Good morning, everyone. I call this meeting to order.
Welcome to meeting number 32 of the House of Commons Standing Committee on Industry, Science and Technology. Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website, and so that you are aware, the webcast will always show the person speaking rather than the entire committee. To ensure an orderly meeting, I'd like to outline a few rules to follow.
Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have a choice at the bottom of your screen of “floor”, “English” or “French”. Please select the language preference now.
I remind you that all comments by members and witnesses should be addressed through the chair, and please wait until I recognize you by name. When you are not speaking, your mike should be on mute, and when it is your turn to speak, please unmute your mike. Please do not speak over each other, as this does not allow for the interpreters to do their important work.
Most importantly, as is my normal practice, I will hold up a yellow card for when you have 30 seconds remaining in your intervention and a red card for when your time for questions has expired. Please keep your screen in gallery view so that you can see the cards when I hold them up. Please respect the time so that all members have a chance to pose their questions.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on February 23, 2021, the House of Commons Standing Committee on Industry, Science and Technology is meeting today to continue it's study on competitiveness in Canada.
I'd now like to welcome our witnesses. Today we have Professor Trevor Tombe, associate professor at the University of Calgary; Mr. Robert Ulicki; Mr. Robert Donald, executive director of the Canadian Council for Aviation and Aerospace; Jim Balsillie, chair of the Council of Canadian Innovators; and Robin Shaban, principal economist at Vivic Research.
Each witness will present for up to five minutes, to be followed by rounds of questions.
We will start with Professor Tombe.
You have the floor for five minutes.
Thank you very much, and it's really my pleasure to be here.
My brief opening comments will focus on how certain barriers to interprovincial trade in Canada may represent material drag on our national productivity, competitiveness and ultimately our economic prosperity. First, to fix ideas it's necessary to appreciate what internal trade costs are, because unlike costs between countries, they are not tariffs. They're not observable in that way. Instead they're countless tens of thousands of individually modest but collectively significant differences in the rules, regulations, standards, certifications and so on, that add costs to businesses operating across provincial boundaries.
Examples abound. In agriculture there are inspection and labelling requirements. For trade in services and a lot of professional services in particular, provincial standards and certifications can prevent customers in one province from accessing the services of a supplier in another. For trade in goods, you have differences in trucking regulations and so on. These are just a small handful of examples, but recent advances in data availability and economic modelling techniques make it possible to measure costs on a broader scale.
For example, Statistics Canada researchers Robby Bemrose, Mark Brown and Jesse Tweedle recently constructed what is perhaps the most sophisticated and robust estimate of interprovincial trade barriers. They found that for manufacturing it adds about 7% to 8% to the cost of shipping from one province to another. Predating their work, Lucas Albrecht,a former University of Calgary graduate student, and I estimated that when you include services, the average cost of trade between provinces is between 8% and potentially as high as 15%.
These may appear modest at first, but they are not. They can inhibit productive producers in one region from expanding and exporting to another. They inhibit consumers' ability to purchase lower-cost goods and services from elsewhere. This matters for productivity, because if you specialize less in areas where you have a comparative advantage, overall productivity can decline. Estimating the size of that effect is not easy of course. It requires a rich model of Canada's economy but that work has been done recently. I and others have developed such models.
In recent work with my University of Calgary colleague, Professor Jennifer Winter, which is forthcoming in the Canadian Journal of Economics this year, we find that internal trade may lower Canada's overall productivity by between 3% and 7%, depending on the measure. Work published through the International Monetary Fund, researchers there and I suggest that liberalizing internal trade in goods alone, just manufacturing, could increase Canadian productivity by nearly 4%. This is large. This represents an increase in Canada's economy by nearly $90 billion per year, over $2,000 per person or $5,000 to $6,000 per household per year.
The results here also suggest that lower-income regions benefit more than higher-income ones. Among the five provinces with the lowest average household, for example, we find that gains there average more than 5% which is significantly more than the overall average.
There's a lot that government can do. A lot of recent reforms have made some progress on this file, notably the Canadian Free Trade Agreement from 2017, but there's much left to do. Continued federal, provincial and territorial co-operation through the various efforts within the Canadian Free Trade Agreement is critical. There is funding needed to increase capacity, for example, to bolster the ability of the CFTA secretariat to work through its growing work plans. That's something we saw yesterday's budget provide a little bit on actually. That can be valuable.
The gold standard may involve provinces moving unilaterally, potentially. Alberta, for example, moved in the summer of 2019 to drop many of its self-imposed exemptions under the CFTA. I estimate that roughly two-thirds of the gains from lower internal trade barriers for a province can be achieved by that province moving unilaterally and recognizing the regulations and standards that prevail in another province as automatically compliant with respect to its own.
I see the 30-second notice. I'll end by saying that of course there are some valid objectives of regulations that apply in one province and another, and so the goal, I think, ought to be, to think about regulations that don't achieve a very specific and well-defined public policy objective and otherwise harmonizing, smoothing out the differences that prevail.
Thank you very much.
My name is Robert Ulicki, and I will outline the complex morass of regulations, committees, expert reports, tribunals and licensing requirements I am navigating to create a day care.
In July 2016 my wife and I purchased a mixed-use property located in Cabbagetown, a residential neighbourhood in downtown Toronto that began gentrifying in the 1970s. It is an ideal location for a day care as it is near families, parks, bicycle infrastructure and public transit.
In May 2017 we applied for a zoning certificate. The city responded four months later telling us that we needed site plan approval that would cost around $100,000. Thankfully, the city was wrong about the application of its own policies but indicated that variances to the zoning bylaw would be required. We applied to a committee of five people for the variances to the zoning. They denied us. We appealed that decision to a municipal tribunal. From the application to the committee to a final decision from the tribunal, it took three and a half years and cost $100,000 for variances to a zoning bylaw.
Why did it take so long? First, we were forced to respond to opposition from a handful of wealthy and connected neighbours who hired a Bay Street law firm, a major engineering firm and a senior land use planner to argue that day care did not belong in their midst.
