INST Committee Meeting

STANDING COMMITTEE ON INDUSTRY, SCIENCE AND TECHNOLOGY

COMITÉ PERMANENT DE L'INDUSTRIE, DES SCIENCES ET DE LA TECHNOLOGIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 13, 2001

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order, pursuant to Standing Order 108(2), for a briefing on the Department of Industry and its initiatives.

We're very pleased to welcome here today the Honourable Brian Tobin, our Minister of Industry, and with him his deputy minister, Peter Harder.

I understand, Minister, you have an opening statement, 20 minutes, maximum 30 minutes. You're going to take us through some points, and you have some screens behind you as well. We'll turn it over to you, and then we'll turn to questions.

Hon. Brian Tobin (Minister of Industry): Thank you, Madam Chairman, and thanks to all of the members of the committee for allowing me to come before you today and make my opening remarks. I will indeed take your hint and not be longer than 20 minutes so that we can have a decent time for an exchange of questions and answers.

You just introduced my deputy minister. There are other officials with us here in the room for us to call upon if required, Madam Chairman.

I've taken careful note that the membership of this committee has changed since last session, after the election, but still it may interest many of you to know that when I asked my predecessor, the Honourable John Manley, how he would describe the committee and his relationship with its members, he told me, if I can use a single word, that the relationship was “superb”. Madam Speaker, I can only offer the hope, at this early stage, that such a relationship is continued.

Mr. Reg Alcock (Winnipeg South, Lib.): Things have changed.

Mr. Brian Tobin: I just noted that, Reg.

I want to build on this cooperative relationship. Your mandate is extremely important to everyone within the industry portfolio, and indeed the mandate of this committee is important to Canada. The ministers and secretaries of state who oversee the science and regional agencies, I, and the officials of Industry Canada will do everything in our power to assist you, Madam Chair, and members of the committee in your deliberations.

Our goal, that is the government's goal, as set out in the Speech from the Throne, is to build a world-leading economy driven by innovation, ideas, and talent, and to build a more inclusive, knowledge-based society for all Canadians. We call this the “innovation agenda”. If you're generating new knowledge and ideas, if you're being creative, doing things differently, if you're pushing yourself beyond what you think your limits are, then you're being innovative. As was supported by this committee's own April 2000 report on productivity and innovation, this innovation agenda must be inclusive. It must involve all sectors of the economy and all regions of Canada. It must be an agenda for all Canadians.

Madam Chairman, I think we've been doing a lot of things right in this country. We've made progress in a great many areas. I—and I know you too—want Canadians to know about this progress. But we also want them to know that we can do, and we are doing, even more. I want foreign investors and highly skilled workers from abroad to know this too.

As Minister of Industry, I have two priorities: to stimulate and nurture a culture of innovation all across Canada, and to brand Canada internationally as a great place to live and work, and, more importantly, as a great place to invest. This is my core message today.

We hear an awful lot of talk as we travel around this country about the “old” economy as opposed to the “new” economy. Madam Chairman, I can tell you this is not a distinction I make. I don't believe there are old economies and new economies. In fact, my experience has been that many of what some would call the old economy areas have modernized, have retooled, have put in place new infrastructure to become increasingly competitive. Whether you're in mining, forestry, agriculture, manufacturing, tourism, or the fishing industry, if you are applying new knowledge and new technology to do the job more efficiently and effectively, then you're working in a new economy.

Canada began its first century by building a railroad to conquer vast distance, as this historic room reminds us. Canada is beginning the 21st century by building not bands of steel but rather high-speed broadband to conquer distance and, more importantly, to battle what I and many others have called the digital divide.

Biotechnology is another key enabling technology for the future. This vital scientific knowledge will provide new ways of dealing with environmental challenges, drive growth in existing and emerging industries, and lead to new medicines and the means to prevent disease. All of this is part of our vision of a smart country, an innovative and more integrated Canada for the future.

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I believe our combined purpose here, both your mandate as members of the House of Commons standing committee and my mission as minister of this department, is of fundamental importance to the vision of Canada's future. My officials and I welcome the opportunity to work together with you to help realize this vision.

Over the last decade Canada has built a strong economic base, and indeed governments everywhere, virtually in every province as well as the national government, have begun the task of getting our fiscal house in order. The fundamentals in this country remain strong. However, there are signs of economic turmoil and uncertainty. Economic growth has slowed, and yet the consensus of international forecasters is that Canada will lead the Group of Seven in growth this year. Our unemployment rate is near a 25-year low, our inflation rate has averaged 1.7% over the last five years, well below the average for G7 countries, and our level of trade remains at an all-time high.

In addition to that, Madam Chairman, we've just implemented, in the fall, the first major instalment of a $100 billion tax cut, the largest in Canadian history, substantially lowering taxes for all taxpayers in Canada, for individuals, for families, for entrepreneurs, for investors, and most importantly for SMEs, for small and medium-sized business.

No country can be sheltered from the turbulence of the global economy. Doubt has recently been expressed about short-term prospects for the U.S., and this has implications for Canada, given the size of our trading relationship—87% of everything we export goes south of the border. So we must be ready for greater competition from Mexico as it becomes a more prominent partner in the North American trade and investment market. But as we prepare ourselves for greater competition from our neighbours to the south, we should be looking for new opportunities as well, in both the United States and Mexico.

Despite the challenges of the current environment, I believe Canada is on the right track and we should not fundamentally alter our course. Technological change will continue to drive economic growth in all sectors in Canada over the long term. This is an important point. There are some who would look at what is happening in the marketplace today, the revaluation or devaluation of some of the technology companies, and come to the conclusion that investment in this sector or investment in R and D is not smart investment for Canada. That would be a terribly shortsighted conclusion to come to. As I say, I believe we have to maintain the course and make long-term investments.

As I remarked earlier, my two priorities are stimulating a culture of innovation and branding Canada as a leading innovator globally, and we can achieve these objectives by building on the solid foundations this committee has helped put in place. Our strategy has been to strengthen Canada's capacity for innovation by investing in research and knowledge, and in particular by helping Canadians gain the skills required in the modern, knowledge-based economy. Our post-secondary institutions, research hospitals, not-for-profit institutions are key drivers, all of them, of innovation, and we established the Canada Foundation for Innovation to ensure that our researchers, everywhere in Canada, have the equipment they need to do state of the art research here at home.

To further increase the resources available to researchers, we are creating up to 2,000 new Canada research chairs at our universities. Many of us hear that number, and its full import hasn't registered, I think. This country had 169 federally funded research chairs prior to the announcement of that program. We're now going to produce another 400 a year over five years.

Canadians can be proud of the quality of their universities. Canada is home to eight of the top 20 electrical engineering programs and seven of the top 20 engineering schools on this continent. We also have the highest proportion of post-secondary graduates in the world. But we cannot be complacent. Our objective is to be one of the top five countries for research and development by 2010. For the moment, within the OECD, we stand at 15. We've got to do better, and we've got to improve our position very quickly.

As its contribution, the Government of Canada will at least double its investment in R and D by 2010, and we will invest an additional billion dollars a year by the end of this mandate. Indeed, we've invested nearly an additional billion dollars this fiscal year alone.

Madam Chair, as recommended in your report on productivity and innovation, these commitments represent a substantial deepening of the government's innovation agenda. We've already taken some major steps toward that goal. On February 28 I announced a further contribution of $140 million for Genome Canada. That brings total funding for that organization to some $300 million. That contribution is expected to leverage another $320 million in contributions from other partners by April 1, 2005.

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In a similar vein, on March 6 I announced on behalf of the government an additional $750 million for CFI, which brings total funding for that organization to over $3 billion—in fact, $3.15 billion since 1997. With leveraging from funding partners this will result in cumulative total spending of almost $9 billion by 2010.

Another important part of our innovation agenda has been our Connecting Canadians initiative. Through such programs as SchoolNet and Community Access we connected all our schools and libraries and thousands of urban and rural communities to the Internet.

Our next challenge is to ensure that all communities in Canada benefit from the advantages of high-speed broadband Internet. The private sector is already rolling out high-speed service in many urban areas. The reality is that the same service is not being offered to rural Canada. That's why we've established a task force. That's why it's private-sector driven—and driven by the not-for-profit sector as well—and why we're asking for advice on the most efficient way to make sure that there's not a digital divide between those who live in the urban belt of this country and those who live in rural communities.

The government is continuing its efforts to put its services online by 2004. For example, the Prime Minister launched the new Government of Canada website just a few weeks ago, and I launched the Business Gateway on February 12. This is one of the first websites in Canada to give business streamlined access to information and services across federal departments and agencies.

Madam Chairman, this site is a good start, but we have to go a lot further and a lot faster than is currently the case.

Consumers are also benefiting from this new kind of service online. The Canadian Consumer Information Gateway, launched last summer by the Office of Consumer Affairs, is an online portal that gives fast and easy access to consumer information provided by more than 35 Government of Canada departments and agencies.

