Very quickly, I have four or five points.
I would first like to present supplementary estimates (A) for 2018-2019.
There's an additional $286 million in total for the budget overall, and $160 million of that is for the department. The main component is related to steel and aluminum. There is $126 million for the portfolio overall. The largest component is $45 million for Churchill.
I have a few more points.
Who are we? We are the executives of the Department of Innovation, Science and Economic Development. ISED, as it's known, has a budget of over $3.4 billion and has almost 5,000 FTEs. In terms of the portfolio, which includes organizations like the National Research Council, the granting councils, Statistics Canada, Business Development Bank of Canada, the Canadian Space Agency, all the regional development agencies, Destination Canada and the Standards Council of Canada, this is an organization that spends close to $10 billion a year and employs almost 19,000 FTE employees.
As Minister Bains would say of me when I sit beside him next, my colleagues will take all the difficult questions and I will do the easy ones. Again, this is just to say we are the representatives of ISED. What we've done as a team working in support of Minister Bains is really focus squarely on implementing Canada's innovation and skills plan.
We have made significant progress to date in implementing a range of targeted, aligned and collaborative programs.
These include the innovation superclusters initiative, the strategic innovation fund, or SIF for short, and innovative solutions Canada. We'll have an opportunity to talk about those programs, I assume, in the questions.
The third point I wanted to make is that, as we've focused on implementation of these programs, which were largely introduced in budget 2017, there have been two new initiatives under way under the innovation and skills plan.
First, we conducted national digital and data consultations from June to October, and we pursued consultations with respect to three areas: innovation, workforce or workplace as related to digital, as well as trust in terms of how we create a trusted framework for working on digital and data strategies.
The other initiative—and this is my last point—is really a result of budget 2018. We had launched six economic strategy tables. They included agri-food, advanced manufacturing, digital industries, clean technologies, health and biosciences, and resources of the future. These tables reported a month ago in one report. Each got an individual chapter, and there was an overall chapter identifying six signature items that were crosscutting in terms of the activities. Much of their focus, of course, was on competitiveness issues and regulatory issues, among others.
Mr. Chair, I'll stop there as a way of introduction, but again, we're the department of ISED, and my colleagues will take all the tough questions.
Yes, we do. We track it and we use evaluation methods as well as audit procedures to do that.
Backing way up and avoiding your question somewhat, just to clarify, what we did in this innovation review was to really identify four platform delivery agents. One is the regional development agencies, and in the context of the review, the focus on their new programming is around cluster development as well as technology adoption. On average, they are supporting SMEs in the $150,000 to $500,000 range.
IRAP, of course, is lower than that, so the National Research Council is at the beginning of the innovation pipeline. It's focused, again, on helping SMEs at that lower end, although it has been given authority now to give IRAP contributions up to $10 million, so it can actually do large ones.
Then there's the strategic innovation fund, which of course tends to be for larger projects and often consortia, so it isn't just for multinationals. There's the trade service that is also at play.
Exactly. It was a specific carve-out.
Obviously, with the duties being put in place against Canada, we knew the immediate impacts were going to be on the large steel producers in particular and aluminum companies as well. The price of aluminum has gone up considerably, but it's a continental price so the effect has not been as significant on the large primary producers, but on steel companies the effect has been in the millions of dollars per day.
The first issue we were aware of that was going to happen was that many of them would be put in a situation where they would be either cancelling or pushing forward their investment plans, and that's a recipe to have firms become less competitive over time. The SIF program, the new allocation of $250 million, was put in place to support investment plans and investments in capital infrastructure by those large producers, recognizing they were going to be the most impacted.
We set a couple of parameters: that the companies had to have at least 200 employees and that they had to have capital investment plans of at least $10 million. That was done—to the point that was raised earlier—to enable us to act more quickly with the largest companies that were going to be the most affected.
