moved that the eighth report of the Standing Committee on Industry, Science and Technology, presented on Thursday, November 23, 2017, be concurred in.
He said: Mr. Speaker, intellectual property is a complex term, so let me start with a bit of a definition. Intellectual property, or IP, is a creative work, such as a design or a manuscript, for which the creator has rights and can apply for a patent, copyright, or trademark. The Conservative Party of Canada recognizes that a robust IP regime is critical for Canadians to not only make a living off the research and creative ideas, but also bring those innovations to market and improve lives in Canada and around the world.
Regulations and laws related to IP protection try to strike a balance between providing firms an incentive to innovate and promoting a competitive market. There are three models of IP used by Canadian universities: institution-owned, creator-owned, and co-ownership models. For more background, technology transfer refers to a formal transfer of rights from scientific research to another party in order to use and commercialize new discoveries and innovations resulting from that research. IP protection is key to technology transfer because it allows researchers to publish the research and still provide industrial partners with the incentive to commercialize their inventions and retain their competitive advantage. Essentially, a good IP strategy lets researchers and innovators work collaboratively on ideas and enter into partnerships. The government's role is to keep the marketplace as competitive as possible, with low taxes and fewer regulatory hurdles for our country's innovators.
A few weeks ago, the Liberal government unveiled its long-awaited IP strategy. Included among the changes are the creation of a governance regime for patent and trademark agents, $30 million to create a third party patent pool to acquire IP that Canadian firms could access, and $17.5 million over five years to set up a government team of IP advisers. In total, the Liberals' IP strategy will cost Canadians more than $80 million. In my opinion, as the Conservative Party's science critic, this IP strategy is a confusing approach that has too much government involvement in the private sector. The patent collective or patent pool idea is a complex system that requires merging private sector interests. Therefore, the government should not have its hands in this.
Many with a keen interest in innovation, myself included, are unsure how this IP strategy will ultimately help Canada's innovation sector. The president of the Intellectual Property Institute of Canada, Grant Lynds, told The Hill Times that the government's patent pool leaves his group with many questions and that the government's goal is not clear because the government did not specify which patents and which licensing firms would form the collective. This overall IP strategy is typical of the government, which often makes promises to Canadians without sufficient consultation with the Canadian public. It then rolls out legislation and strategies that have not been fully thought out. We are seeing this right now with the Liberals' marijuana legislation.
Another point this strategy left out was creating an innovation box, which would provide a tax incentive to encourage firms to develop and implement Canadian inventions and innovations. The Intellectual Property Institute of Canada suggested using this, which is a strategy used in the United Kingdom, France, the Netherlands, and other European countries. China, a country leading the world in innovation, subsidizes IP and has a higher rate of IP filings. Despite claims by the government to have consulted with all stakeholders on this issue, the innovation box suggested by the Intellectual Property Institute of Canada was not mentioned in the strategy at all. Instead, the Liberals focused on the patent collectives as the main announcement.
The Liberals committed to setting up and managing a patent collective, which is an immensely technical process not commonly managed by a government. In procurement and funding research, the federal government generally does not retain intellectual property resulting from those transactions. It is unclear what IP the government has to offer to users, and there is no clear strategy for how the government would go about acquiring further IP that would be useful to Canada's innovation sector. We have witnessed from many mishaps, such as the Phoenix pay system debacle, that the government has neither the agility nor the technical know-how to effectively manage something as complex as a patent collective.
Like the superclusters program, the proposed patent collective is the latest addition in the government's heavy-handed, top-down approach to Canadian innovation, which essentially amounts to picking winners and losers. On the one hand, the government supports selected businesses with public dollars, while on the other hand it continues to make life more difficult for businesses outside of its chosen few, with increasingly higher taxes and more red tape.
Earlier this year, the Liberals announced their superclusters initiative, which divided $950 million among five consortiums of businesses in a variety of industries. There were problems with this program from the start, mainly with the transparency of the initiative. We do not know who participated in the selection process that resulted in the five consortiums. Was it the 's political staffers or federal bureaucrats? We do not know.
The program amounts to insiders in Ottawa picking winners and losers. While the government touted the job-creation potential of this initiative, the reality is that outside the minister's chosen industries, we have seen a dramatic loss of jobs across Canada. Tens of thousands of energy workers are still out of work in my home province of Alberta.