Second, the local councillor at the time sided with the loudest and the angriest neighbours and asked the city to pay for lawyers and hire an outside traffic consultant to further oppose us before this tribunal. Initially, two days were set aside for the hearing which commenced in August 2018. Well, two days turned into six, then eight, then 12 and, finally, 14 days over two years. Fortunately, the decision was in our favour.
When you cut through all the drama and the posturing, the primary issue was setting aside parking spaces on a public road to facilitate [Technical difficulty—Editor] and picking up their children. Every home in the vicinity has laneway parking, but some residents either opt to landscape the rear of their backyard or own two cars and want a cheap spot to park on the street. They pay a paltry 55¢ per day, or $200 per year, for the privilege to park 24-7 on public roads in downtown Toronto. Residents tried to fiercely guard this privilege with the encouragement of the councillor at the time. All this happened when there's a genuine lack of day care in the city and a multitude of policies aimed at making Toronto less reliant on cars.
You would think that it ended there. No. Some residents and the city did not like the tribunal's decision and asked the appeal body to review it, so we got back into the queue. We waited another five months for a hearing and received a decision in January 2021. Once again, we prevailed on the simple argument that caring for kids trumps parking cars.
Where do we stand today? In some ways we are closer, but still far, as we have several layers to cut through. The appeal body that approved the application does not have the authority to amend street parking rules; only city council does. Yes, the same city that sent the lawyer and the traffic engineer to fight us will decide if we can operate. In the end, approving our application is a political decision on parking.
We have hope. The former city councillor who opposed the application lost in the last municipal election. The new councillor, Kristyn Wong-Tam, is a fierce advocate for families and day cares. With the benefit of a 32-page decision that unequivocally supports our application, we remain hopeful that the concerns of our opponents will be laid to rest.
Since the decision, the city's transportation department is prepared to recommend a provision of intermittent parking spaces for pickup and drop-off. We can now hope that logic, fairness, evidence and policies that support day cares more than street parking prevail before city council.
Thank you very much, Madam Chair.
Thank you to the committee for inviting me back. Some of you may recall that in my appearance in March, I spoke about the critical shortage of skilled workers and the lack of training capacity in Canada to produce the graduates we need.
I've been asked today to expand on my comments about competency-based training and accreditation, and what the government can do in the aerospace sector to increase competitiveness and reduce the regulatory burden and eliminate red tape.
As a quick reminder, the pandemic has provided a temporary reprieve from the critical labour shortage for some sectors of our industry, but the shortages have already started to return. Canada's biggest competitive advantage in a global competition is our skilled workforce, but if we don't have the necessary workforce, the jobs will go to other jurisdictions and never return.
The pandemic has resulted in a loss of approximately 35% of our prior workforce due to those being laid off, choosing to retire or to seek employment in other fields. As the recovery takes hold, there will be a surge in demand for skilled labour, which cannot be met from simply trying to rehire those laid off.
We have a lack of training capacity. Canadian colleges do not have the capacity to meet anywhere near the demand from our industry. Even prior to the pandemic, they were only producing 25% of the needed graduates, despite all of them, except ÉNA in Montreal, having wait-lists.
The pandemic has delayed graduations and reduced capacity by approximately 35%. I don't believe it's realistic to expect the government will fund expansion of capacity at bricks and mortar institutions, so we need alternatives, new ways of training and eliminating the red tape associated with hiring foreign workers.
We have a lack of training facilities, not just capacity. In Yukon and the territories, there are no aviation programs. In Quebec, Manitoba, Alberta and Saskatchewan, there's only one college in each province. In the four Atlantic provinces, there are only two.
Turning to the competency-based accreditation and what government can do to help our sector, new ways of training are needed. I spoke at length about Transport Canada last time. There are three issues with Transport Canada regulations for our sector.
First, there's competency-based training versus hours. The benefits of competency-based training are well documented. Despite that, Transport Canada only recognizes hours in class. Transport Canada dictates that colleges must provide 1,800 hours of instruction for maintenance and avionics and 1,000 hours for structures. If students finish a lab assignment in one hour instead of the three allocated by Transport Canada, they have to sit there for two hours anyway and just kill time, because the professor has to certify that they spent that much time in class. Transport Canada says it's too hard. We've spoken to them, but they said it was too hard to move to competency-based. It is not.
The second point is online and blended learning. As I alluded to last time, prior to the pandemic, Transport Canada did not allow colleges to use online or blended learning. As a result of the pandemic, it has now allowed that, but only until December 31 of this year. Like all sectors of society, the air transport sector has experienced rapid technological advancements. Artificial intelligence, machine learning, augmented and virtual reality training are all dramatically impacting the way training can be delivered. Colleges want to use these new ways of training, but TC regulations prevent that.
The third point refers to outdated curricula. Transport Canada-approved colleges are required to follow woefully outdated curricula. Their curricula hasn't been updated in over 20 years. They still require colleges to teach students how to fix cloth wings, wood structures, and insist on repairing components that are no longer in use in current aircraft. Failure to update the curricula will leave the Canadian aviation and aerospace workforce at a distinct disadvantage. Current regulations don't meet the requirements of new and emerging technologies, such as glass cockpits and composites. If we don't act quickly, businesses will not choose Canada, and they'll go where they can to get these essential services for the modern industry.
The hours-based programs, together with mandatory content, prevent colleges from adapting and providing more relevant and effective ways of training. Industry needs more accessible, efficient, effective and targeted ways of training, both from colleges, but also given the lack of capacity for training in the workplace....
I have run out of time. I will leave it there.
Thank you, Madam Chair.
I congratulate committee members and staff for their excellent report on the Investment Canada Act and its recommendations for a needed reorientation of Canada's economic strategies.
My remarks today will build on that direction to improve Canada's competitiveness. I will comment on three issues: the meaning of competitiveness in the intangibles economy; measuring our economy in a way that captures prosperity to promote better management; and developing institutional capacity in our public sector to support policy development.