We know from past practice that, in the absence of some parameters for programs, what happens is that you can get inundated by requests from everybody. We looked very carefully at who was going to be in the field of the most impacted and made sure we were scoping them in, in an effort to ensure we were not effectively paralyzed by an endless number of requests. I think our own analysis, as the deputy alluded to earlier, is that there are about 7,000 or 8,000 other companies that are downstream users of steel and aluminum that have been impacted in one way or another.
The $2 billion that you identified.... That was why there were allocations within BDC and EDC to ensure they were in a position to respond. Some of the data I have is that BDC so far has more than 267 clients that have been impacted for over $100 million, and EDC has done roughly $60 million for 25 clients. Those numbers are up to the end of October.
That was the intention, to have the smaller and medium-sized companies go there, in addition to being able to do things like use the duty drawback initiative, and then also apply for remissions where either they were contractually obligated to continue to purchase, so they had no ability to change suppliers, or there was no steel supply that was Canadian in source. So in instances where you couldn't move within the Canadian marketplace, we have identified a remissions process through the Department of Finance, and they have already begun to provide relief to companies through that.
They deal with all of the elements working together. It would provide a comprehensive response, in addition to, obviously, the retaliation package, where the government responded dollar for dollar to what had been done out of the United States.
The point, too, is that one of those programs is retroactive.
Thank you very much, Chair.
It really is great to be here.
Thank you very much for the opportunity and the invitation today. I really do appreciate the opportunity to meet with you on the occasion of tabling supplementary estimates (A) for 2018-19. In doing so, I am seeking approval for spending that is aligned with our government's priorities, in particular promoting economic growth, which is our number one priority.
Mr. Chair, despite a challenging global climate, Canada's economy remains rock-solid. In fact, our jobless rate, as mentioned by the in the House of Commons today, is at a 40-year low, with over half a million full-time jobs having been created since 2015. Of course, there's no coincidence to this, Mr. Chair.
We have been making strategic and targeted investments. And our middle class has benefited from the creation of new jobs and now has a better and sustained quality of life.
Many of these investments are reflected in the supplementary estimates that we are discussing today. The primary mechanism under which we are doing this work is called the Innovation and Skills Plan.
Through our plan, Mr. Chair, we're taking a partnership-based approach to innovation-driven competitiveness in Canada, one that includes strategic investments and first-of-their-kind programs to develop innovation ecosystems and foster growth.
This new approach to innovation funding is accelerating and building on Canada's economic strengths. For example, it's really supporting the scale-up of Canadian firms and helping expand their roles in regional and global supply chains. It's about how we can compete not only within Canada, but internationally as well. It's attracting the kind of investment that creates good-quality well-paying jobs for the middle class.
It is my pleasure, Mr. Chair, to share with you some of the accomplishments under the innovation and skills plan, which is really our new smart industrial policy, as well as a view to where we're headed.
One of our most successful programs has been the strategic innovation fund, and I want to highlight this because it was a key initiative that was introduced in our plan.
It encourages research and development to speed up technology transfer and the commercialization of Canadian innovations. It facilitates the growth and expansion of Canadian firms and helps attract and retain large-scale investments. And, because industry boundaries are blurred in today's economy, it is open to all industries.
As of November 1 of this year, the fund has announced over 30 projects totalling $775 million in contributions that we've made, investments that we've made. What's more impressive is that these investments have leveraged a total investment of $7.3 billion, and we can all be very proud of this.
In a similar vein, another initiative that many of you are familiar with was highlighted last week. We've been making great progress on the $950-million innovation superclusters initiative. It's a collaborative effort between industry, academia and government through which we are building up existing areas of industrial strength to grow globally competitive companies.
Just last week I was pleased to announce contribution agreements with the Ocean, Advanced Manufacturing, and Protein Industries Supercluster.
The government really couldn't have asked for better partners.
