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Eric Choi
View Eric Choi Profile
Eric Choi
2021-05-27 11:26
Thank you very much, Madam Chair, and members of the committee for the opportunity to appear this morning.
Let me start by saying a little bit about GHGSat. We're a small SME that was established in 2011 as a private sector solution to climate change. We are headquartered in Montreal, with offices in Ottawa and Calgary, and we now have international offices in Houston and London, England.
Our vision of GHGSat is to use satellites to become the global reference for the remote sensing of greenhouse gas emissions from any source in the world, thereby enabling stakeholders in the energy, resource, power generation, agricultural, waste management and sustainability sectors to make informed environmental decisions.
While there are obviously other satellites up there in space that also measure greenhouse gases, satellites from NASA and from the European Space Agency, for example, it's kind of a neat and remarkable fact that GHGSat, a Canadian SME, is currently the only private sector or government entity in the world that has satellites capable of high-resolution greenhouse gas measurement down to a resolution of only 25 metres. Our satellites—these Canadian satellites—are the only ones that can measure greenhouse gas emissions from sources as small as individual gas wells. This is a critical capability for attribution.
Space technology is going to play an increasingly important role in Canada’s transition to greener and more sustainable practices and to building back better. Out of the 50 essential climate variables identified by the World Meteorological Organization as needed to monitor climate change, 26 of these variables can only be effectively observed from space. Environmental satellites are therefore directly aligned with the goals of Canada’s 2030 agenda for sustainable development, specifically for taking urgent action to combat climate change and its impacts—which is goal number 13—and promoting inclusive and sustainable industrialization and fostering innovation, per goal 9.
When we talk about fields of technology, be it space technology or green technology, there are two ways in which the Government of Canada can play a role in nurturing innovation and expanding sustainable trade opportunities. The first is by investing in early-stage research and development. The second is by being an early adopter of new innovations, thereby lowering the risk and allowing the private sector to bring their new products and services to the international market.
Canada is a world leader in supporting early-stage R and D in both industry and academia. As an example of that, the innovative technology behind our methane monitoring satellites was developed with the support of Sustainable Development Technology Canada, the Canadian Space Agency and the industrial research assistance program of the National Research Council.
To ensure that Canada builds back better during the post-COVID economic recovery, an area of improvement for the Government of Canada would be to support industry beyond the initial R and D phase. One of the most effective measures that could be undertaken in this regard is to be an early adopter of new innovations and, furthermore, to be an ongoing anchor customer for green and sustainable technologies. This would strengthen Canadian competitiveness and expand trade opportunities, because one of the first things that a prospective customer asks internationally is whether a new product or service has been adopted by the domestic market.
There are examples of anchor tendency in the field of environmental satellites that we are familiar with, such as the NASA commercial small satellite data acquisition program in the U.S. or the third party missions programme of the European Space Agency.
This is going to be a pivotal year for Canada as we look forward to COP26 in November. One of the high-profile projects expected to come out of this UN climate conference is the International Methane Emissions Observatory—or IMEO—which is the project of the UN Environment Programme that is seeking contributions precisely of satellite data to identify methane super-emitters and thereby provide actionable data for diplomatic follow-up.
In recent months, we at GHGSat have been engaged with the relevant Government of Canada departments to discuss the potential of providing Canadian satellite methane data to the IMEO as a very highly visible demonstration of our country's commitment to fighting climate change.
To conclude, and to reiterate what some of the earlier speakers have said, the success of our post-pandemic recovery and the industrial transition to greener and more sustainable practices go hand in hand with both the government and the private sector as partners in this endeavour to build back better.
This concludes my prepared remarks, and I look forward to taking your questions.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-05-20 16:49
I know that in your testimony you were kind of hoping to see $30 billion for the strategic innovation fund. We're starting with $7 billion.
If I misquoted you, I apologize.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-05-20 16:50
Okay. This budget includes a significant commitment of $7 billion to the SIF, which has been an effective program in helping businesses grow and innovate.
How do you see the chemical and plastics industry making use of the $5 billion in funding for decarbonization of industry through the net-zero accelerator?
Bob Masterson
View Bob Masterson Profile
Bob Masterson
2021-05-20 16:50
It does provide some opportunities, and certainly we have had three major investments in Canada that have participated in the strategic innovation fund to date, totalling, I believe, a proposed $9 billion. One of those investments was put on hold due to COVID. We'll see if it comes back. Therefore, the industry has experience with that.
The $30 billion number that I mentioned is how much investment, total investment, we should have seen come into our sector. Again, we don't expect the government to fund all the capital investments for our sector, but we expect it to create the conditions where that will come.
What I was providing was a historical example. We should have seen $30 billion. We've only seen $7 billion. It tells you that we're falling behind, so there's an urgent need for measures again.
The money in SIF, especially the net-zero accelerator, is very welcome. We have companies that will definitely take advantage of that—my point being, though, it's a minority of the facilities in Canada. We have to create a business environment where we can recapitalize. Getting to net-zero, we have to recapitalize not only our sector, but the mining sector and every other sector in the economy, and that means attracting domestic and foreign investment.
It's a big job, and SIF expenditures alone will not achieve that, as important as they are and as welcome as they are.
Jim Balsillie
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Jim Balsillie
2021-05-20 12:40
Thank you, Mr. Chair.
I'm Jim Balsillie, presenting on behalf of the Council of Canadian Innovators. I'll make two observations about the structure of the modern economy in relation to the budget and conclude with one recommendation.
The accelerated pace of innovation and the digital transformation over the past 30 years has created a new kind of economy in which the basis of wealth and power is derived from the ownership of valuable IP and control of data. Concurrently, the new technologies of this era, centred on the nexus of automated decision-making and machine learning, are reshaping our social and political spaces. Intangible assets comprise 91% of the S&P 500's $28-trillion total value.
This shift is unprecedented in its degree and rapidity, particularly with the emergence of high-profit firms with monopoly positions based on IP rights and control of data assets. Wage growth is now concentrated on the small workforces of firms rich in IP and data, which drives inequality. These firms have a low propensity to invest because they generally don't produce tangible goods. Rather, the marginal production costs of their intangible goods is near zero. Additionally, the nature of the taxation system on the profits of intangible assets allows firms to deploy effective tax-minimization strategies, resulting in tax base erosion for Canada.
Countries around the world, starting with the U.S. in the 1980s, have retooled and recalibrated their prosperity strategies to fit with the shift from the traditional economy to the economy of intangible assets. Canada's prevailing policy orthodoxy, still visible in this most recent budget, is to stick with the traditional production economy strategies for growth, even though such an approach continues to result in weak productivity, lower rankings in innovation indices and, most acutely in the last decade, a decline in our GDP per capita compared with the U.S. As the chart in my appendix shows, Canada's deficit on IP payments and receipts is widening at an alarming rate. This deficit would be much larger if the value of net flows of data was included.
In the contemporary economy, the objective is to generate and control IP and data stock assets for their economic and non-economic benefits amidst rivalrous international economies. Canada's prosperity strategies are not only inadequate but often also counterproductive. The first is creating foreign direct investment agencies and programs that have no contemporary analytical framework, unlike our peer countries globally. The second is a 15-year spree of signing free trade agreements despite economists writing, as early as 2003, that international trade treaties have shifted to dealing with strengthening protections for IP owners rather than traditional tariff reductions. The third is making enormous investments in scientific research without adequate IP policies and strategies. Fourth is the underfunded and outdated mandates for critical regulators in the modern-day economy, such as foreign investment, privacy and competition.
The federal budget reflects an outdated approach to a contemporary economy. It also fails to recognize the real limitations of our institutions. It is irresponsible to pack 270 measures into a 700-page document and expect that they will be implemented. It's futile to invest enormous public funds without updated frameworks and clear strategies that would yield desired outcomes for Canada. While the risk remains high for turning a dollar of taxpayer investment into 10¢, there is also the risk of continued counterproductive measures where taxpayer funds generate negative returns for Canada.
Finally, the redistribution of a fixed economic pie or the prudent fiscal anchors many are advocating for are insufficient without a strategy to generate new wealth. Canada urgently needs growth strategies attuned to contemporary realities and budgets to reflect them.
I offer one recommendation that can foundationally help improve Canada's budget planning and implementation—namely, rebuild the Economic Council of Canada to create in-house capacity for the analysis of the contemporary economy. The nature of today's global economy requires an unprecedented amount of horizontal integration, analytical depth and rapid response to deal with the accelerated pace of innovation and the powerful feedbacks and spillovers that emerge in our networked society. A properly built economic council would lead in the very necessary revival of our policy community and help the government rebuild critical capacity that favours national interest, including post-COVID economic recovery.
In closing, I reiterate that misunderstanding our changed economic realities comes with real consequences to our prosperity, security and ultimately our sovereignty. Helicoptering money does not work like it used to, because the volume of credit needed to produce one unit of GDP growth tripled between 2007 and 2015. Simply chasing jobs with an assumption of relatively homogeneous firms is a race-to-the-bottom strategy that will worsen inequality.
Canada has the potential to build back better, but it begins with knowing what we need to build and how we need to build it.
Thank you.
View Sean Fraser Profile
Lib. (NS)
View Sean Fraser Profile
2021-05-20 13:39
On a similar vein to the question I put to Ms. Tiessen on how we set ourselves up for success, there are a couple of envelopes included in the budget around the strategic innovation fund, including about $5 billion for the net-zero accelerator fund.
You're speaking to a group of parliamentarians here. In your mind, what would you have us do when this meeting ends, if we're going to help inform the next step to make sure that the money that's being budgeted for is actually deployed in the most effective way?
Jim Balsillie
View Jim Balsillie Profile
Jim Balsillie
2021-05-20 13:40
We have a problem in that we view firms as homogeneous while they're strikingly heterogeneous in the evolution of the last 20 years, and we view jobs as relatively homogeneous when in fact they have entirely different characteristics for the benefit of the individuals and the country. My number one recommendation is that we do not have the capacity to analyze and create programs and implement and monitor programs to get the outcomes we're looking for in the quality of jobs, the quality of firms, the quality of productivity and the quality of security, which is in this 91% of the economy called intangibles. We talk the game, but we have to understand that Canada adopted an orthodoxy of extreme neo-liberalism 30 years ago.
The economist who wrote for the Macdonald commission, said that if you're going to liberalize labour, capital and markets, that's fine, but you have to pair it with an industrial innovation strategy or we'll go to a low-productivity, low-growth equilibrium. That was Richard Harris. He was the economist for it, and they ignored.... It was a two-book treatise and they only took one of the books. The first thing we have to do is to have capacity, or we're just going to keep, which is the definition of insanity, doing the same thing over and over again and expecting a different outcome.
Shannon Joseph
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Shannon Joseph
2021-05-19 16:11
Thank you very much.
My name is Shannon Joseph, and I am the vice-president of government relations and indigenous affairs for the Canadian Association of Petroleum Producers or CAPP.
CAPP represents the upstream oil and natural gas industry in Canada. We would like to thank the committee for the opportunity to appear and to be part of its study of Bill C-12.
This legislation and Canada’s work to fulfill its climate change commitments are important to all industries and all Canadians. CAPP and our member companies are strong supporters of and investors in environmental performance and innovation. We want to work with the federal government to achieve its climate change goals. That said, we would highlight for the committee that the pathway to net zero that Bill C-12 sets out is also intended to create economic opportunities for Canada.