In The Globe and Mail, Mark Milke wrote that, “'Superclusters' is just [a fancy] name for...corporate welfare”. The article states:
|| Almost $1-billion in new corporate welfare for the newest political interference in the marketplace, this for so-called “superclusters,” i.e., for locales where politicians hope industries and universities will create the next Silicon Valley.
He went on to call the superclusters initiative a government-sponsored Ponzi scheme. I tend to agree with this view. The government has no hand in private industries and should not be picking winners and losers. The government spent almost $1 billion on this initiative, and I suspect most individuals will not see much benefit from the investment.
While the previous Conservative government made targeted investments in 2011 in lung-, breast-, and ovarian-cancer research, we gave earmarked funds to the granting councils to disburse through a peer-reviewed process, not by handing over tax dollars straight to private companies. Similarly, when we invested in quantum computing, it was not through funds awarded to the Institute for Quantum Computing, a public research institution associated with the University of Waterloo.
The Conservative Party supports the creation of a process to allow the patent holder to restore time lost on 20-year patent protection due to delays in government approvals. Conservatives support small and medium-sized businesses and their need to commercialize innovation. Because of this, we support a shorter and simplified process.
In fact, the previous Conservative government created a stronger record on IP that aligned us with international standards. During that time, we passed and ratified anti-camcording legislation, legislation around the proceeds of crime, regulations for copyright offences, the Copyright Modernization Act, WIPO Internet treaties, the Combating Counterfeit Products Act, and legislative changes to implement five IP treaties. As well, we extended the term of copyright protection for sound recordings, provided IP agent-client privilege, and laid the foundations for the Liberals to table CETA and to ratify the Marrakesh Treaty.
Already in Canada small businesses face tremendous hurdles to be successful. The government tried to make it even harder, with the small business tax proposal from last year.
Adding another layer of government bureaucracy to IP just does not make sense. Conservatives recognize that small businesses generally do not maximize the benefits of their IP assets as a result of a lack of knowledge, limited staff, and high costs. We need to help small businesses however and wherever we can. Conservatives are committed to creating a low-tax and streamlined regulatory business environment that will not only retain Canadian innovators but also attract innovators from abroad. Ensuring that innovators can translate their creations to market is the key to a strong innovation sector.
Furthermore, the government's patent collective to acquire IP that would be accessible by Canadian firms is bound to be a bureaucratic quagmire. The government described it as:
|| a way for firms to share, generate, and license or purchase intellectual property. The collective approach is intended to help Canadian firms ensure a global “freedom to operate”, mitigate the risk of infringing a patent, and aid in the defence of a patent infringement suit.
I prefer the explanation by Richard C. Owens, a Munk fellow at the Macdonald-Laurier Institute, who compared the patent pool to the government's setting up “a program to help a canoe builder to acquire the right screws.”
Patent pools form sometimes to help a group of large corporations with product development. However, the government's proposal is for smaller firms, which are unlikely to have a shared interest in the first place. Richard C. Owens described the patent pool as a “one-stop, online listing of public sector-owned intellectual property available for licensing or sale”. Again, this creates hurdles for small businesses, which will probably be unable to afford the purchase of the IP from a third party.
Additionally, as previously stated, it is unclear what IP the government currently possesses that it could offer but also what incentive there would be for owners of profitable or cutting-edge IP to sell to the government for its collective, when they could license those properties themselves.
We are already experiencing a brain drain of innovative thinkers who are going to the United States, where the red tape is not as rigorous as it is in Canada. This patent pool does not address the problem and will ultimately hurt the Canadian economy when these people move south of the border with their ideas.
As I mentioned earlier, the budget also included $21.5 million to create a team within the federal government to work with entrepreneurs and help them develop strategies for using intellectual property and expanding into international markets. When it comes to assisting private sector innovators and quickly translating their ideas to market, it is difficult to believe that the solution is more bureaucracy. In the Financial Post, Richard C. Owens wrote, “try to imagine the business person desperate, naive or confused enough to get involved with such a lot.”