In the traditional economy, competitive was synonymous with low cost. To attract multinational investors, companies cut red tape, offered land at concessional rates, provided tax benefits, etc., knowing this economic activity would generate a fair return to the host. However, as economic returns increasingly shifted to owners of IP, and more recently data, this strategy amounted to capturing the low-rent district in the global economy—equivalent to competitively priced low-income jobs in an Amazon fulfillment centre, while the highly profitable data-driven rents accrued to Jeff Bezos.
Competitiveness in the intangibles economy means the ability to capture economic rents that flow to IP owners and to those who control data assets that also power rent capture. Canada only had policies for the traditional production-based economy, which is shrinking in importance as the digital transformation continues to transform all industries. For Canada to compete in the 21st century global economy, we need to develop policy frameworks that enable our companies to capture their fair share of economic rents in the intangibles economy.
According to the IMF, Canada's pre-pandemic GDP per capita was 3% lower than 2010 levels, while the U.S. experienced a 35% increase over the same period due to the alignment of its economic policy strategies with contemporary economic realities. GDP per capita is no longer a sufficient metric for prosperity, because it fails to capture earnings on assets abroad and the accrual of value in asset holdings. This gap would certainly be even wider if we included these wealth effects.
Canada's deficit on IP payments and receipts is widening at an alarming rate. This deficit would be larger if the value of net flows of data were included.
I offer one recommendation that can foundationally help improve Canada's competitiveness. Rebuild the Economic Council of Canada to create in-house capacity for the analysis of the contemporary economy. The nature of today's global economy requires an unprecedented amount of horizontal integration, analytical depth and rapid response to deal with the accelerated pace of innovation and the powerful feedback and spillovers that emerge in our network society. This is particularly critical for the data-driven marketplace which features economies of scope and scale alongside information asymmetries that together give rise to monopolies which are reducing the rate of entrepreneurship, innovation and business dynamism.
Proper regulation of the IP and data-driven economy can restore competitive market dynamism, which is why IP and data giants are under investigation for antitrust behaviour by U.S. federal and state authorities, the EU and others.
A revived economic council would have several core functions: develop the expertise to measure and manage the intangibles economy, including the capacity to develop both intellectual property and data governance strategies; serve as a centralized resource to support line department and expertly assess policy decision spillovers on Canada's intangible assets; provide strategic focus for Canadian researchers who have deep expertise on many of these issues, but whose work may not necessarily reflect governance priorities.
With the federal government budget released yesterday, I submit that redistribution of a fixed economic pie or prudent fiscal anchors are insufficient without a strategy to generate new wealth. Canada urgently needs growth strategies attuned to contemporary realities.
The charts and statistics included in my presentation are irrefutable. As successful innovation companies and countries turn their focus to strategically generating valuable IP and, in the last decade, to controlling valuable data to accrue wealth, Canada missed these shifts and as a result became a large IP and data services importer.
IP and data have different features than tangible goods. They behave differently in a marketplace and therefore require different tool kits for both companies and policy-makers. A properly built economic council would lead in the necessary intellectual revival of our policy community and help government rebuild critical capacity that favours national interests, including advancing our competitiveness.
I thank you for your time today.
Thank you, Madam Chair.
Thank you to the committee. I'm happy to be here again to testify.
My name is Robin Shaban, and I am the principal economist and co-founder of Vivic Research. I am also a Ph.D. candidate at Carleton University, where I am studying Canadian competition law.
At a previous hearing, Mr. Erskine-Smith asked that I submit a briefing note to the committee outlining changes that I think should be made to the Competition Act. I will submit this brief in the coming days. In my opening remarks, I will outline some reforms in the brief.
In past meetings the committee has heard about the need for greater independence for the Competition Bureau. Currently, the bureau is nested within ISED. Enforcement actions of the bureau are not subject to ministerial review or approval. However, the commissioner reports to the deputy minister for non-enforcement matters, meaning that the bureau does not have the authority to speak openly about many broad issues of competition policy. This arrangement undermines transparency and is not consistent with our international peers. Therefore, my first proposal is to make changes to the structure of the Competition Bureau so that the commissioner is no longer answerable to the deputy minister of ISED.
Second, the bureau should be given the ability to compel information from corporations to undertake market studies and evaluate the effectiveness of its enforcement decisions. Currently, the bureau can only collect information from corporations during an investigation. In the U.S., for example, the Federal Trade Commission has broad powers to compel information outside an investigation, and it has used these powers to do studies that are available to the public.
Third, as we have discussed before, Parliament should abolish the efficiencies defence on the grounds that it brings us out of alignment with major competition laws elsewhere and is inconsistent with equitable economic growth. Abolishing the efficiencies defence does not mean that the Competition Act will be ineffective at promoting efficiency. Rather, it means that it will prioritize efficiencies that directly benefit all Canadians, not just corporations.
Fourth, some have highlighted that the bureau lacks sufficient resources. An additional way to resolve the bureau's budgetary pressures is to revise the act to make enforcement more efficient.
For example, Canada's system for clearing mergers is complex and more restrictive than that of the U.S. These conditions mean that officers must do more analysis on mergers that are likely not going to raise competition issues, because the risk of overlooking a harmful merger is higher under our system. Aligning our merger clearance system with that of the U.S. could create efficiencies in the bureau, making more resources available for high-impact work.
Another area where our competition policy severely lacks is enforcement in labour markets. Based on my own search, there is no publicly available information that suggests the bureau has ever investigated potential anti-competitive behaviour against workers. I believe there are two reasons for this oversight.
First, our law is inadequate. For example, wage-fixing agreements do not fall under criminal provisions of the Competition Act, unlike in the U.S. Instead, these cases must be taken under civil provisions of the act. This means that the legal test the bureau needs to meet to build a successful case is significantly higher, and this reduces the likelihood of success, accounting for differences between civil and criminal standards of proof. To address this issue, the 2009 revisions to the act with regard to section 45 need to be rolled back.
