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Jason Nickerson
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Jason Nickerson
2021-05-28 14:08
Hello. Thank you for having us here today.
We're going to speak about two issues that are part of the committee's study from the perspective of our organization, which provides medical assistance to people affected by crises in more than 70 countries around the world.
First, Canada should support the TRIPS waiver. The waiver is not a complete solution to scaling up and diversifying COVID-19 vaccine manufacturing to address the supply shortages, but supporting the waiver quickly clears space and removes legal barriers to then focus on the many other barriers. We emphasize that any waiver must encompass not only vaccines, but other tools like therapeutic drugs and diagnostics and medical devices such as ventilators, as well as the components and equipment needed to make vaccines.
Canada's position during discussions around the TRIPS waiver has been one of indecision—never formally rejecting it, while repeatedly raising alternatives that have failed in the past.
One such alternative raised is the TRIPS article 31 bis mechanism, which is operationalized by Canada's access to medicines regime, or CAMR. It is our position that Canada should follow through on its own claims of CAMR's effectiveness by taking the necessary first step of adding COVID-19 vaccines and drugs to schedule 1 of the Patent Act. While Doctors Without Borders does not believe that TRIPS article 31 bis or CAMR are effective tools at the best of times, let alone sufficient in this pandemic, Canada's failure to even list these items in schedule 1 means that Canada is the single greatest roadblock to utilizing the very tools it has promoted at the WTO.
The second issue we would like to discuss is domestic production. MSF supports increased domestic production, but it must be done correctly. If Canada's approach to scaling up biomanufacturing in this country is to provide financial support to pharmaceutical companies to build factories here, this funding must come with guarantees of affordable access to the final products, both for Canada and for the rest of the world. This is just common sense. If the public is paying to develop and manufacture medicines, we should all be able to access them at fair prices. To this end, Canada must also be transparent about the terms of all such deals.
Another key question is what to do between pandemics with the public manufacturing capacity that Canada is building. New quality-assured manufacturing capacity that has been initiated for the purposes of producing COVID-19 vaccines should not be shut down or sold off to private interests after the pandemic fades. Rather, Canada should use this capacity to address other important global health issues. Producing a range of products keeps facilities operating and Canada's skills sharp. After all, it's not clear what the next pandemic will be, and the world needs a diversity of manufacturing capacities.
Canada has world-class researchers. Where it falls short is in end-to-end development to get innovations out of labs and to patients. Products that are vital for global health but have limited commercial appeal have no real pathway to approval.
Take the Canadian-invented Ebola vaccine, discovered by scientists at the National Microbiology Laboratory in Winnipeg. After discovering it, Canada signed a deal to license it to an American company. This ultimately led to the vaccine languishing on a shelf for years. This meant that this effective vaccine was not ready in time for the 2014 West African Ebola outbreak. To be blunt, this cost lives.
Canada has other promising experimental vaccines, such as the ones for Lassa fever and Marburg virus, which have faced similar challenges. End-to-end production from lab bench to patient bedside ought to be part of our biomanufacturing strategy.
Our overarching message here is that there are many important diseases that are essentially market failures: They are not profitable enough to attract investment from private pharmaceutical companies, yet they represent significant public health threats. Ebola, Lassa fever, Marburg and, prior to this pandemic, coronaviruses are all examples.
There are also many important drugs and vaccines that already exist and are regularly in shortage or hard to obtain. Diphtheria antitoxin, the product Connaught Labs was founded to produce, is now almost impossible to procure worldwide. We know this first-hand because when we were responding to simultaneous diphtheria outbreaks in Yemen, Bangladesh and Venezuela in 2017, we quickly realized how few options existed. The same is true for many antibiotics and other low-profit medicines.
A robust biomanufacturing strategy that is guided by public health needs—and not the pursuit of profits—is what needs to guide Canada's biomanufacturing strategy, which ought to be linked to a research and development strategy—
Natasha Hope Morano
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Natasha Hope Morano
2021-05-25 16:27
Thank you, Mr. Chair.
My name is Natasha Morano, and I am an entrepreneur. I am honoured to be here today representing Startup Canada as the corporate and government affairs director.
Since 2012, Startup Canada’s programs have been a gateway to every stage of the business cycle, from ideation to inception to growth.
Startup Canada enables connections, education, promotion and advocacy. We are accessible to 3.5 million entrepreneurs across the country with 30 active communities from coast to coast to coast. To tell the story of every entrepreneur in five minutes is of course an impossibility. The differences amongst them are countless. What ties them together is that each takes the reins of their own financial destiny. Many may have started through passion. Many more have been thrust into entrepreneurship through necessity, and many, unfortunately, have been left behind.
Entrepreneurs are the pistons of the engine that creates jobs, growth, and resilience. They are an essential piece of our country’s economic recovery, and they rely on trusted authorities, experts and qualified enablers of simplification.
The infusion of funds that budget 2021 offers will provide equitable access to support. It is an enormous step in reinvigorating an inclusive economy. Startup Canada is looking forward to the road ahead and the role that we can play in paving it. It is our goal to help ensure that there is no redundancy in the rollout of these programs and that the support offered in budget 2021 gets into the hands of the entrepreneurs who so desperately need it in a quick and efficient manner.
Entrepreneurs are the critical pistons in our nation’s economy and in our recovery efforts through this pandemic, and they need a reliable ignition system. They need access to trusted organizations that know their pain points and develop programs in response to their needs. The Government of Canada should look to partner with like-minded organizations that are equally charged by powering up entrepreneurs and that understand their needs.
The government’s investment of over $100 million to support inclusive entrepreneurial growth is designed to provide new funding for national organizations to lift up diverse entrepreneurs and small businesses across the country through financing, mentorship and advisory services. This design is an absolute mirror of Startup Canada's own mandate, so it is welcomed.
The pandemic has displaced many Canadians and numerous industries. The Canadian Federation of Independent Business estimates that 239,000 businesses are at risk of closing because of the pandemic. This situation must be curbed. COVID-19 has claimed a disproportionate number of jobs held by women. Women account for 37% of self-employed Canadians. Budget 2021 proposes to provide up to $146.9 million to strengthen the women entrepreneurship strategy. This is a good first step in supporting women entrepreneurs, but there needs to be more.
There is an urgency among entrepreneurs to digitize quickly, to move from storefront to e-commerce, from neighbourhood-based to cross-country, and from operating locally to exporting products and services abroad. The government's commitment to help entrepreneurs magnify the scope of their markets and increase the supply of well-paying jobs is welcomed.
Startup Canada is pleased to see that the government recognizes the importance of investing in programs that support businesses and entrepreneurs to be globally competitive. However, businesses start at different rates with different ultimate goals. There needs to be more early-stage support for entrepreneurs who are not globally minded but who have become entrepreneurs out of necessity and are not the “unicorns” of tomorrow. They require simple, easy-to-use tools and advisory support as they try to make a living for their family.
Startup Canada looks to simplify the process for the Government of Canada to roll out programs while also ensuring that entrepreneurs have limited barriers to program entry. We need to make the journey of being an entrepreneur much easier. We need to consolidate and shepherd entrepreneurs through all of the available support that exists across the Canadian ecosystem from incubators to accelerators to public and private sector support and beyond.
Entrepreneurs, more than ever, do not have the time to research what is available to them, particularly as these supports are revised or changed daily. Let’s save them the time so that they can work on their businesses and support the Canadian economy as a whole.
Everything budget 2021 sets out to do as pertains to support for entrepreneurs is what we do on a daily basis. There is no better time to invest in Canada’s entrepreneurial ecosystem. While there are numerous opportunities for entrepreneurs in budget 2021, there remains a gap in support for early-stage entrepreneurs who have that entrepreneurial spirit running through their veins. There is no safety net to capture them if they fall. These are the entrepreneurs who remain left behind and who require support. They are asking for the foundational support to ensure they are equipped with sound advice and the advisory assistance they need to start their businesses on solid ground and consequently create jobs.
Mr. Chair, Startup Canada is grateful for the opportunity to work with the government to throttle the economy fuelled by budget 2021.