In every province of Canada, Canadians are quietly doing quite extraordinary things. They are each innovators in their own right, charting new territory with new ideas and creating new opportunities. I'd like to take a few moments to touch on the stories of some of those Canadians.

In St. John's, Newfoundland, Dr. Judith Whittick and her team at the Centre for Cold Ocean Resources Engineering, otherwise known as C-CORE, are working with Memorial University to adapt and apply space technologies to such resource sectors as mining, pipelines, and oil and gas, all of which operate in harsh environments. Ice engineering is a major part of their work.

For example, if a company wanted to build an offshore oil rig, C-CORE could help the company select a place to build the structure that would minimize ice damage, such as ice scouring. As a consequence, it would provide a far safer working environment for production of oil and gas offshore.

In Nunavut there is quite an amazing project called the Inuktitut Living Dictionary. This project, which uses web-based tools to facilitate the evolution and growth of the Inuit language, has attracted the attention of linguists from around the world. It's the brainchild of Jim Howse of Multilingual E-Data Solutions and Dave Smith, formerly of the chief information office.

In Saskatoon, many of you will know, the Canadian light source synchrotron project at the University of Saskatchewan is providing an opportunity for basic research affecting a range of products, including newer drugs and vaccines, microscopic machines, implants, and more powerful computer microchips. This project is the largest initiative funded by the Canada Foundation for Innovation since its inception. Indeed, with all funding partners in, the capital cost of that project is about $170 million. It depends upon partnership, and it's being overseen by Dr. Michael Bancroft.

In Richmond, British Columbia, David Sutcliffe and his team at Sierra Wireless are developing the next generation of Internet Protocol wireless modems. In fact they're already at... and commercially have made available what they call 2.5 G technology. The next project is to move to 3 G technology. These modems will allow Canadians, regardless of their location, to fully connect with their home offices through laptop computers. The company is doing this with the help of a $9.9 million investment from Technology Partnerships Canada. The company grew, by the way, by 120% last year and is expected to grow by 120% again this year.

I want to point out that TPC—Technology Partnerships Canada, for the benefit of newer committee members—is a loan program, an investment program, in which we fully expect to be repaid and are, in fact, repaid on the availability of venture capital.

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Madam Chair, in some cities and regions the presence of private firms, universities, research institutes, and opportunities for investment are beginning to reach a critical mass. Ottawa's Silicon Valley North is perhaps one of the best known Canadian success stories in the knowledge economy.

Another example is the corridor between Montreal and Quebec City, which has become the second largest concentration of biopharmaceutical product development in North America.

With southern Ontario's concentration of automotive companies, there's an opportunity there to strengthen R and D in one of Canada's most important manufacturing sectors. As you have reminded me, this industry accounts for one job in seven in Canada and provides Canada's largest export product.

Just yesterday in Windsor I announced a federal contribution of $21 million for the creation of AUTO21, the automobile of the 21st century. This creates one of four new networks of centres of excellence, and we established it yesterday at the University of Windsor. These four, together with an existing 18, give us 22 such centres across this country.

In the coming months you'll hear more about the government's efforts to increase international awareness of Canada's great advantages. Our branding strategy will be to position Canada as a world-leading innovator with an attractive business climate and a quality of life that are second to none. To support this effort, we will be launching Investment Team Canada missions to the U.S.A. and to Europe.

Madam Chairman, I'd be quite happy to have, if it is the wish of the committee, representation from this committee on those investment team missions.

We'll also be intensifying our efforts to promote greater private sector investment and innovation. A key part of this will be to ensure that Canada's business environment is more supportive of entrepreneurial activity for large and small businesses alike. We want to ensure that Canada's business laws and regulations are among the most modern and progressive in the world. To achieve this goal, we need to review and, where appropriate, renew our laws on a regular basis.

I will ask the committee shortly to examine legislation to amend the Competition Act and the Competition Tribunal Act. This legislation stems in part from several private members' bills put forward by our colleagues, Mrs. Redman, Ms. Jennings, and Mr. McTeague. The proposed amendments will benefit both consumers and businesses.

Intellectual property laws must provide appropriate levels of protection in the networked environment. Last month, the government introduced Bill S-17 in the Senate to ensure that the Patent Act complies with Canada's obligations at the World Trade Organization. Canada has until August 12 to be in compliance.

Once this legislation is passed, we will engage parliamentarians and Canadians generally in exploring the role of Canada's intellectual property regime in building an innovative economy and in sustaining an attractive environment for investment.

Last month, the government introduced Bill S-11 in the Senate, an act to amend the Canada Business Corporations Act and the Canada Cooperatives Act. These amendments will enhance corporate governance, improve the ability of Canadian corporations to compete in the marketplace, and reduce costs for the business community.

Shortly, the committee will begin reviewing the Lobbyists Registration Act. Madam Chair, I have just written to you—a copy of it will be available to all members—setting out my assessment of how the act has been working since it was significantly amended in 1995 and suggesting some areas the committee might wish to examine.

I'm pleased that 98% of registrations are made electronically at great savings to everyone and that the registry has been up on the Internet for some time. I look forward to receiving your report on this issue. There are a variety of questions that ought to be reviewed, including the question of whether or not compensation paid to lobbyists ought to be included as part of the reporting requirement.

You'll be asked to consider the Business Development Bank of Canada's mandate review, which I will table in the House this spring. The BDC is playing a growing role in the private finance market. Since it was given its mandate in 1995, the BDC has grown its customer base, developed a specialty in dealing with knowledge-based firms, and has consistently remained profitable.

Last year the bank recorded a profit of over $100 million. We think it'll record a profit in that range again this year and return a dividend of $8.9 million to its shareholders. Since 1999 the BDC has nearly doubled its commitment to venture capital financing, from nearly $157 million to $303 million by February 2001. This has led to accelerated growth for Canadian small and medium-sized enterprises and has created Canadian jobs. I look forward to your report on what role the BDC can play in the future.

Finally, Madam Chair, I'd like to note the important influence this committee has had in the area of small business policy in recent years. Your work in such issues as the financial conditions of small business and such programs as the Canada Small Business Financing Act has had a real impact, and members here have played a leading role in that regard. I know you'll continue to work with us in these areas, and I'm eager to work with you in the interests of Canadian small business in the years to come.

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Finally, let me say I'm particularly interested in hearing your views on how we can stimulate innovation and brand Canada internationally. These two remain very important to me and to the Department of Industry.

In closing, I urge the committee to use the expertise of Industry Canada officials. I want to assure you of my collaboration and that of my colleagues associated with the Department of Industry: the Honourable Gilbert Normand, the Secretary of State for Science, Research and Development; the Honourable Ron Duhamel, the Secretary of State for Western Economic Diversification; the Honourable Andy Mitchell, the Secretary of State for the Federal Economic Development Initiative for Northern Ontario; the Honourable Martin Cauchon, Secretary of State for the Agency of Canada for the Regions of Quebec; the Honourable Robert Thibault, Minister of State for ACOA; and of course I want to thank here before the committee and assure you of the continued collaboration of my colleague and parliamentary secretary, John Cannis.

Madam Chairman, with those opening remarks, I'd be delighted to answer any questions you or committee members may pose.

The Chair: Thanks very much, Mr. Minister. You were right on 20 minutes there. It was 20 minutes, 5 seconds, I think. That's pretty good.

Mr. Brian Tobin: As you can see, I practised.

The Chair: That's very good.

We're going to start today with Mr. Manning.

Mr. Preston Manning (Calgary Southwest, CA): Thank you, Madam Chair.

I'd like to congratulate the minister on his re-election and on his appointment, and I thank him for his presentation today. I recall that when he was fisheries minister, some of the fish disappeared. We hope he'll have better luck with the industry side. But I do want to congratulate him and wish him well.

I'd like to ask the minister a couple of questions about his position and his department's position on supporting scientific infrastructure. I think that's very important.

You've listed a number of the projects. I'd like to proceed, if I could, from the specific to the general, but maybe by your answers on the specific, we'll get an idea of what your general positions would be.

There does seem to be a fair amount of agreement among the research community that one component of our 21st century infrastructure should be this Canadian neutron facility for generating neutrons and conducting materials research at Chalk River. That project has been proposed for a number of years. There's a certain urgency in proceeding with it, as I understand it. Today in the House, I asked the finance minister whether or not he was prepared to champion it, because I think you're talking about $500 million over six to eight years. He declined to answer. The reply of the Minister of Natural Resources was rather indecisive as well.

I guess my first question is whether the industry department, and the minister in particular, is prepared to champion this particular facility as part of our 21st century infrastructure.

Mr. Brian Tobin: Madam Chairman, if I might, to respond to Mr. Manning's questions and comments, first of all let me say it's a pleasure being back sitting across the floor from you, because the last time I was here we barely had the opportunity to have a decent exchange, and I went off to do other work. I'm delighted to be back, and I look forward to working with you through this committee.