Second, I find no evidence that the bureau has assessed a merger's potential anti-competitive impact on jobs, even though it could. In this way, the bureau is not fully enforcing the law. This is a major oversight, given the growing prevalence of gig work and other types of employment not covered under traditional labour laws. To address this issue, the bureau should develop specific merger enforcement guidelines that outline how it plans to assess a merger's impact on wages, job quality and job availability.
My last proposal is not a change to the act but rather a change to our approach to competition policy. The logic of our competition law is based primarily on theoretical economic models developed between the 1960s and the 1980s. Research methods in economics have evolved substantially since then, allowing us to create policy based on empirical evidence rather than theoretical models. As part of any reform of the Competition Act, analysts should be collecting and understanding empirical research to inform decision-making. One way to do this could be to reinstate the Economic Council of Canada.
In our conversation today, I'm happy to speak about the proposals outlined here and to answer any questions committee members may have to the best of my ability.
Thank you very much.
Mr. Ulicki, this is good timing, your being here. The government tells us it wants to charge taxpayers $9 billion for day cares. They believe that the best way to provide daycare is to take money from parents and bring it up to the federal government, which will give it to the provincial government, which will give it to the municipal government, which will give it to agencies that deliver day care spaces.
You had another idea, which was just to build a day care and provide 80 kids with a place to go and be cared for. Of course, the obstacles you faced were municipal, but those same municipal leaders are constantly asking for federal tax dollars. That's why they have elevated this to the federal level. I note that there were roughly 80 millionaires who stood up and opposed your proposed day care. You were going to provide 80 day care spaces. So you had one millionaire for every child, one millionaire blocking every kid, from having a day care space. That is quite an interesting ratio.
One of those privileged elites, of course, was Tiff Macklem, the head of the Bank of Canada. He has been a big rhetorical supporter of government day cares, and yet he and his family objected, saying that your day care would have taken away the charm of the neighbourhood and that it would even have required garbage trucks to come to pick up the waste that would be produced by the day care. I don't know who picks up their garbage. Perhaps Mr. Macklem could testify about how he disposes of his waste.
How much money did you have to spend on government already in your efforts to provide these 80 kids with a day care space?
The question is not how much I have spent on government. The spend on government is with respect to paying for permits, etc. The primary cost is the carrying cost of having a building sit vacant for effectively five years now. That includes interest, heat, light and power, property taxes, utilities, insurance, etc. Those costs are approximately $100,000 per year.
May I also I point out that because it's a project that you're developing, as per our wonderful CRA, I do not have the ability to deduct those costs. I actually have to capitalize them. I have to make $200,000 in order to have $100,000, because I pay in after-tax dollars, and I get to capitalize it. Then, once it's completed, if it's completed, the deduction is 4% per year. Basically, with all these carrying costs, etc., I get to deduct at 4% per year into infinity.
Right. So they want the spaces for themselves instead of for the kids.
Mr. Robert Ulicki: Absolutely.
Hon. Pierre Poilievre: Well, we'll see. might be very concerned about this, because she says she is going to create all of these new day cares with her $9-billion-a-year taxpayer-funded plan. I don't know if she'll be able to get them approved by city councils if we have the same experience as you've had.
You know, I have a hard time understanding why someone like you would go through all of this torment. You're obviously a successful businessman. You've devoted almost half a decade of your life and half a million of your dollars to try to do something good for 80 kids. All you've had is a bunch of self-serving gatekeepers protecting their own backyards. One of them actually complained that the danger was that there would be kids making too much noise next to her house. She signed her submission to the city with “Ph.D.”, so I gather she is busy thinking big thoughts in her house while she doesn't want to be interrupted by little munchkins running by, singing songs and skipping their way to the park.
That's how crazy it's gotten in this country. One day I hope people rise up—consumers, workers and entrepreneurs like you—against this gatekeeper economy. Thank you for telling your story and for persisting through all of this bureaucracy.
Madam Chair, how much time do I have left?
Thank you, Madam Chair.
I'd like to thank all of our witnesses for being here today. There's lots of interesting content.
Mr. Tombe, you're the first person I'll be asking questions of.
You spoke a lot about interprovincial trade and the regulations that create barriers to companies from doing this type of trade. You mentioned that basically there's an added cost of between 7% and 15% for many of the different industries that do wish to do this kind of business. Obviously, a lot of these regulations—all of them—are imposed by provinces.
We are the federal INDU committee, so I'm wondering if you could give us any suggestions as to what role we can play in helping provinces move towards this direction in making sure that Canadian companies have less red tape with regards to interprovincial trade.
Thank you for the excellent question.
You're right to note that the source of trade frictions in Canada between provinces stems from differences between one jurisdiction and another in terms of the rules, regulations, standards and so on that a business needs to abide by. Ultimately, that does mean that provinces need to act to smooth out those differences. That's what the Canadian Free Trade Agreement is meant to do.
Currently, through the regulatory co-operation table, it is a slow but important process of identifying barriers, negotiating harmonization agreements or mutual recognition agreements and then implementing them. The federal government can play a role there, first by ensuring that federal regulations that directly affect interprovincial trade are not adding to burdens that businesses face.
A recent example where some progress has been made is agricultural inspection. If you're shipping food products from one province to another, it needs to be inspected by the provincial government agencies and the federal government, potentially adding three different inspection regimes to a single transaction. Having the feds step back and at least trust in the provincial inspection agencies may make sense in some cases.
More broadly, the Canadian government can ensure that the capacity exists within the free trade agreement so that working through the regulatory differences line by line can be done expeditiously. That does take staff in the secretariat. It does mean providing assistance to provinces, especially smaller provinces that might lack capacity themselves.
The federal government can also play a role in ensuring that this issue remains at the top of the national agenda in discussions between federal, provincial and territorial leaders.
Well, the great thing about intellectual property is that it favours smaller countries that are focused, whether you're pharmaceuticals in Switzerland, micro-electronics in Singapore or gaming and telecommunications in Finland. The government has a central role in this, because it creates the framework.