Thank you.
View Michael McLeod Profile
Lib. (NT)
I'll just put the question out to whoever wants to answer it.
The NWT has a very well-established and well-renowned tourism sector that makes up a significant portion of our economy. We've probably had tighter restrictions in the north to limit travel to and from our territories, from outside of the country but also from other regions of Canada.
With the budget's announcement of $1 billion in support for the tourism and events sector, including $500 million to the regional development agencies for tourism businesses and $100 million more for Destination Canada, do either of you anticipate that this funding will help your membership through the remainder of the pandemic and help prepare for the eventual reopening of our regions to tourists?
Éric Paquet
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Éric Paquet
2021-05-25 17:41
The billion dollars set out in the budget to help the tourism sector cannot be overlooked, with $500 million being administered by the regional development agencies. We still don't know how the funding will be allocated; the details are expected to come out a bit later. The money will support tourism initiatives in every region of the country, and that's a good thing. It will be allocated on a by project project basis.
However, as I said earlier, tourism businesses are on their knees. For more than a year now, they have been running on a fraction of their normal revenues. Right now, business owners just want to stay afloat until their revenues return to normal. That is where their heads are at right now, which is why we are asking the government to extend the wage subsidy and the rent subsidy. The rent subsidy, which helps businesses cover fixed costs, has been a real lifeline. Both support programs have kept the tourism sector and tourism businesses alive.
The feedback we are getting from businesses is this: being able to pivot and develop new products and services is great, but right now, all they want is to have access to those programs so they can make it through the crisis. Once they are on the other side, they can work on offering new products and services.
Mr. Ryan, is there anything you would like to add?
Jean-Michel Ryan
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Jean-Michel Ryan
2021-05-25 17:43
At the risk of repeating what's already been said, I would stress that businesses really need to get through the end of the crisis if they are going to bounce back.
The Destination Canada funding and other investments in the budget are certainly important, but the focus is on helping businesses prepare for the recovery. The sector has to be able to rebound, however, and private businesses, in particular, need the resources to do so, as do other organizations.
To reinvest in tourism products, services and infrastructure, businesses need a minimum amount of capital so they can access future programs. If they are not in a position to make that investment, they can't access the support programs or participate in the recovery.
That is what tourism businesses are dealing with right now.
View Pam Damoff Profile
Lib. (ON)
Also, on the capacity-building piece, you'll never get to the equity benchmark if the organizations don't have the capacity to apply. I often hear, “We didn't get enough applications.” Then I talk to organizations, and they say, “Have you looked at the application form? We're trying to do good work in the community. We don't have the time or the knowledge to be able to fill that out.”
Thank you for that.
I have about 45 seconds left, so just quickly, for Startup Canada, I know the women entrepreneurship strategy has been very successful in my riding. How important is it within that type of funding for start-ups is it to have, just as I was talking about, these equity benchmarks for women-led businesses, Black-led businesses and indigenous-led businesses?
Natasha Hope Morano
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Natasha Hope Morano
2021-05-25 17:56
Absolutely, it is incredibly important, and we need to see that long term. That's the big piece.
Similarly with the procurement diversification, I'm really happy to see that there is additional support for under-represented groups. As we're going to look to our great rebuild, we look to the role that entrepreneurs play in creating and stimulating a very sound, strong Canadian economy. We need to be as inclusive as possible and make sure that all voices, all entrepreneur voices, are included in the high-level policies that are going to be implemented.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Mr. Casey, thank you for describing the ecosystem in your field so well.
The field has a lot of small businesses, some of them start-ups. Is there anything the government can do to take them to another level, so that when they make a discovery or have an innovative idea, they don't sell it to a big player?
Would it be worthwhile to allow them to continue to grow and become stronger?
Andrew Casey
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Andrew Casey
2021-05-21 12:06
It is definitely a key objective that we have to strive for.
We have to create anchor companies. We've been very good as a country at creating a lot of early-stage companies, and as you indicated in your question, many of them are sold off. They go to the large multinational companies.
Part of that is an absolute business strategy that is a reality. You have a small product, one single drug. You recognize that you want to sell it to the world. You need the infrastructure that the large companies provide. You're never going to become a big pharma company overnight, so you will pursue that path.
For others that have platform-like technologies or manufacturing capacity, like Medicago, AbCellera or Repare, they are more likely to be able to stay here in Canada and grow. If we want to get to that, we have to figure out where the gaps are. Some of that is investment capital. It's the talent piece, but there are also some other tax incentives. There are things like patent boxes, which are being used in other jurisdictions, that allow companies to earn money from their innovation but not be taxed at a high rate until they become a commercially profitable company.
Incentives such as that, tax measures such as that, would be really important to keeping some of those companies here.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-05-21 12:22
Thank you, Mr. Chair.
I want to ask a question of Mr. Casey.
You've come across as a bit of a cheerleader for the government on its innovation policy, but you also mentioned RIM and we just happen to have had Jim Balsillie here yesterday, who had quite a different perspective on the state of how we approach innovation in Canada. He was talking about innovation writ large, and you're focused on biotech.
However, he did mention the dramatic shift that has happened from a tangibles economy to the intangibles economy, which you just touched upon, and I was waiting for you to touch upon that. I'm going to ask you to expand on that a bit and also to comment specifically on the absence of patent box legislation in Canada. By the way, I've also met with AbCellera representatives. They highlighted the fact that they're being encouraged to move out of Canada because we don't foster an environment in Canada that would keep our start-ups in Canada. Our commercialization is appalling.
Therefore, could you comment broadly on how we address the issue of a new economy and how we specifically implement policies that are going to keep our start-ups in Canada?
Andrew Casey
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Andrew Casey
2021-05-21 12:24
That has to be at least a significant objective, because we put in all those investment dollars and we use tax credits and all, which are basically funded by the taxpayers. You create this fantastic collection of companies, and then if you allow them all to go, we miss out on the real commercial benefits of having those companies grow and become large commercial companies.
My reference to RIM really was more about what it did for the local community in southwestern Ontario, in that once it was up and at its peak, it just created more entrepreneurs, more investment and became a self-fulfilling prophecy.
Just on the patent box, to talk about that at bit, that's an ability to take your IP and earn some dollars off it while you're not yet commercial and to have those dollars taxed at a lower level. This is not something crazy. It has been done in other jurisdictions quite effectively, such as the U.K., which has a life sciences strategy. I think that's probably where I would go with this—to ask how we connect all of this.
We do everything in silos. We do pricing and reimbursement in a silo. We do investment in a silo. We do R and D in a silo. We have universities and talent, but is it all connected? The health and biosciences economic strategy table did a really good job of laying out all the assets we have and has identified a need for a cohesive way to bring it all together so that it is all connected and is truly an ecosystem. Like any ecosystem, such as a coral reef, every piece of it has to be healthy, alive and vibrant if the whole coral reef is going to be healthy. That's what we need right now.
We have all these great investments. We have the infrastructure. We have the talent. We have all the companies. Now we need to connect it all with a coordinated life sciences strategy, not only at the federal level but one that ties into all that's being done at the provincial level as well. There are provinces that are equally pursuing the investment area, the tax area and the talent area, so how do we bring it all together?
That would be my advice. If we're going to do this, if we're going to create companies that are anchor companies in Canada, let's do it through a strategy.
View Julie Dzerowicz Profile
Lib. (ON)
Thank you so much, and thank you to the three presenters for the excellent presentations.
Ms. MacNaughton, I'm going to use you as an example to anyone in my riding who feels that they can't get anything done at the federal level. I will be using your name shamelessly, and I hope you don't mind.
Most of my questions are going to be addressed to Mr. Casey. I think most of my colleagues don't know, but I actually worked in biotech for a number of years when I came out of MBA school. I worked for a tiny company named GlycoDesign. I helped it go public. It ended up being sold to Inflazyme. Therefore, I'm very familiar with the issues within the industry, first-hand.
You were right in terms of indicating that we have tons of amazing ideas. We have enough money for the start-ups. Many of our ideas are actually sold to larger companies.