We took note of the Prime Minister's comment, particularly on the occasion of the April 22, 2021, climate summit, that our climate change response can be “our greatest economic opportunity.” As members can appreciate, you manage what you measure, hence the inclusion in the bill of milestone climate change targets towards 2050 performance measurement requirements. If the path to net zero is to create growth, investment and jobs, then as well as environmental performance, we need economic targets, and economic performance metrics must be built into this legislation as well.
Beyond this, pathways to net zero are going to look different in the diverse regions of our country as we pursue this agenda. This fact must also be integrated into the bill in the ways that the strategies are developed and evaluated. This should done in close collaboration with provincial and territorial governments and their climate change strategies and policies. Canada is an exporting country, and oil and natural gas are our number one export.
We contribute more than $1.1 billion annually to Canada’s economy. We employ over half a million women and men in well-paying, skilled jobs coast to coast, including 63,000 jobs in Ontario and 18,000 in Quebec. Our national supply chain outside of Alberta includes over 2,700 different firms with annual purchases of over $4 billion. In addition, we purchase over $2.4 billion annually from indigenous-owned businesses representing about 11% of our procurement in the oil sands. We are one of the largest employers of indigenous Canadians and are committed to our important role in reconciliation.
I highlight these points because this industry is an important part of Canada’s economic and social fabric and we have played and want to continue to play a role both in both supporting Canadian prosperity and helping Canada and the world achieve their environmental objectives.
An important way we will play that role is through innovation. One of your other speakers talked about technologies being available, but many still need to be developed. According to a 2018 study by Global Advantage Consulting Group conducted for the Clean Resource Innovation Network, or CRIN, about 75% of all clean technology investment in Canada comes from the natural gas and oil industry.
Not only will our leadership in innovation help to reduce emissions here at home but through technology sharing and export, Canada can help reduce global emissions around the world. An example of this is carbon capture utilization and storage. The Weyburn-Midale project in Saskatchewan is one of the world's largest and longest running. We hope to see more of these projects.
Our emerging liquefied natural gas industry in British Columbia also has a role to play in reducing global emissions and in generating internationally traded mitigation outcomes or carbon credits for Canada under the Paris Agreement.
China alone is adding one new large coal-fired power plant to its grid every two weeks. Coal-fired generation is also continuing to grow in India and southeast Asia, all with a focus on improving living standards for their citizens. If these facilities ran on Canadian natural gas, they would generate significantly lower air pollutants and significantly lower GHG emissions, as Ontario experienced when we switched power sources.
We cannot afford, either environmentally or economically, to take a narrow view of what climate change mitigation can look like in Canada. Bill C-12 should articulate the role that economic sectors and other stakeholders will play in the development of plans and in achieving targets. It should ensure that expertise in the technologies and opportunities available to different sectors and regions are brought to bear on Canada’s advisory panel and overall decision process.
We recommend a greater role for the Governor in Council, and in particular the Minister of Finance, in the development of targets, plans and supportive policies under the act, especially given their potential effects on the whole of Canada’s economy and society. We don't think it is appropriate for all of that to rest with one minister.
By working together, industry and government can accelerate innovation and develop technologies that reduce emissions while delivering responsibly produced energy to meet global energy demand. We hope our recommendations to the committee can support Canada in this process.
Thank you.
Jeanette Jackson
View Jeanette Jackson Profile
Jeanette Jackson
2021-05-14 13:07
That's glorious. Thank you for having me.
I wish to acknowledge that the lands on which our office is located are part of the traditional unceded territory of the Musqueam, Squamish, Tsleil-Waututh and Tsawwassen nations.
Foresight is Canada's clean-tech ecosystem accelerator. We bring together partners to identify, commercialize and adopt the clean technologies needed to support a global transition to a green economy. The innovation community is the heart of everything we do, supported by our partners in industry, academia, government and, of course, the investment community. Our whole mandate is to position Canada as a global leader in clean-tech innovation through programming and relevant initiatives.
I'd like to start with a few statements and applaud the efforts to position Canada as this global leader. To expand clean-tech innovation and adoption, we need to better connect Canadian clean-tech companies to global markets and investors, and government agencies play a key role in a few areas.
The first is around policy and partnerships. The Canadian government has an opportunity to provide thought leadership. An example is through our progressive carbon tax. Through thought leadership, we create confidence in the markets for international buyers and investors to come to Canada because of those types of policy initiatives.
We also want to look at trade agreements. CETA and other progressive trade agreements will also allow us to have better relationships with these regions and ensure that clean-tech ventures understand the best practices to enter those markets and do business.
I'd also like to highlight some of the national strategy opportunities. We've seen lots of great conversations between Canadian and European governments, as an example, on how hydrogen, CCUS and the bioeconomy can play a significant role in both of our economies through collaboration, understanding the needs of each of our respective regions and honing in on what innovation opportunities we can export.
We also need to look at adoption. If we're truly going to scale clean-tech ventures in Canada, we do need a strong domestic procurement incentive program. Really, it's those demonstrations that allow us to home-grow our solutions in Canada and showcase those solutions internationally.
We've also been working on some other adoption opportunities through our SDG connect program in partnership with the trade commissioner service. This strategic matchmaking gives an opportunity for international buyers to showcase to Canadian innovators what their needs are and, again, create opportunities for Canadians to innovate on a global scale and to export.
The next bucket is on capital. We've seen lots of different international mechanisms that really create strong capital environments for early-stage and later-stage investments. It's also important to have strategic investor matchmaking sessions profiling Canadian ventures in all of the respective regions where their technologies could apply.
The next bucket is around innovation. While we are starting to see many clean-tech companies scale, it's important that we have a really strong, robust funnel of earlier-stage ventures as well. I think we need, as a collective, to dig in and ensure that the number of high-quality early-stage ventures are problem-driven and understand the opportunities both domestically and globally. Of course, programs from FedDev and provincial government agencies can really help drive these types of initiatives.
Finally, in terms of scale, we need to see more investment in scaling ventures. I know there have been lots of announcements recently on support to do that, but if we can continue to feed that scale-up mentality and that growth mentality to the ventures and provide the support they need, they'll be much better positioned for exponential export growth. While clean tech 101 was challenging for investors, what we've really seen over the last year is that over $1.7 trillion in capital inflows to ESG and sustainability-related funds have come to fruition, and a record $23.7 billion of venture capital investment was deployed to 1,255 climate technologies.
A combined policy and capital push is a generational opportunity for Canada. We have great technology developers and terrific universities, but our markets and local investors are insufficient to fully capitalize our ventures to compete on a global scale. In fact, a study by SDTC and Cycle Capital shows that Canadian clean-tech ventures are generally able to raise only about half the equity and debt capital as a comparable clean-tech company in the U.S. and other European regions. We need to get Canada's private capital and industry off the sidelines and massively engaged with our clean-tech entrepreneurs if we want to compete in the decades ahead.
To showcase some success stories, we are succeeding in some areas on the international stage. Occidental has a partnership with Carbon Engineering in Texas. Svante has a great partnership with Chevron in California. MineSense has projects in South America, and Enerkem has waste-to-chemicals plants in Spain and China.
We're starting to see momentum, but how do we turn these four stories into a hundred stories? That's what we're really trying to dig into.
As a bit of feedback, SDTC is a great opportunity and mechanism to showcase the demonstration of technologies. It would be interesting to look at having a first project deployment off site as well, as part of that funding model.
EDC is also great in supporting the export development opportunities. It would be nice to see some more flexibility in financing options. EDC is not empowered to take technology risks and below-market returns.
Global Affairs has also been a great strategic partner for us in our ventures. We work very closely with the trade commissioner service. Things like industry matchmaking events or SDG connect events are a great opportunity to profile Canadian ventures and position Canada as that global leader.
ECCC has also been very supportive across Canada in supporting CETA workshops. These types of programs help educate all the different stakeholders in the community to understand what we need to do in order to do good business and follow all the trade expectations that have been set at the federal level.
Finally, IRAP's pilot program, both domestically and internationally, is another great tool.
In terms of closing remarks, we really are doing everything we can to help SMEs scale at home to help sell abroad, but we need more resources and tools to do that as an accelerator community. We need to scale the supply of export-ready companies and more proactively source overseas companies seeking Canadian innovation.
We propose a ready-to-export training program—an expanded SDG connect program—that scales our pipeline of export-ready companies. We have some opportunities to present the proposals in that regard.
There is also a critical need for further development of relationships between Canada and the global network of clean-tech accelerators in partner countries. This includes the U.S., the EU, Asia and Latin America. These accelerators are beachheads and validation points for our companies to access these global markets and investors. While we have done some of the work in this area off the side of our desks, we'd love to lean in on this with the federal government as well.
Finally, there are some interesting best practices that we can lean in on. Yesterday an article came out regarding the CAN Health model, which can be applied to clean tech. We would love to work with all of you and your various partners and collaborators to see how that model can help clean tech in Canada scale and really position us as export-ready for global markets.
Thank you for having me. I look forward to Q and A.
Geneviève Aubry
View Geneviève Aubry Profile
Geneviève Aubry
2021-05-13 11:13
Thank you for having me here today.
I am speaking to you today as the director of Collectif Territoire, a non-profit organization based in Abitibi-Témiscamingue, whose mandate is to unite the geniuses of science, arts and industry to produce benefits for ecosystems and communities.
Since 2018, the collective has been working on a project that is gaining support in the community, the Osisko Lake project. This project aims to rehabilitate and improve Lake Osisko, located in downtown Rouyn-Noranda, in a creative and participatory approach that unites several sectors and the population.
Lake Osisko has been damaged by human and industrial activities over the past decades, and is suffering from a variety of problems, many of which are common to different lakes in the region and across the country. These include contaminated sediments, high phosphorus levels, invasive aquatic plants, emerging contaminants, and more. In order to preserve the biodiversity and vitality of this ecosystem, it is important to find creative and adapted solutions to promote its recovery. It is therefore through the search for solutions that we are setting up a true regional innovation laboratory.
The Osisko Lake project is a research and experimentation ground for engineers, scientists, artists and other inventors, who unite their expertise and talents in the pursuit of this noble and inspiring goal. The project already has more than 40 partners. They include industrial companies, artists, universities, college technology transfer centres, schools, public and parapublic environmental organizations, and more.
Numerous people are uniting around the project because it is a positive, constructive project with multiple and powerful benefits. It is a project in which the partners find benefits. It is also a project with a territorial impact. It was selected by the Future of Good organization as one of the 100 best recovery projects in Canada.
The Osisko Lake project is a technological showcase for industrial and mining companies, mainly, that are very active in our region. Their expertise is recognized worldwide. Through this project, these companies enhance and develop inspiring practices in environmental innovation, rehabilitation of degraded ecosystems and bioremediation, and so on. There are many of them collaborating on this project, and they are proud of it.
Added to this rich contribution is that of the Université du Québec en Abitibi-Témiscamingue, about which Mr. Rousson has just given us an eloquent presentation. Researchers from UQAT are participating in the project by contributing their expertise in biology, mining engineering, ethics and digital creation.
The college centre for technology transfer associated with the Cégep de l'Abitibi-Témiscamingue, the Centre technologique des résidus industriels, or CTRI, is also involved in the project, particularly in bioremediation.
The artists bring creativity, a perspective, beauty and questioning, which give the project its colour.