In my role as shadow minister for science, I have toured many labs, innovation hubs, and universities, and I have had the pleasure of sitting down with some incredibly inventive creators. I have seen first-hand that Canada has no shortage of bright minds. However, the panel behind Canada's fundamental science review found that “twice as many Canadians have won research-related Nobel prizes while working in the U.S. as have been awarded to Canadian-born or foreign-born scientists working in Canada.” To me, this statistic reads that we have no shortage of talent to draw from, but we do have a problem converting ideas into usable goods or systems that can be inserted into the lives of individuals in Canada and around the world.
Economist Jack Mintz noted, “Our regulatory environment is becoming infamous for its unpredictability and hostility to new projects.” We know that this is certainly true for the Kinder Morgan Trans Mountain expansion project, which may fail because of the government's incompetence. It is also true for our innovators who own intellectual property. For all the talk and money the government throws at innovation objectives, it forgets that the innovation sector is largely made up of small firms that are small businesses first and foremost. These innovative firms are not immune to the struggle other businesses are facing in this country due to the government's increasing tax burden.
Earlier this month, the Conference Board of Canada gave Canada a C for innovation. This grade was because of weaknesses and a lack of investment by the private sector. This is not surprising, because we know that the government has created a lot of restrictions and red tape within the private sector. A high tax rate, when compared with new, lower taxes in the United States, will drive more businesses south of the border. We know that we have immense talent and innovative thinkers in Canada. However, we continue to lag behind other countries in innovation because of a lack of support from the government. Canada has never had an issue with creating innovative products; it is our ability to commercialize them that is inhibiting our success in being a leader in innovation and reaping the economic success around the world.
The productivity gap between Canada and the United States will threaten our economy, and it already is. This new IP strategy from the Liberals does nothing to address this gap. It is just more red tape and government involvement at a time when we need the opposite: We need a government that will create a more competitive business environment for innovators, allowing their ideas to succeed.
We know how business-friendly our current government is. I know I just mentioned the Trans Mountain expansion project, but it is worth repeating. A private sector company wanted to invest billions of dollars in the Canadian economy to build a pipeline, which would help thousands of unemployed energy sector workers get back to work. The federal government did not support this early enough. It did not step in to stop one provincial government's crusade against the pipeline. Now, we just learned that the Liberal government is pledging millions of taxpayer dollars to incentivize the company to still build the pipeline here. I assume it is millions of dollars, because the Liberals will not tell us how much. Let us imagine that. A company wants to invest in Canada, and the government is so inactive on this file that now public money will be used to prop up the project. Even if Kinder Morgan wants to complete the project, it will still be up against much red tape.
As an Albertan, I have been immensely interested in this project. I think it should be built because it is in the national interest of Canada. However, all the actions taken during this process show the world that under the current government Canada is not a place to invest as a private sector company, and this will have implications for IP owners and firms around the world.
Not getting the IP strategy right will have huge implications for the economy. IP-intensive industries account for approximately two million jobs, or 13.6% of all jobs in the Canadian economy. They also make up 25% of the GDP, which accounts for $332 billion. As well, 40% of all exports can be attributed to IP-intensive industries.
When dealing with IP, we need to strike the right balance to encourage innovation and creativity while attracting more investment, providing businesses with clarity, and promoting consumer confidence. This was not done in the overhaul of the IP strategy.
As a member of the Standing Committee on Industry, Science and Technology, and as the official opposition shadow minister for science, I have met with many stakeholders in this industry. Most private sector stakeholders would like to see their flexibility maintained with regard to IP ownership.
Colleges and polytechnics feel their best IP policies are aligned to the understanding that commercial exploitation of IP is best achieved by the private sector. Many leaders within the private sector have advocated for more funding for intellectual property and technology transfer and have pointed to statistics that show a strong correlation between research funding and invention disclosure. Essentially, industry stakeholders are looking for less red tape and more education.
As well, this IP strategy is costing Canadians a lot of money. The government has committed almost $85 million for this strategy, including $2 million just to conduct a survey to determine whether Canadians understand intellectual property. Hopefully, with so much being spent on the survey, the government will actually listen to what stakeholders tell it and not ignore the information as we usually see.
One of the most common themes I hear from my constituents when door knocking is how much government Canadians have. Most people would agree government has too much involvement in our lives, the current government even trying to tell Canadians how to think and punishing them when they do not agree with it. This IP strategy is yet another example of too much government involvement and it shows how much out of touch the Liberal government is with everyday Canadians.