One of the key issues that existed then and I still think exists right now is building that capacity to actually help grow a company to the next level. One part is the investment, but the other part, in addition to having the talent—and I do think we do attract our fair share of talent and we could do more—is building that capacity to be able to run that larger organization.
What can we do to help build that capacity?
Andrew Casey
View Andrew Casey Profile
Andrew Casey
2021-05-21 12:28
Again, as I said, the investment is always a big part of it. The dollars that need to flow to the sector are absolutely critical.
There are some roadblocks that some of the companies have also identified most recently. If you look at AbCellera and Repare in Montreal, and other companies, they've identified the access to wet lab space as actually pretty critical right now. There is an absence of wet labs in this country, and I think we have to grow more of that.
I do believe the budget contains some dollars that will be dedicated towards that. It still remains that, ultimately, there's going to be a talent issue at a certain point.
Most companies would like to stay here, and if we can overcome some of those roadblocks, I don't think there's a huge issue of losing them, other than making sure that we're keeping an eye on what other jurisdictions are doing to try to take those companies away.
AnaBela Taborda
View AnaBela Taborda Profile
AnaBela Taborda
2021-05-20 14:54
Thank you. That's quite okay.
Good afternoon. My name is AnaBela Taborda. I am branch manager of IC Savings Credit Union and chair of the Little Portugal on Dundas BIA, or business improvement area, in Toronto, in Davenport riding. Thank you for inviting me to take part in this call.
Little Portugal on Dundas BIA represents a collection of approximately 325 small and independent businesses along Dundas Street West in Davenport. We are one of over 80 such organizations in Toronto whose entire focus is on the success and growth of our local economies.
Toronto's BIAs represent a diverse range of organizations with priorities that are defined by local business stakeholders. All funds raised by BIAs are reinvested back into their local communities. Over $1.4 billion have been paid in taxes by BIA members, and together we employ over 551,000 individuals. That’s a massive contribution, and a huge responsibility for individual business owners.
In my role as branch manager of IC Savings, a financial institution in Little Portugal, I witnessed the struggle of many small businesses during this pandemic and how the COVID-19 economic response plan and the initiatives put in place by the federal government provided financial help, without which it would have been virtually impossible for our small and independent businesses to survive. We had very few closures in our BIA, thanks to these programs and the ongoing work of our local MP, Julie Dzerowicz, in tirelessly advocating on our behalf and connecting with our membership to help guide them through the available options. Thank you.
Further, I also want to thank the federal government for increasing Canada’s COVID-19 vaccine supply, which is vital to the recovery of our citizens and small businesses.
We are encouraged by a number of proposed items within budget 2021's support for small business and we look forward to their implementation. We do have some concerns, however, as to the timing, duration and design for some of these initiatives. We are keenly aware that although the future is looking brighter, small business continues to suffer. Indeed, full recovery is still a long way off.
An example would be CEBA. Although it is stated that if a business repays their loans by December 31, 2022, up to a third of the value of their loans—meaning up to $20,000—will be forgiven, we know that even a deadline of December 31, 2022, may still be too soon for our individual business owners to manage.
Another example is the budget 2021 extension of the Canada emergency wage subsidy and the Canada emergency rent subsidy and lockdown support beyond June 2021 to September 25, 2021. We believe this should be extended further, because we must first take our small businesses to a livable state before we even consider setting upon any road to recovery.
Helping small and medium-sized businesses move into the digital age we applaud. The Little Portugal on Dundas BIA has been at the forefront of adoption of Toronto’s Digital Main Street program. We have benefited from having a digital service squad member fluent in Portuguese, since in some cases language was a barrier.
Language challenges aside, however, we cannot force people to adopt a digital program. The design of the Canada digital adoption program must be carefully engineered, understanding that many main street independent businesses are slow and unable to adopt for many legitimate reasons and that some will need support in their native language. The program must be adept at uncovering the barriers up front and addressing them directly before the digital training can take hold and be effective in practice. We know this is the case because of the number of current businesses we have worked with that needed additional hands-on assistance with all government relief programs, subsidies and initiatives, since only online access was available, and for obvious reasons.
But again, we do applaud this initiative.
In regard to new businesses, part of the recovery will be welcoming new businesses into our BIA. We need these new businesses to create new jobs and replace any that may have been lost. We need all levels of government to create ways and means of helping us attract new businesses and helping sustain them in their first years as the country emerges from the pandemic. Proof of revenue loss criteria for government subsidies or relief program applications, for example, must be revisited to be more sensitive to a start-up’s reality.
With regard to accessibility, approximately one in five Canadians, or about 6.2 million people aged 15 and over, report having a disability that limits them in their daily activities. That would include the ability to visit main street businesses.
The Accessible Canada Act was developed following the most inclusive and accessible consultations with the disability community in our country's history. More than 100 accessibility organizations and 6,000 Canadians took part in the consultations. What can be done and how can we prepare, as our population continues to age, to improve the accessibility of Canada’s main street businesses?
In closing, I’d like to say that as the government continues to develop COVID-19 recovery programs, we ask that our local MP representatives continue to actively engage us in the development of those programs. Our BIA boards and staff are highly skilled and adept at identifying potential challenges among our memberships and are only too happy to assist in any way we can.
Thank you.
Liette Lamonde
View Liette Lamonde Profile
Liette Lamonde
2021-05-20 16:08
Thank you, Mr. Chair.
Thank you to the members of the House of Commons Standing Committee on Finance for inviting me.
My name is Liette Lamonde, and I am the president and chief executive officer of Bonjour Startup Montréal, a not-for-profit organization whose mission is to better position Montreal's start-up ecosystem for success. We work to accelerate the creation, growth and influence of Montreal's start-ups by mobilizing a wide variety of partners. The ecosystem is made up of accelerators, incubators, investors, universities, large companies and, of course, governments.
Our organization was created in late 2018 by the OSMO and Montréal inc. foundations, with the financial support of the Quebec government, the City of Montreal and the private sector. In the fall, we received support from the Economic Development Agency of Canada for the Regions of Quebec for the first time.
Since our organization was created, we have launched many projects and initiatives to help fill the gaps in our start-up ecosystem, gaps attributable to its relative newness. Montreal's ecosystem is barely 10 years old. Compare that with Silicon Valley, which has been around for more than 40 years.
In that first decade, Montreal built a critical mass of start-ups, more than 1,300.
Montreal's young ecosystem is now entering the globalization phase, where Quebec start-ups move into the next phase of growth and break into international markets. A crucial step, this is when start-ups finally achieve significant economic and social success.
When an ecosystem is able to produce more companies in the league of Lightspeed and Shopify, it builds prosperity and experience.
The race to create thriving start-up ecosystems is not limited to Canada. It is a global race. Every big city is getting in on the investment, in the knowledge that start-ups are incredible drivers of innovation. If Montreal does not establish itself as a true competitor, not only will it stagnate, but it will also lose ground—literally.
April's federal budget provides continued support for small businesses, in the form of much-needed emergency programs to help them cope with the pandemic. The budget also includes significant investments in innovation. We are delighted to see that the government is leveraging innovation to support the economic recovery.
The budget contains measures to support the financing chain for start-ups such as the renewed venture capital catalyst initiative. Among the measures to support start-up innovation is the National Research Council's industrial research assistance program. The budget includes targeted supports for women entrepreneurs and Black entrepreneurs, which some start-ups will be able to take advantage of. Measures that support flagship sectors of Montreal's economy—clean technology, life sciences, aerospace and artificial intelligence—also appear in the budget.
As the voice of Montreal's start-up ecosystem, we applaud the amendments to the Canada Small Business Financing Act, such as extending the loan repayment period to 15 years and expanding loan class eligibility to other types of assets such as patents and trademarks. We believe these changes will help start-ups remain competitive in the context of a sustainable economic recovery.
