, aquaculture, bio-informatics, and genomics—about which we're going to hear much more in a moment—are all areas of intense biotechnology activity. This emphasizes the reality that biotechnology is a tool to be used in a host of sectors and therefore is an enabling technology.

The report goes into some detail concerning as well the business focus of biotechnology companies. Most are preoccupied with developing new products—doing the research and development, conducting the clinical trails, getting the regulatory approval—and that's not a short-term process.

Financing from a variety of sources is a major concern, as all of these activities require considerable resources. Alliances—R and D alliances, business alliances, and other alliances with companies, universities, and institutes—are an important reality in the biotechnology sector.

Human resources, not just technical resources, but financial and other resources, are also a real concern, especially with the smaller companies. Our report details, for instance, that close to 1,900 positions are classified as vacant—virtually 20% of the employed level.

Biotechnology is truly a science-based activity. As Dr. McLennan said, health care accounts for 87% of the R and D investment by industry. DNA-based technologies represent by far the most important technologies, especially in many of the products that are currently being developed. Within this category, the development of bio-sensors, the use of gene therapy, and bio-informatics and genomics are the areas that are seen as coming up very quickly, again from an industry perspective.

So what are some of the implications of our report? Canadian research in the life sciences over the last few decades—and it does take a long time for this work to come to the point where it can be applied—has provided the basis for much of the Canadian biotechnology activity. Canadian researchers are also recognized throughout the world as being among the best around. All you have to do is look at how quickly our post-doctoral people are soaked up in other jurisdictions.

The research base in universities must be strengthened further. Universities provide a major role, not only in R and D alliances, but in providing specific expertise that companies cannot maintain in-house. Support for the research base in our view is best provided through existing agencies: the research granting councils, the Canada Foundation for Innovation, and the planned Canadian Institutes for Health Research.

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It is also very important to realize that the regulatory system in this country has a strong impact on the biotech sector. In our view, it is extremely important to strengthen the science base within all the regulatory agencies. If you saw the papers this morning, that is coincidental with what the Auditor General has said with respect to manpower in these agencies.

In conclusion, I'd simply like to say biotechnology is here. It is very important in this country, and it is expected to grow at approximately 10% a year over the next few years. It is a science-based industry, and that's why I'm glad to be here to support the idea of further research support.

Thank you.

The Chair: Thank you very much, Dr. Hough.

I'm now going to turn to Dr. Hudson and Dr. Friesen.

Dr. Thomas J. Hudson (Executive Member, Genome Canada Task Force; Director, Montreal Genome Centre, McGill University; Assistant Director, Center for Genome Research, Whitehead Institute/Massachusetts Institute of Technology): I want to thank the committee for inviting Genome Canada to give a presentation.

Representing the board of Genome Canada, I have a list of people in the handout—people from government, from academia, and from industry.

I want to show you how Canadian industry can benefit from the genomic revolution. We don't have much of a genome research program in Canada. Although everyone seems to be supportive, there are some challenges in actually creating one, but there could be a significant impact in creating one.

What is genomics? “Genome” comes from the word “gene” and the word “chromosome”. Genes and chromosomes live inside cells. It's the database of the human body, the database that creates cells, creates bodies, and develops into organisms. It also contains information about disease genes in humans, in plants, and so on.

So a genome is a complete set of this DNA information inside an organism, and each organism, from bacteria to humans, has its own genome, its own set of genes. In the case of a human, about 100,000 genes build human cells.

Genomics is very important to our understanding of the basic processes of life, and we've seen it in human genetics. The number of new genes discovered in the last five years is astronomical, due to tools developed for human chromosomes.

Genomics has revolutionized all biological sciences. Genomics is also becoming a big sector in industry. We're seeing it mostly in the States, and it's something we anticipate will happen in Canada.

Although genomics so far has been applied mostly to humans and the technology has developed for the study of human genomes, there are cross-over applications into plants, into forest science, and into bacterial science. It has applications to lots of different processes.

Genomics can benefit Canada in many ways. It can increase productivity. For example, it can identify crops that grow faster or that are more resistant to pesticides, as well as breeds of fish or trees that resist better or live better in certain climates. These are all things that genomics can offer.

Canadians are already very strong in genetics. This talent in genetics has been shown in the case of plants, for example, with the developments in canola. The basic biological knowledge, which Canadians can translate well, can make genomics a boom industry in Canada. If we don't develop genomics in Canada, it's going to be developed elsewhere, and the licences and fees and so on will belong to multinationals and other countries.

We've sat as a group to figure out what's missing in Canada, because we do have some good science. We have a lot of research councils giving money for science. What we're missing is a piece called genome centres—large groups of scientists working together, funded to do genome science in different applications. We need to bring engineers, mathematicians, computer scientists, and biologists all together to get that critical mass of people to handle the data. It's much more efficient to group scientific teams together, particularly in genomics, than to have a cottage industry type of science.

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We have the support of granting councils, CIHR, and other organizations, because it's felt that by creating genome centres—by creating this technological base—we're going to enhance the science being done in our laboratories and our universities.

Genome centres are also critical to actually starting genome companies in Canada. You can't expect a small, $1 million company to go and build its own sequencing unit, its own geno-typing unit, and get proteinomics expertise, because these are very expensive technologies. It's much more efficient to create centres with a high amount of expertise and give universities, academics, and industry access to these technologies.

By creating genome centres, we can have an impact on a lot of different growths in industry. Some multinationals, such as Novartis and Monsanto, might be more attracted to come to Canada and do genomic plant R and D if they have access to the technologies. We'd like to bring some big multinationals to Canada.

There are very small core genomics companies, such as Algène. About a dozen have started in Canada, or maybe more, and they need access to genome technologies.

Venture capital firms such as GeneChem, BioCapital, CMDF, MDS, and so on all want to invest, and some funds have up to $100 million to go into genomic companies, but right now most of this money is being invested in genomic companies in the States, because we haven't jump-started; we haven't created the environment in Canada yet.

The sectors that can be helped by genome research are in almost all aspects of life. Agriculture and agrifood, fish, forests, and the health sector are all sectors of science and sectors of industry that can benefit.

What's a genome centre? A genome centre, as a high-technology centre, would have technologies for sequencing large tracts and millions of bases of DNA.

As for functional genomics, even if we understand what DNA is, to understand the function of 100,000 genes, we require new technologies.

Genotyping is making a correlation between a disease state and DNA. So this is another type of DNA analysis technology.

A cell has also 100,000 proteins, which interact together. The study of these is called proteinomics.

As for bio-informatics, we're creating a massive amount of data, and to handle it, we have to create some new expertise in this country.

If everyone is for genomics, why isn't it happening? We think one of the barriers is the fragmentation of funding sources. If investigators at universities want to start doing genome research, they have to apply at one place for infrastructure, one place for personnel, one place for the scientists' salaries, and another place for the programs. That is a hindrance to getting big initiatives off the ground.

Also, genomics doesn't belong just to the health sector or just to the agriculture sector. It crosses different fields. The way science funding happens in Canada, we fund just engineering or just biology or just medicine. So again, we're not creating an environment to make big initiatives that cross boundaries.

Dr. Friesen is going to continue.

The Chair: Thank you.

Dr. Friesen.

Dr. Jim Friesen (Professor and Chair, Banting and Best Department of Medical Research, Faculty of Medicine, University of Toronto): Thank you very much for this opportunity to present some views on genomics.

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My colleague said biotechnology is the enabling technology of the last part of this century. That's a paraphrase, I'm sure. But I would go further. I would say genomics is the new vehicle for biotechnology.

Dr. Hudson has given you a background of what genomics is, its breadth of approach, and how important it is. I want to continue on and make the point that Canada, in a sense by good luck, is extraordinarily well positioned to take advantage of the genomics revolution.

There's no doubt from what Dr. Hudson said that genomics study is the vehicle, and we have to be in the front seat of that vehicle. As a matter of fact, we are very near the front seat right now.

I recall in the days of my youth there was another biological revolution, and that was recombinant DNA, about 25 years ago. We lagged very far behind in that revolution. We caught up eventually, but it took us 10 or 15 years.

In this particular case, with the genomics revolution, we are well positioned, because we have a very strong basis of genetics due to people like Dr. Hudson. We have a very strong basis of protein science. We have very strong plant science in this country now. We have very strong medical research. We have a technological base. We have one of the world's best companies for developing and selling mass spectrometers, which is one of the key new instruments in this area. And we have a couple of small, fledgling companies that in fact have world-beating technology that is directly applicable to this functional genomics that Dr. Hudson was talking about.

