:
Good afternoon, Mr. Chairman, and thank you very much. Good afternoon, members of the committee.
Bonjour, mesdames et messieurs.
The Canadian Steel Producers Association welcomes this opportunity to add its voice to your deliberations. This is a much-needed and overdue inquiry. Far too many Canadians either take for granted the future of Canada's manufacturing sector or, worse, assume our economy can thrive without a competitive and diversified industrial base.
The steel industry has a direct stake in this issue, both in its own right as a major manufacturing sector and because our customer base includes other manufacturing and resource processing sectors. In turn, our industry is a major customer for many other sectors, from mining to transportation to engineering. Thus, our supply chain relationships extend in both directions.
The CSPA's member companies operate in five provinces, supporting customer needs in the industrial, commercial, residential, consumer, and public sectors across Canada.
[Translation]
With yearly sales of about 13.5 billion dollars, our members employ some 35,000 Canadians to produce 15 to 16 million metric tonnes of steel each year. More than a third of that production is exported, mainly to the US. In the end, however, Canada is a net importer of steel. Last year, we imported 9.3 million metric tonnes and exported 5.4 million tonnes.
[English]
The CSPA agrees with the challenges identified in the committee's interim report, notably the triple effect of rapid increases in the Canadian dollar, in energy prices, and in global competition. Our companies feel that every day. The industry itself has already made major strides, though the challenges remain serious.
Over the past several years our productivity performance has outstripped the manufacturing average considerably. There is an impressive rate of product innovation. Energy efficiency has been benchmarked at a very high level and we have reduced GHGs and pollutants significantly in absolute as well as intensity terms.
Future progress in all these areas depends on investment and reinvestment in plant and equipment, innovation, and people. It is under-appreciated, in our view, that globalization also means competing for investment as well as for markets. To win needed investment capital, whether that be among countries or within global enterprises, Canada simply needs to offer the conditions to compete against other investment options.
Consequently, the CSPA endorses the key investment measures that have been proposed already by several manufacturing industries to this committee. First, a two-year writeoff for investment in new productive machinery and equipment would accelerate capital stock turnover, leading to improved cost structures and productivity, energy efficiency, and environmental gains. Second is a further reduction in the corporate tax rate to 17% within five to six years. Third, improvements in the SR and ED system would enhance manufacturing innovation performance. And fourth is a tax credit for employer-financed workforce training to strengthen productivity of the existing workforce. This could take the form, for example, of a credit against EI premiums paid by employers.
I'm aware that this committee has been well briefed already on these issues, and you have also considered other issues important to us, including the entire question of energy pricing, availability and reliability, and the need for more rapid development of new and alternative energy sources. We could further discuss the broadly accepted need for improved border infrastructure and processes. Rather than repeat these points in detail, however, l thought I would speak to some topics that have received less attention up to this point.
The first is international trade, and in particular the rapid industrialization of countries such as China and India. For Canada, this is a two-sided coin. Clearly there is a rapidly growing opportunity in these markets, and we agree that Canada needs to pursue them more aggressively. The other side of the coin, however, is the deliberate policy of these countries to develop what they consider critical industries such as steel through direct and indirect subsidies, market protection, and other measures that support their export growth.
A less evident impact on our manufacturing base is the indirect subsidization of exports of steel-containing goods, such as appliances and equipment. These products displace domestic production in North America, both for these sectors and for supplier industries like our own.
China's steel industry is key in this regard. Even with double-digit internal growth, it has rapidly become a major net exporter of steel. This has been developed under a lengthy set of government measures to expand capacity and subsidize exports. The rapid build-up of excess capacity in China and other emerging economies, which invariably view steel as a strategic sector, will result inevitably in market distortions in Canada and elsewhere. These volumes of excess capacity, I would point out, are growing very substantially, as we speak.
Let me be clear, however, that we are not here to propose new forms of trade protection, nor do we seek production subsidies. We do, however, recommend that this committee recognize the importance of applying existing trade rules when unfair trade distorts markets for Canadian manufacturing. Better still would be to address these practices before bigger problems and trade frictions develop.