The government is getting too involved in the lives of innovators and I think it will have the opposite effect of what the government wants to achieve with this strategy. Too much government involvement will deter our innovators and perhaps turn them to the United States rather than encouraging them to go public with their ideas right here in Canada. This will hurt our economy and ultimately all Canadians who stand to benefit from intellectual property.
The Liberals are a proponent of big government. They have been criticized for acting morally superior and not making time for people who do not share the same viewpoint as them. Our even said in a media interview that she had no time for people who did not completely agree with her exact policy ideas on how to combat climate change. Imagine a member of cabinet, whose purpose is to represent all Canadians, not willing to listen to people who do not share her viewpoint.
The Liberals want government involvement in every aspect of Canadians' lives, which discourages a healthy free market. The government's role is to set up and enforce society's basic rules. After that, citizens should be free to make their own decisions and co-operate with each other to provide for their wants. The government should not intervene on each and every problem.
As with the case on this IP strategy, the government will likely create more problems than it solves with the patent pool. That is what big government does, creates more problems than it solves.
After the Liberal government released its first budget in 2016, Maclean's magazine declared that big government was back. The author of the article wrote the “move toward a government-led economy was evident....” This is clear by the ease at which the Liberal government will run deficits.
At the end of Prime Minister Stephen Harper's time in office, he was praised for his work in having the federal government become less active in the daily lives of Canadians and replacing big government programs with direct benefits. This is the type of government most Canadians prefer.
The government needs to step back, give the private sector the room it needs to innovate. It does not need the government to tell it how to do that. What these people need is for some outlets to provide advice on how to maximize their IP protections and ensure a low-tax and streamlined business environment that will enable a quick transition of ideas to marketable goods and services.
The Liberal government's approach to IP is typical of its heavy-handed approach to most things, with more government than necessary. In the case of intellectual property, less is more. The new rules will not help innovators come up with more profitable IP; it will actually hinder them. It is time for the government to step back and let Canadians develop and execute their innovations, which will in turn drive growth in all sectors of our economy.
I appreciate the opportunity to speak to this very important issue, and I will end with one quote, “That government is best which governs least, because its people discipline themselves.”
Mr. Speaker, it is a pleasure to be here this afternoon, speaking about such a critically important, although I must admit somewhat boring, topic. When the words “intellectual property” are put together in the same sentence, most Canadians would probably be turned off about now.
However, for reasons that have been well expressed already by my colleagues, this area truly is a significant part of Canada's future. We need to ensure that we have harnessed intellectual property and, as I will argue, worked more closely with our universities in order to do so. That, of course, is the thrust of many of the excellent recommendations, all 12 of them, that were made in this report of the industry committee, entitled “Intellectual Property and Technology Transfer: Promoting Best Practices”.
It will not surprise the House that I will say a few things about my riding of Victoria, because we are the home of a number of universities and colleges that have been integrally involved in intellectual property accumulation that has then been transferred to our burgeoning high-tech sector. Many Canadians will be surprised to learn that our main industry, in fact, is high tech, which depends on some of the things that the committee has quite astutely observed and made recommendations upon.
Let me therefore begin by looking at some of the recommendations. I would like to highlight only a couple of them that I think are important. Then I will talk about the situation in my part of the country. Lastly, I will end with something that is rarely talked about in this House but which ties very directly into this issue, and that is the so-called Naylor report.
Let me start with the recommendations that I think are particularly important to the university and college sector.
Recommendation 3 of the industry committee report is that the Government of Canada facilitate access to information relevant to technology transfer for Canadian small and medium enterprises.
Why? It claims “in order to promote collaborations between post-secondary institutions and the private sector, notably for the purpose of the commercialization of academic research.”
Sometimes Canadians think that universities are simply an ivory tower place, and that is so far from the reality that exists today. Many of the discoveries that are happening across our country—and Canadians should be immensely proud of those discoveries and the researchers that are making them—can be commercialized and should be commercialized. It troubles and pains me that so many of our young entrepreneurs think there is no sense in trying to commercialize it in this country and that they should just go down to Silicon Valley or Boston or maybe Ireland, which has become such a high-tech sector in and of itself.