In addition to having a strong core of local and regional partners, the project has reached out, and it has sparked partnerships elsewhere in the province, the country and the world.
The Standing Committee on Industry, Science and Technology is interested in examining how the Government of Canada, in its stimulus package, can support industries in their transition to greener, more sustainable practices, and support local and regional development and innovation initiatives.
Faced with the magnitude of the environmental, economic and human challenges doubly highlighted by the health and climate crisis, this plan is an opportunity to implement territorial development models in tune with the needs, particular characteristics and strengths of communities.
To support industries in their transition, the Government of Canada must demonstrate its confidence in community-led territorial development and innovation initiatives. You will not be surprised to hear me say that one sure way to support these initiatives is to put in place a territorial innovation support fund. This type of fund is managed by and for regional communities, and it evaluates projects based on their ability to adequately respond, in an innovative way, to community needs.
The most successful projects are often those that emerge from the regions, and whose development is not hindered by the restrictive or exhaustive criteria of certain government programs.
A territorial innovation support fund is a fund based on the evaluation of the impact potential of projects according to the needs and distinctive features of the regions from which they emerge.
An innovation support fund is a fund administered independently, by a selection committee whose legitimacy is widely recognized by people in the area concerned.
It is a fund that provides support to understand and document the impact of projects and mobilize the knowledge gained. It is also a fund that promotes the transfer and scaling of the innovations, knowledge and skills developed, to benefit other communities and regions.
I have long dreamt of such a fund, and I hope that today's forum has allowed me to make you aware that, in Canada's green recovery efforts, it is essential to give the regions a free hand to choose for themselves the projects that have the greatest potential to impact and benefit communities.
View Sébastien Lemire Profile
BQ (QC)
Thank you, Madam Chair.
I would simply like to say to the honourable member from Pontiac that his riding is enormous and includes the municipality of Grand-Remous, which is close to the UQAT centre in Mont-Laurier. Our ridings are neighbours.
Ms. Aubry, the city of Rouyn-Noranda will soon be celebrating the 100th anniversary of its foundation. The city is not as old as Montreal, which will be 400 years old soon, or La Pocatière, but it will nonetheless be marking its centenary and you will probably be involved in the celebrations.
What can you tell us about the role Collectif Territoire is playing in our economic and environmental recovery in terms of regional innovation and helping industry to transition? What role can Collectif Territoire play in this recovery?
Geneviève Aubry
View Geneviève Aubry Profile
Geneviève Aubry
2021-05-13 12:09
Collectif Territoire is a middleman in the world of innovation. A middleman plays a vital role when there is a systemic vision for innovation which calls upon the skills and expertise of various organizations. This role is all the more important when stakeholders are using the innovation ecosystem to bring key actors together and tear down silos and borders. This is the role we are playing.
We add value to the transfer of scientific knowledge to industry, as Mr. Rousson mentioned, because we bridge the gap between applied and pure research. We also work to foster scientific awareness among school-aged children by encouraging artists and cultural organizations to contribute to efforts aimed at gathering knowledge, teaching and communication.
All this contributes to a holistic vision and ensures that we are not only talking about radical innovation, but also reworking existing innovative projects that will lead us to a sustainable green recovery.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2021-05-13 12:47
Thank you, Madam Chair; and thank you to all of the witnesses for appearing before committee today.
Mr. Mills, I wonder if I could pick up where you left off. You were explaining to us the need to stimulate innovation and risk-taking, and things of that nature.
Given that you explained to us how it's important to incentivize risk-taking to spur innovation, I take it that you look at it from a comparative context. What jurisdiction or country would you say has done the best job on that particular front?
Mark P. Mills
View Mark P. Mills Profile
Mark P. Mills
2021-05-13 12:48
Traditionally, it has been the United States and Canada. This has been the epicentre of new business development. New small business formation has been in North America, not in Europe. In fact, whatever measure you use to look at new companies, new formation of companies, North America has been, up until very recently, what we'll call the “friendliest jurisdiction” in which to be an innovator, an entrepreneur or a small business.
That has become more difficult, certainly in some areas, especially resource extraction. Most small, privately funded mines have left the United States a long time ago, and Canada has had the same trouble. However, it has been the best jurisdiction.
Germany, France and Italy have lagged. This is not a criticism of them as people; it's just the reality of the governance.
Let's go back to BlackBerry, the beginning of the smart phone revolution. It's traced to Canada, frankly, and then the United States, of course, because Apple did one better. I still like my BlackBerry, by the way. I don't use one anymore, for obvious reasons.
Those are good examples.
We hope and expect to have that kind of innovation in physical resource areas like mining and oil and gas. It's a tougher one because they're [Technical difficulty--Editor] industries. Innovation is harder because of the scales involved, but not impossible.
Mark P. Mills
View Mark P. Mills Profile
Mark P. Mills
2021-05-13 12:50
Well, let's clarify. [Technical difficulty--Editor] hedge funds with private equity, which is a different category of private money. Hedge funds have a notorious role because they hedge investments, so to speak.
For most innovation, obviously there's a role for government. This is a very old debate, and a very important one, especially in modern times. [Technical difficulty--Editor] last 80 years since World War II, we've talked about how governments can play a role. However, the essential answer is because of the nature of risk in doing something different than everybody else is doing today, if you want to reward the innovator, you have to give them the latitude to do it, which means they have to find money. It's always still the money.
The risk-taking is taxed. Let's just use a specific example. If you tax risk-takers the way you tax non-risk-takers, you get fewer risk-takers. It seems unfair to reward the risk-taker for the outsized gain in lower taxes, but what you don't see is behind the scenes, for every successful company, there are hundreds that fail. As we all know, it's an old truism, but it's a true truism. Therefore, simplistically, if you want more of it, tax less of it.
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.
Jean-François Samray
View Jean-François Samray Profile
Jean-François Samray
2021-05-11 11:31
Thank you very much, Madam Chair.
Good morning, ladies and gentlemen members of the committee.
Thank you for inviting me to contribute to your discussion on the green economic recovery from the COVID-19 pandemic.
My name is Jean-François Samray, and I am president and chief executive officer of the Quebec Forest Industry Council, which brings together sawmill, veneer, pulp, paper, cardboard and panel companies in Quebec, as well as engineered wood manufacturers.
Today, I want to stress not only the importance of the forest industry's role in our communities' economic recovery, but also the fact that it will be just as much of a key player in the fight against greenhouse gases, or GHGs. Various levels of government will be responsible for creating the context to enable the forest industry to participate fully in those two issues and to support its efforts in innovation, so that it can help reach our objectives.
The Quebec forest industry, which generates over 142,000 jobs, is the economic engine of some 900 municipalities. Nearly 70% of Quebec's municipalities are connected to that industry. The average annual income in the forest industry is $66,500. That sector contributes $41.5 billion to the province's economy and $17.7 billion to the gross domestic product.
Just recently, a study conducted by PricewaterhouseCoopers showed us that, in 2019 dollars, and not at the cost of wood today, $150 is collected in taxes per cubic metre of processed wood. Of that amount, $50 is going to federal coffers. So investing in the forest sector is a win–win–win initiative. It is a win for the economy, for communities and for the environment.
A number of international studies emphasize the importance of an active and responsible forest industry. Among them are studies carried out by the United Nations Department of Economic and Social Affairs, the Food and Agriculture Organization of the United Nations, or FAO, and the International Energy Agency, or IEA. Added to those studies is the Natural Resources Canada annual report titled “The State of Canada's Forests”, which demonstrates that triple role.
So it goes without saying that we are happy the federal government is investing $3 billion over the coming years, so that two billion trees can be planted in the near future. However, a portion of those trees must be harvested eventually to enable sustainable forestry, which could make the most of the various iterations of that carbon neutral product. When a tree is cut down and sawn into planks, it sequesters its carbon longer than its counterparts left to themselves in the forest. In other words, when wood is used as a building material, its CO2 retention period is extended. It is a better alternative to other building materials, such as steel and concrete, which consume up to 34% more energy and emit 81% more GHGs.
Our industry is not short on challenges. The softwood lumber sector is booming, and the demand comes from the United States, Canada and from around the world.
However, the United States Department of Commerce imposes countervailing duties on softwood lumber imports from Canada. But the World Trade Organization, or WTO, concluded in its final report that Quebec is complying with international trade rules. We are counting on the Canadian government to use the WTO's conclusions and require an exemption from countervailing duties on products from public forests, an exclusion for businesses that mostly get their supply on the American side, and an integral refund of the money already collected.
When it comes to innovation, the panel sector and the pulp and paper sector are undergoing a complete transformation and are innovating constantly. Concerning panels, a great deal of research is going into the production of new green adhesives to meet consumer demand. The pulp and paper sector is no exception. A number of innovations have been announced over the past few months, including by FPInnovations, which uses cellulose in the manufacturing of products to fight against COVID-19.
So government support in research and development and in innovation is crucial, especially for FPInnovations, but also for the academic sector and for businesses, to help the industry make a shift and remain a leader in the new green economy.
We also think that using biomass in the heating sector must be done by adding depth to the stream, and not by cannibalizing existing businesses that are making value-added products.
In conclusion, we feel that the government must invest much more in the Investments in Forestry Industry Transformation program, the IFIT, because $55 million, the amount allocated over two years, is clearly insufficient.
Thank you.
View Warren Steinley Profile
CPC (SK)
That would make sense, because one of the comments you made was that sometimes you couldn't differentiate between natural gas going into a house and a grain dryer or a barn, and there is an instance where a natural gas line doesn't have its own meter that goes to a barn or a grain dryer, because many farms have different farmyards for their grain dryers and their house.
I was very surprised by that comment, because that just doesn't happen anymore. You can always tell what natural gas is going to be used for heating a home and heating a barn, drying grain or running an irrigation pump, so that was a bit surprising to me.
Mr. Parry, you've said many times that innovation is driven by carbon pricing or a price on carbon in agriculture. Do you believe that statement?
View Warren Steinley Profile
CPC (SK)
Okay, thanks. That's perfect.
I'd ask: Can you tell me the tax that was forced on farmers that led to the innovation of zero tillage?
Matt Parry
View Matt Parry Profile
Matt Parry
2021-05-04 16:23
A tax on farmers that led to zero tillage.... I don't believe there was a tax in that area.
View Warren Steinley Profile
CPC (SK)
Yes. That was an amazing innovation that led to great soil conservation and the ability of farmers to have better soil quality and more nutrients in the soil.
Mr. Parry, can you tell me the innovation that led to crop rotation for grazing for ranchers across Canada, and what tax led to that innovation?
Matt Parry
View Matt Parry Profile
Matt Parry
2021-05-04 16:23
It was done through official management practices and the sharing of information among farmers. I don't believe there was a tax involved in that, so—
View Warren Steinley Profile
CPC (SK)
I agree with you 100%. I think innovation and conversations through farmers and sharing data have led to amazing innovation in the agriculture sector. I put on the record that saying—and having very senior people in the Department of Agriculture say—that innovation is brought forward in agriculture by carbon pricing is something I think many people I represent and many people I know would have a difficult time believing is the only way to get to innovation.
I think that's what this bill is about, when you talk about it. You can't get innovation. I know we talked about how there might be innovative and new technologies for grain drying. There might be, but that's five to 10 years off. The reason, Mr. Parry, you couldn't mention one is because there isn't an innovation right now that can dry 50,000 bushel bins, other than natural gas or propane. We're a long ways off of that.