As for the disappearing fish, they disappeared on my predecessor's watch, Mr. Crosbie's, although don't tell him I said that, because he'll write a full editorial response. But they teach us. They tell us that we have to act swiftly when opportunity presents itself, or when we're threatened with the loss of opportunity. That's no less true in the technology sector than anywhere.

With respect to your specific question, I'm not prepared today to respond, simply because, as you have noted—and indeed as colleagues of yours in the House noted today—we're talking about a very substantial capital investment of $500 million, and perhaps plus. It is a matter that is now under review, certainly within NRCan, and also by Industry Canada, looking at our total science commitment, looking at the total envelope available to us. We've said as a government that we're going to double our funding for R and D over the next ten years, and that's a substantial commitment, $3.5 billion to $7 billion. We've talked about spending $1 billion a year in new moneys before the end of this mandate, so there's an envelope there.

The question that confronts Industry Canada, confronts NRCan, confronts the government—and I would submit to you that it confronts this committee—is taking a look at all of the demands on that expenditure envelope and asking ourselves where we get the most effective investment for our moneys.

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The project you've mentioned is one that is a priority for review, certainly, but I don't think government is ready at this stage to pronounce itself. We haven't completed the proper review and examination that's required, measuring this priority against all other priorities and seeing at the end of the day which meets the test for expenditure.

Mr. Preston Manning: I'd like to ask a question about your last comments about the general criteria, but let me ask one more specific one about this particular project. It seems to me the reason for the hang-up on this project—and it's been proposed for years, but we're going to miss a window of opportunity, as we so often do—is that the cabinet seems to think it can't make a decision on the neutron facility unless it decides the whole future of Atomic Energy of Canada and that of the CANDU technology, which is of course a huge and complex and bigger issue. It seems to us that this particular facility can be separated from that decision, that the neutron facility stands on its own merits, and that this decision could be made regardless of what the bigger questions are on atomic energy.

As well, there seems to be a feeling in the research and industry community that the National Research Council should take a lead role in managing and directing this facility. It doesn't mean AECL doesn't have a huge role to play too, but NRC could treat this as a national laboratory. That would also kind of separate it from the whole bigger question of the future of atomic energy in Canada.

Again, I'm wondering whether the department or the ministry is prepared to see NRC take a bigger role in this project. It might be able to therefore separate it from some of the bigger, broader issues that seem to be holding it up.

Mr. Brian Tobin: Madam Chairman, I want to say to my colleague that I have to take those comments as representation, certainly a way in which to approach this issue.

I think every member of this committee, on both sides, when it comes to doing good work for Canada and on the fundamental questions, understands that indeed the very questions you've raised are relevant ones. What is the role of this facility as opposed to the broader nuclear energy program in this country? What is the future of nuclear energy within this country? These are all legitimate questions. I think the government, having gone through an appropriate review and having heard all representations, including yours, and those of others within this particular community, ought to have some sense of where the issues are prior to coming to a conclusion.

The cost implications of whatever the decision is that we arrive at are so large—and as a consequence, other priorities that might have been funded are therefore moved aside—that I don't think this is something we should do quickly. Hence, the Minister of Natural Resources, Mr. Goodale, indicated today that he was reviewing all of these questions, and indeed we'll be collaborating with him in that review.

I just can't give a better answer, because I honestly don't have one. We're simply not ready to pronounce ourselves.

Mr. Preston Manning: I have one last question.

The Chair: Yes, your last question, please, Mr. Manning.

Mr. Preston Manning: My last question is on the broader question. It's really a question that I'm sure is of interest to the committee, but also to all the interests that have an interest in science and technology.

Exactly what is the decision-making system whereby the department decides to invest in a particular science infrastructure property? Is it first come, first served? Is it the squeaky wheel that gets the grease? Is it a combination of other factors?

As you mentioned, these projects keep coming. They come to the committee and they come to us as members of Parliament—the light source project, the neutrino project, the astronomers' project for funding the long-term plan, and whether or not the space agency gets involved in the Galileo Project. All of them look good on the surface. When they come to us sequentially, you can build a case for any one of them. How do the departments of industry and finance decide which of those infrastructure projects should proceed and are necessary for the 21st century?

Mr. Brian Tobin: I thank the member for his question, because I think it gives me an opportunity to point something out. With respect to many of the 14 or 15 funding agencies that report through Industry Canada, most of these are in an arm's length relationship from the department, and, for that matter, broadly speaking, from government in terms of coming to decisions about which projects are funded or are not funded.

I just would lay out a couple of principles. Certainly the most important principle is that we should be supporting excellence in our R and D. The merit principle should drive the examination of applications as they are brought forth, whether you're talking NRC or NSERC or the centres of excellence program, or, more recently, because it's had a higher profile, the CFI, the Canada Foundation for Innovation.

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All of the decisions on all of these programs are made at arm's length from me, from members of cabinet, from members of Parliament, from government generally. Of course, that invites another debate we could have. I think it takes a certain reserve and a certain determination, when you have a block of funds, as we're seeing this fiscal year—and we could use a big chunk of it to pay down the debt but part of to make strategic investments—to resist the temptation to go out and do the shopping list or wish list of projects that members, including me, might want to propose.

Instead, we could say to an expert panel—in the case of Genome Canada, a panel from outside the country—of international experts, “Give us your best advice, based on the applications before us, as to where these strategic investments across Canada should go”.

That's what we've done with respect to the space program, or in terms of the very question you raised, the neutron facility. These are the questions that would be determined by cabinet, specifically because they're large stand-alone projects. All the others are done independently.

The Chair: Thank you very much, Mr. Manning.

Mr. Lastewka, please.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Madam Chair, and thank you, Minister, for being with us today.

I have a number of questions. I want to start off with the National Broadband Task Force.

As you know, my concern has always been about having equitable access to Canadians, and that it not be biased one way or the other. We have the private enterprises doing certain things. You have the task force doing other things.

Could you explain a little bit what you're trying to get done in a short time—and I know you want to get it done as soon as possible—to make sure there's equitable access across the board for Canadians, including small business?

Mr. Brian Tobin: First of all, it's not the intention of the government in establishing the task force, for which we've set up the objective of providing high-speed broadband to Canadians no matter where they live, to determine a one-size-fits-all response. You and I have had this conversation before. When one talks about high-speed broadband, the first questions one should ask are: What is high-speed, and what is broadband?

There may be, depending on the function or the purpose that's being served, a variety of different answers. Institutions have one requirement. Certainly private homes have quite another requirement. In terms of delivery mechanisms, some will involve pipes in the ground, as the expression goes. Others could involve, and I think should involve, satellite technology, which is a way of delivering a high-speed service to rural and remote communities.

So fundamentally I think we recognize that the private sector is going to provide the vast majority of Canadians, because of where the vast majority of us live, with a high-speed solution that we can purchase. In most cases we can even have competition in terms of what that solution might be, be it coaxial cable, be it the telephone line, or be it satellite technology, which is used increasingly in our urban centres.

With respect to rural and remote areas, right now high-speed's not available. I have been to too many office openings in rural communities in Newfoundland where the local chamber of commerce is opening a database to serve the business community, we cut the ribbon, and then we wait three or four minutes for the download. We say, “Hallelujah, we're online.” Well, we are online, but we have to be very patient to be online.

That's the problem. There is a digital divide. I would submit to you it's even a larger divide between, as in the old days, those who got Internet access and those who didn't. Frankly, the level and speed of access today makes being commercially successful online almost impossible.

So what we're saying to the task force is to report to us quickly, to give us advice and recommendations. It is, as you know, largely private sector. Some of the same service providers, virtually all of the major service providers, are represented on the task force, but so too are not-for-profit organizations and institutions. We've asked them to give us advice on how we ensure that by 2004, every Canadian, no matter where they live, has access to high-speed broadband.

I don't want to presume the outcome of that advice. Let me just say that it's clear to me that perhaps government, with respect to some communities, will have to play a role, will have to be prepared to spend some capital to make this happen.

Mr. Walt Lastewka: But are you willing, as minister, to look at those areas, especially the rural areas? I've had the opportunity to travel across the country in the northern part of the provinces.

Mr. Brian Tobin: You were recently, I think, in Nunavik.

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Mr. Walt Lastewka: I was in Nunavik just last week. They're all Canadian. They need to have that equal access, and they're not getting that equal access. In the case of the rural areas, or northern areas of the provinces or the territories, extra money will have to be spent to make sure that they're getting the same access as others.

Normally in the northern parts of provinces and territories the businesses are micro-businesses and small businesses, and they are not getting the same advantage as the southern parts of Canada are getting. We need to invest in that area. Is that something you're going to be planning and hopefully doing in the future?

Mr. Brian Tobin: The short answer is I wouldn't say that the notion of high-speed broadband access is a right. I think that would be carrying it further than I should. Still, it's almost a right.