Nevertheless, I would be remiss if I did not express one of our concerns: the federal government's underfunding of the start-up ecosystem in Quebec, specifically in Montreal. The start-up ecosystem in Montreal is falling behind other ecosystems in Canada. We placed 36th in Startup Genome's global ecosystem rankings, whereas Toronto-Waterloo placed 18th and Vancouver came in at number 25.
With their ever-growing potential, Quebec start-ups are drawing the attention of accelerator programs in Ontario, which are better funded and have their sights set on the cream of the crop in Canada. That means Montreal start-ups are at risk of being uprooted, threatening the very foundations of the area's ecosystem, particularly in the sectors I mentioned, as well as in disruptive technologies.
However, the real competition is not domestic, but international. That is why forward-looking measures are needed immediately to ensure Montreal's start-up ecosystem can continue to compete with comparable ecosystems around the world, ensuring the whole country benefits when Quebec start-ups grow.
This highlights the need for a scale-up platform in Quebec. Ontario has one, and it received $52 million from FedDev Ontario in 2019. Vancouver is looking for $39 million to build a similar platform, not to mention that a new economic development agency for British Columbia was recently created. Neither Montreal nor anywhere else in Quebec has a scale-up program, despite the clear need for one. With appropriate funding, we could fill that void. Funding should be evenly distributed across Canada's start-up ecosystems.
Montreal's start-up ecosystem is hitting its stride, as confirmed last week, when we learned that tech companies in the area had received a total of $1.15 billion in funding in 2020, almost as much as companies in Toronto.
However, there is still much ground to gain. As an ally of Quebec business and entrepreneurship, the federal government, through the Economic Development Agency of Canada for the Regions of Quebec, should support the ecosystem's efforts so that Quebec start-ups can contribute fully to the economy, both in Quebec and in Canada.
Thank you.
Daniel Kelly
View Daniel Kelly Profile
Daniel Kelly
2021-05-20 16:19
Just moments ago Ontario announced another two weeks of lockdown on top of another two weeks on top of another two weeks, so I was just blasting the Ford government seconds ago.
Let me switch gears to the federal budget. There is a lot in the budget that we commend and endorse and some pretty serious gaps that I want to highlight. I did send, through the clerk in both French and English, a side deck of some data from CFIB, as I have done several times in the past to the finance committee, just to give the latest on where small businesses stand.
Right now, at this late stage, 14 months into the pandemic, only 51% of small and medium-sized firms across Canada are fully open. That's 51%. It's a pretty serious situation. If you look at the normal levels of staffing, fewer than 40% of businesses have attracted back all of their workers at this stage—in most cases because they do not need them as they are locked down. Most worrisome of all, only about a quarter of small firms are actually at normal or better levels of revenue than they were at this point before. I reiterate: Only a quarter of small businesses are at normal levels of revenue.
I want to share with you some of the measures that we did like in the budget. It did do several things. It allowed small business owners the deduction of up to $1.5 million. That's a very positive measure. We're quite pleased to see that the government did include that. It was a surprise, and a positive one for business owners across Canada. There's a reference to further progress on reducing credit card processing fees. That's also something that we're quite pleased with. That is good news.
Beyond that, we were pleased with the extension of the rent and wage subsidies until the fall. I will note though that there is great consternation right now about the planned reductions in the subsidy levels in the summer months. Here I want to remind this committee that the rent and wage subsidies automatically adjust depending on the level of business losses that a business is incurring, so the subsidies aren't there for businesses that are not in serious jeopardy. There are so many businesses, especially given that we've got ongoing lockdowns, renewed lockdowns and fresh lockdowns in Nova Scotia and Manitoba, they are really worried about the intended reduction in both the CEWS and CERS.
We did like the new Canada recovery hiring program. That new hiring incentive, we believe, is a real positive and we compliment the government for listening to the advice of my organization and others that have called for such a measure. We believe that it will be a way to help wean businesses off of the wage subsidy and allow that to be eliminated over time, but our overall advice is that governments really can't start to withdraw these subsidy programs until such time as governments themselves—federal, provincial and local—can tell Canadians that it's time to go back to work, time to return to the office and time to go dining and travelling, including with an open border.
One of the other measures that does worry us.... One thing I just do want to highlight is that for Liberal MPs on this committee, I urge you to get the message to Minister Freeland, the Deputy Prime Minister, and to the Prime Minister that the government needs to make good on the latter's promise to new business owners in May 2020 to deliver support to them. That was something that I know the finance committee has talked about already, but it hasn't happened. It's a year into an emergency program and I believe it's deeply shameful that the government has not moved to allow new business owners to gain access to the wage and rent subsidies. That needs to be fixed.
The rent subsidy, while working well, also sadly excludes thousands of business owners, as it does not include those who have a holding company and an operating company. Even the previous CECRA program had a fix for that, and this one does not.
We've made a series of recommendations.
The other big worry that we have right now is the rising levels of debt on the books of small and medium-sized businesses. They have, on average, $170,000 in COVID-related debt to deal with. We urge the government to consider increasing the amount of the CEBA loan and increasing the percentage that is forgiven to 50%, and adding a forgivable percentage to the HASCAP program. These are some of the ways that we'll be able to lift some of the debt burden that businesses are facing and help them into the recovery.
There's lots more to unpack, but I'm happy to do that in response to the questions.
Thank you very much, Chair.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-05-20 16:43
Okay. Thank you for that clarification.
I'm going to go to Mr. Kelly.
Dan, I've never heard so exercised about an issue, namely, with how this government has shamefully treated new businesses. You rarely go out on a limb like that. Therefore, obviously this is something that represents a bit of a betrayal on the part of the government.
Could you just expand a little more on why this is so important to new businesses?
Daniel Kelly
View Daniel Kelly Profile
Daniel Kelly
2021-05-20 16:44
Yes. I've been telling new business owners who have been contacting me in huge numbers to just stick with it, that the government is serious about this. The Prime Minister himself promised to do something for new business owners back in May of last year.
A full calendar year later, during a worldwide pandemic, the government has not moved on this measure. Meanwhile, most of the provincial support programs, many of them admittedly with tons of problems, from the NDP in British Columbia to the Conservatives in Ontario, have fixed this issue and allowed access to new business owners.
It is more complicated, but it's not impossible. We've laid out several ways that the government can do that: removing the requirements for a business number before March 1, a payroll account number before March 1. If they don't have a comparable month in 2019 because they weren't around in 2019, allow them to at least compare themselves against the industry average, say for a restaurant in Manitoba, and use that as the amount to get the subsidy.
These are businesses not set up with the full understanding of the pandemic behind them. These are business owners that often started in 2019. Some of them have laid out $400,000 or $600,000 to invest in a brand new 100-seat restaurant that was supposed to open in March 2020, but delayed because of pandemic restrictions until June, and opened with a trickle of business income, and have not had a nickel of federal support despite the Prime Minister's personal commitment to do that. That's why I'm so unhappy about this.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Good afternoon. Once again, we have a fascinating panel.
My questions are for Ms. Lamonde.
Thank you for your presentation. It was very clear and well put together. You explained that the government had taken meaningful steps to support start-ups, but you were also critical of certain things, and that is what I would like to discuss.
What is the federal budget missing in terms of specific measures to help start-ups in the greater Montreal area?
Liette Lamonde
View Liette Lamonde Profile
Liette Lamonde
2021-05-20 16:56
Thank you for your question, Mr. Ste-Marie.
My main reason for being here today is to make parliamentarians aware that start-ups face a different reality, one that government programs need to take into account. For example, initially, the Canada emergency wage subsidy did not factor in the reality of start-ups. We spoke up quickly, and that changed.
What I'd like to see the government do is adopt a mindset, and consider how each program it introduces to support business is really going to help start-ups and how the program can be improved to do just that.
One of the missing government measures is support for a scale-up platform. That's what we need to move into the second phase, to grow and to benefit economically. It's simple: start-ups need funding, talent and customers. A range of services are available to help start-ups in the development phase, which can last two or three years. After that, though, they are on their own. That is when they need new skills, new funding and new markets in order to succeed.