I have a list of things in the digital policy infrastructure. In my business around the world, in about the 150 countries that I did business in, the successful countries focused on the right-hand side of that chart in making sure that they all operate together. If we don't work in alignment with our companies, our national champions, and understand that our companies are going against national champions in other parts of the world.... It's a central job, whether it's how we do research funding or how we do foreign direct investment. For instance, if you look at the SIF program that got topped up and at the superclusters, half of that money went to foreign companies because we think it's a job strategy, which is a race to the bottom.
Every successful economy focuses on generating those assets for their domestic economy, where they get the rent wealth effects but they also get the security effects of that. It's an orientation and it's an expertise issue.
Thank you, Madam Chair.
Thank you to our guests for being here.
My first question is for you, Ms. Shaban.
I don't know if you saw the budget, but there's finally some increase to the Competition Bureau. That will be my first question. I know it's super early, but what do you believe might be the focus if the Competition Bureau has to deal with some priorities but has a little more resources right now?
I know that you used to work there ages ago, but perhaps you could give us a bit of a glimmer as to what we can expect with some of the resources that are coming. What would you say might be the priorities?
Yes, I think that's a really valid question.
My next step for understanding that would be to understand how the European Commission, for example, fits within the broader EU, or how the Federal Trade Commission or the Department of Justice in the United States fits within that bureaucracy. I recognize that those organizations are hived off from the broader government. They're not government departments. They are separate agencies.
As to how that would play out within our government structure, I'm still unclear on that as well. Now that I know you're thinking about that, I'm going to make a note of it and do my best to address that in the briefing note.
It would be great to get your ideas.
I have a couple of models that we're looking at too. I'm looking for input and analysis. It's definitely possible. It's just a matter of how we want to do it.
I'm going to switch over to Mr. Balsillie.
I'm really glad that you brought up the issue of Amazon as an example. People see it as innovation because they call a warehouse a fulfillment centre. I know they get upset with me when I tell them it's a fancy....
I come from just-in-time delivery in the auto industry, and we've been doing these types of logistics for 30 to 40 years. Giving it a different name isn't necessarily innovation. It's fine. It can move stuff quicker, can be more autonomous and so forth, but I don't see that as innovation, quite frankly.
With regard to your suggestion, what would be the mechanics to get the national strategy together with regard to the Economic Council of Canada? What are the mechanics that are necessary to actually lift it up?
I think you need to resurrect it and house it either independently or at the most senior level reporting into the Prime Minister's Office and then the PCO, or part of that. It's so important that we build this expertise.
If I may, I'm hearing a lot of comments on industrial strategy. We've had industrial strategies for decades in Canada. We spend lots of money on superclusters, on the strategic innovation fund, and those have been topped up. We have to understand that this is not about industrial strategy. This is about appreciating the role of government in an intangible economy. You need to house a very expert zone that makes sure that we actually prevail in this.
I'm not talking about more money or less money. We're first world in our inputs but third world in our outcomes. Whether this is for $100 million or $1 billion or $10 billion, this is about changing our outcome. It has to be a place that guides all of these decisions at the most senior level, and it has to be experts. It has to interact with global experts, domestic experts in this, or we will find that we don't get the returns for the money we spend.
We've invested [Technical difficulty—Editor] for decades, yet we keep getting shorter and shorter returns, which is Einstein's definition of insanity. It's the approach that's our issue.
Thank you, Madam Chair, and thank you to the witnesses for being with us today.
My first question is going to be for Ms. Shaban.
Thank you for being here again. I was able to read the opinion piece that you and Ms. Bednar submitted to the National Post. I found it an interesting point where you talked about the updating of our competition laws can prove to be a double-edged sword. It's a fine kind of balancing act that we're trying to do.
You said that with anything we're trying to do, especially with our digital economy, you want to allow for growth and scale-up of our small start-ups but without restricting competition. That's the fine balancing act.
I look forward to your brief. I am wondering if you had any more comments on that. You came in previously to talk about efficiencies and that notion. However, we've had larger operators come in to talk about the need to scale, and scale is important and size matters.
How do we finally balance that to protect not only these companies that we want to engender to grow but also the consumers ultimately?
There are two facets to what you're getting at. The first is a knowledge element. We are at a point in economic research where we are trying to understand and grapple with the new digital economy and what that actually means.
As Jim talked about before, the digital economy is inherently different from the commodity economy, so we need to understand what that actually means for competition, and how to create laws that best engage in that sphere. That's the first element, and it points to the fact there are a lot of unknowns.
A second element is revisiting laws that are clearly inequitable. As I said in my opening remarks, we can have a law that promotes efficiency, that allows businesses to get big in order to compete internationally without creating brutal trade-offs between consumers and businesses. Having elements like the efficiencies defence in there clearly undermines that goal.
The core theme is to recognize that competition and policy is inherently political. We're talking about who's going to get what, who is going to be carrying the responsibility as we are monitoring and policing competition in Canada.
I don't have a lot of concrete answers, because these questions are going to require really deep reflection, from a research standpoint and from a political and philosophical standpoint.
Thank you. We look forward to receiving your brief when it comes in.
Mr. Donald, I'd like to welcome you back and thank you for your presentation. I was reviewing my notes. You mentioned the loss of 35% of the workforce. You said that as the surge of demand comes back post-COVID, we're not going to be able to meet that. You talked about colleges only being able to fulfill about 25% of the requirements that industry needs.
My question is based on one of the comments you made about the outdated curricula. How do we go about having that changed and updated, so that we can start training those new employees of the future?
I'll also talk about the credential assessment process. Could you talk about the curricula process? What's involved with that and getting that updated?
Transport Canada has said numerous times that they're going to do this, that they recognize the deficiencies, but they don't have the resources.
Six months ago they told a group of us, including me and Colleges and Institutes Canada, that they were going to get something out in the fall, and they haven't done it. It's a question of resources for them, but they need to speak to industry about what is needed in that program.
They need to stop micromanaging. They don't need to detail the entire list of what needs to be taught. They need to assess competence when students are coming out, but it's a fallacy for them to dictate every course and every task that has to be taught at colleges. They should talk to the industry and simplify the process.