That should not be the future of Canada. We need to keep the best and the brightest who make these discoveries, so we need to provide the protection of intellectual property that is needed to keep them in this country, where they create jobs and a better future for us and our children and grandchildren.
That recommendation deserves some emphasis.
Recommendation 5 reads like this:
||...that the Government of Canada consider launching a pilot program designed to provide small businesses access to strategic intellectual property advice.
That will be a challenge thrown directly to the Government of Canada, which I hope they will take up as a pilot project.
The last one that I will focus on is that the committee recommends:
||...that the Government of Canada study the opportunity to renew and expand funding allocated to programs supporting technology transfers between post-secondary institutions, (universities, colleges and polytechnics), and Canadian enterprises.
It is abundantly clear that the committee gets it and sees the incredibly important need. However, forgive me if I focus this debate on the community with which I am most familiar, Victoria.
I confess a lot of Canadians do not understand it and have a very unfortunate stereotype about what our community is, thinking of it perhaps as a retirement centre, a government centre, and so forth. That is why I think Canadians need to understand that greater Victoria's technology sector is now a $4-billion industry, making it the largest industry in the capital regional district. It is $4 billion. It is the largest industry. I think that will come as a surprise to Canadians. It has been that way since 2007, when it quietly moved up the ranks and hit $1.6 billion. According to recent studies, for every high-tech job, four other jobs are created.
Here I need to do a shout-out to Mr. Dan Gunn, who deserves a lot of credit for that. He heads up the Victoria Innovation Advanced Technology and Entrepreneurship Council, which uses an enormous number of very amusing and engaging techniques to engage the young members of that burgeoning high-tech community. He deserves credit for putting it together, creating that umbrella, having fun with people, getting them to collaborate informally at what they call “Fort Tectoria” on Fort Street, and has helped to turn the downtown area into what San Francisco calls “the mission district”, full of entrepreneurs and young people.
A long time ago the Liberal government of British Columbia moved many of the government jobs away. It downsized and moved them to different parts of the province. Those buildings are now increasingly being occupied by 20-year-olds and 30-year-olds who are creating a future.
The law firm I used to be with rented the building where all these computers were just sitting, because the people we took the lease from simply sold their entire business and moved to Silicon Valley, leaving thousands of dollars of material laying around.
That is just one of many start-ups that have been so successful in our community, and we are very proud of them. To return to the point I made earlier, it saddens me that many of them think they have to go abroad to succeed.
I commend the committee for recommending that there be a pilot project to make sure we know how to best harness this future and grow it, as we have done so well in our community.
As I said earlier, the high-tech sector employs a younger group of talent compared to workforces like those in government. It is also very diverse. Moreover, its employees make more money than the average worker in other industries.
How about this? Technology employs about 5% of British Columbia's workforce. That is more than forestry, mining, and oil and gas combined. If I said that to most Canadians in other parts of the country, they would scratch their head and say, “That's not what I understand. That's not the image of British Columbia that appears on TV. It's totally different.”
British Columbia has the University of Victoria, Royal Rhodes University, and Camosun College. It has enormous tech innovation centres that are succeeding. It also has what I think is the most important thing, a commitment in our communities to make this happen.
I salute entirely the report that has been provided.
I promised that I would also refer to the Naylor report. What is the Naylor report? David Naylor is the former president of the University of Toronto. He did a remarkable job for Canadians, and I am here to salute him today.
Last year, he chaired Canada's fundamental science review and produced an enormously important report called “Investing in Canada's Future: Strengthening the Foundations of Canadian Research”. That report is, as we might expect, very detailed.
One of the things he recommended, which I think dovetails quite nicely with the recommendations I referred to earlier, is that we create a panel to look at Canada's federal research infrastructure and that the Government of Canada by an act of Parliament create what he calls the national advisory council on research and innovation.
After enormous consultation, the committee thought that we needed such a federal statute to create such a council if we were going to have oversight of the federal research and innovation ecosystems around this country. It is obvious how that dovetails with the recommendations the industry committee made. I commend this Parliament to think about whether that act of Parliament ought to be created. I think it should.
Among the responsibilities of that committee would be to advise the and cabinet on federal spending, as well as broad goals and priorities for research and innovation; to improve the co-ordination and strategic alignment of different elements of federal support for research and innovation; and to evaluate the performance of the extramural research enterprise and so forth and so on.