That is why building a scale-up platform for Quebec is so essential. Without it, Quebec's ecosystem will remain one of small start-ups, and that's not what we want. We have much bigger plans for the future of our start-ups.
I mentioned customers, and the government has the ability to be a tremendous customer for start-ups. For that to happen, however, the government needs to make changes to its tendering process. It needs to listen to start-ups, taking the time to help them improve their technologies and adapt them to government requirements. Imagine what a boon it would be for a start-up to have the government as a customer. Landing a contract with the Government of Canada would give the start-up a reputation that would help it acquire more customers.
Those are two areas where improvement is needed.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you. Those are two very interesting recommendations. First, you want a scale-up platform for start-ups in Quebec or Montreal, and second, you want better access to government contracts. That is duly noted. Let's hope the government incorporates your recommendations into its plan soon.
Obviously, the past 14 months have been extremely tough on just about every business, including start-ups.
How would you say the landscape has changed since the pandemic began? Are things better or worse? Do you know what the mood is on the ground?
Liette Lamonde
View Liette Lamonde Profile
Liette Lamonde
2021-05-20 16:59
That's a great question. Thank you, Mr. Ste-Marie.
At the very beginning of the pandemic, in March, a survey revealed that 60% of start-ups had less than three months' worth of cash. Of course, we feared the worst. By mid-April, though, nearly two-thirds of start-ups had reprioritized and adjusted their business model. That's the beauty and strength of start-ups: they can pivot, adapt and reinvent themselves quickly. Not having a cumbersome structure means they can turn on a dime, as the saying goes.
That ability is the strength from which their innovation flows and has helped them survive the pandemic. Instead of being decimated, many start-ups have seized the opportunities created by the pandemic and are meeting new needs. For instance, MEDTEQ, in Montreal, is involved in a bunch of new projects aimed at solving problems that have emerged during the pandemic. Solutions are also materializing to help restaurants take orders and become take-out operations overnight.
I think start-ups will come through the crisis, but there's no doubt the wage subsidy has a lot to do with it. We are eager to see what comes next. That's when we will be in a position to get a better read on things.
View Gabriel Ste-Marie Profile
BQ (QC)
All right.
An owner of a start-up told us it worried him that the NRC's industrial research assistance program, or IRAP, had not been renewed in the budget. He was concerned about what would happen to his company; he had relied on IRAP funding to run and grow his business in the months to come. He said it would be very unfortunate if he had to close his business right before he could carry it over the goal line.
Do you see a lot of start-ups in that boat, or is this an isolated case?
Liette Lamonde
View Liette Lamonde Profile
Liette Lamonde
2021-05-20 17:01
I'm a bit surprised by the question. It seems to me the government had put additional funding towards IRAP, so I don't think the issue is widespread.
View Peter Julian Profile
NDP (BC)
Thank you.
Ms. Lamonde, I'll ask you the same question. Under Bill C-30, the government will be drastically cutting supports for individuals and businesses, including start-ups, in the next few weeks. How is that going to affect start-up ecosystems in Quebec and other parts of Canada?
Liette Lamonde
View Liette Lamonde Profile
Liette Lamonde
2021-05-20 17:07
Ending those supports clearly puts start-ups and small businesses alike at risk. I'm not sure who, but someone put it well earlier. They said what mattered was the business's drop in revenues, whether it continued or not. That is what the government needs to keep an eye on; that is where help is needed to offset the impact. Obviously, businesses are not going to bring in the same amount of revenue they did pre-pandemic as soon as the supports come to an end.
Yes, there is no doubt that the end of the supports puts businesses at risk. As I said, luckily, many start-ups have managed to find other sources of revenue, but those may not be enough.
View Pat Kelly Profile
CPC (AB)
Thank you, Mr. Easter. I will address my questioning mostly to the other Mr. Kelly with us today.
I'm really glad that you mentioned the lack of response to new businesses so stridently in your opening statement. This is something that all opposition parties have raised repeatedly at committee and in the House of Commons. Back in February, or March, I think it was, the parliamentary secretary for small business claimed in a response to my question, that they were just on the edge of coming up with a response for new businesses, and then nothing happened. Now they're back to just completely ignoring new businesses that have fallen through the cracks of all the aid measures.
We're going to have questions in a moment from Mr. Fraser. He, as the parliamentary secretary, has been part of this ignoring or pretending that there is something out there.
Do you want to comment further about the way new businesses are not being reached?
Daniel Kelly
View Daniel Kelly Profile
Daniel Kelly
2021-05-20 17:09
Yes, this has been a giant issue right from the very start of the pandemic.
I will say I do believe that most members of government, most ministers, are quite sympathetic to this. All of them have said to me many times that they're working on it; they're thinking about it; and they need a solution here. However, it does feel like the energy in fixing government support programs for small businesses has ended.
There was good energy in the fall, especially when the Deputy Prime Minister took the reigns at Finance. She did fix many of the gaps in some of the programs she inherited. There was progress being made, but when the new year hit, it felt as though the federal government said, “We're done. Businesses: you have what you have. We'll renew these programs a little bit longer, but—”
Daniel Kelly
View Daniel Kelly Profile
Daniel Kelly
2021-05-20 17:10
There are huge swaths of the business community—not just those new businesses, but others too—that when they hear the Prime Minister and others say, “We've got your back, small business owners,” it really burns them because they are not getting any of the support that they need.
It's not just the federal government. It's the provinces, too. There are lots of holes in all the provincial programs, including those run by Conservative governments. We have to fix them. This is an emergency, for goodness' sake.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
My question is for Ms. Lamonde.
Can you provide a few examples of start-ups that have thrived, that are performing well, that have been successful? Can you talk about how the start-up cluster is affecting the economy and describe how the scale-up platform is enabling start-up development?
Liette Lamonde
View Liette Lamonde Profile
Liette Lamonde
2021-05-20 17:21
Thank you for your question, Mr. Ste-Marie.
I have a great example for you. The first unicorn in Quebec is Lightspeed, a company that makes us all very proud.
The founder of Lightspeed is from British Columbia. He moved to Quebec and decided to expand his company there. He had a hard time finding the necessary talent in his scale-up phase. He even had to recruit people from abroad to complete his management team. That's where the issue lies. When you don't have a scale-up platform, you don't have the talent at home, and you must go abroad to find it.
Through the scale-up platform, we want to help our start-up founders go abroad to find the missing talent, until we can create that talent at home.
As companies such as Lightspeed are created, this expertise is also created. Suddenly, we have people who can help other start-ups become scale-up companies and perhaps, who knows, unicorns.
This is a perfect example of the trickle-down effect of all the expertise and economic benefits that stem from a success story such as Lightspeed.
There are many other examples, and we're here to create even more.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Minister, as you know, the greater Montreal area and other parts of Quebec are home to thousands of tech start-ups. At the beginning of the pandemic, they told us that the wage subsidy program was inadequate in terms of coverage. A start-up is, by definition, a business where someone puts up their own money while working towards a technological development, which, once ready, they can sell and reap the benefits of. The government turned to the innovation assistance program, administered by the National Research Council of Canada.
Now, some start-ups are asking why the program was not extended until September 25, like other income support programs. As we know, the innovation assistance program provides more than $250 million in funding, largely to start-ups. Some have even warned that, if the program ends, they could go bankrupt by the end of the pandemic.
Why end the innovation assistance program when we are this close to the goal line?
View Chrystia Freeland Profile
Lib. (ON)
Thank you for your question.
I must say, I certainly recognize how important Montreal's innovation ecosystem is. Toronto, where I'm from, has a similar ecosystem. Mr. Julian is here, and Vancouver, in his riding, has an ecosystem as well. The same is true of many other Canadian cities and municipalities.
Start-ups are a very important part of our growth plan. Canadian innovators will find quite a few measures in the budget that are meant to help them, especially small and medium-sized businesses wanting to make growth-oriented investments.
The budget truly focuses on growth and the future, with numerous programs that will be particularly helpful to these types of businesses. If you like, I can put together a list and send it to you.
View Pat Kelly Profile
CPC (AB)
Thank you.