I've also been very impressed with the ability to mobilize the innovation ecosystem, from small and large companies to universities and research partners, and from entrepreneurs and investors to other government agencies as well. The end result of this initiative—and I think this is really important to highlight, Mr. Chair—is that more than 50,000 new jobs will be created over the next 10 years, and these superclusters will add over $50 billion to our economy in the coming years as well. These are huge numbers, so we're super excited about these two programs: the superclusters initiative and the strategic innovation fund initiative. Again, this speaks to our government's overall new smart industrial policy, which is really focused around growth and jobs.
The innovation and skills plan is not simply about dollars and cents. It's about making it easier for businesses to grow. That's what we're truly here to talk about: growth. We made it easier for companies to access government programs through Innovation Canada. This is a one-stop shop. If entrepreneurs want to deal with the Government of Canada, rather than dealing with different levels and trying to figure out different programming, they answer a few short questions and in minutes they will get tailored, clear information about the programs that best meet their needs. I'm talking about federal, provincial and territorial information. It is a way to streamline the process for businesses to be business-focused and business-centric.
Complementing this, we've launched Canada's intellectual property strategy, the first such strategy. Imagine, in a knowledge economy, this is the first time the federal government has put forward such an ambitious strategy. As the members of this committee know, IP is integral to growing firms and fuelling innovation in today's technology-driven economy. Looking at other successful innovation nations, we always knew that our innovation and skills plan needed to include a proper IP plan. Members of the committee, as you heard from stakeholders when you undertook your study on IP, businesses armed with a strong, modern IP strategy make more money and pay their employees higher wages than those without. Those that have an IP strategy pay on average 16% more. This is good for companies, but more importantly this is really good for workers.
Furthermore, small and medium-sized businesses that use IP are two and a half times more likely to be involved in innovation activities. Again, it's about creating a culture of innovation and building that ecosystem. Our strategy, therefore, contains several measures to increase IP awareness and to make the system more transparent and predictable so businesses can focus on what matters, which is innovating and coming up with new ideas for new solutions.
Let me also take this opportunity to thank this committee once again for its thoughtful report and recommendations on this issue, because again it was a collective effort. You stepped up in a big way. We heard you loud and clear, and we implemented your recommendations.
These are just a handful of the government's accomplishments under the Innovation and Skills Plan, but rest assured, we are not done.
Mr. Chair, I want to quickly highlight that we're moving in a direction that also addresses issues around data and privacy, particularly the consultations we've done under the national digital and data consultations. Of course, our country's competitive advantages are increasingly defined by the ability to create, commercialize and implement digital technologies to harness the power of data. That's why we held the national digital and data consultations from June to October, engaging more than 550 thought leaders right across the country. We wanted to genuinely understand how Canada can drive digital innovation, prepare Canadians for the future of work, and ensure they can trust how their data is used. These consultations were a first step and will help guide us as we continue to make sure that Canada is in a leadership role.
I would also be remiss if I did not mention the continued renaissance of our regional development agencies. This truly is a point of pride because we brought the agencies together, provided additional money for them, and allowed them to focus on innovation-related projects as well. Again, they've done a tremendous job of focusing on helping companies scale up. They helped with diversification. This speaks to the concerns—and more importantly, the opportunities—that innovation occurs everywhere and not just in the big cities. It's important that all Canadians benefit from innovation.
Colleagues, as you can see, this is a very comprehensive innovation and skills plan.
The global economy is more competitive than ever. Canada must move quickly or risk being left behind. That is why these measures are so important. For Canada to succeed, innovation is imperative.
All the middle-class families from coast to coast to coast are counting on us to set this country on the right path, and that is exactly what we're doing.
I want to thank you, Chair, for this opportunity, and the committee members for their time. I'd be happy to answer any questions you may have.
Thank you very much.
Well, we are dealing with the digital divide. It's the new reality. It's so important to make sure that we have comprehensive opportunities for Canadians regardless of where they live. Therefore we've been very mindful of making sure that high-speed Internet connectivity is provided to rural and remote communities.