A second theme, quite different now, is to recognize and build on domestic industrial clusters and supply chain relationships. Although globalization has stretched supply chains geographically, our domestic competitiveness can be strengthened by local or regional clusters of related industries and infrastructure.
Industry sector clusters include suppliers and key customers. They create a broader pool for developing and retaining skilled workforces. They are transportation efficient and they collaborate to develop new technologies, products, and processes. Therefore, we should look for competitive, pragmatic ways to strengthen our industrial clusters within Canada and our domestic industrial and technological linkages. One such opportunity is through research infrastructure. Later today, you will hear the impressive story of AUTO21 when Dr. Frise appears before you.
An important opportunity for the steel industry is the move of the CANMET labs of Natural Resources Canada to Hamilton. This has the opportunity to bring together industry, university, and government technology capabilities to create new Canadian excellence in the areas of materials science and metallurgy.
A third topic I wish to cover is a well-trained adaptable workforce to meet the demanding needs of 21st century manufacturing. First, human resources programs, whether federal or provincial, could focus more directly on the advanced technical skills and sophisticated trades that will be in short supply. Second, as proposed earlier, a tax-based incentive for industrial training would stimulate continuous learning and skills upgrading of the existing workforce.
Third, action is needed at an earlier stage. Too many educators and students have an outdated image of manufacturing. Governments and industry need to work together with them to promote the attractiveness of manufacturing as a career choice for tomorrow's workforce, and we'd certainly be pleased if this committee recommended such actions take place.
Finally, there is the theme of how best to knit all these factors together in support of Canada's medium- and longer-term manufacturing interests. In a nutshell, the development of partnership mechanisms bring together key stakeholders to identify what can be achieved, what actions are needed, and what can improve the prospects for Canadian industrial success.
Industry sector partnerships can take many different forms. However structured, they offer a unique opportunity for Canada to take internal action as a basis for competing globally. Canada has a unique ability to work in this manner, and that can work to our competitive advantage.
The steel sector has been particularly active in this regard. For many years, we have worked with organized labour in the Canadian Steel Trades and Employment Council, which is now developing proposals related to skill needs for the industry. We have an aging workforce in a lot of industry sectors; over 50% of it is over 45.
Internationally, the NAFTA governments and their steel industries have formed the North American Steel Trade Committee, and under the security and prosperity partnership initiatives, we have developed a North American steel strategy, which the three governments have approved.
More recently, the CSPA, together with the federal and provincial governments, established the Canadian Steel Partnership Council, of which Mr. Sampson is the director. The CSPC includes high-level representatives of our governments, our customers, our suppliers, our workers, and academia. The next phase of this process will be to develop a shared long-term vision and initiatives on which stakeholders can act jointly to continue to advance the steel and steel-related industries in Canada.
Mr. Chairman, this concludes my opening remarks. As I said, I undertook to cover the areas I thought were getting less attention than some others. We thank the committee for its attention to our advice, and we look forward to the remainder of our discussion with you today.
Mr. Watkins and Mr. Sampson, thank you for appearing here and being so concise in setting out the views of your industry.
I have a couple of questions that are really overarching concerns. You talked about issues of capacity and what may lie in wait for the industry down the road. To be sure, there have been a number of changes in the industry itself, both in terms of the players and production, what they're producing, and of course valuation in your industry, in which, fortunately for all of us, we're happy to see there has been an appreciation in value of product.
I'm interested in getting your comments in some strategic areas. Within the steel industry, though, it seems to me that we've seen an exit from the market. For instance, Canadians are no longer producing stainless steel. I'd be hard pressed to find a single production, I realize, at the primary level, the base level of producing steel. This tends to be a bit more of a refined section, but it seems to me to be surprising in a nation that has both an abundance of ability....
The last stainless steel company, I believe, was taken over. It was bought out. Now, of course, we're seeing the price of stainless steel going through the roof.
