I appreciate the opportunity to meet with you on this occasion, as you mentioned at the outset, with regard to the tabling of the 2019-20 main estimates.
It's my intention to share with this committee the details of the continued implementation of our government's innovation and skills plan. That's what's reflected in the budget, and the estimates as well.
My comments will be brief. I want to allow the maximum amount of time for questions.
However, before I go further, I'd like to thank this committee for its ongoing review of the Copyright Act as well as its invaluable efforts and reports on the Canadian manufacturing sector; innovation and technology; intellectual property and technology transfer—which was very helpful for us when we unveiled our first national IP strategy—and broadband connectivity, of course. Your committee has also studied Bill and Bill , as well as Canada's anti-spam legislation. Long story short, Mr. Chair, our government greatly values these contributions. They have helped shape our innovation agenda.
We are well on our way to accomplishing our goals, but we know there is much left to do. That is why I am here today to discuss the proposed budget allocation of $8.6 billion in the 2019-20 main estimates for the ISED portfolio and to answer any questions that you may have. I am seeking your continued support as we advance the innovation and skills plan.
Allow me to provide some examples of what's in that budget, particularly in the main estimates.
One issue that's very important to us, and that many of you are aware of, is CanCode. To develop the digital economy, our CanCode program has helped more than one million students learn digital and coding skills. It's more than simply coding. It's about collaboration. It's about teamwork. It's about preparing young people for the jobs of tomorrow.
Budget 2019 seeks to provide an additional $60 million over the next two years. Because of that initial success, we've allocated additional funds to help another million young students gain new digital skills. It's not only about the kids; it's also about the teachers. We're empowering many teachers to learn how to teach how to code as well so they can provide additional opportunities for future generations.
Broadband is another area that's very important and that's come up often in the many conversations this committee has had, and of course in our travels across the country.
To ensure we have the infrastructure to put the skills to use, which I just highlighted with regard to CanCode, budget 2019 proposes $1.7 billion for high-speed Internet access.
I look forward to working with my colleague to implement this funding. Our government is committed to this initiative. It complements the connect to innovate program that we launched a few years ago, and we were able to leverage a billion dollars' worth of support in total through that program.
The next item I want to talk about is superclusters.
We've supported the creation of five innovation superclusters. These superclusters will strengthen key sectors of our economy, which will attract international investment.
In doing so, these superclusters are building innovation ecosystems that bridge the gap from idea to commercialization to growing global firms. It's really about creating this ecosystem. I think you'll find this stat very important as well. Superclusters are expected to create 50,000 jobs and to grow Canada's economy by $50 billion over the next 10 years. This is really about growth and jobs, and about continued global leadership for Canada when it comes to our innovation economy.
Complementing this initiative, we are providing new sources of capital for large-scale innovation projects, as well. One such project that is very important to highlight, and that impacts many of our communities, is the strategic innovation fund, SIF. Through the SIF, we have announced contributions of $1.2 billion, leveraging investments of $15.3 billion. We not only are making these investments but also have seen significant leveraged dollars. We're expected to create, again, tens of thousands of jobs. These range from, of course, the automotive sector, which is very critical to our economy, to the aerospace sector to food processing to digital technologies.
If you're counting, that's more than 100,000 jobs from just those two initiatives. I'm talking about superclusters and SIF. I just wanted to highlight some of those key initiatives in my opening remarks as well.
I also want to take this opportunity to talk about the recently launched digital charter, which is central to the next phase of our innovation and skills plan. Under the digital charter, individual privacy and business innovation are complementary, not competing, priorities. This approach supports an environment in which business models that rely on leveraging data for growth put an even bigger premium on trust. This is really about creating and building trust in the digital world. Trust and growth should be mutually reinforcing principles. You can't have one at the expense of the other.
Our government's investments under the innovation and skills plan are working. Since October 2015, Canada's economic growth has led the G7 and unemployment is at a record low.
By building on Canada's competitive advantages—the most highly educated workforce in the world, unrivalled access to global markets and low costs for doing business—companies are growing in Canada, coming to Canada and investing in Canada.