I also want to try to convey the sense of expectation and excitement in the biological research community in Canada. I've never actually seen this before in this country, which I guess is a little bit conservative sometimes in its viewpoint. Everywhere we go, from coast to coast, there is an amazing amount of excitement about the potential for the new science, but more importantly, for the fact that we are poised in this country—if we can get the right kinds of resources and backing and the right sort of organization, as Dr. Hudson was talking about—to make a real impact in this area.

Of course we are not alone in the world. Other people in other countries have recognized that genomics is important. We have prepared, as of 1997—but we have no reason to think that in the last two years it's changed to our advantage—the relative amount per capita that is spent by our major competitors in developed countries. As you can see, Canada is not very high on the list. It's down around Brazil or something, which is not on here, but is slightly above us on the pie chart.

We can do better than that, and our scientific record in the past indicates that we should do better than that. Of course, unfortunately in this life everything comes down to money often. The brain drain and the brain gain were referred to earlier by my colleague, and that surely is happening. We know some of our best and brightest go down to the United States to become trained and don't come back.

What I also know, however—and this is very encouraging—is that just in recent months, with the buildup of the excitement and the potential in this country, the news is getting around. Just last week, for example, we had a visitor from Cold Spring Harbor in New York, which is one of the major biological laboratories in the States—a former Canadian who's down there now and has been for eight years. He came up just to give us a seminar. He started talking with us, and as a result of that, I invited him back and asked whether he'd be interested in joining the faculty at the University of Toronto. He's coming to have a second look, because of what he sees as the potential in Canada for the development of this.

So we can actually, if we play our cards right and spend a little bit of money where it really counts, reverse the brain drain, which is what we would all like to see.

How should we spend that money? Dr. Hudson has already told you the principle of it. The idea is to establish a series of genome centres. He referred to a cottage industry as the way not to go.

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The reason that some of our competitor countries are very successful is that they in fact have taken that step. They have recognized that this is such a complex series of technologies that the only thing that really works is to have strong, central, well-personed facilities that will be a magnet for scientists, for the training of students, for the training of technicians, and especially for the interaction with the private sector. And as Dr. Hudson said, the private sector cannot hope, especially if it's a small biotechnology company, to set up this very costly and very complex technology, but can expect to buy into it on a fee-for-service basis or other basis that will enable them to use it.

In the States, we're seeing that a lot of this is becoming centred in the very large pharmaceutical companies. We don't really have the direct equivalent of that in this country, but we can nevertheless provide for our private sector the kinds of facilities they need for this.

In addition, it's going to provide a place where managers can receive the expertise they need in developing new companies.

I will close with this. We are in a good position. Fortune has put us there. Good management and good planning and some resources will keep us there. I hope that in the fullness of time and in the wisdom of groups such as this, we may in fact receive the kind of backing that is appropriate.

Thank you.

The Chair: Thank you very much, Dr. Friesen. I'm now going to begin with questions.

Mr. Anders, are you prepared to begin?

Mr. Rob Anders (Calgary West, Ref.): Yes.

I apologize for not catching the full presentation, but the gist I take from what you're saying here is you'd like to see more money put into this.

I can understand the value of this type of industry. What I'm going to bring up, though, are some other concerns, because other things impact on this, aside from government funding.

You mentioned the conservative, if you will, Canadian outlook with regard to some of these things.

A voice: With a small “c”.

Mr. Rob Anders: No partisanship intended; small-“c” conservative. I'll use the word “restrictive” if you prefer.

As far as I know, the first kidney transplant was in Montreal in 1956, I believe. Is that right? I'm talking about organ transplantation.

I don't mean to put anybody on the spot. The reason I bring this up—and you can correct me if I'm wrong—is that Canada lost its early lead in organ transplantation. We were ahead of countries such as France and Italy, and even the United States in some of these things. But because of this restrictive situation we have in Canada in terms of timelines for the publishing of journals... As I understand it, we're behind. We don't allow these things to happen as quickly as they happen with some medical journals in the United States, for example, and other countries. So we lose our edge.

Even if we have excellent research facilities, and even if the government dumps a tonne of money into these things, because of the medical establishment and some other factors aside from government funding, while you can sit here today and talk about getting increased government funding, those other pressures will still drive those researchers south to the United States, or to France or Italy if they can get into programs there.

I have a question about that. I personally know people who I attended school with at the University of Calgary who are brilliant with regard to genetic research, and they are now working for Amgen in the United States, because the possibilities were not here in Canada for them to continue their careers.

I'd like you to discuss that. You're asking for government funding, and I want to know whether or not you feel that's going to have a net benefit when you look at some of these other things. I know you're going to say it will, but I have some serious questions.

I have one last question with regard to genome centres. What do you want from us in order to get there? Is it simply a question of funding, or are there other things we can do aside from funding to help you out with that?

Dr. Jim Friesen: Maybe I could answer the first question and turn the second question over to Dr. Hudson, who has more experience with that.

You are absolutely right. I can cite even more examples in the last 15 years or so of where a research advantage in this country essentially leaked down south or overseas because we didn't have the capacity to exploit it.

I absolutely agree with you as well that there are more reasons for that than just the level of funding, and no doubt we could discuss it. One of the major reasons is that there has not been a good interface or connection between, let's call it basic research, whether it's done in hospitals or universities, and let's call it the exploitation of that by the private sector.

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In our system, it's the private sector that senses a good idea and exploits it, because it sees a way to do good business out of it. That's fine. That's as it should be. But that requires a connection between the two, and we haven't had that. In the last five to eight years, we've seen substantial growth in that, through such things as CMDF and other labour funds. There's a general new awareness, on the part of both the investment community and especially university people, that this must happen.

It's not perfect. We came from quite far behind, because we didn't have that large group of large pharmaceutical companies that in some ways, at least in the health sector, was a massive engine for that attraction with the university sector.

It's really happening. I was on the National Biotechnology Advisory Committee for about 15 years. In fact I was one of the authors of the final report that came out about a year ago. What I saw during that 15 years was a sea change in attitudes and availability and cross-fertilization among various groups.

So you're right. I did say it's going to happen, but I believe it—

The Chair: Dr. Friesen, I don't mean to interrupt, but we have a policy at this committee. I should have explained it at the beginning. It's five minutes for questions and answers for each questioner. Right now we're at five minutes and we haven't finished everything. I understand Dr. Hudson is going to respond briefly.

Dr. Thomas Hudson: I'd like to answer the first question first.

The Chair: Well, wait a second. Did Dr. Friesen just answer the second question?

Dr. Jim Friesen: I was trying to address the first one.

The Chair: Dr. Hudson, I'm going to ask that your answer to the second question be very brief, please. You're here as a group, so...

Dr. Thomas Hudson: Thank you.

There were three questions, actually. The second question was about how much funding we want. Through the memorandum to cabinet, through the CBS, we asked in the last budget for $500 million over five years.

We're actually in the process right now of redefining how genome centres would be distributed across the country, and next month I expect to send you a final report. But we're looking at perhaps between five and 15 genome centres in Canada, which could each need $10 million in infrastructure and $5 million a year to continue. But the final numbers I will send to you in a report.

The third question was about how you could help us. I would hope that, as the industry committee, you would recognize that it's important to create a genomics industry in Canada and that there's a tremendous growth potential. I would also hope that that awareness could be translated to government levels when talking about money.

The Chair: Thank you. I'm going to have to move on.

I'm going to ask members to ask one question at a time. I'm only going to allow that. I'll stop you if you start a second question, because we have three different groups here that have a lot of expertise.

Mr. Murray.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks, Madam Chairman.

I do have a number of questions, but Dr. Friesen, perhaps I'll start with you. When you mentioned the fellow who came back from the States and saw what was going in Canada and how he was impressed, I was reminded of a suggestion by Dr. Howard Alper at the University of Ottawa. I believe he talks about brain circulation rather than brain drain.

He has suggested recently that we have a “Rediscover Canada” program, which would be aimed at scientists who have gone abroad. I just wanted to ask what you thought of the idea of perhaps having a government-sponsored “Rediscover Canada” program for those people. Do you think that would be effective?