We're also noticing the wider impact this has on other forms of manufacturing. The committee may very well be in touch with one of the many stainless steel aftermarket producers, and they are complaining about the fact that because there is no presence in Canada, that they are subject to the whims of an international market and often Canada is sort of an afterthought with respect to consumption. I'd like to get a little comment on that.
I'm interested as well in the change in the industry itself. Has there been a concern with respect to the change in the ownership of many of the companies? I know we're past the point of Minmetals, but I'm thinking, for instance, of Arcelor's takeover of one of our steel industries in Hamilton.
Perhaps, finally, I'd like just a comment as to whether or not—and I say so without reference to being tongue-in-cheek—the October 31 announcements on income trusts will have a negative or a neutral impact on your industry as a whole.
:
Thank you, Mr. McTeague.
On the first question, not just on stainless but the whole product mix and who makes what, of course, as with a lot of industries, there has been a combination of consolidation and specialization that has developed across the industry. As I pointed out in my remarks, we do compete within North America, and in fact I would contend that we probably have, in some respects, the most open steel market in the world. Certainly we face import competition from other countries, as well as from the U.S.; and equally in the United States, we need to compete with very big companies. None of our steel companies are in the top 50 globally in terms of size, so there's a specialization factor that certainly comes into play there.
Your second question related to the ownership changes in the industry. It continues to be, in some respects, an incomplete novel, frankly. There has indeed been major ownership change in the Canadian steel industry, and it's not just ownership. We did, of course, have the CCAA proceedings with respect to Stelco, and Algoma before that. The Dofasco situation now sits in kind of an interesting legal situation within the Arcelor framework, broadly defined, but not part of a Mittal-Arcelor combination. So there is no question that we have companies that are under both new ownership and to some extent new management, and we continue to see that develop.
Your final question was with respect to the income trust issue. Frankly, I'm not aware of any particular impact I'd identify today. I certainly haven't had any opportunity to discuss it with any of our members.
:
Thank you very much. It's an honour and a pleasure to be here.
In my brief, which I'll be referring to in my testimony today, I introduce the AUTO21 network of centres of excellence, which is one of over 20 networks of centres of excellence funded by the Canadian federal government in areas such as manufacturing and engineering topics, health issues, and natural resources issues. I'm going to talk today about the importance of the NCE program to Canada, and in particular AUTO21, and also about what I feel are some issues around Canada's innovation system, which in my view bear a look from the standpoint of improving our ability to compete in the world.
In terms of the socio-economic context, the auto industry, as I'm sure you're well aware, is Canada's largest manufacturing sector. I've given some statistics on the first page of my brief, which I think will fill in some useful numbers for people who may not be familiar with the auto sector.
It's a very dynamic sector. Virtually every statistic to do with the auto sector is huge, and Canada, frankly, is a big player in the auto sector. Since 2000 we have gone from the number five auto-making nation in the world to number eight, but we actually make more cars and trucks now than we did then, by a small number, so we're not losing in terms of absolute production. But we are dropping in position, and that's as a result of the rise of other economies such as China. In that respect, I'd like to really support what the previous speaker said. We have to compete in the world. It's terribly dynamic and things change very fast.
One of the key statistics in page 1 is the amount of overcapacity. If members will note, there is a capacity to produce about 80 million light vehicles in the world per year, but only about 62 million to 64 million are produced, so there is a significant amount of overcapacity. In fact, the amount of overcapacity just about exactly matches the amount of capacity that North America possesses in vehicle assembly, so we need to fight for every automotive job and every automotive piece of output everywhere we can, and Canada has to do that on the basis of innovation. As I point out on page 2 of my brief, we cannot do it by being cheap. We have to do it by being fast, agile, high quality, reliable, and innovative.
I'd just like to move to a general statement about the role of university and public sector research organizations.
It's my view that the role of universities and public sector research organizations is to create new knowledge, to advance the state of the art in a wide range of fields, and to educate people to enhance their employability and stimulate their creative energies. Universities do not make cars and do not make auto parts, and I think it's really important, as we hopefully begin a systematic look at Canada's innovation system, to make sure that everybody is carrying out their role and sticking to their knitting.