In the U.S., the FAA is getting out of the business of dictating the curricula. Transport Canada might consider that.
I hope that we will see more progress on this, because this is truly critical, as you have rightly pointed out.
In the interest of time, I will go to Ms. Shaban, please.
Ms. Shaban, thank you for your testimony. Again, you highlighted a number of different issues that I think this committee should consider for the purposes of its final report. One of the things you spoke of was that very little enforcement was spearheaded by the Competition Bureau.
You have previously asked for more funding for the Competition Bureau. This has been an ongoing issue since 2010, when the Competition Bureau did not have the necessary resources. Could I have your reaction to yesterday's news in the budget that the Competition Bureau will be receiving an additional $96 million over the span of the next five years? In particular—
Thank you for your question.
The most important thing is education. We need to teach our policy community and our entrepreneurs, and all the people in the organizations, how it works so they can take their fantastic ideas and own them or generate the intellectual property for them so they can command the rents. Alongside that, make sure all of your other programs—your university research funding, your global trade agreements, and so on—insert the kind of rules that advantage your companies, because that's exactly what other countries do to us.
When you look at NAFTA, it has a million words but you will not find the words “free trade” in the agreement. Their companies simply created the words to advance their profits in intangibles by foisting them on other countries.
This is the nature of the world. It's very sharp-elbowed, very rivalrous. It's not a very co-operative system anymore. The road is going to be bumpy for some time on these things, so we have to get ready to contend in this new way.
Well, there are many things.
In a sense, the ideas economy, the intangibles economy, works opposite to the tangible economy, so it's actually about creating regulations that favour you.
When we hear people like Robin Shaban speak, we know we have to look after the power of our own companies by how we run our Competition Bureau. We have to look at the power of our own citizens and companies for how we regulate data in our privacy economy, how we set standards, how we do trade agreements and how we do research funding.
It's really about programs that focus on what the gain is, which is generating the assets that determine our prosperity and our security. It's a totally different role for government. This is, frankly, what's been missing in our approach for the last 25-plus years. It's why we've faded in these regards, but it can be fixed.
Thank you, Madam Chair.
I'm going to follow up with Mr. Balsillie.
This is with regard to your experience with the U.S. Business Council and the Business Council of Canada. I'm vice-chair of the Canada-United States Inter-Parliamentary Group. Some members here have been part of the delegations where we lobby the U.S. Congress and Senate. It's a bipartisan thing for Canada. In fact, it involves members of our Parliament and our Senate. It's been effective in many respects.
One of the things that I don't think we quite grasp over here is that there's always a sense of free trade, as you mentioned, or a free market economy. I've never seen that in my years of being elected. All we have right now is buy American, but the buy American act before that, the Jones Act, is a whole series of trade agreements that favour the United States.
Is this something that, as well as the Economic Council of Canada would give advice on how to deal with some of these things? We just finished our lobby to Congress and Senate a few weeks back. Even the strong supporters there—being American, they are elected officials—who have a lot of empathy don't seem to have any traction whatsoever on giving Canada an exemption from buy American, which we've had in the past.
What's your sense of these elements? Does this tie into what you're proposing as well?
Yes, it does. The world has changed to one that's more rivalrous rather than co-operative.
In the tangible economy, when you sign a free trade agreement and get rid of friction, everybody wins. However, the ideas economy is based on the principle of friction. They're always creating ways to extract rents. Yes, it absolutely is one that should help us.
It's much harder to create barriers for a highly value-added economy. It's hard to stop a product. It's hard to stop technology products, value-added automotive products or pharmaceutical products, but when it's commodities, it's much easier to create trouble.
On your previous question about how to set up this council and deciding on the kind of roles, if it is of interest to you or the committee, I'd be more than happy to create a paper that summarizes some of the approaches for that.
We have to understand that the world has changed. We're in much greater need of sovereign approaches than we were 30 years ago. The world has changed in the last 25 years.
Thank you very much, Madam Chair.
It's great to have all the witnesses here this morning.
Mr. Balsillie, some of the things you mentioned earlier were that we are first world as far as income is concerned, but we are third world as far as our outcome is concerned. We heard earlier that a bunch of money is going to be allocated to different potential projects to help out as far as industry issues are concerned, but you also indicated lots of money but poor results. The other thing that you mentioned on our research funding with great fanfare was that the superclusters are a great idea, but of course, so much of the intellectual property and the main focus go to other countries.
I know that in the past you've made comments about how we seem to be losing our place. I'm wondering if you can comment on some of those issues right away.
It's really just a set, a patchwork of prior approaches, but with more money. When you look at the superclusters, they were set up with no idea, data or strategies, without the governance set up, and then they started to try to fix that as they were rolling. When we did our SIF program, half the money went to foreign companies. Again, if it's a traditional production economy, you count on the positive spillovers of those partnerships. In the ideas economy, all we're doing is making other countries rich, impoverishing Canada.
I don't think we have an innovation strategy. These are job strategies, but they're low-quality jobs. It's a race to the bottom. If we had a proper lens of expertise, we would recraft these programs.
The government has a central role in this. I do believe in investing in these things, but I would like to see us get $10 out of our $1, not 10¢.
Thank you. I think that's an important aspect.
In the past, Canada has designed our energy prosperity and sovereignty. We created innovative hydroelectric projects. We developed transformative technology in nuclear power, oil and gas extraction, and so on. According to the 2020 Bloomberg innovation index, Canada fell to 22nd place. This would seem to indicate that somehow we've abandoned the concept of those nation-building ideas, which we've been so good at in the past.
Of course Mr. Balsillie, you've given previous testimony that I think is important for us to look at, as far as protecting intellectual property and data is concerned. Could you perhaps outline some of the factors that you feel we could use to correct some of those issues over the near term and the long term?
For sure we have to fix the Competition Bureau. You've heard Robin Shaban talk about that. We absolutely need proper privacy regulations to control data. Bill , I've written, is woefully inadequate in that it's written to favour Silicon Valley, not Canada. I know that the has responded to approach universities on guidelines for research funding. I don't know why we spend taxpayer money to make Huawei and China richer and more secure at the expense of Canada's security and prosperity.