Dr. Jim Friesen: That's an interesting idea. No one has ever suggested that to me before. Something along those lines would be very good, because there is such a flowering of activity in genomic-related areas in Canada right now. Frankly, people don't expect it, and they're very surprised when they come up here. So a little bit of reintroduction might in fact be in order.

Mr. Ian Murray: So, looking specifically at genomics, it would be the excitement of being involved in that, rather than perhaps a financial difference, that could attract people back to Canada?

Dr. Hudson also wants to make a comment.

Dr. Jim Friesen: Yes, go ahead.

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Dr. Thomas Hudson: Obviously I'm not used to these board meetings; I'm a scientist.

I did my training in science in the States at MIT. I am assistant director of the MIT Center for Genome Research, and I have a group that put together half the markers of the human chromosome map. I work with engineers, biochemists, computer scientists, and so on, putting a group together. For the last three years, I've commuted: on Monday and Tuesday I'm in Boston, and the rest of the days of the week I'm at McGill.

The environment is totally different. In the U.S. I was part of a group that put together a $50 million grant. It was one application, it went to government, and we got the money for the building, the space, the renovation, the equipment, and the personnel for five years. And just now we were successful in getting a $384 million grant from the government. Why? Genomics is important. In Boston I've seen the companies grow—Millennium and so on. My boss started this company. I've seen so many companies start and grow. There's so much growth in genomics.

Coming back to Canada as an investigator, the genome program in Canada, which did exist for four years, dropped dead five weeks after I set foot in Canada, because science funding had been cut. That program disappeared at the most crucial time.

So I've been going around raising interest in genomics. I've seen the agriculture people. I've been to Saskatoon and so on. I see growth. CFI just gave us a $10 million grant in Canada for equipment, but not for personnel. To get money to operate this centre, we'd have to write $70,000 grants. I'd be writing all the time. To get the money to operate a centre, basically we just have to be applying for small pockets of money everywhere. It just isn't the same culture in the States.

Are there Canadian scientists in the States who are experts in genomics? Well, there are two other assistant directors, group leaders, at MIT who are Canadian. Washington University, which has the biggest sequencing centre, has two who are Canadian. If you go to Stanford and all these places, there are many Canadian scientists who have been training in the States. I'm actually one of the few ones who just came back to Canada. Why? Because there's no opportunity. There's just no opportunity. The universities are strapped for money. There's no opportunity to build big centres. So they're not coming back.

After four or five years of being the assistant leader or whatever to the director, they go on to companies or other universities in the States and put down roots in the States.

The Chair: Thank you very much, Mr. Murray.

[Translation]

Mr. Dubé, please.

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): I have several questions to ask. The first one is in regard to the brain drain. You say that we have lost up to 30% of our biotechnology researchers. Is the situation the same all across Canada? It might be different in Quebec given that the scientists would be Francophones. Is the percentage the same for Quebec or is there a higher retention rate?

[English]

Dr. Barry McLennan: Maybe I could answer that.

We recently did a survey of the biomedical, clinical, and health research communities in Canada. We asked them to give us data on a five-year span, from 1993 to 1998. We said, “Give us real names, live bodies, names of people who have left Canada and others who have come back.” The simple truth of it is that we lose five highly trained researchers for every one who comes back. And as I said, this is across the biomedical research sector and would certainly include some of the genomic scientists my colleague has referred to.

The reason they leave is interesting. It's not all salaries. As a matter of fact, that was the last item they listed in answer to, “Why did you leave?” It has to do with the research environment, which was referred to earlier. Give them the tools to do the job and they'll stay in Canada; they'll come back to Canada.

In terms of investment in Canada, of course we need to maintain the research environment that attracts not only people, but companies. The tax laws have to be fairer and the regulations must be even-handed. All these things must come together to provide an environment in Canada to hold and attract not only individuals, but also companies.

The genomics group would very much like to have an institute for genomics, and I applaud that. I think it would be a great idea. I happen to teach genomics in biochemistry. It's a very important sector for us to be developing in this country. But I would hope part of that could be solved through the CIHR, which is in the formulation stage.

• 1620

I happen to be on that interim governing council. We're going to move that fairly fast. It may not be quite as ambitious, and maybe genomics should be funded separately—I don't want to debate that here—but I certainly think the genomics case that's being made is an excellent one that's illustrative of many that should be made for Canadians.

Thank you.

The Chair: Monsieur Dubé.

[Translation]

Mr. Antoine Dubé: You didn't really answer my question, relating to the percentage for Quebec, but it doesn't matter.

In BIOTECanada's report, there is a graph giving the number of jobs per region. As a Quebecker, I am very happy to see that according to the estimates, Quebec will be ahead by the year 2001. How do you explain that situation?

[English]

Dr. Paul Hough: That's quite correct. That graph shows the responses from the companies as to where they're at now and where they expect to be in 2001.

There's a lot of activity in Quebec. There are a lot of small companies. Actually, the distribution of companies in Quebec is quite interesting. They simply see the benefits and the opportunities in all areas of biotechnology, including genomics, but not exclusively, and are predicting that the growth in Quebec is going to be very considerable.

[Translation]

Mr. Antoine Dubé: I am not an expert in the field. You are talking about genomics. In the Quebec region, we sometimes talk about genetics. Are we talking about the same thing, or is it an off-shoot? Could you explain that to me?

Dr. Thomas Hudson: Genomics is a science. Genetics are what are parents give us. We inherit certain traits or certain illnesses. Genetics is the transmission from parent to child. Genomics is the information found in the genomes database. In each cell, there are chromosomes and genes. Genomics is the information contained in the chromosomes and genes.

Genetics call upon genomics. The information contained in the database is useful for human genetics' study. It is also interesting in the area of plant genetics, fish genetics, etc. I would say that genomics is a tool for genetic study.

In Quebec, we are very strong in the area of genetics. There is a whole culture of genetics research and there is therefore a lot of support for the development of genomics, because this will help Quebec researchers, who have access to good families and to a good health care system, have access to advanced technology in sequencing, genotyping and DNA microchips.

The researchers of Quebec's genetics community would like to be able to use genomics to stay on the cutting edge of research.

The Chair: Thank you.

[English]

Madam Jennings, please.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you very much for your presentations. You dealt with several issues, but I have only one question.

In their presentations, all of the witnesses, except perhaps Dr. Hudson, mentioned the regulatory framework, the legislative framework and the fiscal framework, that could be helpful or not, both for the research and biotechnology industries and genomics.

I would like you to explain how our regulatory framework could help your industry. When I talk about industry, I am thinking of research as well as of the development of products and services based upon research, and of the innovations that have been realized, creating a type of industry in each and every field. How can the regulatory framework faster or hinder development? It is at the level of the rules, the legislation and our taxation system.

• 1625

[English]

The Chair: Dr. McLennan.

Dr. Barry McLennan: Thank you.

That's a very good question you're asking. Let me use an example from the pharmaceutical industry. I don't have any shares in any pharmaceutical company, but I think I understand the industry.

When a company whose headquarters is in Switzerland asks the question, “Should we do research in Canada? Should we invest in Canada?”, they ask a number of other questions as well.

Is there an environment there? Do they have a cadre of scientists who can do the job? Is there a competitive advantage in terms of the taxation levels in Canada? Are the regulatory environments equal? In other words, if it takes 800 days—and I'm just picking a number out of the air here—to get approval to put a drug on the market in Canada, and it only takes 500 days in Europe or 300 days in the States, you can guess where they'll put their money.

That's what I mean by the research environment, which includes regulatory aspects and so on—the tax laws, the patent protection, and so on. We have to be competitive as a nation. All those things come together. I just use that as one example.

Frequently in CBHR we get letters from companies asking for information on what kinds of resources we have in Canada to do a certain kind of research. In other words, they're not willing to invest in Canada if we don't have the scientists and the laboratories in place to do the work. And why would they?

All of these elements come together to create an environment that will attract foreign investment from that industry into Canada, and I submit it's the same in the other sectors. To be competitive with the Europeans and the Americans and the Japanese, we must provide an environment that will bring money here.

I'll go back to the pharmaceutical industry just for a minute. We're a small player on the world stage. We're an important player, but we're small. We're only 4% of the total activity. But companies like to invest in Canada, because they like our environment. They know our researchers are competent. Of course the tragic evidence of that is that when we lose researchers to other countries, they have no trouble getting jobs. Other countries know we have talented people. We need to make use of them here.