AUTO21, I hope people would agree, has been a very good investment for the people of Canada. It's an effective and efficient public-private partnership in every sense of the word. The board of directors is led by...and a majority of the directors are from the private sector, from auto industry companies of one level or another. These are committed, very senior level executives who give a lot of time and energy to governing AUTO21 in an effective and efficient fashion, fully within the boundaries of the rules of the NCE program.
One of the most exciting things about networks of centres of excellence is that they allow a very seamless crossing of disciplinary lines. It's very important, I think, to appreciate how important it is to put the right people to work on the right problems. Not all problems can be solved by people in just one discipline. In fact, some of the most vexing problems really require a multi-disciplinary approach.
For instance, in a vehicle safety issue that we worked on recently, we have a team of nurses, physicians, engineers, physiotherapists, human kinetics people, and some sociologists. I think it's really important that this can take place. Under the usual system of funding in Canada, it's not easy for people who span that breadth of discipline to work together, because the funding councils tend to have relatively rigid mandates. They certainly try hard to break out of that, but I think AUTO21 and organizations like it have an agility that is very useful in attacking those kinds of problems.
That really brings me to the core of my message to the committee. I think there are three issues I would ask the committee to consider, and I hope to elicit your support on these.
The first one I would suggest is probably a regulatory change or something like that, and that's the elimination of the 14-year NCE sunset clause. The way the networks of centres of excellence program is structured in Canada--and it was a Canadian invention in the late eighties--their first mandate is for seven years, and they're able to apply for one more seven-year term.
Let me say at the very outset, and I'll probably say it again, that I do not believe in entitlement, by any stretch of the imagination. AUTO21 has no objection whatsoever to a searching, rigorous, and thorough review of our operations, including a demonstration by us of the value we create for the taxpayers' investment. At the same time, in my view, it makes no sense to work hard to create a good program with value and buy-in from the user sector--the industry--that creates a great educational opportunity for young Canadians and then shut it down because a certain number of years have passed. I just don't think that make sense. Yet that is the way the program is designed now. I think this is a flaw.
In my paper, on pages 4 and 5, I bring out the example of the Australian collaborative research centres program, which was modelled on the Canadian NCE program. In fact, one of their newest collaborative research centres in Australia is the AutoCRC, which is modelled directly on AUTO21. It says that right in their proposal. The Australian program permits networks to continue to apply for successive terms. These are granted, as long as the user sector continues to back it. As long as the user sector is committed--and I mean financially committed too--to leveraging the public sector funding, then the government remains committed. That has enabled Australia to make research progress and contributions and, more importantly, to support their economically key sectors to an extent, in my view, that is way beyond what a country with a population of 21 million or 22 million would normally be able to do. I think it's because their program is designed systematically to succeed and create certain outcomes. I think that's something we really need to look at.
Again, I do not believe in entitlement. If AUTO21 stops working properly, stops creating value, and if the industry stops supporting it, I will be the first one to suggest that it be shut down.
The other thing I would like to talk about very briefly is the issue of collaboration and cooperation among the various research funding programs. I have some examples in my brief that I would draw your attention to. The way it is right now, you basically apply for equipment money from one source, and people support money from another source. Those two programs don't really communicate very well. I think that's a flaw. Again, we need a systematic approach here.
Finally, I feel programs that create value and work well should really have inflationary increases in their funding to allow them to remain current and competitive. Just as business has to compete worldwide, researchers have to compete worldwide for the best people, the best equipment, and the best ideas. I think Canada has done a great deal of work over the last number of years in supporting research and innovation, but I think there's a lot more to be done.
I would urge the committee at this juncture to call for a systematic review of how all the programs work and how they interlock, to try to ensure that things happen in a way that makes sense.
I think I'm out of time. Thank you very much.
:
Thank you very much, Mr. Chairman and members of the committee. It's a pleasure for me to speak to you this afternoon, and I thank you for the opportunity.
As the chair suggested, my career has been a combination of things. Most recently I spent some time in Ottawa with the National Research Council, but prior to that, I was in the venture capital business as an entrepreneur. Essentially all of it has been in technology commercialization and technology innovation.