The report spends an enormous amount of time talking about our proud funding agencies, NSERC, SSHRC, the medical research council, and the funding agencies, but makes very specific recommendations. I am advised that our universities are in broad agreement with the Naylor report, so it would be a win-win for the government to introduce that act of Parliament, and do what Dr. Naylor and his team suggested and get on with the job of harnessing the technology of intellectual property, which I have spoken about and the committee addresses and takes so seriously.
The new economy, the digital economy, is not based on land or money or the resources one normally thinks of, but on information. Technology in a digital economy is harnessing that intellectual property, be it medical research or research into applications on the Internet and the like. If we do not get our hands around how we can preserve and protect that intellectual property, obviously we are not going to thrive in the 21st century. We are not a country anymore of hewers of wood and drawers of water. We are not a country that simply uses the land and the resources provided to us as Canadians as our legacy and our heritage to create a new economy.
Our children are working in jobs many of us do not even understand. My son has a high-tech job that I do not even know what it involves. I am not the only parent in that situation. He does geographic information systems. I do not even know what they are, but all I know is that he is doing well, making money, and staying in Victoria because in our community we have people who do that. It is part of this new economy that I speak of.
However, if we do not have intellectual property rules that are effective in the 21st century and that understand the technological basis of that new economy, as a Canadian public, we are going to be the losers. Every time I see one of those planes going from the airport in Victoria down to the Bay area, which happens a couple of times a day, I do not know whether to laugh or cry. Many times they are going down to get the financing they need to advance the technology, which I am delighted they do. However, many times, they are going down so that people can take up new jobs in the Bay area, and we are losing that opportunity for our children and grandchildren here.
I commend the industry committee for recognizing the urgent need to get our hands around the preservation of intellectual property, the commercialization of the research it generates and, finally, to get jobs for Canadians, high-paying, family-supporting jobs in technology that will sustain the future of our country.
As for what those jobs are, let me talk about my community and the technology sub-sectors in greater Victoria. I do not think people will believe this. These jobs are in software; performance marketing and ad tech; fintech, which is technology for the finance industry; gaming; virtual reality; aerospace; life sciences; biotech; advanced manufacturing; telecom and wireless; ocean sciences and marine technology; technology services; and clean tech. It goes on and on. Again, not every Canadian knows what each of those words means, but they do know when their daughter or son comes home with a big paycheque from something they are working at. They do not even have to know what the word means. I had to look in the dictionary when my son came home and told me he got a job in this field, because I did not even know what it was. That is a bit disconcerting, but that is the new reality many of us here will understand only too well.
I cannot overemphasize the critical importance of the work this industry committee has done for Canadians. Of course, the question then always turns to this side of the House and whether they get it and if they want to keep Canada on track. I support some of the things the government has done with technology development and innovation. I accept that it has done better than the last government, that there is funding required, and that it has made significant investments in this. It would be disingenuous of me not to recognize and salute that. However, intellectual property preservation, boring though it might sound, is at the root of this. The government needs to figure out with us in this place how we can harness it.
Naylor suggested that we have a statute. I think that is a very good idea. Most university professors and presidents with whom I have spoken accept that as a critical first step to do what has to be done. There is lots of work we can do as Canadians to get on with the job.
I salute this report, I salute the committee, and I say, “Let's do it.”
Mr. Speaker, it is my privilege to stand today and speak to this report as well. I know the committee spent a long time doing a study on this.
There is no doubt that the government has a specific role to play in intellectual property. I am an automotive mechanic by trade, and one of the reasons I came here was that I was frustrated, because I often feel that the government gets involved in things that it has no business getting involved in. However, intellectual property is one of the areas in which I think the government definitely has a role to play. I would put it under the honest weights and measures aspect of what the government ought to be doing.
If one has a good idea and develops that idea, one ought to be rewarded for that idea. Often there is a great amount of risk that comes with bringing forward an idea. If the level of risk is there and one is successful in getting that idea brought forward, there should be some reward that comes with that.