We have put forward initiatives like the connect to innovate program, which we're very proud of. It speaks to the strategic investments we've made in many communities across the country: 900 communities have benefited under that program, and we were able to leverage dollar for dollar, if not more, from the private sector and other communities as well. In terms of significant investments, 19,500 kilometres' worth of fibre has been put in place, which is absolutely essential to providing that backbone infrastructure.
With respect to the coding question, I would say that it's essential that kids learn how to code, not simply to code but to really have digital literacy and skills in this new digital economy. It is absolutely critical, no matter where you live or which segment of the economy you're interacting with.
We put forward a $50-million investment that will help teach one million kids from kindergarten to grade 12 to code. We're well on our way. Over 245,000 kids have learned how to code under this program so far. We're confident that by the end of 2019, we will reach our target of one million kids. It's empowering teachers as well, so that they have the tools to teach kids in the classroom about coding.
For me, as the father of two young girls—I have an 11-year-old and an eight-year-old—it's very important that they have these opportunities. From a personal perspective, this program has been a success, but more broadly speaking, I've heard positive stories from Canadians. It's really about promoting lifelong learning in a digital economy, to really make sure kids have the digital skills to succeed.
As you know, one of the areas we talked extensively about was clean tech—the investments that are being made in clean technology and the green jobs that are being created. Some of that diversification in job creation opportunities is really a reflection of the additional monies you advocated for, along with your colleagues from northern Ontario, for FedNor.
Actually, since we formed government, we've seen an increase of $58.2 million for FedNor. We've seen that in three successive budgets. There was $5.2 million in the 2016 budget, $25 million in the 2017 budget, and $28 million in the last budget. That speaks to the overall funding increase that we've seen in the last budget for all the regional development agencies, $511 million. Specifically, FedNor has received funding in all three budgets.
There are enormous opportunities in innovation. As I said, we talked about high-speed Internet connectivity. It's essential to make sure people have access to the Internet so they can really succeed in the e-commerce platform.
Also, as we discussed when I was there, the opportunities with clean tech in the Soo are enormous. It's great that we have municipal leadership on board. Christian Provenzano, the local mayor, is on board as well. Many companies are receiving support through Sustainable Development Technology Canada, which is a commercialization support mechanism start-up for clean tech. There have been some good announcements there.
They're further supported by FedNor, and that's an example of the kind of diversification that's taking place and the jobs that are being created. It allows young people to stay there and raise their families there. It enables that community to grow. There's no doubt steel is important, and we're very supportive of working with Algoma, but there's so much happening there in the Soo, and I want to thank you for your leadership in that.
Look, it's important to acknowledge that the previous government made a mistake when it cancelled the mandatory long-form census. It was clear that Munir Sheikh resigned as chief statistician as a result of that, but your government has not done a very good job of managing Statistics Canada either.
You had Wayne Smith, the subsequent chief statistician to Munir Sheikh, resign in protest to your government's management of Statistics Canada. You promised to make Statistics Canada fully independent from the department in the last election campaign. On page 37 of your platform, you said you'd make it fully independent, but Bill doesn't in fact do that.
In fact, before the election you argued that the chief statistician should be nominated by an outside committee, but when Wayne Smith resigned, you unilaterally appointed his successor. Now we have the fiasco of this pilot project, where the proposal is to obtain the personal financial data of millions of Canadians at a granular level that's never been seen before.
You know, when people fill out the mandatory long-form census, they imply their consent or face consequences for not filling it out, and they know exactly what information they're providing to the Government of Canada. With this pilot project, you're basically getting the data through the back door, through the banks, and it's very personal information. It's about whether somebody purchased personal hygiene products at Shoppers Drug Mart, or whether they paid for psychological services at a therapist, or whether they purchased a beer at a bar, and when they did it. This is data that is far more intrusive than anything we've seen before at a level that would make Alphabet and Amazon blush. We're talking about very personal information from millions of Canadians—hundreds of thousands, if not millions of households.