I come here today representing an organization called EnergyINet. We are a not-for-profit, non-lobby, impartial consortium of government and industry devoted to the acceleration of energy technology innovation.
There is nothing particularly I'm asking today other than to try to present you with a picture of energy innovation in Canada and where it isn't as effective as it should be, and with some suggestions on how it can be improved.
First of all, it's obvious that energy supply and availability and security in the right form, in the right place, at the right time, to the right customers is critical to our industrial sector and in fact to our society as a whole. And you've no doubt heard this from many witnesses over the past few months. What I'd like to do is address a few comments to energy itself and why it's so important, and then talk about why innovation in the energy industry is not being pursued as effectively as it might be.
The first main slide, at the bottom of the first page, deals with an undeniable and essential link between energy consumption and economic prosperity. While we might alter the angle of that curve, there is no doubt that if we want to move from the bottom left corner of the page, we have to consume more energy, whether we like it or not. This is part of sustainability, and I use the word “sustainability” here to include economic sustainability and sustainability of our society and our way of life, in addition to the usual use of the term, which is just about environmental sustainability.
So is energy a bane or a boon? Well, as I've said, energy consumption correlates very strongly to our GDP and living standards, and it's clearly very important for a healthy manufacturing sector. One of the key points I'd like to make today is that energy production and consumption per se do not contribute meaningfully to global warming. If we took every joule of energy that is produced and converted it to heat--and thermodynamics determines that most of it is converted to heat--we would not warm the temperature of the planet by more than one-tenth or two of a degree. The byproducts of energy consumption and production are what contribute to global warming.
So increased energy use is not axiomatically problematic, and it is not contrary to responsible usage, sustainability, or a sound environmental set of policies. Indeed, energy helps solve many of the global world problems, whether they be social or environmental.
Desalination requires energy, carbon dioxide sequestration requires energy, and so on. So I put it to you that we should be actively accelerating energy production technologies while mitigating the byproducts of production and use to prevent further environmental deterioration. And this applies to both fossil and renewable and alternate fuels.
Rising energy global demand is driven not just by Canada--in fact, it is driven by Canada only in a minor way--but particularly by countries like China and India, and you've seen the statistics I've shown there. It is inevitable that global consumption of energy will rise. The good news is that, actually, we have plenty of energy resources in the world. It's simply a question of how we exploit and use them.
So really, some energy supply conclusions would be that we have sufficient energy resources in this world for hundreds of years, if not indefinitely. But the extraction technologies and the byproducts of these industries are problematic. There is no magic bullet solution. Every energy source will be needed, and fossil fuels--carbon energy sources--in particular will supply most of the world's energy needs for the next 100 to 200 years. There is no way around that.
Renewable energy sources will accelerate rapidly, and should, but they will comprise no more than about 20% of the world's energy consumption by 2050 if we do a good job of energy innovation.
So we have a couple of options in front of us. We can carry on with business as usual, which will lead to increasing geopolitical tensions, supply disruptions, deteriorating environmental and climate change, and increased market and supply instability, or we can enter an era of responsible and sustainable energy supply while we focus on fossil fuels, in particular, although we reduce their carbon footprint and we reduce collateral resource requirements, and by that I mean things like water. We need to integrate all energy sources with distribution networks and markets into a “systems thinking” approach to energy. We need to accelerate the development of unconventional and alternate energy resources, so that those can come on stream to gradually transition to a greener type of energy. And that puts a strong emphasis on energy technology development and deployment, but also on a responsive regulatory environment and a more certain and stable business environment, where the long-term investments in energy technology and energy technology projects can be made.
Again, I comment that we need to recognize that fossil fuels will supply most of the world’s energy for the next hundred years or so—we do need to recognize that—but that technology can do a tremendous amount to help mitigate any of the difficulties of using fossil fuels. To point out how technology can be used, I've given one example in the slide, the picture of resources—these are North Sea resources—that were first identified in 1976. The three different-coloured curves—I think they're in black and white in your copies—show just how technology alone doubled and doubled again the reserves that were available from that field.