Let me give you a quick snapshot. I'm an accountant; I like numbers. In 2018, we saw the highest levels of venture capital investments since the early 2000s. It was $4.6 billion. That's clearly an indication of how we're turning a corner. We're seeing additional investments—particularly late-stage investments—in companies that are scaling and growing. Foreign direct investment grew by nearly 60% as well, which is really important to know.
We're seeing nearly twice as many Canadian companies on their way to the billion-dollar mark, which is a true sign of global competitiveness. We call them unicorns. How do we create more Shopifys? How do we create more large-scale companies that are growing and creating jobs? Right now, we have 20 in the pipeline that are well on their way to doing that.
Canada has become one of the world's best places to live and do business. We saw that recently at two conferences. Collision in Toronto and C2 Montreal highlighted again how the world is coming to Canada to take advantage of all the opportunities here.
Our world-class workforce and cutting-edge infrastructure is attracting investment and opportunities.
Our government is committed to building a strong and innovative economy that benefits all Canadians.
Once again, I thank this committee for its work and for giving me this opportunity to speak today.
I'm happy to answer any questions you may have.
Thank you very much, Minister, for joining us this morning and for that presentation.
The first area I wanted to ask about is the innovative superclusters initiatives. For my riding of Oakville, this was a huge announcement. We have many advanced manufacturing concerns in my riding. There's food, innovative nuclear, aerospace, and of course, I'm home to Ford Canada and Ford's largest manufacturing plant in Canada. It's a really important area.
The one thing I heard from all the stakeholders working in this area of advanced manufacturing was what you said about the goal here, which is to go from an innovative idea to invention to commercialization to globalization, and assisting our homegrown Canadian manufacturers through that cycle into global competitiveness.
My first question is around that. Can you give the committee an update? Where are you in terms of the rollout? How do you see the supercluster initiative progressing? Maybe give us some highlights from British Columbia and from Ontario of what's happening in this area.
I think it really speaks to a key part of our innovation skills plan, which is around growth and jobs, of course, and also creating a collaboration in the culture of innovation.
We had a very competitive process when it came to the superclusters. Many companies, organizations and academic institutions partnered up to put forward their proposals. Ultimately, we selected five. One that really stood out was advanced manufacturing—the one that you highlighted—or NGen as it's called and as it's being marketing presently. It's a supercluster that really has brought together some key areas of strength in manufacturing. We have a footprint that's reasonably strong at 10%. It needs to not only maintain that level, but to grow now.
This supercluster is really focused on advanced manufacturing, 3D printing and skills. They have a concierge service where they are upskilling and re-skilling individuals to understand that as technology evolves and changes, so do the functions and the roles of individuals who use this technology. They need the skills and upgrading as well. It's a really big play on talent and people.
As you highlighted, the digital supercluster has not only moved from a strong governance model, but ultimately now has announced projects as well. You will see projects coming forward in the coming weeks that highlight collaboration where data strategies are shared, where intellectual property strategies are shared and where collaboration will take place, particularly between the larger and smaller companies. How to integrate the supply chains was also a key desire of our programming.
It's also really interesting to note that when we are out there trying to attract foreign investments, many of them are talking about these superclusters because it allows companies that are new to Canada, for instance, to automatically connect into an ecosystem where they can leverage relationships and really be part of some interesting collaborations.
It's across the country. We'll see investments in the ocean supercluster in a timely manner, as well as in Scale AI for artificial intelligence.
As I mentioned in my opening remarks, we are very confident that we'll hit a minimum of 50,000 jobs. We think that we will exceed that, but that's a very minimum benchmark in the coming years.
Absolutely. I was there when we announced the projects in British Columbia. British Columbia is taking a lead when it comes to superclusters, unveiling its projects first. What's really exciting is using data for good. One area that this digital supercluster is focusing on is health care. There were numerous companies that were announced as project winners that looked at using data for early diagnosis of diseases using artificial intelligence and big data.
That really speaks to why we also unveiled the digital charter as well. We want to build trust in this area. We want people to have confidence in their personal privacy and in their personal data. Not only do we need to generate more data, but we will need to use it in a thoughtful way to get positive outcomes.