This is why this has raised the ire of so many people. What's particularly egregious about this pilot project is that it's going to be used by some of the largest corporations in the world. Yes, we know that the data will be scrubbed and cleaned up and aggregated on a postal code basis, but nevertheless the reality is that this data is going to be used by some of the largest companies in the world in order to market their services to Canadians. Your government proposed to use the coercive power of the state under the Statistics Act to get this data. It's a big-time overreach on the part of your government, and I think it reflects poor management of Statistics Canada.
Thank you, Mr. Chair.
In the USMCA, there was a lot of debate about dairy and supply management, and a lot of thoughts and feedback about the automotive sector. The current President said he would invoke section 232 on the automotive sector and impose a 25% tariff. We were very fortunate, because of the leadership of , to shield the automotive sector. It's such a critical part of our economy: 500,000 direct and indirect jobs are connected to the automotive sector.
It's not only about the OEMs or the major automakers; it's about the supply chain and the number of people they employ throughout the country, not only in Ontario. We took very clear steps to protect that by making sure that production levels for the number of vehicles that are built, and also the parts that are sold, have significant growth potential. Part of the USMCA also changed the rules of origin for vehicle content, making sure there was a higher threshold for regional value content.
Currently, we're at 62.5% for regional value content for vehicles made in North America to local content requirements. That will go up to 75%. That creates more opportunities in the automotive sector. That complements our support. Since we've been in government, we've seen $5.6 billion invested in the automotive sector. Those are significant investments. People talk about how people view Canada. When it comes to the automotive sector, a lot of innovation and a lot of investments are occurring. That's translating into a lot of jobs, both being maintained and created on a going-forward basis as well.
That was a key aspect of the USMCA, to make sure that we not only protect the automotive sector, but set it up for success going forward. A high regional value content helps, and also the labour standards with Mexico, because now their labour standard employee costs have gone up to $16. A competitive advantage potentially existed with Mexico in labour costs, which now no longer is the case. The difference is much smaller. That makes Canada even more attractive as an investment opportunity. We're very pleased with the progress we've made, and now we look forward to working with the automotive sector to build a car of the future as well.
This supports what we've also done in the aerospace sector. Recently the announced significant investments in CAE from the strategic innovation fund to make sure it continues to be a global leader in flight simulation. They have also pivoted toward health and health simulation. There are great opportunities in Canada for investments, for growth and jobs, particularly in the automotive and aerospace sectors, two sectors that were part of industrial policy for decades and that have a bright future as well in some of the policies and programs we've put in place for innovation and trade.
Thank you for that question. Intellectual property is a foundational piece and an essential piece for the knowledge economy going forward.
If you look at the U.S. and their S&P 500, you see that 84% of the assets attributed to the companies are intangible assets. It's connected to IP. If you look at the TSX top 30, you see that 40% of the asset base is attributed to IP. We're behind the U.S., and compared to other jurisdictions as well, and we really have to step up.
We want to be in the business of generating more IP and making sure that we see the benefits here in Canada. That's why we put forward the first national IP strategy, based on the work you did. It was really well received.
Jim Balsillie, for example, someone who is really knowledgeable about this, said that ISED—not me, but more specifically the department I work with—“has been a tireless champion of innovative Canadian companies". He said, “I'm delighted that [under the leadership of ISED we've] put in place this most significant pillar for an innovation strategy.... Raising sophisticated domestic capacity in IP ensures Canada will improve the commercialization of our ideas globally.” This is pretty high praise from someone who understands the importance of IP.
We received similar support from many different professors, the IP Institute of Canada and the different organizations and companies that use IP. Particularly in our smaller and medium-sized businesses, only 10% actually have an IP strategy, and only 10% actually use that IP strategy as part of their business plan. What we're trying to do, fundamentally, is to say, how do we increase that number?