It's interesting to note, for example, that in the province of Alberta the government there is going ahead with its own program, and we certainly welcome that. We don't suggest the federal government has the only answer here or can play the only lead role here, and I'd like to single out Alberta as an example of a province that's pushing ahead, has the capability to do so, to provide high-speed broadband access to quite literally the entire province. To the best of my knowledge it's without distinction as to whether or not we're dealing with urban or rural, and in some cases remote, locations.

So we'd encourage that where we see it, but clearly, yes, I think there's a role for the national government and for provincial governments to play—and that's part of what we want to wait and see by way of advice from the broadband task force—in filling the gap between the areas where there's a straight business case, which should cover most of the country, and in locations where's not a clear business case.

But if we don't get people online, their capacity for educational opportunity, for communication, for meaningful leisure opportunity that can be drawn from the Internet, and for business and commerce will be very much hampered by the inability to be online with a high-speed service.

Mr. Walt Lastewka: In your presentation you mentioned a number of times how much money the Canadian government has put back into research—the CFI fund, the increase to the CFI fund. You also mentioned in your opening remarks a number of items that have been invented by Canadians and promoted by Canadians.

Some of these companies are, again, I want to emphasize, small companies that don't have the money to advertise or don't have even the money to go out and share with Canadians what's happening in the technology area. But in each case, any time we've asked questions of ministers about why we don't do some promotion of what's really happening with Canadians in terms of technology... We've done a lot of firsts.

I'll be very kind here; I don't mean to slight anyone, but when I said I was going to the high-tech area of Newfoundland, I got questioned as to whether I was going to the right province or not, only because high tech is not part of the Newfoundland past. It is at present, but who knows about it? Who knows about some of the things that have come out of the small businesses in the Vancouver area that, for instance, have invented the earthquake safety valves for gas pipelines, protecting people around the world?

We haven't had the opportunity to promote that. We're not doing anything to share our technology across the country.

Mr. Brian Tobin: I think the comment you're making is very valid. I think we have to re-brand Canada internationally and tell a better story about what Canada is. Canada is a lot of wonderful things—the Rockies and prairies and icebergs and whales and a pristine environment. All of those things we all celebrate, but Canada is more than that in terms of its technological competitive position.

We have to be very effective in going out and branding this country internationally. I submit to you that we have to do a much better job, and I agree with you entirely, Mr. Lastewka, branding Canada to Canadians. These investments we're making are very substantial. They're longer term. Canadians have a right to know where this money is going, for what purpose it's going, and the kind of success, and individual success, not government success, that we're really celebrating and emulating in nurturing this kind of technology. At one point I do hope to come back to this committee, perhaps in response to your specific question, to tell you that I think we have a branding program that has to be undertaken.

• 1615

Let me make one last comment in that regard. When I was Premier of Newfoundland, we had a branding program within the province, called “Doing it Right Here”. Nowhere in any of the information we provided was the word “government” present. It didn't exist. The program essentially held up a mirror of individual success stories in certain sectors—notably IT, which grew 25% a year for the last three years—and held it up as a role model to the broader community. I believe that by keeping government out of it, the credibility and the effectiveness of that program was much enhanced.

The Chair: Thank you, Mr. Lastewka.

I'd like to remind both our questioners and our answerers to try to keep it more brief. We are going to have a vote at 5:30 p.m., and I have a long list of questions here.

[Translation]

Mr. Brien, please.

Mr. Pierre Brien (Témiscamingue, BQ): Good afternoon, minister. I was glad to hear you say that you wanted to put an end to this distinction between the old and the new economy, because traditional economic sectors are big users of technology.

The mining industry, a sector that I know well, is much affected by the low market prices. The industry feels slightly abandoned because there are all sorts of aid programs for the new economy—for example, Technology Partnerships Canada—but very few tools to help it go through this crisis. It is particularly true for low capital corporations.

Are you monitoring the situation closely? Are you going to intervene or by some other way help the mining industry? That being said, I will add that many workers are leaving the country for places in better position to develop their mining industry. We are losing high-calibre workers. It is the same in my region and in northern Ontario.

[English]

Mr. Brian Tobin: Thank you for your question. Again, I think it's very important that we quit using the terminology “old economy”. I don't say it happens around the table here, but there's this dismissive tone that if we talk about “old economy,” we're talking about industries that are fading and disappearing. The reality is that a lot of traditional sectors are being given a new life because of the application of technology.

Let's take mining as an example. There is at the moment at least one application before TPC and a second one that is at least being talked about. Both of them are coming from mining companies looking at developing what is called a hydromet process for processing of mining material. Hydromet is a process that involves autoclaves, high pressure, chemical leaching, and electrode twinning to reduce the mineral content from the source material in a manner different from the traditional kiln processing facility. It's currently being used around the world on laterite deposits but not on sulphides or hard rock deposits. There are at least two firms in Canada trying to give new life to existing deposits by finding a more efficient and cleaner way of processing base materials. That's one area where, at least for the moment, we're studying the possibility of being involved with the mining industry.

The second area where the Government of Canada is involved right now is applying the same principles that are appropriate to telemedicine or distance education and using that technology to do deep mining. Right now we can't do it, as you know, in some of deposits that exist in the mines you referenced both in Ontario and Quebec. Some of these mines have become less productive because you have to go very deep to mine. Going very deep is very dangerous.

We have technology being developed today that will allow companies to put an operator in a shirt and tie—which is regrettable, the tie especially—on the surface, in a control centre, mining a deposit very deep in a safe environment using modern-day robotics and distance technology, the same technology we would apply in these other areas to mining.

What we're seeing is a tremendous enabling effect. We're very interested in how we can use the principle of innovation, investing in innovation, to make traditional sectors more competitive.

By the way, as a general comment, I would apply that same principle to the notion of shipbuilding. There is no point trying to sustain what hasn't worked in the past and no point talking about subsidizing plants that don't work. But there's every reason to talk about innovation and investment in technology, and know-how, and efficiency.

• 1620

[Translation]

Mr. Pierre Brien: I would like to comment on what you just said before commenting on another subject.

I agree with what you have said, but on the condition that you do not wait until most of the present industries are in an even worst situation. Innovation produces results in the mid- to the long-term whereas the crisis is immediate.

Earlier in your statement, you mentioned the Canadian Foundation for Innovation and university chairs. Those are interesting tools for several universities. However, to obtain a chair or to get a project approved by the Foundation often results in additional expenses for the university, even in regular expenses, such as mentorship or premises. That's why I say something is missing in your support policy; transfer payments in the area of education are not increased. Therefore, funding from the provinces does not increase either.

Universities are then faced with a situation where, to obtain funds to establish a chair or money from the Foundation, they have to draw from their main budget. They are forced to make difficult choices concerning the teaching they will offer their students, for example.

Is there really a missing element? Are you working on a solution? I would like to hear your comments on the subject.

[English]

Mr. Brian Tobin: I can tell you without fear of contradiction that you'd be hard pressed, given the blunt reality that governments everywhere, without exception, dealt in part with the problem of deficits and getting their fiscal house in order by curtailing spending, transfers to individuals, and transfers to institutions. There is no exception to that. For a period of time, our universities, and in particular our R and D capacity, suffered as a consequence of those decisions made by all governments.

If you go across this country talking to university presidents everywhere, the renewed commitment to R and D through CFI and other measures has been greatly welcomed. The fact that CFI provides 40% of the cost of a project and requires funding partners for the other 60% really has had the effect of getting governments without exception working together, prioritizing together, and attracting where appropriate private sector participation with institutions. I think that's appropriate as well.

The questions you raise are on indirect costs. There's no point in applying for money for a piece of technology if you can't operate it. I think we recognized in October that was a problem by putting aside $100 million to deal with those indirect costs.

There's a broader discussion out there. I've heard from both sides of the House, including Liberal members. The broader issue is whether or not CFI is functioning in a way that while it rewards excellence as it should, is the system designed in such a way as to recognize excellence or allow for excellence to reveal itself in smaller centres. That's an issue we're grappling with. I don't have all the answers today but I do appreciate your representation in that regard.

The Chair: Last question.

[Translation]

Mr. Pierre Brien: To end on this note, I will not go into whether it should be managed by you or by an independent organization. But you are right that small universities will be facing a danger.

[English]

Mr. Brian Tobin: You want me to take control of the money?

Mr. Pierre Brien: No.

Mr. Brian Tobin: I'm just checking.

[Translation]

Mr. Pierre Brien: I don't want you to take control of the money, but at the very least I would like you to be responsible for it. I am asking you and I do not wish to get as an answer that the money is managed by the Foundation or that university chairs are managed by others. There is the risk that our smaller universities will lag behind because the bigger universities are much better equipped and their projects ready. They are better able to retain their first-rate researchers.