When the minister appeared at committee to discuss the fall economic statement, she admitted there was nothing in the fall economic statement, or the Speech from the Throne, or any of the previous measures to assist small businesses that opened their doors in, say, late 2019 or the early months of 2020 and do not meet the criteria of the existing support measures.
Is there anything in this budget that would address this problem? This was something that has been widely acknowledged now by the government as a shortcoming in the support measures.
Evelyn Dancey
View Evelyn Dancey Profile
Evelyn Dancey
2021-05-11 17:41
I was pausing to see if my colleague, Mr. Marsland, wanted to reply as well, but perhaps we can share in our response if we have different things to say.
There are actually new or enhanced program announcements for Budget 2021 that will be available to new businesses or those that have been launched since the beginning of the pandemic.
With respect to my area at Finance of economic development, there is the Canada digital adoption program to support the acquisition of technology to help the digitization of business. There is the expansion of the Canada small business financing program, which includes a number of elements that are included in Bill C-30 for further detail, but both expands the range of assets that can be financed as well as the different types of financing available.
There also has been an expansion of the government's suite of entrepreneurship measures for women entrepreneurs, Black entrepreneurs, and other equity-deserving entrepreneurs.
View Pat Kelly Profile
CPC (AB)
For the entrepreneur who has spent all of their life savings in 2019 to build a new restaurant with an opening date of March 15, 2020, there's really....
With all due respect, I think many of the programs you've described, or some of them, will decline those businesses, and for the same reasons they don't qualify for all of the existing programs. Is there really anything for a business such as I've described?
View Pat Kelly Profile
CPC (AB)
All right.
The new hiring credit involves much of the same criteria as the wage subsidy and rent subsidy. As I mentioned in my second question, the requirement of a loss in revenue compared with early 2019, or a year-over-year loss, excludes many businesses, including new businesses. Was this a deliberate exclusion in the hiring program? Will new businesses be able to access this program? If not, why not?
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2021-05-11 17:45
It's correct that for the proposed hiring program one of the criteria is that the employer has suffered a revenue decline. That is correct. Essentially, the program is focused on recovery from the pandemic and provides an alternative calculation to the wage subsidy. The proposal is that it would not apply where there's no revenue decline as defined under the wage subsidy.
Hari Suthan Subramaniam
View Hari Suthan Subramaniam Profile
Hari Suthan Subramaniam
2021-05-10 11:27
Thank you so much, Madam Chair, members of the committee and my colleagues from industry. It's a great honour to be here to talk about how we may be able to take part and inform the discussion on Canada's export of environmental and clean technologies on goods and services.
I'll take a bit of a departure from my colleagues. I think I'm one of the only software companies to talk about software exports and what they mean.
My name is Hari Subramaniam, as Madam Chair has introduced me. I head up strategic growth and global sales for Opus One Solutions. We believe we are probably a good fit as a litmus test or a canary in the coal mine with respect to how we've been able to garner help from domestic support, from the government's policies and regulations, while at the same time we can give you a sense of the competitive landscape that we and other colleagues in the sector face.
As a quick snapshot, Opus One was Canadian-founded. We have two offices, Richmond Hill in Toronto and downtown Toronto. Hopefully, we will be moving out for more talent across the country. Opus One is one of the few companies that has been named four times to the top 100 clean-tech companies globally. We share that honour with CarbonCure in Nova Scotia.
We started to build our pilot technology in about 2016, really moving to commercialization in 2019-20. We have grown about 500% in employment, hitting well past about a hundred this year, and we've actually grown during COVID, or the global pandemic. That's the uniqueness of the sector that we're in. Overall on revenues we're at about 300% since about 2016, and we're one of the few leading companies from a software perspective to facilitate energy transition. Our customers tend to be utilities, whether they're privately owned or government-owned.
I should probably provide you with a sense of how we segment our customers and how we serve from Canada internationally.
One of our other unique attributes is that we've actually grown into about six to seven countries between 2020 and 2021. We've actually gone international and global during the global pandemic, and 90% of our staff are Canadian-based.
First, I'd love to thank the committee and the governments writ large for the policy framework and the funding associated that have really helped to drive-start our start-up nation, giving birth to companies like ours. We just happen to be in the clean-tech sector. One of the stats that I do not have, and I'm not sure if it's robustly there, is the split between hardware from clean tech; money that leaves us, whether it be renewable developers that are Canadian or are elsewhere; software; and then services in clean tech as an export quantity.
From a software perspective, I would think Canada is one of the biggest exporters of clean-technology software globally. How do we help that sector? That's probably why I'm here to share my thoughts.
I'll give a shout-out to a Canadian company that is a little less known, but pretty big here actually, called CGI out of Montreal. They're one of the largest clean-technology services firms globally. I think there's a lot of diamonds in the rough that perhaps through this process we can unearth.
I'll get to the two questions that, I think, were posed. One is, what is going well? I think we've built a great ecosystem for start-ups: the federal agencies, the incubators. We have a wonderful job done with the trade commissioners engaging in a meaningful but also a metric-driven manner to help Canadian companies export abroad. I think from ISED to SDTC to NRCan, they've done a fantastic job with IRAP in terms of how to construct funding or leveraging to help companies grow. I think EDC and BDC have done a good job from a venture cap perspective. I'll give credit to Diana Cartwright from the trade commission for really shaping that organization. We have definitely been blessed and have benefited from that.
There's some great funding with collaboration, the Canadian-Indian industrial partnership, the Canada-U.K. funding in terms of helping Canadian companies enter the market by collaborating with one of their own. I think they've been a big benefit. I would like to commend Amanda Wilson and Cynthia Handler,from the departmental side, for really leading that and paying attention to companies like ours and our growth.
A lot of MOUs that have been signed by the government in innovation have actually helped us, and the same thing with FedDev in terms of scaled and continued growth. However, having said all of that, which has built the ecosystem, one of the things I'd like to share is that I think we've done a great job on start-ups, but I think we haven't really looked holistically at the scale-up of companies. I think there are gaps in the scale-up aspect.
Opus One Solutions is no longer a start-up. We're a scale-up, so where do we go?
There are a couple of things to point out. Every jurisdiction in the world is revolving around clean tech. They want a sector to be grown there. They want taxes to be paid to their jurisdiction. What I would urge departments in the government to do is to actually take a competitive benchmarking. I personally don't think we do that well as a nation.
What I mean by that is that Germany and the U.K. are really pushing in tandem with companies in their jurisdictions to move globally—more, I would say, than we are. In terms of whether it be financing or giving funding to enter the market to do a pilot, I think that's critical for a lot of technologies. The majority of customers for our products or even my colleagues' prefer to have a case study or someone who has bought their product and tested it in their local market rather than having that done in a Toronto, Halifax or Vancouver. It doesn't carry as much weight. Everyone wants to know if you've done it in Illinois or Brazil, and so on and so forth. I think that's a big gap. That's missing.
The other one is in terms of financing or funding as you move towards profitability. I think most of EDC and our venture capital, whether they're government-backed or independent, have a tendency to try to want to deal, so we'd rarely invest in companies that have reached a valuation of $50 million-plus. We are one of the few companies that see, from a Canadian perspective, that there are not enough folks willing to bet on our own companies' growth because our valuation has gone up.
It's very much on start-up, not on scale-up. There we look at financing from other investors, which generally means that over time we will stop being a CCPC. I think that's something we should focus on. How do you ensure that there are more companies that continue to be CCPCs, that continue to apply for IP in Canada and are as Canadian as possible?
The other attribute I'd say that can be improved on is MOUs. Trade relationships are critical. As my colleague said, with buy America and buy Europe, how do we continue as a trading nation be in those discussions and help companies? There's also the fact that, in most of our agreements, we have a reliance on joint research and development. I think we should be cautious in pushing that. As a private entity, I would like to do customization of research to sell my product into a market of choice. I do not want to be beholden to doing research with a third party if there's an agreement or funding attached to that. I think uncoupling some of that would help us move into markets faster.