So it's partly putting this environment together that attracts investment.

The Chair: Dr. Hough, do you have anything to add?

Dr. Paul Hough: Yes, I do, Madam Chair, if I may.

Two points are very important.

First of all, it is extremely important to have a very strong, capable regulatory environment, regulatory agencies, for a number of reasons. Number one, they are the source, if you wish, that provides the public with the assurance that whatever is coming on the market is not only safe but efficacious as well. That can only be done through an independent body. That independent body must have the expertise to handle it, not only from a scientific point of view, but as Dr. McLennan just indicated, from a time point of view.

With any company, be it in the pharmaceutical area or in another life science area, it takes a very long time to develop these products. You might have patent protection on certain aspects of what you're doing, but that starts the clock ticking a long time before you actually have the ability to go out and start earning some money. So time is definitely money, and the regulatory process is extremely important in that.

The other aspect is that expertise attracts expertise. There's a lot of talk about partnerships as if they don't happen. They do happen. They happen a lot. Our survey indicated that the greatest number of alliances were with universities. Companies are basically looking for where that expertise is, and they will locate there.

With the renewed optimism that Dr. Friesen referred to, through the funding increases recently, modest though they are, what you're seeing is a rejuvenation within the research sector. If we can build upon that further, we'll attract more people, more companies, and more activities.

There was reference earlier to a certain reticence. In fact I would suggest we're getting out of that. That's a bit of an old characterization. You don't arrive at the second-largest number of companies by sitting in the back seat and saying you can't do it. Almost all of those companies have come out of the research sector.

There is certainly a very strong move on the part of researchers to take their ideas further, whether they do it themselves or in conjunction with other people. It happens in a variety of manners, but it is happening, and it's happening without a lot of fanfare.

• 1630

The Chair: Thank you very much, Madam Jennings.

I find myself, as chair, in a little dilemma here. I have five speakers on my list, and we have maybe 10 minutes before we have to move on. We only have this room until 5.30, and we have another group of witnesses. So what I'm going to propose is that everyone who's on my list and wishes to ask a question will ask one question, and only a question, with no long preamble. How about that? How about we try that?

An hon. member: On division.

The Chair: On division? That's fine.

Mr. Anders.

Mr. Rob Anders: I'm deciding on my question. Okay, here it is. I have three questions I could ask, but I'm going to ask one.

You mentioned a retarding approval process, 500 days versus 800 days. What can we, as members of Parliament, do to speed that process up? I realize there's brain power, approval process, patent protection, and tax law. What can we do to help you on the approval process? Can we do anything?

The Chair: Dr. McLennan.

Dr. Barry McLennan: Thank you.

We suggested a number of years ago that we create a separate agency to deal with this. The Health Protection Branch is understaffed and underresourced to deal with this. There are good arguments, which I won't go into here, for having a separate agency. I think that's the best solution, personally.

Dr. Paul Hough: Madam Chair, may I also respond?

One of the things that could be done is to push Health Canada to adopt a slightly different policy. All regulatory agencies in different countries have a charge for the approval process, and that's appropriate. However, the policy in Canada was that Health Canada removed a very substantial portion of the budget of the Health Protection Branch, including the therapeutic products program, and told them to go out and get that money by backfilling from cost recovery.

The FDA in the United States, which is the regulatory body there, also has cost recovery, but it's on top of their base budget, and they applied that cost recovery revenue to bringing in 300 additional evaluators and reviewers. That's one of the main reasons the FDA has been able to dramatically improve their assessment time. And that's the reason that in Canada, while they have actually improved the assessment time, if you look back over the past few years, it has plateaued, and it's plateaued at a higher level than other countries.

The Chair: Thank you very much.

Thanks very much, Mr. Anders.

Mr. Keyes, please.

Mr. Stan Keyes (Hamilton West, Lib.): Thank you, Madam Chair.

Thank you, Doctors, for your presentations.

So as not to paint a picture of doom and gloom in the research and biotech areas for the people who may be watching this particular program—

The Chair: No preamble.

Mr. Stan Keyes: —I don't think there's any doubt in this country that Canada is a leader in health care. I'm familiar with the basic research and the biotech activity, because of my exposure to labs and professors and students at the McMaster University Medical Centre in my riding of Hamilton West.

I'm encouraged by your remarks. With what the finance minister, Paul Martin, has done on the CIHR, we're moving in the right direction, re-establishing funding to pre-1993 levels. Mr. Friesen is shaking his head in agreement, and I'm glad to see that.

Dr. Jim Friesen: I'm nodding.

Mr. Stan Keyes: So we are moving in the right direction.

I have some bullet questions that you could probably answer for us. How long have we been involved in the biotech industry, as compared to the U.S.?

Dr. Paul Hough: I guess it really depends on where you want to start the clock. Biotechnology has been around for 2,000 years, but the modern biotechnology industry has been active for probably the last 15 years. Canada has always been there; it's just been at a lower level.

Mr. Stan Keyes: They do have a sense of humour. Doctors have a sense of humour.

We're talking about 10,000 people, working in 300 companies, generating about $1 billion annually in sales. How much of that money invested in the companies that employ the 10,000 people and that generate $1 billion in sales—

Mr. Rob Anders: If he gets a second question, I get a second question.

Mr. Stan Keyes: You've had two. I haven't even asked one yet. You had two rounds.

Mr. Walt Lastewka (St. Catharines, Lib.): He gets five minutes.

The Chair: No, Mr. Lastewka, I changed it for the second round.

Mr. Rob Anders: The rule was—

Mr. Stan Keyes: Mr. Anders, you had two rounds.

The Chair: Okay, let's have some order here.

Mr. Keyes.

• 1635

Mr. Stan Keyes: Getting back to the question, I'm wondering, when you're talking about investment in companies that are creating $1 billion annually, how much of that money is government investment in those companies to generate the $1 billion, and shouldn't we be playing more of a private sector partnership role in these things? It's open for us there.

The Chair: Thank you, Mr. Keyes.

Dr. McLennan.

Dr. Barry McLennan: The PMAC group—that is, the Pharmaceutical Manufacturers Association of Canada, that cluster of companies—currently spends about $824 million a year in Canada. About a quarter of that is research and development money. I haven't related that to sales, but they're certainly in compliance with the general rules covering Bill C-91 and so on. If there is a similar ratio for other companies, then I'd like to see them spend more on R and D in Canada, a higher proportion.

I'll give one quick example related to the time question. One of our colleagues mentioned he'd been in Saskatoon. We have established there an agricultural biotechnology centre, which has become world-class in a very short period of time. Why didn't we do it sooner? Part of it's the science. This is very recent science, and that technology is coming from the science, the genomics that's been referred to. It's a tremendous science with tremendous potential.

So in Saskatoon, Saskatchewan, agriculture biotech has been started. It didn't happen overnight. It started by a government investment about 15 years earlier to get it going. I'm very confident that we can do the same in other sectors—there's no question about it—but we can't rest on our laurels. This is the point my colleague was making.

The Chair: Thank you, Dr. McLennan.

Dr. Hough.

Dr. Paul Hough: By asking companies how much they put into R and D related to biotechnology, we found that companies invested $585 million in R and D in 1997. That's all private sector money.

Many companies are actually putting in 50% to 60% more of their revenues or resources, and some are 100% R and D. The government involvement is over and above that amount, or at least that percentage. We estimate it's between $300 million and $400 million, from a variety of different sources. But the money I was talking about is all from the private sector. Now they anticipate further investments into the future, and a lot of those activities are already built on partnerships.

The Chair: Thank you very much, Dr. Hough.

[Translation]

Mr. Dubé, please.

Mr. Antoine Dubé: In the spirit of cooperation, I will give my turn to someone who hasn't yet asked questions.

[English]

The Chair: Thank you very much, Mr. Dubé.

Mr. Lastewka.

Mr. Walt Lastewka: Thank you, Madam Chair.

My question has been partly answered. I think Mr. Hough or Mr. Hudson was trying to answer the question. It was concerning the decision-making when our scientists leave Canada. We always talk about the salaries and so forth, but my experience has been that those researchers—and I have one in the family, so that's why I'm asking the question—many times make their decision on the availability of proper labs and money to do their complete tests, and not be phased out. They get into a research project, and before you know it, they're being asked to cut it short and so forth.

That's the message I've been receiving: the importance of setting aside proper labs and proper money to do the projects from start to conclusion. Could you comment on that?