The B.C. digital supercluster really focused on health care. They're focusing on health care and forestry, two areas that are important to British Columbia, but really across Canada. They announced projects in early stages at companies that really looked at early diagnosis of diseases, particularly cancer, which, as you know, is a challenge for many Canadian families and many people around the world.
Not only can we see these projects succeed in Canada, but I'm confident that these projects and these solutions can ultimately be exported to other jurisdictions and help other people as well.
We have a robust governance structure. The first thing we wanted to do, as we put forward these superclusters, was to really create an environment for small businesses to have a strong voice, for academic institutions to have a strong voice and obviously the main partners as well. The goal is to make sure that we really promote collaboration.
The key success markers, of course, are the contributions to the economy, $50 billion to GDP growth, and that's going to be something we'll track very closely. The job numbers matter, and we're going to be tracking those very closely as well, but also how much IP is generated. We're an intangible economy now. It's really about intellectual property and making sure that the IP that's generated is done in a manner that provides maximum benefit and that the benefits remain here in Canada. That's really important to us, and we'll be keeping an eye on it.
We're also looking at data strategies, privacy protection and making sure the data that is generated is done in a way that still protects privacy. Particularly in health care, that data needs to be anonymous and needs to be protected. That's really critical.
Then, of course, I would say the other area that's really important to us is the promotion of diversity. This has been a priority for our government. We want to see the metrics diversity in every aspect in terms of the workforce but also diversity in implicating smaller businesses. This is something critical to integrating the supply chain.
Something my deputy minister has talked about often is how we help smaller businesses tap into the superclusters so they can scale and grow. I mentioned in my opening remarks that there are 28 companies that are on their way to becoming unicorns. A lot of them are also implicated in these superclusters as well. How can we accelerate that growth? We're keeping an eye on that as well.
We're not hiding. From day one, as you know, the was in Paris. We all supported the Christchurch call for action. At that meeting, he also indicated that we would be coming forward with a digital charter. No specific principles were highlighted there. When I came to Canada the following week, I made an announcement where I clearly articulated the principles within the charter here in Canada, spoke to Canadian media, engaged with Canadian businesses and other community members to talk about these principles. We're far from hiding. We've actually been open and transparent about our commitment to building trust and dealing with a lot of issues around privacy.
As I mentioned, the changes being proposed to PIPEDA, for example, talk about the fact that people should have more control over their data and should be more empowered. How have we done that? We have significant enforcement mechanisms in place to make sure that companies are held accountable, that companies take privacy laws seriously. We provided clear language guidelines around consent, because there are these complicated user agreements that individuals sign off on that create challenges that we've seen. Cambridge Analytica, for example, comes to mind.
We've also said it's about transparency. If an ad pops up, for example, on your screen, you have the right to know how that particular ad popped up. Transparency, control, enforcement—these are examples that all provide greater tools for individuals to be more empowered and make it very clear that privacy is important, and so is control over their data.
The reason I have concern about that, Minister, is that it's a significant allegation, really, of 100,000 jobs being created. The problem is that we don't have any of that information and data.
I'll shift to where I'm going with this, which is with regard to Crown copyright. Again, we have an example where we have a minister of the Crown coming here, making—I guess—an argument about the creation of jobs from materials, but we have no access to any of that information.
In 2017, over 2,000 Canadians independently called for the elimination of Crown copyright. During our copyright submissions here, there were over 200 organizations that called for the elimination of Crown copyright. For more than four decades, there have been Parliaments—in 1981, 1985, 1993 as well another Parliament—calling for the abolishment of Crown copyright.
There have been continued delays of public information and Crown materials with the transition to the digital platforms that have taken place, and in fact, we're losing not only that information but our heritage, because some of this material is being destroyed. This feeds our democratic deficit and economic disadvantage, because the U.S. does not have Crown copyright.
We do have a report coming forth. Your government decided to go ahead with an order in council for Matty Moroun, a private American billionaire, to provide a new border crossing in my riding, without any stipulations to the local community and without any type of public input or even involvement.