This bill Mr. Lawrence is proposing is that exemption to give farmers a chance to continue to do what they do well, because there are farmers in Saskatchewan, Alberta and Manitoba who pay tens of thousands of dollars on a carbon tax because of using grain dryers and irrigation pumps.
Mr. King, you talked about irrigation. My farm still has delivery. They have a propane tank, and that propane tank is delivered by a truck into the yard, and that tank runs a motor that pumps irrigation through the pipes. It's not just a pipeline. There are still cases where propane gets delivered for on-farm use. I think Mr. Lehoux would have many people who have propane delivered to heat barns in his riding of Beauce.
Those are just a couple of things I wanted to point out. Farming is an agribusiness in Saskatchewan and western Canada, and they're very big operations. These grain dryers are solid equipment, industrial equipment, that gets used to keep people fed, not only across Canada but around the world. I believe these farmers need this exemption to make sure they can continue to provide that good service.
My final question would be: When it comes to crop rotation—and I know you guys know this very well—it is one of the great innovations in agriculture that led to keeping nutrients in the soil. Once again, I'd ask Mr. Parry: Was there a tax brought forward that induced crop rotation practices by farmers across Canada?
Matt Parry
View Matt Parry Profile
Matt Parry
2021-05-04 16:26
I think you likely know the answer. There was no tax in that regard, but I would note that I don't think I ever said that carbon pollution pricing was the only tool, just that, in a number of circumstances, it can be efficient and effective in providing a price signal to promote innovation and the development of new technologies.
View Warren Steinley Profile
CPC (SK)
I appreciate that statement very much, and I know farmers are as innovative as they can be, because they know that their bottom line is very important. I know they do whatever they can to innovate, not only for the environment but for the bottom line and to ensure that their operation is successful now and for the next generation of farmers in Canada.
Thank you both very much for your time.
View Dave Epp Profile
CPC (ON)
Thank you, Mr. Lawrence.
Mr. Parry, I believe you said in your testimony that agricultural greenhouse gas emissions have been stable since 2005. What does that tell you about the rising production from agriculture since then? With rising greenhouse gas emissions from virtually every other segment of our society, what does that tell you about the innovation and environmental stewardship of the agricultural community?
Matt Parry
View Matt Parry Profile
Matt Parry
2021-05-04 16:41
It states that the sector has made significant progress in reducing the emissions intensity of production and in producing agricultural products more sustainably, with a lower greenhouse gas emissions content. It speaks to the innovative capacity and performance of the agricultural sector in Canada.
View Lyne Bessette Profile
Lib. (QC)
Thank you.
One of my colleagues asked the previous witnesses a question earlier. I'd like to hear your thoughts on it, to wrap up.
Do you know how other countries are transitioning to greener farm fuels? What does innovation in this sector look like around the world?
Serge Buy
View Serge Buy Profile
Serge Buy
2021-05-04 17:14
Another good question.
It depends on the country. In France and Germany, for example, many things are done to help producers make the transition. In particular, there's a great deal of funding for producers. This isn't the case in Canada. We aren't at the same level. In those countries, given the subsidies that they receive, farmers can afford to adopt these extremely expensive technologies. Most farmers couldn't afford to do so otherwise.
However, our environmental concerns may not be shared by other countries, such as Russia or Brazil, which still compete with us. Our farmers, if they want to sell their grain, must be able to compete with these types of countries.
That's why I'm saying that we must really pay attention to our actions. As the saying goes, it's better not to kill the goose that lays the golden eggs.
Michel Chornet
View Michel Chornet Profile
Michel Chornet
2021-05-04 11:19
Thank you.
Good morning, Madam Chair, and ladies and gentlemen of the Standing Committee on Industry, Science and Technology.
Thank you for inviting me to appear before the committee.
My name is Michel Chornet, and I am Executive Vice-President, Engineering, Innovation and Operations, at Enerkem.
The theme of the economic recovery provides a unique opportunity for Canada's energy transition. First, I will say a few words about our company.
Enerkem was cofounded in 2000 by my father Esteban, an emeritus professor at the Université de Sherbrooke, and my brother Vincent. They developed and brought to commercial scale a revolutionary technology that is unique in the world. It produces advanced biofuels and renewable chemical products from biomass and nonrecyclable waste.
Our technology is a key link in a genuine circular economy. We therefore contribute to energy diversification and to the manufacture of everyday, low-carbon products. This is a sustainable alternative to burying or incinerating waste materials. While many see waste materials as garbage, we at Enerkem see them as a source of accessible, circular and inexpensive carbon.
Our headquarters are located in Montreal and we operate large-scale commercial demonstration facilities in Edmonton, Alberta, and two innovation centres at Westbury, Quebec and Edmonton, Alberta. We employee more than 250 people across Canada.
With our advanced recycling technology, we have succeeded in creating industrial partnerships in Canada and abroad, including with Suncor, NOVA Chemicals, Shell, Repsol, Proman and SUEZ.
Enerkem is founded on a business model that relies on innovation. We are developing a technology that required, and continues to require, a lot of research and development. To continue our development and to demonstrate that our technology was viable and, above all, commercially scalable, we had to secure private and public capital.
Through our plant in Edmonton, Enerkem has succeeded in demonstrating the flexibility, efficiency and maturity of our advanced recycling technology. The need to innovate never stops, however. Although the technology has reached commercial maturity, the competition is such that additional investments in innovation are required.
Canada has a unique opportunity to develop an advanced recycling model. This would keep the chemical and petrochemical industries competitive through major reductions in greenhouse gases and the creation of high-quality jobs. The Canadian model of advanced chemical recycling would be based on infrastructures already in place, such as low-carbon electricity, and on nonrecyclable waste, which is a major source of carbon.
Last December, we announced the construction of a biofuels plant in Varennes, on the Montreal's South Shore. Our group of strategic partners includes Shell, as the lead investor, Suncor, Proman and Hydro-Québec, which will supply renewable hydrogen and oxygen. We also have the support of the governments of Canada and Quebec. This C$875-million project is called Recyclage carbone Varennes.
The plant will produce a second-generation, low-carbon biofuel. It will reduce the annual production of greenhouse gases by about 170,000 tons of CO2 equivalent. In the world of waste management, Recyclage carbone Varennes' contribution will be considerable. Each year, the plant will convert more than 200,000 tons of nonrecyclable material into almost 125 million litres of biofuel. The economic impact in Quebec will be $85 million per year, not to mention 500 jobs during the construction of the plant and 100 jobs when it is operating.
The economic future looks promising. Currently, we are actually seeing a very rapid progression in the market for new-generation biofuels, because few technologies have reached maturity in making the transition.
Let's quickly look at Canada's situation in the world. In 2018, Canada was in 10th place among greenhouse gas emitters. In 2019, total gasoline sales in Canada reached 45 billion litres. Prime Minister Trudeau has committed to reducing greenhouse gas emissions by 40% to 45% by 2030. Canada has also committed to have a carbon-neutral economy by 2050.
To reach our targets, market conditions that are favourable to rolling out innovative solutions must be created.
A competitive market must be created in order to attract private investment and develop bioenergy projects. An investment tax credit could make it easier to finance companies.
Consistent support for the lifecycle of technological innovation must be assured, through the use of current programs.
The Clean Fuel Standard must be used to support Canadian innovation.
In closing, let me repeat what I said a little earlier. Canada must create favourable conditions to allow the development of innovating companies, as they will contribute directly to our economic recovery in the post-COVID-19 period.
Thank you for your attention.
Michel Chornet
View Michel Chornet Profile
Michel Chornet
2021-05-04 12:03
In my opinion, Canada has a unique opportunity to meet those objectives. However, any standards or regulations must support innovation.
In California, the state standard supports innovation. For example, it recognizes renewable hydrogen, which is hydrogen produced with a renewable source of electricity. It has a standard and it provides transparency around the life cycle calculation, which is used consistently for all products industry-wide. It is able to recognize innovation and provide credits in our industry for waste diversion, for example, to account for what would happen if it were not recycled.
In my opinion, the Clean Fuel Standard being developed is an attempt to address this issue, but it needs to be more consistent. The standard needs to drive innovation, which we think California has done well, as has Europe with the Renewable Energy Directive.
View Pierre Paul-Hus Profile
CPC (QC)
Thank you, Mr. Chair.
Good afternoon to the witnesses.
The Innovative Solutions Canada program was launched in December 2017. So the 2019-2020 report was tabled two or three years after its implementation.
In the “Challenge Stream” component of this report, funding provided to companies, particularly in the technology and health fields, is discussed. Recipients of funding included 60 businesses. No indigenous businesses received funding, no businesses run by people with disabilities received funding, and only two businesses run by women received funding.
Is there a reason for this?
Lorenzo Ieraci
View Lorenzo Ieraci Profile
Lorenzo Ieraci
2021-05-03 15:50
Thank you for the question.
The Innovative Solutions Canada program is managed by Innovation, Science and Economic Development Canada, or ISED. So I'm not in a position to answer the question directly, unfortunately. My colleagues who work in that department would be better able to answer questions about the parameters of the program and how it is managed.
View Pierre Paul-Hus Profile
CPC (QC)
So none of the three witnesses here today can answer these questions.
I assume the same will be true for my next question. In the 2019-2020 annual report, it states that only 2.6 % of the companies that applied to the programs were majority women-owned companies.
In your opinion, is this low percentage normal?
Lorenzo Ieraci
View Lorenzo Ieraci Profile
Lorenzo Ieraci
2021-05-03 15:51
Again, our colleagues at ISED would be better placed to answer a question about the Innovative Solutions Canada program.
I know, however, that the program, which was developed by our colleagues at ISED, is intended to encourage innovation in technology. Unfortunately, I don't know how the program is doing to ensure that companies are aware of the program and understand how it works.
View Pierre Paul-Hus Profile
CPC (QC)
This program was put in place by the Liberal government, and it was my Liberal colleague who wanted to study it today. We're trying to ask the right questions to understand what happened. Having said that, I understand that this is the responsibility of another department, and I don't blame you at all.
I would still like to go back to the “Challenge” component. Of the companies that applied to the program, 2.6% were majority women-owned, and of those, 2% received funding.
I assume you can't tell us why some companies were selected and others rejected, because that is a matter for ISED. Am I wrong?
Lorenzo Ieraci
View Lorenzo Ieraci Profile
Lorenzo Ieraci
2021-05-03 15:53
That's right. ISED representatives would indeed be in a better position to answer your question.
I can mention one point, though, that I hope will be helpful. The Office of Small and Medium Enterprises, or OSME, is one of the organizations that is part of our department. OSME has offices across the country, and one of its activities is to ensure that businesses view the Government of Canada as a potential client to which they can provide goods and services.
Some businesses may not think of the Government of Canada as a potential client. Through its activities, OSME ensures that businesses are aware of this fact, and helps them by explaining the procurement system. It lets them know what opportunities exist and explains how to be part of the procurement system.
View Tim Louis Profile
Lib. (ON)
Thank you. I appreciate that.
I'll move to Ms. Turcotte. You mentioned Triple Green in Manitoba. They use a biodrying air system, which is a nascent technology, but it's scaling up quickly because propane is 82% water and natural gas is 66% water, so that moisture turns into water vapour and that's being put into the grain dryers and the grain. By making the heat source dry, it creates efficiency. Their motto is “solutions that save money”.