I think the larger companies, generally speaking, are better when it comes to IP generation and IP development and the benefits of it, but it's really about the small and medium-sized companies. We've put forward measures in the IP strategy to also protect Canadian companies, particularly around trolls, to deal with issues around the demand letters that are issued in order to make sure that those demand letters protect them and protect their IP. We've looked at patent collectives, another area that's really important: to combine different patents to provide more opportunities for businesses and to deal with trolls as well.
These are some of the strategies we're deploying. It's $85.3 million that we're investing for significant investments in IP, so it's not simply legislative changes that you're seeing in the legislature, in the House of Commons, but financial resources as well, to move forward on the strategy.
Dr. Wayne Smith, the former chief statistician, said that Bill —this is your bill that you had in the House of Commons—does nothing to prevent a repeat of the uproar after the 2011 switch from mandatory to voluntary long-form census.
We're back here now, and I can understand the reservations of people, because the reality is that data will be mined down to your postal code in terms of influencing consumer behaviour. Bill is different on a couple of things from the bill I had, and I would like your opinion on these things to end this meeting.
One of the biggest things was that the chief statistician would be responsible to Parliament, similar to the Auditor General, and wouldn't be the creature of the office of the Minister of Industry, as it is right now. Would you agree to that change?
Another thing would be, would you actually fulfill the promise that you had in your election platform with regard to making a new appointment process that's different from what we have right now?
Last, will the Statistics Canada department continue to be the one that actually gets the data from Canadians, and not Shared Services Canada?
Those were the divergent points. I agree that data is a very important point, but what is just as important is the quality of the data and also the empowerment and the personal confidence people have in giving it. In this situation, the chief statistician has undermined his own process, because people will change their banking ways with what's taken place.
On those three things, can you give at least some guidance in terms of whether you would change Parliament and the Statistics Act to create a culture of inclusion and accountability for the position of the office?
Thank you very much, Minister, for coming and sharing some time with us today.
We are very tight on time, and we have some votes for the supplementaries. May I get unanimous consent to lump them all together?
Some hon. members: Agreed.
ATLANTIC CANADA OPPORTUNITIES AGENCY
Vote 5a—Grants and contributions..........$25,537,539
(Vote 5a agreed to on division)
CANADIAN NORTHERN ECONOMIC DEVELOPMENT AGENCY
Vote 1a—Operating expenditures..........$99,196
(Vote 1a agreed to on division)
Vote 1a—Operating expenditures..........$1,800,000
Vote 5a—Capital expenditures..........$29,654,327
(Votes 1a and 5a agreed to on division)
Vote 1a—Program expenditures..........$99,196
(Vote 1a agreed to on division)
Vote 1a—Operating expenditures..........$4,149,095
Vote 10a—Grants and contributions..........$154,667,316
(Votes 1a and 10a agreed to on division)
DEPARTMENT OF WESTERN ECONOMIC DIVERSIFICATION
Vote 5a—Grants and contributions..........$53,521,644
(Vote 5a agreed to on division)
FEDERAL ECONOMIC DEVELOPMENT AGENCY FOR SOUTHERN ONTARIO
Vote 1a—Operating expenditures..........$99,196
(Vote 1a agreed to on division)
NATIONAL RESEARCH COUNCIL OF CANADA
Vote 10a—Grants and contributions..........$4,927,922
(Vote 10a agreed to on division)
NATURAL SCIENCES AND ENGINEERING RESEARCH COUNCIL
(Vote 5a agreed to on division)
SOCIAL SCIENCES AND HUMANITIES RESEARCH COUNCIL
(Vote 5a agreed to on division)
Vote 1a—Program expenditures..........$7,542,506
(Vote 1a agreed to on division)
The Chair: Shall the chair report the votes on the supplementary estimates to the House?
Some hon. members: Agreed.