Our challenge, therefore, is not how to use less energy, although I'm not arguing against energy efficiency and energy conservation as part of our solution to our energy challenges, but how to unleash technology innovation to increase energy supply while minimizing its environmental impacts. The solution to that is to integrate and balance an innovation supply chain for effective solutions delivery.
What do we mean by an innovation supply chain? What is it? On the next page, there's a slightly complex graphic, for which I apologize, but it shows how ideas eventually transform into products, from the bottom left to top right, and produce an economic benefit. That is a supply chain. It starts with knowledge and ends with a product with economic benefit. If we don't have a supply chain that works in exactly the same way as the traditional supply chains work, but a knowledge supply chain with good, integrated linkages and different performers along the way, we will not achieve the economic benefits from the millions of dollars that are spent at the front end of this process.
To compare Canada's innovation performance, take a look at the chart down below. This shows work that is conducted by a group consisting of both me and Lipsey from Simon Fraser, and even Michael Porter is involved with it. We actually present some metrics under which Canada is scaled against some of the best innovative economies in the world. And you see the best practice statistics suggesting an R and D ratio of three parts private to one part public. It isn't clear in that slide, but it should be three parts private sector R and D to one part public. You see where Canada's ratio is.
The result is that what we have in Canada is an imbalance of knowledge push over market pull. We have supply-side innovation economics—i.e., discover it and they will come. We do not have an integrated innovation supply chain. We do not share common vision and objectives between the parties involved in the innovation supply chain. We do not have holistic policies. We have more than 200 government programs focused on innovation, but almost all of them are too small or too difficult to apply for, as I note from my private sector colleagues. The organizations involved are diffuse and uncoordinated. And finally, the metrics and benchmarks we use are not agreed to or are different, depending on different parties. I can give examples of that. So we have an imbalanced supply chain, which is ineffective in delivering economic benefits, given the enormous amount of effort we've put into the front end.
Part of this is a funding dilemma. The next graph shows that the government provides most of the front end, where ideas are formed in university and government labs, while the private sector invests most of the money at the product end—hardly a surprise. The problem is that you have a gap in the middle, where funding for the most difficult part of innovation and technology transfer and technology commercialization, namely pilot plant and demonstration phase and the commercialization phase, is the most weakly funded. This is simply because it's an area where there's increased political risk. The numbers are high and the number of projects is small, so people get accused of picking winners and perhaps putting $100 million into something that doesn't work. But at the same time, it's also the area where the private sector perceives their highest financial risk to be. And so it requires, absolutely, a partnership between both.
The energy industry is one that doesn't differentiate its products. It produces commodities like gasolines or electrons, and so on and so forth, and therefore it's very difficult for them to see the returns from being highly innovative when their non-innovative competitor next door produces exactly the same product that can't be differentiated.
Finally, to summarize on what government should do in improving the innovation cycle, it is, above all, to share technology innovation and implementation risks, possibly by insurance mechanisms, and to strengthen Canada's innovation supply chain to improve the outputs of technological innovation. By focusing those on the energy industry, I can assure you that we will generate huge technology exports and contribute more perhaps to global sustainability than by any other cause.
Thank you, Mr. Chairman, for the opportunity to address the committee.
:
Thank you very much for your question.
First of all, you're right. The OEMs, the automakers, are foreign owned, but what has been found--and this has been the case for a long time, and each of the OEMs is a little different in this respect--is that of the five companies, the Canadian arms of at least a couple of these companies have very strong research and development mandates within their companies.
They have to compete internally for those mandates, but the folks in Oshawa at the General Motors' regional engineering centre, the people in Windsor with DaimlerChrysler Canada's ARDC, and the soon-to-be-opened Ford innovation centre in Oakville, and also the international truck and engine innovation centre in Windsor have competed very successfully within their respective companies to be the people on a certain issue. No company would have all its R and D in just one place.