I think this is an honourable, righteous, and necessary role for the government to be playing in Canadian society and in the world at large. I know that there are groups in the world that are always on the lookout for good ideas and that try to bring these ideas to market, long before folks here in Canada have the opportunity. Therefore, I am pleased to see that the committee studied this, and I am pleased to see that the report has come out. Overall, the report goes in the right direction on a number of things. What we need to always remember, though, is that necessity is the mother of most invention.
My colleague's point was that when the government starts to pick winners and losers, that is when we end up in an interesting area. I do think the government has a particular role to play when it comes to intellectual property, but it must always be careful to ensure that it does not pick winners and losers. It must set out a framework. It must set out a series of protections, much the same as we protect all other areas of life in Canada. It is the government's role to protect things. However, as the federal government, we should not necessarily be encouraging one area and not another area. We see that, in some respects, when it comes to particular industries. The government picks winners and definitely tries to stifle others. We see it with the aerospace industry, for example. The government will bend over backward to prop up that particular industry and ensure that it is capitalized, and that sort of thing, whereas in the oil patch, we see very little support. In fact, it wants to phase it out, as the has said.
Coming from northern Alberta, I would say that we have seen major advances in the intellectual property that has come to northern Alberta through necessity, essentially. Northern Alberta is a rugged place. The elements are fairly harsh, yet it is a thriving place. We have significant forestry, farming, and oil patch initiatives going on. When it comes to the government's role in all of those things, it is to manage them in a manner that allows the companies and individuals who are operating up there to protect their good ideas.
One of the things I like to talk about that I have a personal connection to is the fracking industry in northern Alberta. Members might be interested to know that to put one hole in the ground and frack it out in an average fracking operation costs about $17 million. The interesting part is that $10 million of that $17 million, more than half the cost, is for the water that is used. It is not necessarily for the water. It is purely for the trucking costs to get the water from where it is produced at one hole over to another hole. There is a huge cost associated just with using the water, because we do not want to use fresh water. We typically use polluted water from other sources.
For example, in Whitecourt, Alberta, the forestry and pulp industries use a bunch of water. At the end of that, they have a slurry that has been spent, they cannot use it anymore, so they sell that water to the oil patch, which pumps it down the holes when they do a frac. A significant amount of water is needed when that happens. They use that water. That water is not lost; it goes down the hole. They use it to break open the rocks at the bottom. Over the course of the next three years, all of that water will come back up.
Basically what has happened is that they keep using the same water over and over again. Once the water comes back up, they ship it over to the next hole and they start fracking at the next hole.
However, a large amount of water is used, and about 70% of it comes back within the first three months. Then it takes about three years for the rest of the water to come back up the hole. There always needs to be a significant volume of water, which is being trucked around from hole to hole as the fracking is done.
Fracking sounds like a harsh word, and a lot of people wonder what actually happens. The best way it has been described is that it is like blowing into a balloon that has a pinprick in it. When the balloon is fully deflated, everything looks normal. As the balloon is blown into, the hole in the balloon gets larger and larger, so someone has to blow faster to keep the balloon expanding until finally a point is reached where someone can blow really fast into a balloon and all the air leaks out of the hole because it keeps getting larger and larger.
That is essentially what happens during a frac. The water is pumped down the hole very fast, and the water squeezes into microscopic cracks in the rock. The water forces those cracks open, and tiny pieces of sand are sent out with the water. When the pressure is released, the water backs up out of the hole and leaves the sand behind. The sand holds the rocks open to allow the natural gas and oil to come back out.
Due to the amount of water that is needed and the cost, and as I said earlier more than half of the cost of a particular hole is just the water, there have been huge innovations in how to reduce the amount of water because of the benefits to it. If the amount of water needed can be reduced, that could mean less trucking, these holes could be produced cheaper, and it is in the best interests of everybody to ensure our water can be used for agriculture, for example.
Just on that point, the vast majority of industrial water use in Alberta is in the agricultural industry. The oil patch only accounts for 1% of all use of industrial water.
My personal connection to that is that my uncle works in the oil patch. He has a company that heats water. The company started out in the building construction industry, melting the frost out of the ground so people could pour basements during the winter. It was kind of an innovative thing that came about in the boom times, in 2004-06, when it could not build houses fast enough. When workers were heating the ground to get the frost out so it could dig a hole to pour the basement, he got the idea to get into the business of heating the ground.