The Chair: Dr. Hudson.

Dr. Thomas Hudson: If you have an academic, someone who writes grants, in your family, you'll know they write grants all the time to get money.

We do have ambitious goals. The goals of a Canadian scientist are as ambitious as the goals of a U.S. scientist, but when you're applying for money, you tend to, knowing that the funds are less, try to undercut what the actual cost of the product is. You get the grant back and it's been cut a further 30% to try to get as many grants as possible. So the actual amount of money coming from a grant, if you're successful—if you're in the top 20% of grants that actually get funded—is still a 30% or 20% cut from what you asked for.

A lot of young investigators struggle to get their first grant. For the first two or three years, they're supported by the university and get fed up because of this difficulty. It's the difficulty in actually getting started that... It's just greener on the other side, so they make the decision to go to the U.S.

The Chair: Thank you.

Thank you, Mr. Lastewka.

Lastly, Mr. Shepherd.

• 1640

Mr. Alex Shepherd (Durham, Lib.): Thank you.

My question is mainly for Dr. Hough.

I'm trying to get a view of the industry. You made the comment that 50 firms equal 100% of the sales, and five equal 60%. When I look at your list of members of your group, I see names such as Eli Lilly, Glaxo, Upjohn, Monsanto, and Merck Frosst. Is it typical of your industry that it's essentially foreign-controlled?

Dr. Paul Hough: No, I don't think so. We have a number of the large companies within our organization, within BIOTECanada. Most of the biotechnology companies in this country, though, are small.

Mr. Alex Shepherd: You made the statement that five companies account for 60% of the sales. That indicates to me that it's skewed, that there are five major players.

Dr. Paul Hough: There are five major players. That's probably the case. I cannot identify which companies those are, because the nature of the survey is such that the copyright is with Statistics Canada. All we know is that five companies of whatever description account for 60% of the sales. That's what the data tells us.

Mr. Alex Shepherd: Would they likely be foreign-controlled?

Dr. Paul Hough: They would likely be, but I cannot confirm that, because I don't have access to the actual names of those companies.

The Chair: Thank you, Mr. Shepherd.

I'm trying to keep some order here, and I wish my colleagues to the right would cooperate just a bit.

I want to thank our witnesses for being here. I apologize. This obviously could have gone on much longer. We do have a second group of witnesses and we only have this room until 5.30, and there's still the possibility of a vote.

So I want to thank all of our witnesses for being with us. I appreciate the briefs and the discussion that's ensued. I anticipate you may have some questions coming from members' offices at a later time, based on this discussion.

I'm going to ask that we exchange places in an orderly fashion. I'm not going to suspend, because we don't have time. Anyone who wants to have a conversation will take it outside, please.

I'd like to welcome our next two witnesses with us this afternoon. Our next topic is Arctic research. We have Ms. Bonni Hrycyk, the director of the Polar Continental Shelf Project at Natural Resources Canada; and Dr. Peter Johnson, president of the Association of Canadian Universities for Northern Studies, and vice-chair of the Canadian Polar Commission.

We're very pleased to welcome you. I believe Ms. Hrycyk is going to begin.

Ms. Bonni Hrycyk (Director, Polar Continental Shelf Project, Natural Resources Canada): Thank you very much, Madam Chair and committee members, for the opportunity to appear here today.

For the northern research science community in Canada and those of us who support their work, the past years have been very difficult. From our vantage point as Canada's primary Arctic logistic support agency, the Polar Continental Shelf Project continues to support approximately 150 research projects in the High Arctic each year.

Overall, there has been a decline during the past decade in the numbers of federal and territorial government and Canadian university research projects in Canada's north. This translates in real terms into less research, for example into the impacts of climate change on our polar region—impacts such as increased melting of permafrost and the problems that will pose for infrastructure, such as pipelines and buildings in communities. Already the coastline at Tuktoyaktuk has eroded to such an extent that some buildings in the community have had to be moved further inland.

• 1645

Research into non-renewable resources does continue as well. A large joint federal government-university geological mapping program on south Baffin Island in the mid-1990s led to a staking rush by mineral exploration companies. But again, this kind of research has slowed to one or two large programs a year. Two large existing lead zinc mines in the Arctic, Polaris and Nanisivik, are likely to close within the next five to 10 years. Industry is searching for other viable deposits to develop in the north, and of course mines are a vital source of jobs and wealth.

Renewable resource assessments conducted by northern land claims co-management boards in partnership with federal scientists are being conducted annually, but they're not keeping pace with the growing needs of the new governments in the north. This work is crucial to helping northern communities and government decision-makers at all levels develop well-informed plans for sustainable local hunting and fishing economies.

Research into food chain contaminants and impacts on the health of northern residents who consume country foods has slowed. Hydrographic surveys to help identify safe entry ports at northern communities and safe shipping routes for coast guard and supply vessels and ships taking products from northern mines to market have been scaled back. Large sectors of Canada's northern waters have never been surveyed in detail or at all. Long-term plans to conduct these surveys ended last year.

Polar Shelf provides on average $1 million a year to support Canadian university programs. One of our main criteria in extending this support is that students be included in university field programs. In the past decade I've seen undergraduate students complete their graduate studies and become full tenured professors. They in turn are now training the next generation of northern researchers. However, the numbers are few, and fewer students are being trained each year.

Those of us who support northern research—and in large part, the research would not be carried out without the support systems now in place—have been working together to make the best use of our collective resources. Polar Shelf and the Canadian Coast Guard, for example, have been very successful in coordinating our respective services to keep costs in check, and we extend support to scientists in a cooperative fashion. We're also working with the Nunavut and Northwest Territories research institutes to coordinate support to researchers across the Arctic.

Polar Shelf and DND have been working closely to clean up old abandoned field sites. We're also working very closely with Environment Canada's High Arctic weather stations to share resources and services.

Even with these cost-cutting measures and coordination of delivery of logistic services among government and university research groups, we must recover on average 45% to 50% of our costs from government users each year.

The focus on and requirements for northern research within Canada and internationally are growing. Canada is currently working on development of a northern foreign policy. The three northern territories are working on economic development strategies. Northern governments need science to make informed decisions.

As noted earlier, the past years have been rather challenging. We have begun to turn a corner. Polar Shelf has been given additional funding this year to help increase support to Arctic research programs. However, many challenges remain.

The northern research community and the logistics agencies that support their work share a common concern, which is that as a community, we may not be in a position to meet, as effectively or as fully as we'd like, the needs of today and the challenges of tomorrow.

Thank you.

The Chair: Thank you very much, Ms. Hrycyk.

Now I'm going to turn to Dr. Johnson, please.

Dr. Peter Johnson (President, Association of Canadian Universities for Northern Studies; Vice-Chair, Canadian Polar Commission): Thank you very much for the opportunity to address you this afternoon.

The university community in Canada considers that there is a crisis in Arctic research. That's fairly obvious when you look at the number of hats I'm currently wearing.

• 1650

In addition to being a professor in the department of geography at the University of Ottawa and president of the Association of Canadian Universities for Northern Studies, which represents 33 universities and colleges, I am vice-chair of the Canadian Polar Commission, a new appointment of the commissioners in the last few months; I am a member of the interim council for the University of the Arctic; and I'm also the Canadian council member for the International Arctic Science Committee. This is fairly typical of the roles that fall on the few Arctic research scientists who are still left.

I'm often asked why we should do Arctic research. There are a number of justifications for Arctic research. Some pertain directly to technology and to industry, such as maintaining our leadership in some areas of cold regions technology, developing capacity, and ensuring sustainability during the development of Arctic resources, which Bonnie has already referred to. It's also a necessary underpinning for education in the north, leading to opportunities for employment and entrepreneurship in our territories, which is a major concern with the onset of devolution. It's also important that we contribute to major world research issues. At the present time we are falling way behind other circum-Arctic nations in this respect.

And a message that came through quite clearly in the last few weeks, during a consultation process I held, is that fundamental Arctic research is absolutely essential to support renewable resource management by our northern communities.

On the international perspective, in the last 18 months to two years, since I've become president of the Association of Canadian Universities for Northern Studies, every time I go to an international conference or hear feedback from my colleagues who've been to international conferences, we constantly get the following questions. Why do these gaps exist in Arctic science, which seem to coincide with the Canadian border? What's happened to Canadian monitoring? When we have a logistics organization, the Polar Continental Shelf Project, which is held up worldwide as the shining example of an Arctic logistics organization, why, up until last week, had we been constantly cutting the support to that organization in support of science?