The other key point to make is that research and development activity in the world in more recent times and into the future tends to follow the talent. That's where it goes. It goes to where the people are available, who have the knowledge and the energy and the insight to make contributions. Whether those people live in our country or in somebody else's country, that's where the work will go.
So we find within AUTO21 that we're drawing interest from elsewhere in the world to access Canadian talent and know-how, and the trick is to do that without giving it away. The fact of the matter is that I think the talent we generate here will bring investment to Canada and be a net benefit.
Finally, in the parts part of the sector there are quite a large number of Canadian-owned companies whose headquarters operations are in our country, and we need to support those folks very strongly to make sure they keep their innovation activities here and employ our young people.
:
There were some very interesting points from both of you, and I want to thank you for those.
I will refer to two comments. You made one, Dr. Frise, about our country, our money, with respect to Nokia's experiment in Finland and success around the world with respect to cell phones. Dr. Raymont, you made the other, with respect to having had some success in commercializing south of the border.
I've often been tested, and we find ourselves struggling as a committee, to wonder whether it's a question of economy of scale in Canada or whether it's a lack of coordination, as you've suggested, Dr. Raymont, between the various programs that are out there--or might it just be the fact that it is impossible to build the kind of strategy that would see coordination among many of the sectors of industry, simply because the industries, to a large extent, are controlled by decisions made well outside of Canada?
This not a cry to the good old days of nationalism, but to respect the fact that almost every country you've used as an analysis here has leader industries. Their head offices are located in those countries and their decisions are made in those countries to the largest extent. There can be the kinds of synergies in which new products are brought forward. I've often looked at the drug industry to recognize that very few world mandates are coming from them, yet there is research and development; much of it is done in order to correspond to Canada's drug patent laws as far as being able to put forward your product goes.
In relation specifically to energy and to automotive, having worked with and been public relations director for Toyota Canada for a number of years, I find it passing strange that there, while they may not have direct government subsidies and protection of their market, which is a whole other issue, they do deal with the paradigm of the keiretsu, in which one company trades within a variety of other companies. There is a trade relationship that you can't penetrate; it serves very much as if it is almost a strong state-related organization or operation. I don't see how Canada can get around something like that, given that many of the decisions with respect to its automotive industry--and I speak from first-hand experience with my company--were made in other parts of the world.
Specifically on the question of innovation, if a company were to come forward and, for instance, be able to dim those lights by 50%, you wouldn't be able to appreciate the change in terms of the light that it emits. It seems to me that kind of technology could be backed, but the reality for companies that may have those kinds of inventions is that most believe they should in fact commercialize south of the border, where there are capital markets and access to the capital to do these things.
How would you grow or coordinate Canada's economy, given the current economic landscape in terms of who controls what in our key sectors? How do you coordinate such an outcome when decisions and capital markets tend to be outside this country?
:
Frankly, I don't know why that clause is there, and I don't know within whose control it exists. I'd like to know that, and I'll try to find out.
But in terms of other issues, I would say that in general Canadian programs—not just the NCE program—take a long time to decide to do something.
Mr. Raymont mentioned this as well, where you have somebody having to write a 44-page document to get a couple of hundred thousand dollars. In research circles, it's often suggested that hundreds of people are competing for dozens of dollars.
The full proposal for the Australian CRC, the AutoCRC, was about 20 pages long, and the proposal for AUTO21 was three telephone books. Now again, I don't mind a searching, rigorous process, but it takes an awfully long time to get any answers on anything.
We're up for renewal next year, and I'm confident we're going to stomp all over this thing and do a great job. But it's going to really stall the progress of our organization for many months, going through the whole process of creating a new proposal and so on, and we have to kind of stop everything while we do that. Then there's a long decision-making process, and then the decision is announced.
The whole process will take almost 20 months. Yet we have a five-and-a-half-year track record; we have external audits, which are clean; we have an independent board of directors that's very demanding; and we have fully peer-reviewed researchers at 40 universities across Canada, supervising 500 graduate students who depend on this funding. Yet we're going to stall everything for 20 months while we decide whether or not to do it some more.
That's the kind of thing we run into.