For their part, smaller universities could become less competitive because the bigger ones will get more money. I would like this to be part of the guidelines applied to these organizations, that you require that they take into better consideration the smaller universities. It could become more difficult to attract researchers. It is already the case to a lesser degree.

[English]

Mr. Brian Tobin: Madam Chairman, in response to the last comment, I think this concern is a legitimate concern that smaller institutions—and not just in smaller provinces, by the way, but even in the larger provinces, Quebec and Ontario—not be disadvantaged because of their size relative to those better endowed public institutions. It is something I'm concerned about and have spoken to CFI about. It's something we've responded to, and in good measure, I think, with the October $100 million allocation. But it's an issue that, I assure you, I have a personal interest in and will continue to work on to ensure that there is an opportunity for fairness, real fairness, in the distribution of these funds.

• 1625

The Chair: Thank you.

Merci, Monsieur Brien.

I'm going to remind everyone again that shorter questions and shorter answers means everyone will have more time.

Mr. Alcock, please.

Mr. Reg Alcock: Thank you, Mr. Chairman. I will attempt to ask two brief questions.

Mr. Brian Tobin: I will attempt to give two brief answers.

Mr. Reg Alcock: We'll see who succeeds.

We have a new minister and a nearly new deputy, and a new mandate, and a new Speech from the Throne, and some really exciting commitments.

I think the target for 2010 is incredible and I think the broadband commitment exceeds anything I would have dreamed of. I think it's a very aggressive goal, and I'm excited about being here, frankly. To the extent to which you and your deputy had a hand in crafting that, I think you should be congratulated.

I want, though, to raise two questions.

The first one picks up on Mr. Brien's question about the activities of the CFI. We learned a long time ago that regional development agencies trying to pick winners didn't do a very good job, that there were a lot of problems with their ability to select according to a narrow set of criteria that may fit in one area but not fit in others.

It seems to me we're in danger of reliving this experience with CFI that tends to view Canada through the lens of four large 19th century universities and seems to believe that in the 21st century—with all the talk about broadband and network and power and building networks worldwide—you can really only find excellence if you pile a lot of money into a large campus.

I'm really quite saddened by it. I have worked hard on R and D initiatives since I came to Ottawa. I was excited at the creation of the CFI, and I have come to be a real skeptic.

I know members of this committee are going to be interested in looking hard at that. Yes, it's at arm's length and no one wants to take over the expert role, but one wants to instruct an agency that's funded by public money, that has a public responsibility, that involves all regions of this country. So I'm quite pleased to see your recognition of this problem, and I expect we'll see some activity.

I'm also a little disappointed that we extended that last payment to them—until such time as we've had an opportunity to review. So I'll leave it there.

I'll ask my second question first, then you can give both answers.

Your talk about new economy, old economy, I also agree with. I think if you read about the classic old economy, the rustbuckets of the U.S. have in fact become quite innovative to the application of the new tools to what were classically old industries. Similarly, we have some old tools lying around the country and I'm beginning to wonder whether or not they interfere with our ability to modernize our economy and increase our productivity.

One of them would be Western Economic Diversification. I wonder if it hasn't outlived its usefulness and if it isn't time to have a good look at whether or not it in fact impedes the west's ability to access mainstream supports that are available in the rest of Canada. I think it's a question that we might want to spend a little time considering.

Mr. Brian Tobin: Madam Chair, with respect to CFI, I think we've had a good exchange, which you've added to, on the concerns about CFI and how it's going to work and how it's going to impact smaller universities. But I would just point out, because I think it's worth pointing out, that the largest single investment that CFI has made is in the synchrotron project, which is at the University of Saskatchewan. So while the observation—

Mr. Reg Alcock: One exception does not make the rule.

Mr. Brian Tobin: I'll find a few other exceptions along the way and we'll have a new rule.

But that is a substantial investment. As I said earlier, the concern you raised in your comments is a valid concern. I think we have to demonstrate, and CFI, which is at arm's length, has to demonstrate by its review process and by the strategic decisions it makes that it does recognize excellence and will reward excellence everywhere in Canada and not—to use your terminology—in a handful of—

Mr. Reg Alcock: Four 19th century institutions.

Mr. Brian Tobin: —four 19th century institutions. At the same time, you wouldn't want to penalize those 19th century institutions either. I'm sure you'd want to see them continue to develop their capacity for excellence.

With respect to your second comment, on WED, I think it's appropriate that all of these agencies of government, Industry Canada itself, should, where it's appropriate, come before the standing committee, as you ask us to, to talk about what it is we do, what our priorities are, and to justify our existence.

• 1630

With respect to WED, I think it's fair to say that if there has been representation with respect to that agency, to my knowledge, generally—I make this as a general comment—the representation has been to look at its funding levels, its A base, with a view to bringing it more in line with some of the other regional agencies. So this is an interesting comment today, and I can only say I'd appreciate hearing more.

The Chair: Thank you very much, Mr. Alcock.

Mr. Brison, did you have any questions?

Mr. Scott Brison (Kings—Hants, PC): It's rare that I have no critical word to give at committee, but I won't complain.

Mr. Brian Tobin: That's because I gave such a short answer to such a short question.

Mr. Scott Brison: That's right, you guys are noted for being concise when giving answers, or at least for being brief.

Thank you, Minister, for appearing before us today, and thank you as well for not claiming that you invented the Internet or anything like that.

Mr. Brian Tobin: No, that was Al Gore.

Mr. Scott Brison: That's right.

As a first question, we're asking for a comment relative to the anti-small-university bias of the Canada Foundation for Innovation. I think there is some truth to that, and I don't think it's all anecdotal.

Coming from the cradle of higher education in Canada—Nova Scotia—I know the undergrad programs in our institutions, which are considered quite small, actually play a very important role in encouraging students to go on to post-graduate studies in science. Also, with the death of distance as a determinant in the cost of telecommunications, a lot of the scale of universities shouldn't be quite as important, as scientists and researchers are linked. So I would like to concur with some of the other colleagues who expressed that view.

My first question is on the Atlantic Innovation Fund, which was viewed as a response to Technology Partnerships Canada. How much money has been approved under this initiative since it was originally announced?

Mr. Brian Tobin: First of all, with respect to your comment on CFI, let me make something clear. I think these comments are legitimate concerns, but I certainly don't want to be on record as suggesting that I think the board has not done a good job in seeking out—as they are mandated to do by government—excellence in the kinds of applications that are supported and funded. For example, yesterday we announced four new centres of excellence, all of which are managed out of institutions in the province of Ontario, but all of which have partnerships all across Canada, with participation by hundreds of researchers all across this country.

When we see that the University of Western Ontario has received a contribution for a centre of excellence, it's very important that we not come to the conclusion that it is a project for a single institution, I can tell you. Our centres of higher learning have gone online. They have partnered, and through partnering they've built strengths. Almost every funding arrangement that you see has partners throughout Nova Scotia, throughout Newfoundland, through western Canada. I think we have to look at the full project to realize it.

With respect to AIF, AIF has made a first call, as you know, or is making a first call for proposals. The advisory board at AIF will be announced very shortly, jointly by myself and the minister for ACOA, and I would think AIF will be in the business of making decisions or announcing decisions by the early part of this summer.

Mr. Scott Brison: Why wouldn't Technology Partnerships Canada be used as the vehicle? I'd like to know how much money has been disbursed through that vehicle during the same period of time. What I'm getting at is the idea that, due to the creation of this new vehicle, there's a holdup that is hurting technology investment in Atlantic Canada.

Mr. Brian Tobin: When you recognize that the funds were committed last year, that we had an election in November, and that we're very early into this year, I think the fact that we're going to have a process up and running this spring is, for government generally, timely. Believe you me, we've been pushing hard to move this process forward.

• 1635

I think it's going to be an effective process for Atlantic Canada. One of the reasons I believe so is that I have met with university presidents from a number of the universities throughout Atlantic Canada, and already they are working together, across provinces and across institutions.

One of the great tragedies for Canada is seen when every single province and every single institution believes it must have an equal measure of programs paralleling that of their neighbouring province. That's not a good use of money or effort or resources for Canadians. One of the things I think we've managed to do with AIF is to get the people of Atlantic Canada focused, partnering, avoiding duplication, avoiding repetition, and building centres of excellence where their own particular niche is well established. I can tell you the interest in AIF—I think you know this—is extremely high, and the funding will be more than welcomed at our universities in Atlantic Canada.

The Chair: Last question, Mr. Brison.

Mr. Scott Brison: The next question—

Mr. Brian Tobin: You had asked a question with respect to TPC. With TPC, there is $16 million over five TPC projects in Atlantic Canada currently in the account.

Mr. Scott Brison: Okay.

My next question is in terms of general economic development strategy, and specifically ACOA. ACOA's budget is about $332 million per year. Federal corporate tax in Atlantic Canada is about $400 million per year.