There are also disturbing trends in the increase in foreign funding of research in Canada, and also the foreign funding of Canadian research in Canada, and the necessity for some government research to be supported by Japanese, German, and U.S. money.

Some of these fundamental research questions on sustainability, climate change, and socio-cultural changes are important within the international community, because of our involvement in the Arctic Council, because of the initiatives within Foreign Affairs and International Trade in developing a northern foreign policy, and also for basic sovereignty issues in the Arctic. The day before the declaration of Nunavut, I was struck by the fact that one of our senior members of the armed forces actually commented yet again that our sovereignty is maintained in the Arctic by only 20 surveyance flights per year across the High Arctic.

When we also look at the other circum-Arctic countries and other countries with an interest in the Arctic, we see they are making major investments in Arctic science. At the present time the United States is making major investments in logistics and science funds. Norway, for example, is making major investments in their new Polar Environment Centre. And with the exception of Russia, you can draw examples from every other circum-Arctic country and many of the other European nations.

On the national scene, there's been a decline in Arctic science. This is particularly noticeable in the physical and life sciences. Messages have come through quite strongly in the last two days, in fact, that an NSERC-SSHRC task force on northern science has been held, with the objective of giving recommendations to NSERC-SSHRC council with respect to support of northern science.

• 1655

Bonni has already referred here to the decline in federal government northern science. I should point out that the Auditor General's report, which was widely publicized on the radio this morning and which is on the web site, has just indicated the overwhelming need for scientists in government and that we're losing both young and experienced scientists. I think the prediction was the need for the government to hire 3,000 new scientists in the next five years.

The question there is, where are we going to get them from? With respect to northern science, universities are needed to train those northern scientists, and yet we're seeing a major decline in the ability of the universities to deliver those scientists.

One of the major problems is that there is a large cohort of Arctic scientists who are getting close to retirement. Within the next five to 10 years we will be seeing a massive retirement of northern scientists in the universities, and universities are not making the commitment to replace in northern science fields.

What are the solutions we can suggest? The main thing is that we need a commitment by government to Arctic science. We need the equivalent of the United States Arctic Research and Policy Act, which has pushed the United States to produce policy. There are various policy-producing bodies, such as the United States Arctic Research Commission, the Interagency Arctic Research Policy Committee, and agencies of this sort, which are primarily responsible for developing Arctic research policy.

We also need to continue to upgrade our support for the Polar Continental Shelf logistics organization. We need to develop capacity in the north, both for infrastructure and training opportunities. We do not have a university in the territories. The only university in this country that has a mandate in its charter for northern studies is the University of Northern British Columbia, although about four or five other universities have a fairly strong northern program.

We need to persuade granting councils to have dedicated programs for northern science. At the moment there is nothing in the granting councils that specifies northern ecosystems or anything of that sort. But the fact that we have this NSERC-SSHRC task force is a very positive sign.

We also need effective coordination of government research and monitoring. I'm glad to say the Northern Science and Technology Committee, the ADMs' committee, is becoming more and more active in this respect and is another positive sign.

We need to not only sign onto a lot of the international science programs or international agreements, but also make the commitment that Canada will participate as an equal member in these activities.

As two final comments, we also need to make use of the new expertise that is available within the revitalized Canadian Polar Commission and support other organizations. I don't mean financial support, but support in terms of asking for policy recommendations and so on from other organizations, such as the Association of Canadian Universities for Northern Studies.

The Chair: Thank you, Dr. Johnson. Now we'll have questions.

Mr. Anders, please.

Mr. Rob Anders: I'd like to know how you feel about Canada being the training ground for cold-weather military operations. We have a huge expanse in the north—according to the documentation, 40% of our land mass—and for those nations that don't have access to those types of things, that may be useful. So I'd like to know how you feel about it.

Secondly, as a kind of tangent to that, could increased NATO troop presence in the Arctic be of aid to science and other related endeavours in the Arctic?

The Chair: Dr. Johnson.

Dr. Peter Johnson: I don't know that I'm sufficiently into politics to be able to answer that question. I personally, from an environmental perspective, would not like to see increased military presence in the Canadian Arctic.

• 1700

The Chair: Ms. Hrycyk, do you have anything to add?

Ms. Bonni Hrycyk: No. I think the Minister of National Defence would be the best person to ask that question.

The Chair: Mr. Anders, that's it? Okay.

Mr. Shepherd.

Mr. Alex Shepherd: I want to ask some questions about a personal experience of mine. I ended up in Churchill one day. I know that's not the High Arctic, but there is a training school there. I wandered to this school and talked to the one person who was on duty, an administrator.

You talked about a science policy. I don't even think we have a northern policy of anything.

How can Canadians occupy their space? We're told we're a nation where 80% of us live in urban areas about a stone's throw away from the American border. So how do we turn this vision of the north...

They're all related to the same issue. You can't get funding for science. We can't even get people interested in visiting the north or touring the north, and yet we can bring Japanese over to this country and they'll go and tour the north. And we know the people in Norway utilize their space a lot more effectively than we do.

Churchill has some great things, such as the polar bear of course. There's also an old fort that's all run down. There doesn't seem to be any money to revive that and some of our natural history that's there.

So the question is a larger one than just dealing with sciences. How can we make Canadians more aware of the country they live in? Maybe that is a role for government. How can we encourage people to visit the north and make that part of this country's existence?

Dr. Peter Johnson: I'm not sure it's solely a role for government to try to encourage people to visit the north. One of the problems is that the perception of Canada as a northern nation is really not based on a perception of the Arctic and the realities of the Arctic. It's based on the perception of the pristine nature of the Arctic, but not really strongly on the Arctic as a homeland for quite a wide range of indigenous people who rely on the land for food and for their livelihood.

More and more people are visiting the Arctic from the tourist point of view. However, I would suggest that in fact it is far cheaper for somebody from Germany or somebody from Japan to visit the Canadian Arctic than it is for Canadians to get to the Canadian Arctic.

I'll cite one case in terms of cost. It's similar to lots of cases in terms of costs for researchers getting into the Arctic. We had a meeting a few weeks ago in Inuvik on this northern science and technology strategy. Two people came from Goose Bay. It cost those two people $6,000 each for airfare from Goose Bay to Inuvik. If you want to get Canadians going into the Canadian Arctic, visiting and interacting with the communities, something has to be done about the internal airfare structure.

I leave tomorrow, and Bonni is leaving as well, for a meeting in Norway. I can go to northern Norway for less than I can go to Whitehorse.

The Chair: Make this your last question, Mr. Shepherd, please.

Mr. Alex Shepherd: You mentioned that your initial concern was that you didn't want to see people going to the north. I suspect that's a natural scientist's reaction: we don't want human beings up there disturbing the fauna and the flora and so forth. But in reality, there has to be some kind of merger of that.

I see the polar bear is there. Kenya and countries like that have been able to find some way to deal with that issue. Unless you get Canadians interested in the north, it's going to be a hard process for politicians to find new money to support your research, if people aren't experiencing it.

• 1705

Dr. Peter Johnson: It didn't say I didn't want to get more people up experiencing the Arctic. I said I didn't want to see any great use of the Arctic as a military training ground. I have no problems with getting more people up to experience the Arctic from both an educational and a tourist point of view.

The Chair: Thank you.

Thank you, Mr. Shepherd.

[Translation]

Mr. Dubé, please.

Mr. Antoine Dubé: In Quebec City, a month and a half ago or perhaps even a few months ago, there was an international conference on northern studies that was much talked about by the media and that attracted my interest. As a former student of l'Université du Québec à Trois-Rivières, I know that there is a dean of science at the Université du Québec à Trois-Rivières who was very interested in the establishment of a centre of northern studies.

In your brief, I read something that struck me. There are other countries that come here to finance research work. I am interested in that. Do they fund universities or do they themselves carry out research in the North? What kind of research do they do? Why does this interest them? Tell me more about it because it really aroused my curiosity.

[English]

Dr. Peter Johnson: There are a number of reasons that people from foreign universities and foreign governments are coming and doing research in the Arctic.

One is that the Canadian sector of the Arctic is a critical component of the whole of the Arctic Ocean system. It is now believed that the Arctic Ocean system is a major control on the whole of the world's oceanographic system, which has a major role to play in climate change. So there is considerable interest from that perspective.