This technology is growing and it's moving quickly and scaling, but there's also a role for the private sector. Can you explain a bit about the competitive advantages of companies like this that would drive innovations, not only with our government making investments but the private sector also investing.
Isabelle Turcotte
View Isabelle Turcotte Profile
Isabelle Turcotte
2021-04-29 16:20
Yes, absolutely. More than anything, companies need policy certainty when [Technical difficulty—Editor] their investment portfolios. That requires a [Technical difficulty—Editor] on the price signal. It requires a clearly communicated [Technical difficulty—Editor] increasing price on carbon.
It bears noting that the private sector or the corporate world has gone through flip-flops on carbon pricing, including Alberta and Ontario most notably. In these provinces we're seeing a private sector that is hesitant and is struggling to get [Technical difficulty—Editor] from headquarters, which are not in Canada because they were uncertain about where Canada was going on carbon pricing.
It is really important that we send a strong message to these companies that Canada is a place to invest, to produce your low-carbon products and to be a leader in innovation.
View Nathaniel Erskine-Smith Profile
Lib. (ON)
Should we be looking to say, then, in our recommendations, that some fraction of the proposed SIF funding and the renewal of SIF should be devoted to early stage start-ups?
Lynne Manuel
View Lynne Manuel Profile
Lynne Manuel
2021-04-29 12:54
I've been talking about this for quite a while now, and I think that's really a necessary part of what the government needs to be supporting, and I will say that there's so much leverage on those dollars. We're talking about doing lab-scale work where people can take that data forward and convince other investors that they have a working technology.
Working at that scale is very economical for everyone concerned. We don't want people to reach that investable stage before they've done their homework, because it costs so much more to do the work at that point. I think it's really a good deal for everyone.
View Sébastien Lemire Profile
BQ (QC)
Absolutely.
What are the regulatory roadblocks to innovation currently faced by our businesses and entrepreneurs?
Jim Balsillie
View Jim Balsillie Profile
Jim Balsillie
2021-04-20 12:13
Well, there are many things.
In a sense, the ideas economy, the intangibles economy, works opposite to the tangible economy, so it's actually about creating regulations that favour you.
When we hear people like Robin Shaban speak, we know we have to look after the power of our own companies by how we run our Competition Bureau. We have to look at the power of our own citizens and companies for how we regulate data in our privacy economy, how we set standards, how we do trade agreements and how we do research funding.
It's really about programs that focus on what the gain is, which is generating the assets that determine our prosperity and our security. It's a totally different role for government. This is, frankly, what's been missing in our approach for the last 25-plus years. It's why we've faded in these regards, but it can be fixed.
View Earl Dreeshen Profile
CPC (AB)
Thank you very much, Madam Chair.
It's great to have all the witnesses here this morning.
Mr. Balsillie, some of the things you mentioned earlier were that we are first world as far as income is concerned, but we are third world as far as our outcome is concerned. We heard earlier that a bunch of money is going to be allocated to different potential projects to help out as far as industry issues are concerned, but you also indicated lots of money but poor results. The other thing that you mentioned on our research funding with great fanfare was that the superclusters are a great idea, but of course, so much of the intellectual property and the main focus go to other countries.
I know that in the past you've made comments about how we seem to be losing our place. I'm wondering if you can comment on some of those issues right away.
Jim Balsillie
View Jim Balsillie Profile
Jim Balsillie
2021-04-20 12:18
Sure, I'm happy to.
It's really just a set, a patchwork of prior approaches, but with more money. When you look at the superclusters, they were set up with no idea, data or strategies, without the governance set up, and then they started to try to fix that as they were rolling. When we did our SIF program, half the money went to foreign companies. Again, if it's a traditional production economy, you count on the positive spillovers of those partnerships. In the ideas economy, all we're doing is making other countries rich, impoverishing Canada.
I don't think we have an innovation strategy. These are job strategies, but they're low-quality jobs. It's a race to the bottom. If we had a proper lens of expertise, we would recraft these programs.
The government has a central role in this. I do believe in investing in these things, but I would like to see us get $10 out of our $1, not 10¢.
View Sébastien Lemire Profile
BQ (QC)
One of the issues I see with this is that the financial envelopes for federal programs, particularly CED programs, often have a time limit. They are open from November to May, for example. Obviously, innovation doesn't necessarily happen when the program envelope ends.
What are our innovative entrepreneurs frustrated about? How do our programs adapt, or not, to the fact that innovation and program funding are not always in sync?
Jim Balsillie
View Jim Balsillie Profile
Jim Balsillie
2021-04-20 12:41
That's a very good question.
What places like Germany, South Korea and Singapore have done is integrate things like their IP expertise and their data governance with the research funding, and they stay with the firm for decades. You don't look at it as a transaction; you look at it as a parent-child relationship. You stay with these firms in the completeness, not as a transaction that is hot and cold, hot and cold.
I think we could get guidance from how the Fraunhofer Institute does it in Germany. They stay with it forever. That's research funding, commercialization and other things like that. That would guide us.
View Jean Yip Profile
Lib. (ON)
I am going to expand on Mr. Williamson's point and go back to your opening statement, Mr. Leuprecht, wherein you talked about image and reality and said that China has lots of vulnerabilities and that we need to bolster our own Canadian dynamicism. I like the positive statement and the support for Canada.
What are China's vulnerabilities? What can be done to bolster our own Canadian dynamicism in innovation?
Christian Leuprecht
View Christian Leuprecht Profile
Christian Leuprecht
2021-04-19 21:18
I'll give you a quick overview of a few matters.
Looking at demographic change, China is going to hit peak labour by 2025. It has already maxed out in its productivity gains. Currently there are eight working Chinese per retiree; by 2050 there will be two. China has a real challenge with growing old before it grows wealthy.
It has rising debt levels—300% of GDP in 2019—and so China can't buy its way up the ladder in the way, for instance, that South Korea or Taiwan did. China is running out of runway to catch up, which is why President Xi is doubling down. He knows he has only so much time to catch up.
At the same time, there is the sclerotic political system, this Leninist rigidity. There is shrinking room for innovation and top-down decision-making. Bad news is never tolerated at the top. This is why we saw the challenges coming out of Wuhan in reporting on the virus.
We see the rising negative views of China, which are at historic highs across a diverse set of partner and allied countries, including Canada. There are budgetary constraints with a cooling economy. There are rising demands from its population and an aging society. There are serious risks of default on some of the loans from the belt and road Initiative, which would have serious legitimacy implications for the Chinese leadership, which has really sold this idea as the future of China. They're also vulnerable on food and energy security: China can't grow enough food for its population, and it imports half its oil from the Middle East.
I can go on, if you'd like.
View Sébastien Lemire Profile
BQ (QC)
Thank you, Madam Chair.
My question is for Mr. Kotak.
Thank you for your presentation. I felt that it had some especially worthwhile elements.
I would like us to discuss innovation.
Would exempting small businesses with an income below a certain threshold, as set by Canadian authorities, be an effective measure to reduce the regulatory burden and foster innovation?
Ritesh Kotak
View Ritesh Kotak Profile
Ritesh Kotak
2021-04-15 13:26
Yes. At the end of the day, anything that would make it easier for small businesses—to me, they are the backbone of our economy and where we're seeing a lot of innovation—and cheaper and that would reduce the red tape would be of great benefit to small businesses. But in order to actually see the benefit, we also have to, as I mentioned earlier, aggregate resources. If we're able to aggregate, if it's easier for that small business to spin up to essentially start conducting commerce, to understand the different tools that are available to them and to have point people within government to help them navigate the regulatory space, and we reduce that red tape, yes, it would increase competition, which in turn would also increase innovation in Canada as a whole.
View Sébastien Lemire Profile
BQ (QC)
Can you talk to us about obstacles businesses involved in innovation face?
At the end of the day, are regulations not limiting innovation in Quebec and in Canada?
Ritesh Kotak
View Ritesh Kotak Profile
Ritesh Kotak
2021-04-15 13:27
From my personal experience, I truly believe that regulation is good. It protects Canadians. It tells us what we can and can't do. But at the same time, we need to make it easier. We need to make it more accessible.
Let me give you an example. If you're a small business trying to operate in the food space, do you really understand the regulations within the industry if you want to sell across the province? There are bilingual labelling requirements. Do you understand all of that stuff in terms of the label and the prior notices? There are so many different elements to this.
Yes, I truly believe that if we can cut the regulation but at the same time make it more accessible and put it in simple language that people can actually understand, then that in itself will make it easier and increase competition, absolutely.
Thank you so much.
George Roter
View George Roter Profile
George Roter
2021-04-12 15:52
I'll take it from the top. Third time's the charm.
Thank you so much again for your patience.
I'm very pleased to join you as the managing director of the Canada Plastics Pact.
The Canada Plastics Pact is tackling waste and pollution at source. We're a member of the Ellen MacArthur Foundation's global Plastics Pact network and an independent initiative of The Natural Step Canada, a national charity with 25 years of experience in fostering a strong and inclusive economy that thrives within nature's limits.
Over 50 leading organizations are part of the Canada Plastics Pact, all taking action to achieve a circular economy for plastics. This is a growing network with expertise ranging from chemical and resin manufacturers to packaging and consumer goods producers to retailers, collectors, sorters and recyclers. It includes for-profit, not-for-profit and public sector organizations. This is the only network that brings together all of Canada's plastics value chain under one roof.
We recently completed a study showing that about 1.9 million tonnes of plastics packaging is produced in Canada each year. Of this, 88% ends up thrown away in landfills, burned in incinerators or lost to the environment. Just 12% is recycled.
That 88% represents waste, not just garbage. It's a wasted economic opportunity, a wasted chance at investing in innovation and industrial development and wasted greenhouse gas emissions.
If the question is how to address the make, take, waste reality of plastics today, the answer is with a circular economy—as we've heard from the other speakers—in which we keep plastics in the economy and out of the environment. This would mean eliminating the plastic packaging we don't need while innovating to ensure the plastic packaging we do need is reused or recycled. A circular economy for plastic turns waste into tens of thousands of jobs and billions of dollars in economic value while stimulating innovation and benefiting the environment.
A 2019 Recycling Council of Alberta report identified that increasing recycling in that province alone could generate $700 million per year in economic value and nearly 6,000 jobs. This is also true elsewhere in Canada, where a circular economy for plastics can produce high-quality, future-fit jobs. Imagine well-paid, safe, and secure jobs in sorting, recycling and industrial facilities from Kelowna to Kitchener, coast to coast to coast, in urban, rural and remote areas.
For the petrochemical sector, this poses an opportunity to develop world-leading innovation. Take, for example, a recent partnership between B.C.-based Merlin Plastics and Calgary-based NOVA Chemicals to turn recycled polyethylene into food-grade plastic resin.
Canada has an R and D infrastructure in place, supported by leading academic institutions, that is already driving this type of innovation in established companies and start-ups. More is possible.
The environmental benefits are also clear. Keeping plastics out of landfills and incinerators benefits our communities and animal and human health. Recycling plastic reduces greenhouse gases by over two-thirds compared to making resin from fresh, virgin resources.
If the early stages of the Canada Plastics Pact have proven anything, it's that industry is highly invested in bringing about a circular economy for plastics in Canada.