One of the other things I would also urge the committee to look at is that the goal of the Paris accord is a good one, but if we are to drive clean-tech companies abroad, I would rather that, as a nation, we would have objectives and goals that are audacious. An example of that would be that some of our provinces were chasing solar manufacturing or renewable manufacturing about a decade ago, 15 years after Germany had defined it. Germany defined it because they had an objective or a goal well before anybody else did, and by virtue of that, entrepreneurs came to that segment.
The U.K. and France, for example, have said they will not have a single combustion vehicle on their road by 2050. It's an audacious goal. What it means is that they're starting to think about what new industries have to be born to serve such a market if they're serious about that goal. I would urge Canadians and Canada to have an objective that we're driving towards.
I shall not talk more about buy America, it is of concern for us, especially with cybersecurity and security as an issue as well. I think it was covered by some of my colleagues. Really, what I would ask is to rethink some of our government funding and protocols to play more holistic role in terms of enhancing our growth in exports and paying taxes to Canada and employment in Canada.
Thank you.
View Sukh Dhaliwal Profile
Lib. (BC)
Thank you, Madam Chair.
I want to thank all the presenters for the leadership their companies have shown when it comes to clean technology and services. My first question will go to Mr. Subramaniam.
Mr. Subramaniam, you mentioned that you are going to expand across Canada. British Columbia has beautiful weather and wonderful people, and more important when it comes to environment technologies, it is a leader in those technologies. We have LNG, Ballard and many more to come.
How might you take advantage of what British Columbia has to offer? Do you see prospects for your company here?
Hari Suthan Subramaniam
View Hari Suthan Subramaniam Profile
Hari Suthan Subramaniam
2021-05-10 11:43
Thank you, Mr. Dhaliwal.
From a software perspective, we're a people-based business so talent is one of our biggest drivers. If I may speak openly and honestly, Toronto is a lovely city, but its growth in software and talent has ensured—in a good way, I think, for the federation—that we look at the talent pool across the federation. Vancouver is pretty good from a competitiveness perspective but also with respect to the talent pools coming out of universities and coming into the country through immigration.
We're looking at Vancouver but we're also looking at Prince Rupert and Victoria, while also looking at eastern Canada and Alberta as a talent base from a software perspective. Given the pandemic that has driven us to a virtual environment, the beautiful thing about Canadian companies like ours is that we can go to our own nation to find the best talent, irrespective of province or physical location.
Hari Suthan Subramaniam
View Hari Suthan Subramaniam Profile
Hari Suthan Subramaniam
2021-05-10 12:02
I would say a couple of things. One is to have a bit more holistic look from inside the government as we engage with companies, again focusing on more scale-up. Can the hand of government come in broadly to help our companies that are starting to scale up to move internationally?
One thing I would re-echo, which I think my colleagues would share, is the ability to look at funding and financing as a way to help companies enter a market. The trade commissioner service and the others are fantastic at making their connections and the networks, and we can definitely drive to get the deals ourselves, but what makes it easier is if you come together and say, “Let us ensure that we get into that market”. We find that our European colleagues are doing a much better job from a government perspective in really pushing their companies to enter such markets.
We've done a great job, but that doesn't mean we can sit on our laurels. I will say we need to competitively benchmark what others are doing and ensure that we do the same amount of support for our companies so we can be leaders globally, while at the same time—a couple of my colleagues shared this—we look at and create a domestic market.
There is a little bit of a mismatch, I would say, Madam Ashton, in that we look at domestic policy and domestic funding as being a bit aloof from helping companies to go international. The Americans, as we talked about, are linking it together. I'm not saying we need a buy Canada framework, but there are different avenues by which we can ensure Canadian companies do prosper while keeping trade regulations open for international companies to compete with us at home.
View Ziad Aboultaif Profile
CPC (AB)
Thank you, Madam Chair.
Thanks to the witnesses. We have four companies in front of us. It seems they're mostly net exporters.
I believe that, if you can sell your product domestically, you should be able to sell it internationally, and it takes both the private sector and the government to be able to set the competitive benchmark, as Mr. Subramaniam has mentioned.
I'm interested in knowing what the government can do to help on a scale-up, first of all. On start-ups we could probably do okay, but a scale-up is a different game altogether.
Second, it is common knowledge that to become competitive, on the government side, you need less red tape. You need a better taxation policy. You need better programs in order to be able to upgrade when you need it for your equipment and your ability, so, Mr. Subramaniam, what are we lacking in order to be able to set the competitive benchmark?
Hari Suthan Subramaniam
View Hari Suthan Subramaniam Profile
Hari Suthan Subramaniam
2021-05-10 12:06
First would be a competitive benchmark from government, policy to policy. I know it's ever-evolving, but especially if we look at post-COVID, apart from stimulus, what are each of the countries doing to help their companies in the sector grow? That's one benchmark.
The second benchmark is around financing. I know there's a rebirth of the Canadian Commercial Corporation, which looks at how to get our companies very close to governments that are spending. That should be benchmarked in terms of federal government instruments, whether it be through their own bank, like EDC-BDC, or leveraged companies. How do we benchmark that against other competitors, the export development bank type of competitors?
I'm looking at both of them.
The third thing that is really hard to benchmark, which you're alluding to, is around our own culture of innovation as a nation. We are, if I may say so, a nation of cruise control. We like what we have, so why disturb it when things are going so well? Unfortunately, with the global energy transition, some of us have been in this sector for a couple of decades waiting for what we have seen happen today. I'll be honest. It's actually moving at a much faster pace than I thought, whether it be big companies or small companies, but also with the amount of capital that is being unleashed in terms of energy transition and decarbonization.
Therefore, this is the question for a nation like Canada and members of Parliament like yourselves: If the wave is already here, how do we ensure that we build the right surfboard for our companies and our people and then actually ride that wave all the way through? It's not going to be a blip. We think it's going to be at least the next 25 years.
Competitive benchmarks are one thing. Working together is another thing. What I would say to you as members of Parliament is that Germany has employed this through multiple government transitions. All the parties have always agreed on what the core thing is for economic development and have stuck to it. That would be one of my asks. On the key fundamentals, if it is going to be greenhouse gases and climate change, can we all align to ensure that there's a consistent wave forward so that we can crest this from a company perspective, but also a people perspective?
View Randeep Sarai Profile
Lib. (BC)
Thank you.
Mr. Subramanian, you have said that EDC and BDC have helped foster growth in clean tech, and scaling up is a big challenge.
Can you give us some suggestions? How have EDC and BDC helped, and how can they help further to scale up Canadian businesses in the context of—
Hari Suthan Subramaniam
View Hari Suthan Subramaniam Profile
Hari Suthan Subramaniam
2021-05-10 12:15
Yes, I think it's twofold. One would be that I think there is extra financing available, but ultimately they are a bank. I think, moving forward, what would be a great discourse is the flexibility that BDC and EDC should offer that other traditional commercial banks wouldn't. I think that's one way.
Second is venture capital. They are both still looking at a small start-up style seed funding. I think there is a little bit of hesitation in terms of betting on, let's say, Canadian companies that are x percentage and above, so I think they should be bold. They should bet on our companies that are going to hit $100 million.
View Paul Lefebvre Profile
Lib. (ON)
View Paul Lefebvre Profile
2021-05-07 14:33
Thank you, Mr. Chair.
My thanks to all the witnesses for joining us today.
Again we have another really good panel of witnesses, just to show us the ingenuity in Canada, as we are tackling climate change and looking at economic opportunities, which this represents. I really want to thank all of the witnesses who are here today for the work you do.
Actually, I'll ask Bob a question.
How are you?
It's good to see you.
We've heard a lot about food versus fuel, which I find very interesting. At the same time, though, we talk about supply and demand, because that obviously drives the economy. As I say, we're looking at this as an economic opportunity. It's a necessity. At the same time we're looking at how we reduce our greenhouse gas emissions.
Your members are obviously among some of the largest fuel producers in Canada. How do they see this economic opportunity and their role in reducing greenhouse gas emissions at the same time?
Bob Larocque
View Bob Larocque Profile
Bob Larocque
2021-05-07 14:34
Thank you very much, Paul.