It's up and down the line. Look at the right-hand side of the chart I showed you. Countries have been doing each one of these items for a changed economy for 25 to 30 years. The most important message I can leave you with today is we need to understand that the role of the government changed 25 years ago. This is not about industrial strategy. This is the role of the government. How do we build that role?
That's why I talk about this economic council. That's a place where we can build the expertise. We haven't built the expertise. You can spend all the money, but if you don't have the expertise to perform it well—whether it's competition, research funding, the Privacy Commissioner; whether they're standards; “trade agreements” which are mega-regulatory agreements—until we understand the role and the focus and the technocracy of it, we're just going to be making foreign countries richer and more secure on Canadian taxpayer funds. That erosion I showed you in that chart is going to continue because this rate of change is accelerating.
I stress that it can be fixed. This is an optimistic story. We have lots of expertise. We can reverse this course, but we have to understand it's an issue.
Yes. My only thought on that is that it's really important for Parliament to think about what the role of the Competition Bureau is going to be if private right of action is permitted.
Right now, competition law in Canada is not about advancing public interests. That isn't a philosophy that's ingrained in the legislation, and there aren't a lot of aspects of the act that allow the bureau to take on cases for broader public interest such as we see in other jurisdictions. This is evidenced by the fact that there's a real schism between competition policy and consumer protection, whereas in many places, these two policy areas are intertwined and actually undertaken by the same agency.
To wrap up quickly, I want to make the point that I think it's important that if we're going to open up private access to the tribunal, the bureau should be committed to still taking on cases and the private—
Jim, you and I have spoken a number of times on IP strategies. When I read yesterday's budget, I feel as though maybe your comments are being heeded in some respects and your advocacy is being listened to.
I read that there's going to be a program to help accelerators, incubators, provide start-ups with access to expert IP services and that IRAP will provide high-growth firms with access to expert IP services. Then there was one line, but it wasn't expounded upon in a serious way, which said that a strategic IP program review will be launched which will do a broad assessment of IP “provisions in Canada's innovation and science programming” to “make sure Canada and Canadians fully benefit from innovations and intellectual property.”
I know it was one line relating to strategic IP program review, but if developed in a fulsome way, it would get at some of the concerns you're talking about, including that the superclusters program or other government financing isn't really considering IP in a serious way. Do you think there's reason to be optimistic when you consider these provisions?
I do 100%. I give real credit to the acknowledgement, understanding that this should have been done 30 years ago, so that's on both parties, but absolutely this is very encouraging. My principal concern now is how we do it, because if we do it wrong, it won't work.
I will say—this is an associated thing—that there was talk of a data commissioner, which I find very, very troubling, because if they put this into a little box, that would compromise the role of the Privacy Commissioner, and yet it's not integrated as a crosscutting thing. It really says to me that this all goes to the expertise and the implementation, but absolutely, the direction on IP is very, very positive. Let's make sure that we have the experts implementing it and that we build the capacity in the civil service to do it in a crosscutting fashion. Yes, it's very positive.
Thank you, Madam Chair.
Thank you to all the witnesses.
Ms. Shaban, I hope you go into politics, and hopefully, under the right colours, not to put too fine a point on it. I find you are very smart, and your comments are very informative. Madam Chair, as I'm new to the committee, I don't know if I'm allowed to recruit. In any event, we need women like you in politics, Ms. Shaban. I find what you are telling us about this to be very instructive. I will stop there for now and come back to it if I have time.
Mr. Ehsassi, I take issue with what you said about Mr. Ulicki. His presence today is just as relevant, if not more so, than any other witness, if you ask me. It is not because he has a direct relationship with the federal government, but rather because his relationship with it is indirect. After all, the provinces and municipalities are creations of Canadian politics writ large.
Mr. Ulicki, if you spoke French, I would tell you to come to Quebec, because we need people who want to open daycares, and it's probably much less complicated than in Toronto.
I have a quick question, for you, Mr. Ulicki.
Did you invest any more money, other than the half a million dollars that you said you lost earlier? Had you started construction on your daycare centre before you had all those permits?
Thank you very much, Madam Chair, and thank you to all the witnesses. It's certainly been a very wide-ranging discussion this morning.
I'm also on the transport committee, so my first question is for Mr. Donald, in relation to our thriving aviation and aerospace industries, as they certainly were prior to the pandemic and hopefully will be again.
Mr. Donald, you've made it very clear that you feel that the curriculum is outdated in terms of training all the workers that we need in the aviation and aerospace industries. If for a moment you could assume that finally Transport Canada puts that together for you, and being aware that in our budget yesterday there was an announcement of some $721 million over two years for some 100,000 job opportunities for the workforce of tomorrow, how would you, in a practical sense, want to see that money allocated specifically to the aviation and aerospace industries?
Thank you for the question.
Of the two programs the government has run in the past through ESDC, one's ongoing, the student work placement program. Those have been hugely beneficial for the industry. CCAA alone has put over 1,000 students into the workforce, and a high number of them continue to be employed after they graduate.
ESDC used to have a program called career focus, to provide incentives to employers to hire graduates. The work-integrated learning is for students. We'd like to see a reintroduction of the career focus program, to give employers an incentive to hire and train new workers who, again, are a great asset to the industry.
Does that respond to your question, Ms. Jaczek?
I hope that those comments will be clearly picked up by our analysts, because I think this is the way to get things done. As the federal government, obviously, it is our role to make major commitments, but if we don't see results on the ground, it might be for naught.
On that sort of practical topic, Professor Tombe, you alluded to each province having its own regulatory colleges and so on. I have a health care background, so when you referred to different regulations in terms of, say, the scope of practice of dental hygienists or any other of the health professions, I totally agree with you that it doesn't seem to make any sense. Why on earth wouldn't we collaborate? Of course, we're dealing with human nature, however. Everyone basically wants to keep their own control over their particular area.
How do we get beyond that particular barrier?