Will you commit to moving on Crown copyright in any form necessary to abolish this procedure that's blocking Canadian innovation, access to information and democracy? The reason I point it out in your materials that you submitted here today is because there is valuable information that could be helpful. I'm not saying your business plan was not effective. However, none of that is available. Will you, then, do what's necessary? I have Bill and you can steal it. It has been done before in the past. Will you commit to abolishing Crown copyright before the next election?
Okay, I will be fairly brief.
Again, I come from an automotive background myself, so I fully appreciate the issues raised by my colleague. The Pacifica, as he mentioned, is part of the rebate program that we proposed in the budget, as well, to counter the cuts made by the Ontario government, which were hurting sales and production in Canada.
We have seen record investments in the automotive sector since 2015, over $6 billion. There have been certain challenges in certain communities. You talked about Oshawa. We recognize those challenges and we continue to work with the automotive suppliers and the automakers to see how we can bring additional investments to Canada.
As I highlighted in the House of Commons, Mr. Chair, in the first three years of our mandate, we've seen more than 11,500 net new jobs created in the automotive sector, full-time jobs, versus the previous Conservative government, which saw 20,000 jobs lost before the recession even hit. We're very proud of the fact that we've turned the corner when it comes to the automotive sector. We've seen additional investments. More can be done and more will be done. That's why the strategic innovation fund is very important to help provide that tool that we need to bring some of those investments.
One of the premises of how we develop policy is that we have to engage stakeholders and communities, and we have to engage Canadians as well. This is nothing new. When we developed the innovation and skills plan, we had a long, thought-out consultation process to really understand where the gaps were, what the challenges were and where the opportunities were. Similar to developing policies going forward, economic policies, we put forward economic strategy tables.
The six areas were digital, clean resources, clean tech, health and bioscience, advanced manufacturing and agriculture. The reason why these were selected was that industry played a leadership role in determining that this was where the growth opportunities are, this is where we can see the economy going forward, where Canada is well positioned to succeed internationally as well. These strategy tables were comprised of people from those different sectors from a variety of backgrounds: experts, people who run businesses, people who advise businesses and Canadians from a consumer perspective as well. We covered all different aspects and came forward with a bunch of recommendations in these strategy tables.
Many of those recommendations were implemented in the previous two budgets, particularly the last budget and the fall economic update. For example, there was the capital cost allowance issue where we made it easier for businesses to write off the capital cost allowance so that they can compete with investments that were being made in other jurisdictions.
Work-integrated learning was a big issue that was presented in our budget where the private sector is stepping up as well.
The global skills strategy is an immigration pilot project that has become permanent based on their recommendations, because they want Canada to attract not only great Canadian talent but global talent as well.
The objective of this economic strategy table is to develop policy ideas with industry, businesses, with people who understand the real issues on the ground, and work with them to come forward with solutions that can see growth in the economy. I highlighted in my remarks that we have seen over one million jobs created by Canadians in the economy, and we want to continue to create conditions for Canadians to succeed going forward. The economic strategy tables create conditions for success. I've just highlighted some of the policy proposals that they put forward.
Thank you very much, Mr. Chair.
Before I begin, I'd be remiss if I didn't thank you, the rest of the committee and all members from all parties for the support of the steel and aluminum industry and the tariff lift. The minister referenced a few of the studies and things we've done.
I remember standing with many of you and with your predecessor down in Washington, with a real Team Canada approach. I appreciate that, Mr. Chair.
In that same vein, Minister, you were in Hamilton about a year ago when the government announced $2 billion in aid for the steel and aluminum industry, including $250 million from the SIF, which you referenced during your remarks.
Could you confirm to the committee that the support from this government will continue for the steel and aluminum industries? Although the tariffs are lifted, they're still recovering. Could you please touch on that?
It was a very important day for Canada. It was a very important day for our economy when we announced that these tariffs had been lifted, both the tariffs imposed by the Americans and our response. You may recollect that we responded very quickly, dollar for dollar, to these unjust and unfair tariffs imposed under section 232 by the administration under the guise of national security.