The involvement of all levels of government is also key. Bans on single-use plastic items are one possible tool on the menu of options available to governments. While partners in the Canada Plastics Pact have a range of views on this topic, our signatories have committed to designing out plastic packaging that is problematic for collection and recycling supply chains.
I would, however, like to shine a light on some additional approaches that the federal government can consider.
First, there's a clear role for the federal government in coordinating an effort to collect and share plastics data. Currently, data is inconsistent and insufficient on what plastics are flowing through the system and where they're ending up. Simply, you can't manage what you can't measure.
Second, there's an opportunity for the federal government to establish an industrial policy agenda for a circular plastics economy. Specifically, it can create national definitions in performance standards for the collection and recycling of plastics; support the provinces as they set out performance-based regulations, such as extended producer responsibility; and establish national recycled content standards while using public procurement to drive demand. These supply- and demand-side policies will set the basis for technological innovation in the circularity of plastics.
Third, no one part of the plastics value chain can address the challenge of waste alone, so it's important for governments to invest in the multi-stakeholder platforms for collaboration that are crucial for driving holistic systems change.
To conclude, let me be clear that the Canada Plastics Pact members do not speak with one voice on the proposed bans. What we are agreed on is that there is a broader agenda and a set of policies that the government will need to put in place to realize the benefits of, and position Canada as a leader in, the essential transition to a circular plastics economy.
Thank you.
Dwayne Winseck
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Dwayne Winseck
2021-04-06 11:16
Twenty-five years ago, Rogers and Shaw carved up cable and Internet access markets into “cable monopoly east” and “cable monopoly west”. This lead some to believe that a tie-up today will have minimal to no effect on either of these markets. While it is true that they did not compete with each other head to head thereafter, Shaw's earlier embrace of new cable network and set-top box technology revealed it to be the more innovative of the two firms, while also forcing Telus to roll out IPTV and fibre to the home five years earlier than Bell in Ontario and Quebec.
Shaw's decision to not enforce data limits on Internet subscribers after Netflix arrived in Canada in 2010, while other big ISPs did, revealed these limits for what they are—artificial constraints on people's use of the Internet. If this deal goes through, Shaw's customers will have to get used to counting their downloads against the meter. The proposed Rogers-Shaw deal will also have a considerable impact on Canadian TV, film and culture.
Ben, take it home, please.
Ben Klass
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Ben Klass
2021-04-06 11:17
Let's be clear: This merger is simply a play by Rogers to extend its dominance from coast to coast. Now is not the time, during the pandemic, for even more consolidation. This merger will result in higher prices and less innovation, when what we need is greater affordability. Regulators and policy-makers should do what they can to oppose this merger.
Thank you.
Brad Shaw
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Brad Shaw
2021-03-29 13:13
The right competition, dynamic competition adds to that. It doesn't have to be a number of players. I think that when you have that dynamic competition in the market, the federal government will be able to create the policies to be able to do that. We still have a regulatory overhang—
Rick Whittaker
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Rick Whittaker
2021-03-25 11:07
Thank you, Chairperson.
Thank you to the committee for inviting me to participate in this important study on the aerospace sector. It truly is a privilege to share my perspectives as an aerospace manufacturer and as a proud Canadian.
By way of background, I am the co-founder and CEO of AirShare, Inc., a Canadian company headquartered here in Ottawa that makes safe and cost-effective systems to help manage airspace and small aerial drones as they become increasingly part of our daily lives. Our systems are used in aerospace, commercial and defence applications.
Our company has developed an airborne rocket-powered robot that is used to safely intercept drones that may have gone off course, or which may have nefarious intent.
Our Prime Minister helped coin our tagline in a meeting we had in 2019, as we described our interceptor as the world's friendliest guided missile, something that could only have originated in Canada. So I feel the study and this undertaking that this committee is engaging in is vitally important to Canada and near and dear to my heart.
The input to the study I share today comes from the perspective of a small innovative manufacturer of equipment in the aerospace sector.
It will come as no surprise that the aerospace sector has been hit particularly hard by the pandemic, from reductions in air travel to disruptions in global supply chains. For our segment of the industry, drones and drone safety, there are no concerts, no large public gatherings, tournaments or events that would typically use drones and require drone safety systems as a routine business.
Suppliers of specialized components used in these systems have reduced their production, increased their cost, or have ceased operations altogether. The impact has been broad-reaching throughout the sector.
As a small company, we have had to react quickly, first by working with our key suppliers to develop alternative approaches to maintain product continuity. We then focused on the segments of the customer base that were still in business, and finally we developed new technology and capabilities for a post-pandemic reality.
We were grateful for the support we have received from the Canadian government thus far, utilizing the work-sharing program, for instance for our production staff, while our company funded the supplier, customer and technology changes that were necessary to our ongoing survival.
In terms of recovery, the pandemic has created a great upheaval on a scale we have never seen. While it's hard to see a silver lining, this does present an opportunity for Canada's aerospace sector, and in particular for autonomous aerial vehicles and government to work together on recovering and reinventing.
There are many measures that this committee may wish to consider, however, I'll just mention two in my opening remarks.
The first one is innovation. In a changing world, supporting innovation is even more critical. I have been honoured to see Canada's innovation system grow and adapt over the past 25 years.
We are now seeing a spectrum of support for innovation, starting from the lab and all the way up to market entry. There is lots to build on, and now more than ever, a lot more to do.
Countries like the U.S. have created a system that uses government needs as the market pull. We are now seeing that emerging in Canada with programs like Innovative Solutions Canada and IDEaS.
The U.S. innovation system, and in particular the small business innovation research program, SBIR, focuses heavily on government as the end-user and even funds early-stage projects intended to secure our government user as a first customer, creating memoranda of understanding, matching funding with the private sector investors, leveraging departmental funding and importantly, creating a pathway to large-scale procurement, up to $250 million using other transaction authorities. This program provides continuity with multi-year, multi-stage involvement as the technology, company and customers progress. It would seem that some of these techniques could be applied to Canada's aerospace sector.
The second point is regulation. Government can play a big role by creating sandboxes for the aerospace development and testing that do not require complex regulatory approvals that are typically associated with commercial products' introduction. It goes hand in hand with the innovation emphasis I mentioned previously.
For Canada's aerospace sector to recover, it must reinvent.
From the perspective of our autonomous aerial vehicles manufacturing, this means testing new approaches safely and efficiently, and revisiting regulations in this regard would be most beneficial. We struggled with this aspect, having to fly across the country to get a few days of testing at an approved test site. We eventually purchased our own private test range, which is not sustainable for this sector, and which could have been solved with some regulatory innovation.
I could touch on many more topics, however I'll stop here with my gratitude to the committee for allowing me the time to share my passion for this sector.
Thank you.
Suzanne Benoît
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Suzanne Benoît
2021-03-09 11:11
Good morning, Madam Chair, ladies and gentlemen.
I am very pleased to be appearing before you today on behalf of the members of the Quebec aerospace cluster. We are very grateful for this invitation and for the interest you have taken in our industry.
As you know, the global aerospace industry was hit hard by the current crisis. The recent report of Canada's Industry Strategy Council also cites aerospace as one of the sectors most affected by the pandemic across the country and most in need of targeted emergency measures by the federal government.
For a year now, the vast majority of the global air fleet has been grounded as a result of the sharp decline in air traffic caused by the closing of international borders. As a result, thousands of aerospace workers are now unemployed, and hundreds of Canadian businesses are struggling to survive.
However, our industry is developing measures that would allow operations to resume, as many other countries have done and are still doing. Leading executives in our sector have also mobilized as never before and, last May, established the alliance for aerospace recovery to accelerate the industry's emergence from the crisis. The alliance is a strategic committee of Aéro Montréal's board of directors that, in the past few months, has helped to develop a specific action plan that is readily applicable and suited to the industry's needs.
However, the government needs to take a position on it quickly because every day counts. We have already observed a nearly 60% reduction in airlines' new aircraft requirements and do not anticipate a return to previous production levels until 2024-2025.
The global aerospace industry had hit unprecedented heights before the crisis. To meet demand, many airlines took on debt so they could continue expanding at pre-crisis growth rates, acquiring new equipment, investing in automation to increase their productivity and expanding their plants. However, their operations have since declined by as much as 50%.
Many SMEs now have cash flow problems as a result of those capital investments and of the changes made to repayment terms by nearly all decision-makers in recent months because they too are struggling to survive the crisis.
Extending the Canada emergency wage subsidy for our sector until the end of the crisis, which is anticipated in 2024, would help us retain our qualified employees and thus ease pressure on corporate cash flows.
We must block the exodus of sectoral workers to other places around the world where governments are engaged or to other industries less affected by the crisis.
Since the pre-crisis labour shortage will still be intact when the sector recovers, it is therefore vital that we retain workers within our businesses.
The few nations that have an aerospace industry support their strategic sector because they know that exports of high-tech products will create jobs and wealth. That is why they advance strong industrial policies to ensure its growth.
To address the crisis, France has invested $26 billion in its aerospace sector, the United States $80 billion and Germany nearly $10 billion. Here in Canada, we are still waiting for the targeted assistance that is so slow in coming. What will Canada do to support this pillar of our economy?
Aerospace is a strategic and key industry for the economy. On its own, it generates total revenue of $34 billion and contributes $28 billion to Canada's GDP. It represents 235,000 direct, indirect and induced jobs, including more than 43,400 in Quebec, and consists of hundreds of SMEs and large businesses. It invests more than $1.4 billion in research and development every year. The sector exports more than 80% of its production, which contributes to Canada's collective wealth. It is therefore essential that we invest now in order to preserve our industry and halt its decline.
In the 1980s, Canada's aerospace sector was ranked fifth largest in the world. Today, we have fallen to ninth position, and, if nothing is done, we should simply consider taking ourselves out of the running.
Canada has set very clear greenhouse gas emissions targets, and the transformation of the aerospace industry will play a crucial role in meeting those targets.
A large number of initiatives conducted by our businesses across Canada are already in development and include the design of new low-emissions engines based on hybrid, electric and hydrogen propulsion.
All these disruptive technological projects are part of a long-term strategy and require a profound transformation. Here in Canada, we are fortunate to have all the operational and technological assets and skilled talent we need to contribute to a greener recovery.
To support the aerospace industry and ensure its long-term viability, the federal government must become our strategic partner and quickly establish an integrated national aerospace strategy. That strategy, together with competitive funding, would enable Canadian businesses to compete with other countries on an equal footing.
By contributing to efforts to develop the industry, the Canadian government will help our country continue to distinguish itself and to shine on the global stage. The facts are clear: support for our industry is a profitable investment for Canada.
Madam Chair, ladies and gentlemen, thank you in advance for your support and attention.
View Tony Baldinelli Profile
CPC (ON)
Thank you.
Again, going back to your “Vision 2025” document, you addressed the whole issue of innovation. We've talked about green technologies and so on. What more can the government do to foster that kind of environment, so that the research and development can take place here, so that those jobs can then be created in Canada to create those green technologies?
Mike Mueller
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Mike Mueller
2021-03-09 12:59
You're absolutely right. At the end of the day, it's about the jobs that are here.
When people talk about the Canadian aerospace industry, you think of planes, helicopters and satellites, but it's not that. It's the people behind it and it's the high skill and high wages that we have here.
I would agree; we need that sector strategy to be in place to ensure that we retain those good paycheques that are across the country in every single region from Victoria to Newfoundland and into the north.