The company then developed a technology that is fairly innovative. It does not use a boiler. It has a different way of heating the water. It has a patent on that, which has served it well. The company has branched into heating for the oil patch. It just started out, as we can imagine, with this large volume of water that is used for fracking, which happens at all times of the year. That cannot be left to freeze. It sits in tanks. If it freezes, then the tanks would rupture, and there would be a real problem.
Then what happened was it started talking with the folks, telling them that if the water was at a different temperature as it went down the hole, maybe less amounts of water could be used. The company has discovered, and has patented this idea as well, that as it does the frac, it actually heats the water up as it goes down the hole. Apparently that makes the water more slippery and it goes down the hole faster. It allows the frac to be done in a shorter amount of time, hence using less water. That, in and of itself, was interesting.
It has caused them to use much less chemical in the water, and it has also reduced the amount of water needed. That is an innovation that is happening in northern Alberta. It is an innovation that is happening just because of necessity, and it is interesting to see.
My hon. colleague from the NDP talked a lot about how the universities are playing a big role in that, and I would say that they are in this case as well. My uncle's company has partnered with the University of Alberta, and they are in constant contact getting the physics and mathematics of it organized. My uncle's company is doing business out in the real world. People often say, “This seems to work, but we do not know why. Can you help us figure out why it works? Are there any tweaks we can make on it?” I would say that our universities play a significant role in this as well.
We often talk about the commercialization aspect, and that is what this entire report is talking about: how we can take those ideas and make them viable in the real world. That is an important aspect, but in its recent rollout on intellectual property, the government missed the whole piece on the first patent.
I was talking with my uncle about that. The first patent was a hurdle to get over. These people had no idea what they were up against. They had not even thought about it. They were just trying to heat up water, and they were not thinking that maybe they were the first people to think of it and perhaps there was a patent. Once they had made it through that hurdle of patenting the first thing, suddenly the next patent was a lot easier. They were thinking, “Hey, this is an idea. Nobody else seems to be doing this. Maybe it is a patentable idea.” Their patents are now being used all over the world. They are operating all over North America, up in Alaska and down in Colorado. They have set up shops in both of those places. That speaks more to the record of the current government in terms of taxation and not championing the oil patch. They are definitely still thriving. They are working in Alberta, but also in the United States.
Recommendation 9 in the report talks about a tool kit for Canadian technology transfer. This is based on the work that has been done in the United Kingdom. I know that the United Kingdom and Canada were built on the same basic framework of the system of law, so the tool box built in the U.K. is definitely something we should look at bringing into Canada.
One thing that is interesting is that oftentimes universities, on the public dime, create a good idea but there is no good mechanism for that good idea, that intellectual property, to be transferred to a corporation or a commercial interest. That is where this tool kit comes in. It would be interesting to look at how that tool kit worked in the U.K., to ensure that we have a good transfer of great ideas from universities into the so-called real world, where they could be used to make all of our lives better. That is probably the thing we all need to remember.
My hon. colleague from the NDP was talking about these jobs that we do not even understand yet. Perhaps we do not necessarily know what his son does on a day-to-day basis, but it is a geology technology that is being used there. It sounds to me as if he is probably involved in mining or something like that, whether it be copper mines, the oil patch, or whatever.
In my opinion, the economy always comes back to food, clothing, and shelter. Those are the three basic necessities for all of humanity. To make all of our lives better, we want to be able to get our food cheaply and make sure that it is healthy. We want to be able to live in a place where we want to live. We want to find shelter and we want to be clothed. All those things drive the economy.
The member's son worked in geology technology. I know that is a big part of northern Alberta. For example, when I was a mechanic, I did an oil change on a customer's truck. He also had a Viper, so I will always remember him as one of the few customers we had with a Dodge Viper. His job was to estimate how much gravel was in a certain gravel bank when there was to be a gravel pit development. He had to estimate what kind of gravel potential was there so that the government could understand what kind of royalty revenue it could anticipate from that project.
One of the things that he used was a drone to take measurements of the land. He said that using this new drone technology allowed him do three or four times more work in a year. The drone in and of itself is very cool, and we have all seen the camera, but it is the software that takes the measurements through the camera that makes it immense. I am sure that this technology as well was being developed in northern Alberta—