To put it in perspective, for the clean fuel regulation, that's B10, if you wish, or bio-based 10% and ethanol at 15%, we need billions of litres in Canada by 2030—anywhere from six billion to 10 billion. We will send a brief to the committee about those numbers of litres versus percentage and cost that we talked about. We are taking this very seriously. We're looking at every single option.
Hydrogen is also an option for us. Electrification is another one, with charging stations in our sites. We're also looking at coprocessing, which is actually putting crude right into a refinery. That's something that we haven't talked about yet, but there's a facility in Burnaby, B.C., right now doing this. They want to double it. Tidewater is also talking about that in their investments.
This is significant, and billions of dollars are going to be invested. We already saw $1 billion go into two facilities in the last three months, and we'll see a lot more.
View Paul Lefebvre Profile
Lib. (ON)
View Paul Lefebvre Profile
2021-05-07 14:35
That means that the businesses are seeing a big opportunity to do this.
View Jeremy Patzer Profile
CPC (SK)
With the coal phase-out that's happening because of this government, it's obviously good to see the jobs that you're going to be making here and producing here. What's the opportunity to expand in this and to make this an even larger-scale operation than what you have right now?
Josh Gustafson
View Josh Gustafson Profile
Josh Gustafson
2021-05-07 14:43
We would be foolish not to take into consideration the ability to increase and to move alongside the market as it grows. Obviously it's a little bit more risky since it is just coming in. The CFS hasn't even been fully rolled out yet. We have plans to look at increasing in size to adapt to different feedstocks and to look at production and marketability for everything from Canadian fuel producers and suppliers to a home for it in the U.S. right down to the export market.
We haven't even talked about the spinoff effects for all the other industries that are going to be affected, like the processors, the logistics and shipping industry, and farmers. There are going to be widespread impacts.
Lynne Manuel
View Lynne Manuel Profile
Lynne Manuel
2021-04-29 11:22
Good morning, Madam Chair, ladies and gentlemen.
We are pleased to appear before you on behalf of GreenCentre Canada. We're grateful for the opportunity to provide our perspectives on economic recovery for the clean-tech sector. We've had the pleasure of meeting several committee members. For those unfamiliar with GreenCentre, we're a unique, not-for-profit organization that provides specialized technical and commercial services to companies developing sustainable chemistry-based technologies.
GreenCentre's past clean-tech projects have benefited a range of Canadian industries, from forestry and agriculture to energy, automotive, consumer products and resource recovery.
GreenCentre is here to request the creation of a program directed specifically at the needs of early-stage clean-tech companies. Our experience proves that a single lab-scale validation project valued at $100,000 can unlock public and private investment of $1 million or more to finance the more costly stages of scale-up and demonstration. A program that funds such projects has the potential to maximize short-term impact and accelerate economic recovery with the added benefit of reducing long-term dependency on government grants and subsidies.
Established companies and innovators with proven technologies are eligible for generous support from FedDev, SDTC, SIF and the net zero accelerator. Private sector investors also provide financial support to scale up and commercialize new technologies after and only after they've been substantiated.
We're concerned that government programs overlook early-stage clean-tech companies needing assistance to reach the point where blended financing is possible. These companies are an important part of the pipeline for both federal programs and private investors, but they face significant barriers to accessing the talent and resources needed to help them qualify.
Earlier this year we discussed this gap with 28 MPs, parliamentary secretaries, committee members, ministry staff and a senator, who expressed unanimous support for our concept. We were pleased to see a recommendation supporting GreenCentre's initiative included in the report from the Standing Committee on Finance released in February.
COVID-19 has disproportionately affected early-stage clean-tech companies. Unlike larger businesses, they operate on a narrow margin of survival. They face delays due to facility closures and occupancy limits, being forced to shift cash earmarked for technology development to cover operating expenses. Hiring has been frozen. Personnel have been laid off. Discussions with partners, investors and customers have slowed or stopped altogether and are only now beginning to resume.
Further, many clean-tech companies are led by young entrepreneurs and recent graduates. They are energetic and resilient but they struggle to finance the validation of their technologies even without the challenges of the past year.
Young Canadians must be at the heart of our recovery not only to help them rebound today, but also to ensure their future success.
GreenCentre has an established track record of invigorating Canada's clean-tech ecosystem. Since 2014, we've leveraged government funding to assist over 100 Canadian start-ups and SMEs which have raised over $250 million and created hundreds of jobs. The impact is irrefutable. These companies have industrial partners and investors. Some have domestic and export sales. Others have support from SDTC and are well on their way to commercial operation.
Li-Cycle, a previous GreenCentre program participant, has made the global clean tech 100 list for two years and has commercial operations in Ontario and New York as well as a project planned in Arizona. They are only getting started.
The federal budget proposes to make $1 billion available over five years to attract private sector investment in large-scale clean-tech projects. A mechanism is needed to advance innovative companies to the point where they actually qualify for these programs. GreenCentre has demonstrated the expertise, resources and reach to accomplish this. A GreenCentre program of $50 million over five years would accelerate up to 150 early-stage clean-tech companies to the point where blended financing could work.
The future health of Canada's clean-tech sector depends upon the success of the innovators developing new products today. Accelerating the time to market is critical not only for their survival, but also to ensure Canada's success in meeting ambitious climate goals and becoming a leading global supplier of sustainable products and processes.
To become a clean-tech leader, Canada must do more to bridge the gap between the research and commercialization. Early-stage clean-tech companies now more than ever need access to expertise and resources to aid in their recovery. A program that meets these needs will attract private sector investment and help fuel the growth of Canadian companies, create jobs for highly skilled workers and bring sustainable environmental benefits to the world.
Madam Chair, ladies and gentlemen, thank you for your attention. We look forward to your questions.
View Tony Baldinelli Profile
CPC (ON)
Is there a gap, in a sense, in those small and medium-sized enterprises knowing that your services and others like ERA exist out there to assist? When those small businesses need help, how can they find it?
Lynne Manuel
View Lynne Manuel Profile
Lynne Manuel
2021-04-29 12:21
You're right. That can be a gap. At times we've run several programs. We're quite well networked across Canada because we run some NRC IRAP-sponsored programs, so we get in touch with a lot of different companies. With the IRAP program, it's SMEs that are more at the revenue-generating end of things. We've worked with a lot of start-ups through several programs that we've had in the past few years.
Our most recent program ended in March 2020, just 13 months ago. We canvassed all across Canada very quickly to find seven projects in that year. We completed those projects. Those companies have since gone on to raise $45 million and hire 60 people in Canada.
If we can put the word out that these programs are available, there's very good uptake. Certainly, creating more of a national ecosystem and network with regional offices set up to really look in the various regions to find the best opportunities would be even better.
View Nathaniel Erskine-Smith Profile
Lib. (ON)
Thanks, Chair.
I want to start with Lynne.
You have spoken about the gap in existing federal supports as it relates to early stage start-ups and the necessary research and development that needs to happen for those companies to succeed. There was a lot of money in the budget for a SIF renewal, and specifically a net zero accelerator, and there seems to be a continued and increased focus on clean tech going forward and on growing clean tech in Canada.
Walk me through how those proposed supports continue to miss early stage start-ups.
Lynne Manuel
View Lynne Manuel Profile
Lynne Manuel
2021-04-29 12:52
Thank you for the question.
The issue is that those programs require industrial participation up front in terms of dollars. They require private investment before the programs can even begin.
The issue with this is there's so much technology that is created.... We have a great research community in Canada, we really do, but in order to get to the stage where investors are willing to put out money—industry, private investment or even the federal government programs—companies are required to prove that they have something, that they have something investable.
It's a kind of catch-22. In order to get money, they have to show that they're investable, but they can't show they're investable because they don't have money to prove it. It's a really difficult situation.
What that tends to do is really elongate the time frame it takes for these new technologies to get to market, because they struggle to raise the money to get there, and some of them don't make it. Some of them leave and go to another jurisdiction. They go to a different country or—
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