Another reason is this. I had this expressed to me, and I wouldn't like to tell you who said it. It was a foreign scientist, who said there are various research questions that need to be answered in the Canadian Arctic—whether it's sustainability, contaminants, or climate change—and if Canada is not going to answer them, they will come in and answer them. That's another reason people are coming in.

In fact a number of major proposals have not gone ahead because of the objections in these other countries to putting so much money into Canadian programs. One of the biggest expeditions this year through the Canadian Arctic is a Swedish-led expedition. The original proposal was for a Swedish ship to come through the Canadian Arctic, and there are a few places on board for Canadian scientists. About three days ago I had a call from one of those scientists, who had got all the funding from the Swedish side to be on the boat and collect information and collect samples, but no funding in Canada to analyse them. So this particular scientist was pleading, “Where can I find some money to do something with the samples?”

I think Bonni can say a bit more about that, because in fact the Canadian Coast Guard is now providing the vessel.

Is that correct?

Ms. Bonni Hrycyk: Yes, it's the Louis S. St. Laurent.

I'll just add that the projects we see come through our system are amalgamations of various kinds of partnerships. Some are primarily Canadian in content with one or two foreign partners, and those foreign partners of course bring funds along with them, so it's very much a shared effort. In other cases we see primarily foreign research programs come up, but they will take advantage of Canadian expertise and get some Canadians involved. Again, it becomes a cost-shared effort, and certainly you have better cross-disciplinarity in terms of scientific research. Others are purely foreign research groups that come up and do their own projects.

[Translation]

The Chair: Mr. Dubé.

Mr. Antoine Dubé: My question if for Mr. Johnson. Education being a matter for provincial jurisdiction, part of the work done by professors and researchers is financed by the provinces, but there are also budgets provided by the federal government. You are denouncing the fact that there have been cuts. Which agency are you specifically targeting?

• 1710

[English]

Dr. Peter Johnson: The general downsizing in university systems has resulted in what they would call rationalization of what is being done within each university, with the exception of a few universities, Laval being one shining example in fact. There has never been a very large group of northern expertise, and it's always in the past been disseminated through the university. It's a primary target. If positions are going to be cut or if replacements are going to be made, it's not going to be in the northern science area.

It's also discouraging for northern scientists themselves in terms of the career demands within a university. If you are working on northern Ellesmere Island, you have a fairly good chance of losing a few days of your research season or even a whole research season because of weather or logistics problems. Yet you're still required to fulfil the demands for tenure and promotion within the system. So from a career point of view, it's a very difficult choice for a young university professor to decide to work in the Arctic.

I am fortunate now that I'm in a position where I can devote my time to things more on the political side, if you like. But many young Arctic northern researchers are stretched to the limit just trying to fulfil the requirements for career progress.

The Chair: Thank you.

[Translation]

Thank you, Mr. Dubé.

[English]

Madam Jennings.

Ms. Marlene Jennings: Thank you for your presentations.

I'm quite concerned about some of the statements you made, Dr. Johnson, concerning the decline in funding for the Polar Continental Shelf Project.

So Ms. Hrycyk, I'd like to ask you some questions about that, given that you're the director. What was the funding five years ago, and what is it today?

Ms. Bonni Hrycyk: It was $6.4 million. It's now, with the new funding we just received, $4.2 million.

Ms. Marlene Jennings: So it's been restored.

Ms. Bonni Hrycyk: Partially, yes.

Ms. Marlene Jennings: Almost to five years ago.

Ms. Bonni Hrycyk: Minus $2 million.

Ms. Marlene Jennings: Oh, it's $4.2 million now. I understand.

What type of staffing did you have five years ago, and what do you have today, or what do you project having, now that it's been partially restored?

Ms. Bonni Hrycyk: We are rebuilding staff. We were at about, to use the jargon of the bureaucracy, 24 full-time equivalents. We're now using about 11.

Ms. Marlene Jennings: And with the partially restored funding, where do you project your full-time equivalents will be?

Ms. Bonni Hrycyk: It's really hard to predict. Right now we're trying to rebuild a core of expertise and make sure that expertise continues into the future. We're very much there to serve the community. If the community becomes more active in the Arctic, of course we need more human resources to be there to help them—15 or 16 FTEs into the foreseeable future.

Ms. Marlene Jennings: Minimum.

Ms. Bonni Hrycyk: Minimum, yes.

Ms. Marlene Jennings: And that's simply to respond to the demands you have right now.

Ms. Bonni Hrycyk: Well, we're able to do that. We're pretty lean on the ground, admittedly, but we're able to respond to the demands placed upon us every year.

Ms. Marlene Jennings: Do you agree with the premise of Dr. Johnson that one of the reasons there's been a decline in demand is the downgrading of the services and the number of personnel available?

Ms. Bonni Hrycyk: We've often talked about this. It's a bit of a chicken-and-egg situation. I don't know what comes first. Certainly, if I may use the term, we're the tail that wags the dog. We're there to serve the demands of the science community. Obviously our ability to do so is restricted, not so much in human terms, though that is a factor, but because we extend logistics support in part for free—largely for free to university groups, and in part on a cost-shared basis with government. Sure, that has an effect.

• 1715

Ms. Marlene Jennings: Do you agree with some of the solutions Dr. Johnson has presented on behalf of the organizations he represents, such as a commitment by the government to have some kind of formal Arctic research and science act, as exists already in the United States; spurring policy development by using associations that already exist; and support for your organization so that it can be made a semi-autonomous or arm's-length organization with its own funding, and I would assume with a legal mandate to be able to develop partnerships where moneys could be generated that you could then reinvest, etc.? Do you agree with that? I think it's really interesting, but I'd like to hear what you have to say.

Ms. Bonnie Hrycyk: I like the one about more resources for Polar Shelf. That's particularly attractive.

In terms of policy issues, again, I think that's best left up to the ministers of the Crown to decide. I can't really go any further than that.

Ms. Marlene Jennings: You're a good civil servant, aren't you?

Ms. Bonnie Hrycyk: We've had a lot of discussions on the best route to take. There are a lot of active discussions around the whole community, government and university.

These are interesting times. I'll leave it at that.

Ms. Marlene Jennings: Thank you.

The Chair: Thank you very much, Madam Jennings.

Mr. Anders, please.

Mr. Rob Anders: I have two questions, if that's okay.

I know there's been mention of space science. Is there any particular advantage in the Arctic in terms of the environment, the clarity of the atmosphere, or anything? I don't know. I'm asking. I'm pleading ignorance on this. Does the Arctic provide particular advantages with regard to those types of things?

Second, how much, if any, of the research in your area is privately funded, and if there are private funders, who are they? What's the nature of them?

Dr. Peter Johnson: I'll answer the second one first. There is very limited access to private funds. There's always been a problem with matching industry funding in some of the previous definitions of programs at the granting councils, although that definition has been changed and there are now more possibilities for matching funds or for funding resulting from the land claims settlements and devolution.

On the first question, the Arctic is particularly important from an atmospheric point of view in that it is the sink for many of the contaminants that are generated throughout the rest of the world. It's the cold temperatures in the Arctic atmosphere that in fact allow these materials to be precipitated as they are in the Arctic, and therefore they bio-accumulate through the marine life system and the terrestrial life system.

Mr. Rob Anders: You said there was a little private funding. What nature of research is that and who's involved? I know you said there isn't much, but I'm curious about what it is exactly.

Dr. Peter Johnson: Let me use one example. Under the land claims agreement with the Inuvialuit, they have some research funding. They're mandated to do basically monitoring-type research on wildlife species that are resource species. They would like to enter into partnerships for agreements on basic ecosystem research to understand the ecosystem better in order to plan their research management much better.

But there's very little, recently anyway, in industry funding. We went through a period when there were oil industry funds and some mining funds available, but in the High Arctic, that availability of funding is quite limited.

Mr. Rob Anders: You said “resource species”. Are you talking about caribou, or is that too far south? What exactly are you...

Dr. Peter Johnson: Caribou, whale, muskox, and seal are all viewed as resource species in the Arctic.

Mr. Rob Anders: Okay, thank you.

The Chair: Thank you, Mr. Anders.

Mr. Murray and then Mr. Lastewka.

Mr. Ian Murray: Thank you, Madam Chairman.