I know you have a great interest in and knowledge of the Ireland experience. Much of that was based on aggressive corporate tax strategies. I'd like to know your views on using equalization and regional economic development funds currently targeted through ACOA as a macro lever to allow provinces in Atlantic Canada to reduce taxes, working with the federal government, specifically focused on some of the less politically palatable taxes, to reduce corporate taxes, with a growth strategy modelled after the Irish experience.

We seem to embrace a lot of failed economic development strategies or, if I may, old economic development strategies or economic development models like ACOA, which are old-economy vehicles—and I'm sorry for using that term—when we're trying to foster new-economy growth. It's like taking a Model T on the autobahn. I'd like to get your views on using a more aggressive tax base strategy.

Mr. Brian Tobin: First of all, let me say I can just speak to my own record. I was the first Newfoundland premier since 1949—and I think this is more a function of circumstance and opportunity than ideology—to cut sales taxes, cut corporate taxes, cut payroll taxes, and cut personal income taxes, none of which had been cut from 1949 until 1996-97 because no government was in a position to forgo those taxes.

I was fond of saying quite often that if taxing the most and borrowing the most were keys to prosperity, we would have been the most prosperous part of Canada. We tried the other way and it didn't work. So as a way of expressing my own belief, I think you have to have a competitive economy, you have to have a tax base that is attractive to business, and you have to have a tax base that rewards those who work hard. We need to celebrate success, not envy it.

Having said that, you're right, I've paid a lot of attention to Ireland. I've signed several MOUs with Ireland, trying to understand how Ireland was able to turn its circumstances around. It did so because Ireland was able to use equalization as an opportunity for sustaining a program of growth.

But it had something else. It had five-year plans. The first one was negotiated in 1986 by the current Taoiseach, Bertie Ahearn, who was then Minister of Labour under Charles Haughey's government. Government and industry and labour sat down and negotiated five-year plans that set out targets for wage increases, inflation, and GDP growth. Everybody restrained expectations to a certain extent necessary in order to create a very attractive investment climate. It worked very well for Ireland, and they have targeted growth areas. So I think that kind of thinking is healthy.

But let me just say this: When you talk about equalization, it's not a matter of the federal government alone doing a bilateral deal with a province or a number of provinces. As you know, equalization is a contract or a deal between the federal government and all the provinces of Canada.

Certainly, I spent much of the last five years talking with Ralph Klein, with Mike Harris, with the Premier of British Columbia, and others about whether or not we could find a new approach or a fresh approach to equalization. That's the dialogue that has to happen. It isn't just a dialogue here in this place or in this government, it's across this country.

• 1640

I certainly would ascribe to the notion that if we can find a way to break Atlantic Canada, for example, out of a pattern of falling behind the rest of this country in economic terms, our minds should be open to that dialogue. We have nothing to lose from it.

The Chair: Thank you very much, Mr. Brison.

Ms. Jennings, please.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you Madam Chair. Thank you also, minister.

I will move on to a subject that was mentioned by at least two of my colleagues, i.e. universities, to which I would like to add colleges, CEGEPs and infrastructures. I was very happy to hear that funding for the Canadian Foundation for Innovation had been increased. I am also happy with the creation of a partnership in the area of technology and by all the new policies and programs put into place.

However, the deficit reduction effort and the consequent investment reductions made by the federal government as well as by the provinces in our universities, colleges and cegeps have caused a deterioration of the physical infrastructure. Studies have showed that simply to maintain, not to improve but to maintain their infrastructure, they would need at the very least $3 billion. It is not true that the national infrastructures program announced will cover these expenses because, for the most part, it will apply to municipalities, to proposals made by municipal governments.

I would therefore like to know what we and what you can do to help universities in the short term. That is my first question.

[English]

The second question concerns the funding councils. Prior to being in politics, I was appointed to a provincial agency. It was not a funding council but it was an administrative organization. It was created in virtue of a piece of legislation. We had specific powers that once I was appointed, no minister and no government could interfere during the term of my office.

However, I am also very aware, because of my experience, that once you are in a field over time, it can tend to corrupt you without your being conscious of it. It can corrupt you not in the way of money passing hands or whatever but when something new happens the people you consult with are from your little group.

So when you look at, for instance, the funding councils, I look at what is the mechanism in place if a project doesn't get accepted. Who is on the selection committees? It tends to be the same people over and over again. That's one.

A high level of university professors and researchers live in my riding. They come to me and submit a request. Let's say it's a good one. It scored very well but they didn't get it. Then they're told to reapply next year. They do so and still don't get it. They contest because they feel it hasn't been done properly, and it's basically the same people who are reviewing the appeal or the request for a review.

I think that's a problem. I think it's good that it's at arm's length but I think government also needs to have some kind of a process where a committee can review issues like this directly with the council. Let the council come and have some kind of parliamentary governance on some issues for the average individual, or in this case researchers or universities.

If you can't give an answer to that, I'm sure after consultation with your very able deputy minister and your other department officials, you'll be able to come back with an answer.

Thank you.

Mr. Brian Tobin: I'll give a quick response to your comments. Indeed, your comments are very much in line with those of your colleagues on CFI, except you've taken the additional step of talking about whether or not there is an appeal mechanism and to whom appeals are made.

• 1645

First of all, with respect to your earlier comment on infrastructure, I wouldn't propose that infrastructure is going to be an effective means to deal in any substantial way with the infrastructure needs of universities. It's there but it's basically green projects and other priorities, not as a university program. CFI can play a substantial role in infrastructure in capital-intensive requirements for new technologies and new equipment, not so much for bricks and mortar.

Ms. Marlene Jennings: That's the problem.

Mr. Brian Tobin: I understand that. I've been on the other side of this dialogue as a provincial premier trying to do a budget for five years, looking at the needs of universities and colleges. I don't think the federal government can be expected to step in and become the funding agent for all of the infrastructure needs of all of our institutions—

Ms. Marlene Jennings: I agree.

Mr. Brian Tobin: —especially when some of our provinces, not all of them, have very substantial and healthy tax positions. Alberta is an example of that but Ontario is in pretty good shape. Some of them are making decisions to go even deeper in the cycle of tax cuts, as opposed to putting some of that money back into our post-secondary institutions. We'd have the bizarre circumstance, if we weren't careful, of the national government subsidizing additional tax cuts in a provincial jurisdiction because the provincial jurisdiction decided education didn't come first but another tax cut did. There's some balance required here.

To come back, Madam Jennings, to CFI, I think it would be useful and helpful for the CFI perhaps to be invited to come before this committee and talk to members of Parliament from all across this country, to have a sense of the perspective that you bring in reflecting the concerns of the institutions you represent within your ridings, or certainly within your provinces. I think that would be a very useful contribution to the dialogue.

Beyond that, I simply would say to you, I'm taking aboard everything I'm hearing. I regard the commentary of this committee as being important. The fact that it crosses both sides of the divide is, I think, instructive.

Ms. Marlene Jennings: I have just an additional point, given the very valid point you make that some provinces have the coffers. Rather than reinvest part of those coffers or surpluses in the infrastructures of universities, colleges, institutes, and CEGEPs, they have decided to go and put it elsewhere, to cut taxes or whatever. Then, when CFI gives money on capital investments to universities in those provinces, are we not in some way through our arm's length agency rewarding that province? If the province has the money to do it—

The Chair: I'm going to have to stop you there. The minister has a comment and then I'm moving on.

Mr. Brian Tobin: I would think as a general comment, yes, if the federal government decides to fill the gap between what is being done or undertaken by provinces in their responsibilities and/or other priorities, we would be sending out a signal that you can abandon an area of provincial jurisdiction and the federal government will fill the gap. I don't think that's a very good signal to send, but let me just say that with CFI we're specifically targeting research.

This is not so much a bricks and mortar program, and neither will AIF be so much a bricks and mortar program. It is a question of recognizing that if you're going to keep the best and brightest researchers working in Canada, these researchers expect to be able to carry out the work that's important to them in their lives. If they can't do it here, they'll do it somewhere else because their commitment is to research. We need to create an environment that allows them to function in a technologically modern environment. A lot of the equipment associated with research is very expensive. We're giving the universities a chance to catch up very quickly.

So we're not building the buildings, we're equipping the labs.

The Chair: Thank you very much.

Ms. Torsney, please.

Ms. Paddy Torsney (Burlington, Lib.): Minister, I have a couple of opening comments. Certainly on the broadband issue, you talk about the divide between rural and urban. There's also a divide between older urban parts of the country and newer urban parts. I know constituents of mine are very concerned that if they happen to be located in an older part of town, they can't get the same access. We could actually be causing further erosion of downtown cores. You need to be careful of that.

• 1650

The second thing is that my relatives in Ireland would think me totally incompetent if I didn't mention the fact that Ireland is not just about taxes. It's about education and huge expenditures—

Mr. Brian Tobin: Big time.