Above and beyond that, we also put forward a $2-billion support package, which you highlighted. This is to say that until we resolve this issue with the tariffs, we need to continue to support the sector. That was through financing through BDC, particularly for smaller businesses, and also through EDC, to help a lot of the steel and aluminum companies to export and to make sure they had financing.
Also, $250 million was allocated through the strategic innovation fund. The goal there was to help our businesses, particularly our producers, to be more competitive. Of that $250 million, close to $180 million has been committed already for different initiatives and projects. Some have been announced, and we'll continue to announce the remaining ones going forward.
To answer your question more directly, we absolutely will continue to support the steel and aluminum sectors. They're a critical part of our economy. They employ tens of thousands of people directly and tens of thousands of people indirectly in communities across the country. We're very optimistic about the future of the steel and aluminum sector.
One of the key challenges we have is that we want to promote lifelong learning but we also respect provincial jurisdiction when it comes to K-12 education. Recently in Ontario, for example, we saw many cuts to education by the provincial government. One of the areas we felt we needed to invest in was digital skills and digital literacy for young people. It reflects the jobs of today, and ultimately the jobs of tomorrow as well.
We worked with not-for-profit organizations to build capacity that could be utilized by different schools across the country. The uptake has been phenomenal. As I indicated in my remarks, over one million kids have been exposed to coding and have learned different coding skills, which is really important. We've also empowered teachers by making sure they get the necessary tools to teach kids.
We've impacted a lot of rural and smaller communities that are dealing with a lot of challenges with high-speed Internet connectivity. This type of investment in coding has helped those communities as well. We've had a particular focus on indigenous people and girls. We're seeing the tech sector evolving. There's greater participation of women, but far less than the percentage of the population, so we need to make sure we see greater balance and diversity in our tech ecosystem.
Investments in coding are designed to do that as well, targeting younger girls to make sure they are provided more exposure to opportunities to promote STEM—science, technology, engineering and mathematics. This has been a very successful program. That's why we added another $60 million in our budget for coding. You've seen the estimates as well, to help an additional one million kids to be exposed to coding going forward. We do this in a way that protects and preserves the provincial jurisdictions' responsibility when it comes to education. We're very proud of the fact that this is part of our overall commitment to the innovation and skills plan.
You can't have innovation without skills. The global skills strategy, the work-integrated learning, the concierge services I talked about and the supercluster, mid-career training grants for people who want to go back to school. All this is designed to make sure that we invest in our number one resource, which is our people, to allow them to succeed going forward, particularly where enormous transition is occurring due to technology.
That's a really good point. I'm responsible for other regional development agencies and it is an enormous point of pride because there has been enormous growth in all these regions. There are still some challenges, but ultimately we are turning the corner and we're headed in the right direction.
Since we formed government, from 2015, we've seen investments in all the regional development agencies of $1.2 billion. All the regional development agencies have seen their funding go up and it has been substantial in terms of the investments we've seen.
For example, in ACOA, as you mentioned, we've seen $170 million worth of additional funding since we formed government. That's in sharp contrast to the previous government, the Conservatives, that cut $51.7 million. They had a minister from Atlantic Canada, but it didn't really work out well for them because they lost $51 million. Now they have a government that believes in that region and has outstanding representation and we've seen significant investments.
That is applicable right across the board. I would also highlight the WD, which also saw substantial investment, because we know the unique challenges that are faced out west. These regional development agencies are growing. They're making additional investments, creating conditions for success and building those partnership models that allow more jobs to be created.
We have with us from the Department of Industry, Mr. Knubley, deputy minister.
Thank you again for staying with us.
From the Department of Industry, we have Lisa Setlakwe, senior assistant deputy minister, strategy and innovation policy sector; Philippe Thompson, assistant deputy minister, corporate management sector; Mitch Davies, senior assistant deputy minister, industry sector; and Andrea Johnston, assistant deputy minister, Innovation Canada.
Thank you all for being here. As there are no presentations, we are going to go right into our questions.
Mr. Jowhari, you have seven minutes.
Welcome to the department.
I'm going to start with you, Mr. Knubley.