Dr. Johnson, your paper is entitled “Crisis in Arctic Research”. In our business, almost everything is presented to us as a crisis. Perhaps this is a problem in Arctic research, but it doesn't sound to me as if it's necessarily a crisis, unless you're a researcher looking for funding for your research.

• 1720

I don't want to be totally unfair here, but I'd like to ask you who your champions are. If it's such a crisis, there must be other people out there, outside the research community, saying this is very serious and something has to be done. Who's sticking up for you out there, other than fellow researchers?

Dr. Peter Johnson: Primarily the northern communities and the territorial representatives, who see an absolute need for research, particularly research aimed at the local research agendas and the research agendas that have been published by the research institutes.

Our other champions, on the side of research that I would categorize as more of a national or international importance, are members of governments of the other circum-Arctic countries—not necessarily the scientists, although the scientists in the other countries are obviously champions, but also the governments themselves in those countries.

Mr. Ian Murray: You mentioned NSERC funding for researchers. Has NSERC's contribution as a percentage of NSERC's total funding increased or decreased over the last few years for Arctic research?

The point I'm trying to make is this. Again, I'm not trying to be totally antagonistic here, but is it a question of politicians who are deciding that less money should be applied to this? Or are actual scientists who are involved in peer-reviewed funding looking at Arctic research and deciding that resources should be allocated somewhere else within the scientific community?

Dr. Peter Johnson: It's been very difficult to actually pull that financial information out of the databases, because “northern” was not a category under which research was listed for a number of years. So the search back through the database involved going back through almost every individual application to find out if it was northern. Some were obvious in terms of location being stated in the title and things like that, but others were not obvious at all.

The overall trend has been a diminution of the amount of funding that has been going into northern science from the granting councils.

Mr. Ian Murray: Okay.

If I have time, I have a quick question to Ms. Hrycyk.

You talked about the challenges. Who defines those challenges? Is it, again, the scientific community that defines the challenge? Or do, say, resource extraction companies come to you and say they have a challenge that needs to be addressed? Or is it all of the above?

Ms. Bonni Hrycyk: It's all of the above, really.

The new governments in the north require the information as they try to set up their own systems of governance and make their own decisions. And that's not just Nunavut; there's a new territory in the west as well. How do they make informed decisions to develop sound economic, environmental, and social policies for the future? That's one key area that's really placing new demands on the whole science community across the Arctic.

Federal departments as well are being tasked with doing a lot of new research that pertains to or is based in the north.

So the context within the northern research community is working. It's changing and evolving rapidly, and the pressures are coming, as Peter mentioned, internationally around the circumpolar basin, through the Arctic Council, and in northern communities from northern governments.

Mr. Ian Murray: Just to sum up, I believe the project started in 1958, so it sounds as though it probably was a result of Prime Minister Diefenbaker's northern vision. That's an assumption. I don't know if you'd agree.

Ms. Bonni Hrycyk: Yes, it was.

Mr. Ian Murray: Oh, was it? Okay. So perhaps it's a case of Canadians once again embracing this vision of the north. Perhaps Nunavut will help with that.

I wish you all the best in your search for more resources.

Ms. Bonni Hrycyk: Thank you.

Mr. Ian Murray: Thanks, Madam Chairman.

The Chair: Thanks, Mr. Murray.

Mr. Lastewka.

Mr. Walt Lastewka: Thank you, Madam Chair.

First of all I'd like to thank the witnesses for appearing. I am going to be asking questions along the same line as Mr. Murray's and those of a few other people, because I feel not too many Canadians know about the north, to start out with. They don't know about the research and they don't know what benefit it is to Canada.

When I read your report, I didn't see many examples I could use to convince Canadians of the positive aspect of doing research in the north. I wonder why that is the case. Why don't Canadians know a little bit more about northern research? Have we just taken it for granted that money just flows, and all of a sudden now money isn't flowing and we're asking where the money is?

• 1725

Ms. Bonni Hrycyk: It's something the science community really is trying to come to grips with. The north is so far out of most people's daily experience.

There is immense public interest in our north. When you do talk to people about the Arctic and about Arctic research, they're extremely interested, and on the occasions when there are documentaries on TV or media coverage in the papers, it generates very positive feedback.

Peter could talk more directly to this, but I know the Polar Commission and Polar Shelf have been trying to focus more energy into publicizing or communicating the benefits of research. Web-based information technology is going to help us do that by getting into the schools and using tele-education across the north.

There was an earlier question about how to raise the profile of northern science. We're all keenly aware that we need to do more work in that area.

Dr. Peter Johnson: Historically scientists have been very poor communicators, and I think we're learning to be much better communicators.

From the point of view of northern scientists, we're learning to be much better communicators and to get our message out, because we now have to communicate with the local communities. We have to discuss our research programs with them. We have to convey results back to the communities. So we're learning how to do this.

Bonni is right in her comment about the Polar Commission. One of our objectives for the next three years is in fact to ensure that not only do we communicate about polar science with the government community and the Parliament community, but that we communicate about Arctic science to the Canadian public at large. So hopefully we're going to be sitting there in the middle, feeding information back from the general public through to the government and parliamentarians.

Mr. Walt Lastewka: When I was reading your report, the first question that came to mind was this. You talked about research in the north leading to opportunities. How many new entrepreneurs started in the last five years, and how many new people have employment as a result of northern research?

Dr. Peter Johnson: I'm not sure I can give you any statistics at all on that. I do know a number of small enterprises have started in the north, in the Northwest Territories and in Nunavut. A lot of those have been stimulated by devolution.

There's also been quite a reasonable development of cold regions technologies, which in fact have been marketed worldwide, because we're a major equipment supplier to the Antarctic. Bonni could probably tell you more about the actual nature of those enterprises, but they're all relatively small enterprises.

The ones that have started in the north that are not high-technology-based have major problems in terms of the physical links—the problems with the sea link and aircraft links—in order to do business outside the circumpolar region.

The Chair: Thank you.

Thank you, Mr. Lastewka.

I have one final question before we let you go. I'm just wondering if you can give us some idea of or maybe some specifics on how Canada compares to other northern nations in terms of Arctic research. Can you give us any ideas or specifics on that, Dr. Johnson?

Dr. Peter Johnson: I'm trying to keep away from using the United States as an example.

The Chair: No, go right ahead; use the United States as an example.

Dr. Peter Johnson: Let me start with Scandinavia or the Nordic countries.

The Finnish government has made a major commitment to programs that have been set up by the University of Lapland, including the Arctic Centre. They have hosted the secretariat for the Circumpolar Universities Association. They have recently put into the Arctic Centre, in cash and in kind, $300,000 Canadian for two years to support the communication office for the University of the Arctic. They are actively chasing money from the European Union to support Arctic research.

• 1730

The Norwegians have consolidated most of their polar research at the new Polar Environment Centre at Tromso and have, over the last five years, made major investments in infrastructure and funding the science in the Arctic.

If you compare that with the United States, as a result of the Arctic Research and Policy Act, the National Science Foundation now has, under the Office of Polar Programs, four major programs that relate to the Arctic: the Arctic natural sciences program, the Arctic social sciences program, the Arctic system sciences program, and an Arctic logistics program. All of these are very well funded. In the last three years, the increase in Arctic funding has been in the order of $18 million U.S., I think. Last year alone, they had an increase of $20 million, primarily oriented towards the logistics side of Arctic research.

The Chair: But as a committee that has been looking at basic research, where does that take us, and what develops from it?

Both Mr. Anders' question and Mr. Murray's question are interesting. I had the unique opportunity of visiting the Polar Continental Shelf Project in Resolute, and I saw that an old military base that had a large part of the population of that community is no longer there. So there's a struggle, because the Polar Continental Shelf Project benefited from that group being there as well, and it's no longer there.

As for Mr. Murray's comments about the northern vision, in fact several communities were moved to the far north, and we've left them there, to a certain extent. We have to determine where research is going to take us, for their own viability.

There's tremendous opportunity, in my own personal view, but unfortunately we've not been able to get Canadians there. With satellite and with Nunavut and the new energy that's been brought into that territory, I hope a large number of Canadians will see the benefits of investment in the north.

We've restored other research budgets to where they were five years ago, but we haven't restored this budget to where it was. I hope this committee will take a look at that.

I want to thank you both for joining us here today. It's been very interesting, and we appreciate your time. Thank you very much.

The meeting is now adjourned.