Ms. Paddy Torsney: —in post-secondary education so that they had the brightest and most talented people, so the companies could come and locate there. Some of the opposition parties just want to focus on the tax cuts, which is really inappropriate.

They actually watched question period and were quite astounded by it. So they really want you to know that it's about education, and we have to increase both the number of people going to post-secondary institutions and the quality there. I was pleased to see you recognizing that with respect to our engineering schools, we are in the top 15 in all of North America.

I have two other concerns. This morning I met with some individuals who are making major waves in the astronomy area. They're saying “Look, we've got this opportunity to piggyback on a big international program. We need ten-year commitments. We're moving from NRC to CFI. We've got the space agency already committed for $100 million.” Is there a way for these organizations to get everyone at the table in an innovative way so they can move forward? Because a pocket here and a pocket there and a pocket the other way does not an international commitment over ten years make. So it's complicated for these guys.

As for my last question, you speak on page 7 about the innovation agenda and say that after Bill C-17 passes and we meet our commitments to the WTO, you want to engage parliamentarians in exploring our intellectual property regime and sustaining our interactive environment for investment. When do you see that rolling out? Is that September? Is it sooner than that? Is it going to be a national consultation? What program are you going to embark upon?

Mr. Brian Tobin: With respect to international research, first of all, the project you're referring to in particular is one we're now seized of and are examining within the Department of Industry. We have not come to a conclusion on that particular project.

Generally speaking, international research is one of the two areas we try to respond to; there's a concern about that in the October budget statement. We put $100 million down for indirect costs with respect to CFI, for smaller schools that can't afford to carry those costs themselves. Secondly, we put aside another $100 million, over and above an existing $100 million, for international collaboration.

So we recognize that what you say is quite true. You can't put research in a box and say that if it's done in Canada, period, we've met the criteria to remain innovative and competitive. We need our researchers to be able to link up, to make longer-term commitments, and to work with researchers around the world. We're funding more of that. We could always do more, but we've made an additional commitment of $100 million, for a total of $200 million.

The Chair: —

[Editor's Note—Inaudible]

Mr. Brian Tobin: Looking at the work plan of this committee, unless you're able to dispose of much of this work sooner—certainly to operate a lot better than when I was a member of committees in the past—I think realistically, on the last point you've made, intellectual property regime, that is a matter to come back to in the fall. I can then come back, make a full presentation, and seek the advice and help of the committee.

The Chair: Thank you, Ms. Torsney.

Mr. Penson, please.

Mr. Charlie Penson (Peace River, CA): Thank you, Madam Chair.

Minister, I'm happy that you're here today, and I look forward to having you here more often so that we can get into these issues a bit more.

I know your department has a lot of demands on it. In fact, the Canadian government has a lot of demands for spending money. In the area of innovation, research and development, and science and technology, we've talked at length today about some of these programs, but I have two questions. The first one arises because I didn't understand well enough from the answer to Mr. Manning's questions how these decisions are made, what kind of process is involved.

You're funding a lot of different groups—CFI, the R and D tax credits, the Atlantic Innovation Fund, the research councils, Technology Partnerships, networks of centres of excellence, university research chairs, biotech, the Canadian Space Agency. Mr. Minister, I know you told us there are excellent groups making recommendations in all of these different programs—A, B, C, D, and so on—but how do you rate them? How does that work? If you don't have the answer today, I'd be happy if you could provide that to us, because it's of interest. We need to know if taxpayers' money is being allocated in a manner that is beneficial.

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Secondly, once the decision is made to fund programs such as TPC—and I'll just use that as an example—my question, again, is this: How do taxpayers know they're getting value for money? We've not been able to have a transparent process so that, as members of Parliament, we know if the companies receiving these repayable contributions are actually paying them back.

The money goes into a global pool, and that's not an adequate process in my view. I think if we're going to continue down that road, and continue to make investments that way, there needs to be better transparency. I would challenge you to provide it for those programs so that we parliamentarians can answer those questions on behalf of our constituents.

Mr. Brian Tobin: First of all, just to put things in perspective, how does government make the decision to fund TPC or CFI or any of these programs? These are decisions of cabinet. They're certainly not decisions made by the Minister of Industry alone, or the ministers associated with Industry Canada, or internally in the department. These are all cabinet decisions, as they ought to be.

Secondly, to give some perspective on the number of funding councils or agencies functioning under Industry Canada, this is a total portfolio...

What's the most recent number?

Mr. Peter Harder (Deputy Minister, Industry Canada): It's 17,197 people and $3.94 billion, approximately.

Mr. Brian Tobin: But of that budget, about $1.2 billion is for the Department of Industry itself and its own internal programs. So all the other funding agencies that report through Industry Canada, all of the various institutions we've talked about—there are 15 in total on the list—are discharging their responsibilities, their mandates, and their budgets, most of them, fairly arm's length from government in terms of individual applications or funding decisions. What they have is sets of criteria, which Parliament gives to those agencies.

CFI results from legislation, as you know—and there'll be a review of that legislation in due course—as do all the other funding agencies. That's why I make the comment, and I think it's a fair comment, that these agencies, because they operate at arm's length and with peer review, shouldn't be distant from Parliament or the committee process. It's quite legitimate for you to ask the agency to come and describe for you how the process works, how decisions are made.

I would make one other comment. All of these agencies, every one of them, are subject to independent third-party audit. Every one of these agencies report, through me, to Parliament, and every one of them can be examined by you, or by this committee, or for that matter by any member of Parliament in the House of Commons.

Mr. Charlie Penson: Last week you announced a $750 million increase for the Canada Foundation for Innovation. Did you have to go to cabinet, to planning and priority, to get that?

Mr. Brian Tobin: Absolutely.

Mr. Charlie Penson: And that's how it's handled, through planning and priority at cabinet?

Mr. Brian Tobin: Always. Any kind of funding decision that large is determined by cabinet. It's in close consultation, obviously, with the Minister of Finance, the Prime Minister, and the sponsoring ministry, which in this case is Industry Canada, but it's a cabinet decision.

Mr. Charlie Penson: Okay.

Perhaps you can answer the second part of my question with regard to the transparency of agencies and whether these repayable contributions are being paid back by the companies involved.

Mr. Brian Tobin: In the case of TPC, for example, we give a full accounting of all our accounts. I think I can report to you today—

Mr. Charlie Penson: Excuse me, Mr. Minister, but my point was that I know a global amount is shown, but if, for example, Pratt and Whitney receive a repayable contribution, then down the road, perhaps in ten years, how would we know that Pratt and Whitney has paid that back?

Mr. Brian Tobin: Peter, do you want to comment on that?

Mr. Peter Harder: Subject to commercial confidentiality, there are some ways in which it's circumscribed, but we do report to this committee what funds have been repayable. Last year, for example, TPC received $16 million in repayable contributions. We expect that to go up to $20 million this year. That's early in the cycle, and we're still collecting on some of the previous... In the DIPP program, for example, with respect to one particular jet investment, we will generate about 240% return.

Mr. Charlie Penson: I understand that, but that's not the point of my question. As you can understand, I'm looking for specifics with regard to individual companies that are required to pay this back because it's a repayable contribution.

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My question stands: How do we know?

Mr. Brian Tobin: Well, I think I can say to you that if there are any specifics you'd like to address to me through the committee, through Parliament, I would be very glad to give you the answers—bearing in mind the constraints of commercial confidentiality. Frankly, I think the program needs to be as transparent as possible.

Let me give you an example. I myself looked into whether or not, through not TPC but EDC, the various customers of Bombardier, for example, who have had assistance through EDC in the past, were compliant. The answer was 100%.

Mr. Charlie Penson: Okay. I will look forward to that.

The Chair: Thank you, Mr. Penson.

Just to remind committee members, we'll be doing estimates in a short time and we'll have many of these different groups here, and there will be opportunities. The minister will be back to talk about plans and priorities and estimates down the road, so there will be that opportunity.

Five people still want to ask questions. We have 15 minutes before the bells start to ring.

Mr. Brian Tobin: Can I suggest that we listen to all the questions, and try to respond at the end? That way, all the questions would at least get on the record before time runs out.

The Chair: If everyone's in agreement, we can try to do that. Okay.

Mr. McTeague.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): I'll be very brief just to make sure the other four have an opportunity to ask as well.

Minister, has your department given any consideration to the changing landscape of the Canadian economy, particularly in the areas of concentration we've seen right across the plenum of our economy—airlines, transportation, grocery, energy, telecos, media, financial institutions?

On the last point particularly, there's an article today in one of the papers that suggests the question of mergers with respect to banking may very well turn into something of a race as to who comes first should there be yet another round of proposals to change. Are your department and the Competition Bureau equipped, financially and otherwise, to be able to deal with all merger questions? Do they have the resources?

Secondly, you've suggested... to make sure that we have Bill S-17, dealing with the patent question, as it complies with Canada's obligations of the WTO. I wonder if you could tell us whether the infringement used by patent holders, which has the effect of delaying new or copied drugs onto the market, is part and parcel of that WTO obligation.