Based on table 1 of the document from the Library of Parliament, there are a number of federal agencies that have received more funding or requested more funding. I would like to go through a couple of them specifically. I looked at the percentages, and I went across. The department that's apparently requesting the highest percentage is the Canadian Northern Economic Development Agency. It is asking for $63.5 million. That's an increase of about 122%. Can you expand on that one?
I have a number of them, so I can quickly go through them.
Western Economic Diversification Canada has a 106% increase. Then the Federal Economic Development Agency for Southern Ontario has a 40% increase. National Research Council Canada has a 17% increase. Finally, the Social Sciences and Humanities Research Council of Canada has an 18.3% increase.
If you could cover those so that I don't have to keep interrupting you, that would be good.
I'll do my best. Maybe I'll just go to the top first and then let some of my colleagues help me out.
Overall, in terms of the main estimates, $8.6 billion is identified for the department and portfolio; $2.9 billion is for the Department of Innovation, Science and Economic Development; and $5.7 billion is for the portfolio.
In terms of the department, there's actually an increase of only $3.3 million. That reflects a wind-down of the PSI-SIF program, which is the infrastructure program for colleges and universities. That's $640 million. Then there's an increase on the departmental side of $643 million related to steel and aluminum. From budget 2018, there is particularly CFI, DRI and the IP strategy. From budget 2019 there are young Canadians, digital strategy and broadband. Then there are some transfers that specifically relate to procurement, BCIP.
In terms of the portfolio, there's an increase overall of $791 million. You identified a couple of RDAs, I think in the case of CanNor the big increase relates to IDEANorth, which is a program, and there's an increase. There's an announcement in the budget of $75 million, so that is reflected in the main estimates.
I'd really appreciate that. I think that would be good.
I would like to move to the Canadian Space Agency. I know there were some increases with regard to that, but right now, there's a decision-making process. We've been participating in the Hubble telescope, and the Webb as well, but we're not part of the next one. Are there decisions about that? Have there been budgetary allotments to allow them to participate in that?
As well, there are going to be some new initiatives on core component designs and partnerships. I'm just wondering whether the Canadian Space Agency is receiving support to do more work, in terms of outreach, and how Canadian companies can engage in international competitions for project procurement.
You may not be able to answer this now. It might be a bit too specific, but I'm curious, in terms of the budgetary allocations for the Canadian Space Agency, whether those include more comprehensive support for them to win contracts for Canadians companies, or to be engaged themselves in competition for joint initiatives.
In the strict term of expenditures, the department has been going on a higher tangent over the last few years. We went from $800 million in expenditures in 2015-16 and we reached $1.8 billion last year. We are expecting to spend $2.2 billion this fiscal year.
In terms of the lapses, we are currently anticipating a public accounts lapse of $846 million. Of that lapse, $4.9 million is for the operating budget of the organization. It is less than 1% of the budget of the organization, which is pretty good.
We are expecting a lapse of $1 million or 12% on the capital budget. In terms of the grants and contributions budget, it's $841 million.
That being said, we remain committed to spend all the grants and contributions funding that have been provided to the organization. We rarely lapse the funds. We profile those funds into the future years. We are, of course, honouring the budget commitments and ensure the programs are delivered effectively with the best value for Canadians.
All this funding that is in grants and contributions has been re-profiled and approved.
I would say the following. In terms of the traditional approach to industrial development, there has been an emphasis on creating the right macro framework and then creating the right tax regime to incent research and development among firms and that sort of thing. That is the policy that we have basically followed since 1995.
What has happened in the last four years is really an elaboration and a greater emphasis on direct programming so that we are investing, using programs like SIF and superclusters, to directly target specific microeconomic results that we would like in the economy.
This is something that is being done by all governments. What I would say, to give you a sense of where Canada stands on this, is that Canada had always been, in the OECD countries, an outlier in terms of the balance between tax and direct programming. That is to say we used, almost exclusively, tax measures like SR and ED to promote research and development.
What's happened over the last four years with the innovation and skills plan is that the balance has moved much more in line with more direct programming. I think an increase of about 40% has been around direct programming.
This is something that is not unique to Canada. In fact, many countries have been re-examining what the right balance is between tax and direct programming.