If there is one item or one idea I could impress upon the committee, it is the need for that sector-specific strategy that encompasses everything.
View Maninder Sidhu Profile
Lib. (ON)
Thank you, Mr. Bain. I appreciate your insights.
The Canada Infrastructure Bank recently announced a partnership with the Government of Alberta to help build a modern irrigation system that will enhance crop production while providing water security and mitigating the impacts on the environment. Our government is committed to supporting innovative projects across the country, like the Alberta irrigation project, that will bring us into the future and provide significant returns on investment.
Can you speak to the new innovations that the Canada Infrastructure Bank should consider supporting? It's similar to my last question but more in depth.
Derron Bain
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Derron Bain
2021-02-23 15:57
Can you maybe be a little more specific with what you're trying to get at?
View Maninder Sidhu Profile
Lib. (ON)
The Canada Infrastructure Bank can be used for many different competitive projects. I'm just thinking of taking an innovative approach. What are your thoughts on that?
Derron Bain
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Derron Bain
2021-02-23 15:58
If you look at the list of projects that it's committed to, whether it's the one you cite in terms of Alberta Irrigation, whether it's Lulu Island District Energy, the Oneida Energy Storage project, Pirate Harbour Wind Farm, that's a basket of projects, clearly, that lands in the renewable energy space. I think that's certainly a priority for this government and it's clearly a priority for many others, as we face the challenges of climate change.
Élise Gosselin
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Élise Gosselin
2021-02-23 15:38
First, I want to thank you for giving me the opportunity to provide some information to this committee.
I would like to approach processing capacity in the dairy industry from a slightly different angle, namely that of innovation and research, which support the capacity for innovation.
As you know, the majority of the industrial matrix, as far as dairy processing in Quebec in particular is concerned, is composed of small and medium-sized enterprises. However, to support research and innovation, these businesses can only rely on limited financial capacity and human resources.
This innovation is essential to processing capacity. To ensure the survival of companies, a constant effort is made to meet market demand, adapt to standards, and increase processes and competitiveness. Climate change and its environmental impacts also require companies to constantly adapt their processes.
In terms of societal concerns, the news this week showed just how important everything is in the dairy sector. This even includes animal feed. Consumer demand for more natural products and views on animal welfare mean that companies have to adapt to a constantly changing environment. They must adapt both their products and processes to be able to produce in this environment. Currently, it is industry suppliers, engineering companies, that support innovation in small and medium enterprises, particularly with equipment, but this does not necessarily meet all needs.
I would like to introduce you to our organization. Novalait is living proof that the Quebec dairy sector is particularly innovative. Twenty-five years ago, in 1995, dairy producers and processors decided to create a fund to invest in research. They not only created it, they created it together. In other sectors of the agri-food industry, particularly beef, which my colleagues are familiar with, samples taken from carcasses are used for research. This is also the case in the dairy sector, where producers and processors have come together to invest in research.
In the case of Novalait, all Quebec farms and all companies that process milk, from artisanal cheese dairies to multinationals, contribute to the research funding. Novalait solicits the expertise of researchers to develop knowledge and solutions to solve problems associated with the production and processing of milk. Since its creation, Novalait has invested $11 million in research, in more than 125 projects, for a total value of almost $55 million. This amount has been invested by producers and processors.
We often hear that in the agri-food sector, we are less innovative or we invest less in research than in other OECD countries, but it is important for you to know that this capacity for innovation is really present in the dairy sector in Quebec.
When Novalait was created in 1995, the dairy industry was facing two major challenges: diversification of dairy products and a significant decrease in fat consumption. Twenty-five years later, we can say that extraordinary progress has been made in the variety of dairy products offered. And just as people were afraid to consume milk fat 25 years ago, today's markets are hungry for milk fat in the form of cream or butter. This is a positive development for our sector.
On the other hand, we realize, not only in Quebec or Canada, but worldwide, that milk is made up of a certain percentage of proteins, fat and other solids. We try to match this composition as much as possible to market demand, but there is an imbalance. We meet 100% of Canada's butterfat requirements, but at the same time there are surpluses of protein and other solids, including sugars from fat. This means that every time we process milk, there is a coproduct, which is skim milk, made up of permeates from the concentration of milk. It is a coproduct that we must be able to add value to.
This problem exists in the United States and Europe, but Canada's situation is unique because of the free trade agreements and international agreements it has entered into. The ability of dairy processors to add value on world markets to their coproducts, i.e. skim milk powder or permeates, is limited. The Dairy Processors Association of Canada also mentioned this to you at a previous meeting.
At Novalait, we are looking for solutions to solve this problem. We are working on milk composition and trying to manage the cows' diet so that it can be aligned as much as possible with the needs of the industry, but this has its limits.
We also work with processors to better control processes to reduce the structural surplus imbalance of non-fat solids and find ways to add value to these products. We are currently looking for solutions.
What is important to understand here is that any increase in dairy processing capacity will result in an increase in coproducts, which we must be able to add value to. This is an issue that needs to be addressed in order to increase milk processing capacity in Canada. We have solutions to address this problem. We are concerned about the future. We want to emphasize here that research and innovation are among the priorities for the future.
Thank you.
Nadia Theodore
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Nadia Theodore
2021-02-23 15:46
Thank you.
Good afternoon, everyone.
I am here representing Maple Leaf Foods, the largest food-processing company in Canada. We have operations across Manitoba, Alberta, Saskatchewan, Quebec, and Ontario and an exporting footprint that includes Asia, the United States and Europe.
We are truly, as a company, Canadian-born and globally grown. We are committed to and invested in the success and sustained growth of the Canadian agri-food sector and of the processing sector in particular, which we believe will be key to Canada's post-COVID-19 economic recovery. However, the question we're trying to grapple with today is how to make this happen. What will it take to make economic recovery happen?
I would like to highlight three areas that Maple Leaf Foods believes will be critical to success.
First is regulatory agility. We know that, if done correctly, regulation can have a positive impact on growth and foster a thriving competitive market that supports innovation and technological progress. However, if executed poorly, regulation stifles productivity, results in unnecessary costs for all businesses, particularly for small and medium-sized firms, and effectively reverses our competitiveness gains.
The good news is that Canada's regulatory system gives Canadians and our country's trading partners confidence that products made in Canada meet the highest health, safety, environmental and quality requirements. The bad news, however, is that our regulatory system is complex, with a multi-layered jurisdictional structure with no clear authority. Perhaps more troubling to us is that many regulations are either outdated or focused too heavily on prescribing a process than ensuring an outcome. This deters innovation and solutions that would improve health, safety, and environmental outcomes and stymies much-needed investment to our country. The ultimate results are additional cost, distrust between industry and regulators, and an overall less-than-efficient system that prevents us from living up to our true potential on both health and safety and global competitiveness.
Now, with the emergence of COVID-19, the Canadian government has shown that agility is possible in the regulatory process within the agri-food sector, and we sincerely hope the government continues to prioritize regulatory flexibility over the long term. In this regard, the recommendation out of the 2018 agri-food economic strategy table for an approach that is focused on predictability, efficiency, and effectiveness and that—equally important—considers the cumulative impact of regulation on competitiveness and net economic benefit to Canada should be further explored.
A second area that other colleagues have already mentioned today that I would like to also highlight is talent. Like any industry, ours requires an adequate workforce to keep operations going. This sector continues to identify chronic and critical labour shortages as one of the most pressing risks and a major constraint on both agricultural growth and global competitiveness. Right now, this sector is in need of 30,000 workers, 10% of our workforce. By 2025, we expect that number to more than double.
Now, this is not a new challenge. The industry has been sounding the alarm bells for several years, luckily coupled with concrete solutions that we are eager to work with all government partners on. Changes to the temporary foreign worker program and to immigration programming are needed to support immediate labour shortages. Even more immediate a need is to help address significant labour challenges that the sector is facing due to COVID-19. Even during a pandemic, Canadians need to eat.
It is because of our frontline workers that Canada's food plants continued to operate throughout the pandemic to provide us with food on our tables. Maple Leaf Foods alone has invested over $50 million to keep our workers safe to allow them to do so. It is critical that governments also reinforce that our frontline workers are critical, and the importance of their contributions to keeping our food supply safe.
We sincerely hope that the federal government will work with the provinces to ensure that food-processing plant workers are prioritized for COVID-19 vaccines immediately after critical health care workers, in all provinces and territories. This is in line with the direction provided by the national advisory committee on immunization and with what other countries around the globe, including our competitors, are doing.
As we have seen recently, there is also a serious animal care consideration to sustained labour shortages. In particular, the supply chain in the pork industry is very tightly calibrated. If there is a break in the hog supply chain, it certainly does not take long for things to get very serious on the farms. We have seen this just this week.
To solve longer-term labour problems, the recommendations of the agri-food economic strategy provide a good road map to assess future needs for all skill levels, to develop a sector-specific strategy for skills development that includes a focus on apprenticeship and skilled trades needs, and to promote the sector as a good career choice.
Before I close, I would like to touch on the topic of innovation. The global agri-food market in 2025 will be highly competitive and filled with new challenges—a growing population, climate change, and rapid advances in technology, just to name a few. Maple Leaf Foods strives for continuous evolution of our products and business strategies to meet these challenges head-on. In 2019, we became the first major food company in the world to be carbon-neutral and the only food company in Canada to set science-based emission reduction targets.
Existing federal innovation programs are not well suited to food manufacturing. Often they are premised on job creation or the development of disruptive technologies. In a small market like Canada, it is unrealistic to think that all or even most innovation will be disruptive.
Our industry will benefit from adopting technologies that already exist in other countries or industries and, in so doing, will introduce and customize innovation products and processes within our sector. Innovation will be critical to ensure the stability and growth of the sector, and more can be done to tailor the programs.
I'd like to thank you again for having me. I look forward to your questions.
Thank you very much.
View Lyne Bessette Profile
Lib. (QC)
Thank you very much.
In committee, we heard a lot about the labour shortage in the food processing sector, and that automation could be a solution. What do you see as the future of mechanization and automation in the dairy processing sector? Is this part of your research?
Élise Gosselin
View Élise Gosselin Profile
Élise Gosselin
2021-02-23 16:06
In fact, it is mainly the equipment manufacturers who will be the leaders in this sector. This is indeed very important. What goes hand in hand with automation—we see it on farms—is the fact that dairy farmers who use milking robots can spend more time on business management.
It's the same for processing. We can reduce the operational work, but we will still need people to manage and analyze the business. That's where we come in.
View Alistair MacGregor Profile
NDP (BC)
Thank you, Mr. Chair.
Thank you to our witnesses for coming today and contributing to our study on processing capacity here in Canada.
I think I'll start my first question with the Canadian Cattlemen's Association.
Mr. Laycraft, you were talking about automation. I remember that in 2018, during the previous Parliament, our committee did a cross-country trip, and one of our stops was in Guelph, where we visited the major Cargill plant there. As you correctly noted, a lot of the jobs involved in that plant require a lot of talent and a lot of skill. There is a lot of stuff that you need human hands for, which a machine simply can't do.
For our committee's benefit, then, when you're talking about automation, can you list some specific examples of where you'd like to see that investment and what kinds of jobs you'd like to see automation move into?