That's my final question.

The Chair: Mr. Rajotte.

Mr. James Rajotte (Edmonton Southwest, CA): Thank you, Madam Chair.

Thank you, Minister Tobin, for appearing today. The same goes for Peter Harder.

My question relates to science and technology. Obviously this is an area of increasing importance. In fact, the committee's name is changing to reflect that. This increasing importance for society, government, and policymakers has placed a burden on parliamentarians as policy-makers, because most of us simply do not have a scientific or technological background. But we are placed in a position of having to make decisions relating to science and technology.

I see that as a problem. In Britain they have addressed this problem by establishing a scientific advisory panel to advise and guide parliamentarians on scientific and technological issues. This panel reports to and advises Parliament directly.

My question is, in order to assist Canadian parliamentarians, would you be willing to institute a chief scientist of Canada who would report directly to Parliament and who would help coordinate science issues in all departments, help scientists communicate their findings, and help bridge the gap between scientists, bureaucrats, and elected officials?

The Chair: That's a very long question but a very good question.

Mr. Savoy.

Mr. Andy Savoy (Tobique—Mactaquac, Lib.): Thank you very much, Madam Chair, and thank you, Minister, for coming here today.

In response to the question from the member across the way, I think maybe everyone on this committee should get an engineering degree. Then we'd all be talking on the same level.

Ms. Paddy Torsney: But would anybody understand us?

Mr. Andy Savoy: Back to university funding and small universities, I have a very short question. Has Industry Canada considered the cluster arrangement for small universities? I realize that presently, and in the past, the majority of R and D has been focused on five or six large universities.

Mr. Reg Alcock: Four.

Mr. Andy Savoy: Four, thank you, Reg.

However, there is certainly some validity to the cluster arrangement whereby smaller universities work as a cluster with their core competencies and together form a critical mass. Especially in this day and age of information technology communication that's available to all sectors, think it would be very valuable. I'd like to hear what the minister has to say on the cluster concept.

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The Chair: Mr. Bélanger.

Mr. Mauril Bélanger (Ottawa—Vanier, Lib.): I have a couple of questions, Mr. Minister.

First, I'm curious to know if you have ever, as minister and spokesman for the Government of Canada, indicated the government's position on the matter of proprietary information on the human genome, as to whether the government believes we should allow or encourage patenting of human or higher life forms or whether the information of the human genome on basic genes and the sequencing of genes belongs to everybody.

Secondly, in the 1990s, Canada participated in the international human genome effort—a rather small one, some $20 million—and it lapsed. While research accelerated, we didn't act. Now, finally, we have acted, and I congratulate you on the recent announcement of the doubling, essentially, of our commitment to that field of endeavour.

There is another field of endeavour that may be very similar, and that is nanotechnology. I am advised that the Government of the United States plunked down $500 million last year on a nanotechnology institute. Even if we applied the traditional 1:10 ratio, that would indicate perhaps a $50 million commitment in Canada towards nanotechnology and its massive significance in the future. What is the Government of Canada's position vis-à-vis supporting a nanotechnology institute or spending in the field of nanotechnology?

I also wish to add my support to Ms. Torsney's comments about the astronomy file. I think that's an area in which Canada has had a rather good reputation internationally, and for the relative amount of money for which they are asking, perhaps the Government of Canada ought to consider doing that.

My final question would be on consumers affairs, but perhaps this is an overtone for some other time.

I am of the view that there perhaps may be an inherent conflict in the industry, science and technology department in that it is the voice of industry and is also called upon to be the voice of consumers. What happens when there is a conflict between those two, such as some people believe there to be in the biotechnology area or even mandatory labelling of genetically modified goods? At some point—we perhaps do not have the time now—I'd like to have your comments and thoughts on that whole aspect.

Thank you.

The Chair: Mr. Cannis has a very brief question.

Mr. John Cannis (Scarborough Centre, Lib.): I get to sweep up.

Minister, very briefly, aside from welcoming you to the committee, you saw how the government members here don't distinguish whether it's government officials or not. They become more aggressive.

If you can, I'd like you to just elaborate on the Canadian Space Agency and its funding or lack thereof.

The Chair: Thank you, Mr. Cannis.

Mr. John Cannis: That's it?

The Chair: Minister, you have a great challenge. You have about six or seven minutes to try to answer those questions. Good luck.

Mr. Brian Tobin: I think the Canadian Space Agency is well funded. The next big signature event is going to be the payload worth $1.2 billion, all in capital and operating costs of the Canada Space Arm 2, taking off on April 19. I hope some of you will be there, at the Kennedy Space Center.

An hon. member: I'll be there.

Mr. Brian Tobin: Do you mean on the shuttle or on the ground?

Voices: Oh, oh!

An hon. member: Can you arrange that?

An hon. member: Because if you can, I'll go.

Mr. Brian Tobin: I think we've been a very major participant in this program. It's 16 nations. I think we have a terrific buy-in, and we've been able to demonstrate Canadian know-how and technology. This new arm is going to be a real icon for us.

Going backwards here, with respect to the question raised by Mr. Bélanger on the human genome, as you know, we have the Canadian Biotechnology Advisory Committee now consulting on many of the questions you've raised. In addition to that, the Minister of Health indicated earlier this year that he intends to bring forward legislation covering many of these questions in this session of Parliament.

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I don't think I would want to pronounce prior to hearing back from the advisory committee, and we expect to do that later. Perhaps later this spring or early in the summer we'll get information and advice, and at that point I'd be very glad to come back and have a broader discussion.

But generally speaking, obviously the mapping of the human genome is an important event in the history of humanity from a science perspective and ought to benefit humanity and not just private individuals who would seek to take profit from it.

You also mentioned consumer affairs and whether there is an inherent conflict. I think that is a fair debate and a fair point to raise. I would argue that you could equally debate or raise the point that since Industry Canada has within it the consumer affairs branch, we have a sensitivity to the consumer side of the question, not just the business side of the question, that may otherwise be lacking in our policy formulation as an organization. But that's a broader debate that I'd be glad to engage in another day.

Mr. Savoy raised questions with respect to cluster arrangements. I want to report to Mr. Savoy that this is exactly what we're encouraging now. That's part of the dialogue and discussion now with all the institutions in Atlantic Canada with respect to AIF. That's precisely what we're asking them to do and they have agreed to do, to avoid putting the advisory panel, or for that matter, the government, in the position of trying to replicate in every centre, every bit of research expertise that might be available in one location. So we're very pleased that there has been a positive response to that, and in fact that's the road we're going down.

On science and technology, my colleague has said parliamentarians don't have the background to... and I think that's a fair comment. First of all, none of us have the background, and neither does the minister. Second, this business is changing so quickly that we need a capacity as policy-makers, those of us who are involved in making policy, to be well equipped and well informed about the kind of funding decisions we're making. If we want to compete in a global and modern economy, we don't have the luxury of taking an awful lot of time. If we want Canada to be a player, Canada has to be swift, not just smart, in our decision-making process.

I can't give you an answer today to the notion of naming a chief scientist. Frankly, it's not within my purview. That would be a question on structure of government, which really goes to the Prime Minister and the prerogative of the Prime Minister.

That being said, on the notion of ensuring that members, in particular members of the committee, are well equipped, I would respond to you by saying that if specific suggestions came from the committee as to how the committee could be better equipped to do its job, and those required a constructive response from Industry Canada, I can assure you, without seeing your list of requests or demands, that I would be most positive, as positive as I could be, in my response to any suggestion you would make as to how we could assist you.

Oh, Reg has a grin on his face. Can I take back that last sentence?

My final comment—I'm cognizant of the clock, and I regret that I have to move as quickly as I am—concerns the questions that came from Mr. McTeague with respect to the Competition Act. We're very close to concluding deliberations within the department on the components of the act that we intend to propose to you, and because that deliberation is not complete, I don't want to offer a more complete answer today.

Are we aware of issues surrounding concentration and so on? Yes. Is it a matter for discussion? Absolutely. Is it appropriate to amend the act and to respond to much of the work that has been done here? To be quite frank, I think you'll see within the package of amendments we provide, quite literally, something that is very much a direct response to the work of individual members of this committee, yourself and others.

I can't say more than that today, because we haven't made a final call. We will shortly, and we would ask you for your advice and views.

The Chair: Thank you very much, Mr. Minister.

Mr. Brian Tobin: On nanotechnology, we're working on it. We're currently seized with that question. I don't want to get ahead of the process, but we're very much interested.

The Chair: Thank you very much, Mr. Minister. We look forward to meeting with you again.

Perhaps if the technology is working, the bells will begin to ring. If not, I would remind everyone that there is a vote at 5:30 p.m.

Mr. Brian Tobin: Thank you very much.

The Chair: Thank you.

The meeting is adjourned.