That's a very good question.
What places like Germany, South Korea and Singapore have done is integrate things like their IP expertise and their data governance with the research funding, and they stay with the firm for decades. You don't look at it as a transaction; you look at it as a parent-child relationship. You stay with these firms in the completeness, not as a transaction that is hot and cold, hot and cold.
I think we could get guidance from how the Fraunhofer Institute does it in Germany. They stay with it forever. That's research funding, commercialization and other things like that. That would guide us.
Thank you, Madam Chair.
Mr. Donald, I'll get you to expand with regard to the suggestion of having industry train the skilled trades, as you mentioned earlier. I want you to highlight a little bit more about that.
The one thing I worry about is it devalues the training that took place for other people who went through the accreditation. Also, where I'm from, we've been fighting to get a new border crossing, and part of the border crossing was a P3 where they brought in foreign workers, and they didn't do the welding properly. They had to dig up over 200 girders for a highway system after it was exposed. In fact, we only found out about it because a guy in my gym was telling me about it and was able to break the news on it. They had to dig these things out of the ground.
How do we deal with that? Are there ways that we have the system to get people more supports and more accreditation but not lose our standards or be hoodwinked by bad actors?
In terms of your first question about training in the workforce, as I say, we have such limited capacity in our country and so few facilities. People from northern Quebec, for example, have to move for three years to Quebec City to do their training, and they don't do it.
AAR is a company in Windsor. It has to hire people off the street. It's the largest private maintenance, repair and overhaul company in North America. It has to hire people off the street because there are no colleges locally.
They need help and, bluntly, we're working with them.
Mr. Donald, we bring 300,000 immigrants to Canada every year. On average, they tend to be more educated than the Canadian-born population. They're more likely to have masters and Ph.D. degrees. However, they're less likely to work in the fields for which they were trained.
We also have veterans who leave the armed forces with immense skills but not licensed qualifications. They do all kinds of trades work on military equipment, and then they don't have, for example, licensing to do work as mechanics or other tradespeople.
Finally, we have other people who pick up skills throughout their lives that are very real. Farm kids are the best possible example. They learn how to work on all kinds of equipment. They're obviously qualified. They use these extremely complicated mechanical apparatuses on their farms. However, if they ever leave the farm and try to get into these trades, they're not licensed.
The licensing in this country is based on, as you say, hours and hoop-jumping rather than on what people can actually do.
I'll give you the example of a constituent of mine. He came here to work as a heart surgeon. He'd been doing heart surgeries in Singapore, a country that's more advanced than Canada. He got licensed by the college of physicians, but guess what? Immigration, Refugees and Citizenship Canada wouldn't give him a work permit because they had not independently done a forensic analysis of his life. The college of physicians thought he was qualified. The Singaporeans thought he was qualified. I might add that the human heart in Singapore is biologically the same as the heart here in Canada. They almost stripped him of his work permit, and he was ready to go home because, frankly, he can get a job anywhere in the world. Thank God we intervened and got him his practice back. There are probably hundreds of Ottawa residents whose lives have been saved by him since.
What do you suggest we do across the entire system to remove this bureaucratic gatekeeping that prevents people who can demonstrate they have the skill set to do the job from getting licensed to do it?
You've got it exactly.
That's exactly right, and because they didn't study, for example, cloth wings back in Berlin, now they have to do a gap training on cloth wings, but they can't do that, just that little piece, at a Canadian college. Colleges aren't set up for that, so they have to go back for two years to study, and they can't afford to do that: to quit their job and go back to school for two years.
We had an orthodoxy of extreme market fundamentalism in Canada that everything's hands off, and the ideas economy, by definition, is hands on, all day and every day—full contact. Once we understand that's the role of government—and not cutting red tape or bringing incentives to foreign companies, etc., but in fact shrewd red tape, if you want to call it that—then that's what you need to do.
It's technical. These countries do it in a very coordinated fashion. I could go into considerable depth, but I obviously don't have time, about how they do it. Each country is attuned to its own approaches. That's why there is the idea of an economic council that is a centralized place for managing these crosscutting complex issues, so that we don't invent the ebola vaccine and transfer it to the U.S. for $200,000, where a company promptly sells it four days later for $50 million, which is a building block for a vaccine for COVID and so.... That wouldn't happen if you had the expertise and an integrated approach. Now this—
I just want to make sure that the analysts have that. In the previous question from MP Poilievre, we were discussing what is called prior learning assessment and recognition, which is something that actually came out of the GI Bill. It was generated after the Canadian soldiers came back from war in order to help them get those competencies assessed and help them move into another job stream. It is something that is actually being done. In Quebec, it is called
the recognition of acquired competencies.
This is something that could absolutely be leveraged in this regard. The Canadian Association on Prior Learning and Assessment, CAPLA, is doing extraordinary work in this regard.
Before we adjourn, I know that MP Poilievre wanted to speak, so I will turn the floor to MP Poilievre.
We have the motion before us. Is there any further debate on the motion?
Before we go to the vote, I'll read it one more time:
That in relation to the study of the proposed acquisition of Shaw by Rogers a call for briefs of a maximum of five pages be issued and that the deadline for the receipt of these briefs be no later than Friday, April 30, 2021 at 4 p.m.
I don't see that we need a recorded division.
(Motion agreed to)
Thank you very much, MP Poilievre.
That wraps up our time for today. I'd like to thank the witnesses for being with us. That was extremely helpful testimony.
For those who will be submitting briefs, please submit them to the clerk directly. If they are not translated in both official languages, he will make sure that is done so that they can be circulated to the committee. All documentation for the committee must be circulated in both official languages.
With that, I will gently remind you, colleagues, that if you have not had a chance to get your witnesses in for the green recovery study, that is beginning next week. Please get those to the clerk so that we can make sure to invite folks and send them headsets in advance of the meeting.
Once again, I'd like to thank the interpretation services staff for their hard work.
To our analysts, our clerk, and all the folks in the room who make this all possible, thank you so much for your help.
The meeting is adjourned.