Dennis Laycraft
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Dennis Laycraft
2021-02-23 16:14
Yes. There are a few interesting ones. Some people have put in automated box storage facilities. Normally, you'd be using forklifts and moving stuff around. It's all set up on conveyors, and they actually have the capacity to mix and match orders in a very sophisticated way, as you're selling around the world.
It isn't always on the processing line that the automation is going to occur; it's throughout the entire system.
We're also using some remote vision technology where there can be third party monitoring, for instance. We're working with the CFIA on the future of that as well.
There are many different ways that maybe just don't fit your traditional mindset of what automation should look like.
Glenn Fraser
View Glenn Fraser Profile
Glenn Fraser
2021-02-18 15:49
Thank you, Chair.
It is an honour to be invited today to discuss building back better with a more robust and competitive agri-food sector. Enhancing our domestic and global competitiveness with respect to food and beverage manufacturing capacity has never been more critical. A global race is on and Canada cannot afford to fall behind.
My name is Glenn Fraser and I'm the national leader of food and beverage processing at MNP. I am joined today by colleague, Kelleen Tait, national lead of livestock and poultry.
As a leading accounting, consulting and tax advisory firm headquartered in Canada, MNP is in the unique position to be the voice of over 20,000 agri-food clients, including 1,000 food and beverage manufacturing companies from coast to coast to coast. One thing is for sure, the post-COVID-19 business environment will look much different than it did pre-pandemic. More virtual activity is forecast as food and beverage manufacturers look to technological solutions to increase their efficiencies and effectiveness by adopting automation, mechanization, digitization, e-commerce and AI.
MNP believes Canadians will witness a significant increase in the applicability and investment in these areas within the industry supply chain. It's already happening as we speak. To enhance domestic and global competitiveness, we believe the federal government can help resolve ongoing issues and impediments to growth and profitability. We have three specific building back better recovery recommendations.
Our first recommendation is that the federal government take a leadership role in establishing new policies and programs to ensure the consistent availability of high-skilled labour. Labour supply is critical for an industry that is the backbone of Canada's food supply. In today's food and beverage manufacturing industry there is a labour shortage of 10%, which is expected to widen in the next five years. To address this the federal government needs to explore policy options that would invest in automation, training and career awareness.
Automation can bring in efficiencies and cost savings for businesses, and it also has the potential to help address labour shortages, which are particularly sensitive to disruption. Automation will equally create demand for skilled workers and draw more youth to well-paying jobs in their communities that they can be proud of.
To fully capitalize on this opportunity, the federal government will need to create programs and provide incentives geared toward training and skills development for the modern workforce. It is also critical to create specific policy geared toward developing awareness among youth of the variety of rewarding and skilled career and employment options within this industry.
Our second recommendation is for the government to foster innovation in the food and beverage manufacturing sector. The food and beverage manufacturing industry is currently experiencing decreased investment caused by declining margins, difficulties in accessing capital for investment, and ongoing barriers to accessing tax credits toward scientific research and experimental development.
Working in partnership with provincial governments and industry, the government should broaden existing funding programs while also developing industry-specific policy that can be used to promote innovation in food and beverage manufacturing. Innovation doesn't need to be leading edge or new technologies. Innovation can also be achieved by adopting proven strategies and technologies that may already exist inside or outside of Canada.
Programs such as Agriculture Canada's agri-innovate program and ISED's strategic innovation fund have the potential to be expanded to include incentives for food and beverage manufacturers to invest. We would like to emphasize the importance of innovation, automation, mechanization, digitization, e-commerce and AI in this sector. These funding programs need to be specifically tailored to the food and beverage manufacturing industry so there is a more streamlined and simplified method of accessing these funds.
Our third recommendation is for the FPT agriculture ministers to ensure there is a grocery code of conduct that establishes a fair, transparent and efficient relationship between grocery retailers and food and beverage manufacturers. In Canada, five major grocery retailers control 80% of the grocery market. This has caused an unbalanced relationship in the business landscape between retailers and the food and beverage manufacturers where arbitrary transaction costs, fees and penalties are levied, at times retroactively.
In addition, the COVID-19 pandemic has exposed additional challenges and costs at all levels of the supply chain.
Retailers have taken some of these financial costs associated with COVID-19 and passed them down to the manufacturers. This adds additional strain on already escalating costs for most if not all food and beverage manufacturers.
A grocery code of conduct would enable the food and beverage manufacturing industry and retailers to engage in a constructive and transparent manner that ultimately provides positive outcomes for all Canadians.
In conclusion, we want to thank this committee for its important work in building a more competitive food and beverage manufacturing industry. Automation, skilled labour, training and awareness, enhanced innovation programs and a grocery code of conduct would ensure this critical industry is equipped to grow and prosper at home, reach attainable export targets and compete abroad.
These recommendations are vital to our future food security and an affordable supply of quality food for all Canadians.
Thank you.
View Lyne Bessette Profile
Lib. (QC)
Thank you.
You mentioned automation earlier.
In your opinion, what are the main barriers to innovation and the adoption of new technologies?
Also, to what extent can private investment help boost innovation?
Ron Lemaire
View Ron Lemaire Profile
Ron Lemaire
2021-02-18 16:12
Private investment is a key function of driving innovation. It's also rethinking how we process, so some new, innovative tools that can change the actual production line, change the thinking around how we operate our line, again, from a fruit and vegetable perspective.
Also, it's looking at including the entire supply chain in the solution and not just looking at it within one segment of the market. Bringing in the growers, right through to the retail end, the buying end, and having that discussion as a group to find where those opportunities lay through the automation process is fundamental.
Samantha Anderton
View Samantha Anderton Profile
Samantha Anderton
2021-02-02 15:57
We believe Canada needs to have a top-down approach to support commercial airlines. This would mean that support would flow to original equipment manufacturers, OEMs, and down the full supply chain, including those companies focused on aircraft maintenance. But, make no mistake, this is only part of the solution.
We also need a bottom-up aerospace framework to foster innovation and collaboration at the SME level. This would spur novel, sustainable technologies in green tech and advanced manufacturing.
Supporting a dynamic, collaborative aerospace innovation ecosystem such as the one we are developing at DAIR would be valuable to all stakeholders. For example, DAIR was able to rapidly respond to support COVID-19 research by working on a project to study how to reduce passenger exposure to the virus. By leveraging our access to an extensive expertise pool, as well as our established relationships with industry and academia, we were able to accelerate funding applications and reduce wait times to initiate and advance this key research. That's the power of collaboration.
Collaboration also helps SMEs to grow by mobilizing their talent and expertise through facilitating knowledge transfer between smaller enterprises and the larger stakeholders such as tier ones and OEMs. SMEs have so much untapped knowledge in key disruptive technologies such as eVTOL, hybrid-electric propulsion and UAVs.
We can seize this chance to differentiate ourselves as Canadians if we focus our energy on these novel technologies now. We can also leverage the similarities the Canadian aerospace sector has with other industries, such as the automotive industry, when it comes to artificial intelligence, machine learning, the Internet of things, advanced manufacturing, and big data.
More incentives have to be created to encourage working together rather than in silos. This will benefit all of Canada. Strengthening investments in R and D now would not only offer long-term benefits, but it would also provide the ability to pivot out of the COVID pandemic to emerge a stronger, more resilient aerospace sector. This will have tangible results in all levels of our industry, from airlines to OEMs and SMEs across Canada.
View Lyne Bessette Profile
Lib. (QC)
Thank you, Mr. Chair.
Thank you to all the witnesses for being here today.
My questions will be directed to representatives of the Dairy Processors Association of Canada.
According to a recent report by the Agri-Food Innovation Council, there is a lack of research and innovation, which hinders the growth of the processing industry and its international competitiveness.
In your view, what measures are needed in the long term to encourage innovation and technological advances in the industry?
Mathieu Frigon
View Mathieu Frigon Profile
Mathieu Frigon
2021-02-02 16:59
I will respond first, and then I will let Mr. Barrett add his comments.
We are well aware of this report. However, the dairy industry was not consulted as part of this report.
In my opinion, the first step is the compensation program that we mentioned in our presentation. As we were saying, it’s not a matter of sending a cheque in the mail. We want a program that will allow the industry to position itself in the long term to encourage investments. I think that this first step is mandatory.
As we stated in our presentation, pressure from retailers, the impacts resulting from the access granted under international trade agreements, in addition to the constraints that will be imposed on us with respect to the export of dairy ingredients, make this program absolutely necessary. It is this type of program that will enhance investments and innovation in the dairy processing industry.
Michael Barrett
View Michael Barrett Profile
Michael Barrett
2021-02-02 17:00
I couldn't add any more than to say that innovation and investment go hand in hand and that there is a requirement to have both. Recognizing that we have a small population—I heard this said in the last panel as well—the ability to innovate and to seek markets elsewhere is a critical component of growth, and that modernization fund is a critical part of doing so, as Mathieu has outlined.
View Yves Perron Profile
BQ (QC)
If you were compensated as promised, it would help you to innovate and make technological improvements, which is what we are studying. Am I wrong in saying that? You're asking for tax credits and an innovation program, right?
Michael Barrett
View Michael Barrett Profile
Michael Barrett
2021-02-02 17:08
Yes, and to answer your question, the concept of the support of the compensation is so that we can reinvest and reinvent our industry to be able to face a new market reality. With restricted exports on products that have been an important growth element, being able to reinvent ourselves is an important criterion in being able to balance this industry out. You can't continue to be able to support producers without understanding that you need somewhere to process it.
Again, we don't oppose any producer compensation. I'm a co-op. We do not oppose that. However, we are looking for some equity, because the modernization of our industry has to be able to take place, and the reinvention of our industry has to take place because we have to be able to adjust to a new market and global reality of where we can compete and where we can't anymore, based upon the trade restrictions that are now imposed under the trade agreements.
Scott Doherty
View Scott Doherty Profile
Scott Doherty
2021-02-01 11:40
Thanks, Chair. It's Scott Doherty. I'm the executive assistant to the national president of Unifor.
As you know, Unifor is the largest private sector union in the country, with over 315,000 members. I'm responsible for the forestry sector for our union. I worked at Elk Falls pulp mill as a process engineer, the same as our other witness, in Campbell River for 16 years prior to starting on staff with the former CEP in 2008.
We have almost 22,000 members in the sector, with 250 units spread across 10 provinces. Unifor is well positioned to talk about every aspect of the forest sector. Members of this committee are well versed in the forestry sector, and I know that previous witnesses probably have shared information on the state of Canada's forestry sector and the contributions it makes nationally, regionally and to local economies in terms of the economic production, taxes and so forth.
It's Unifor's position that we will not create an effective COVID recovery plan without also addressing the challenges facing this sector prior to the pandemic, which are, as some have already said, low pulp prices, ever-growing fibre supply issues, obviously the ongoing softwood lumber dispute, volatile unpredictable global trade situations with China and the Trump administration, and obviously natural events such as pine beetle and forest fires.
All these factors have caused serious liquidity issues for many of our employers. Amidst all of these pre-existing challenges, the pandemic struck, worsening some of the problems and creating serious new ones. For example, pulp and paper producers across the country have made capacity adjustments in response to the impact of COVID-19. We've seen the number of layoffs across the country caused by temporary shutdowns or permanent shutdowns of pulp mills. For many of our members, the pandemic has deepened the sense of uncertainty and employment insecurity that they felt prior to 2020.
Unifor, however, is optimistic about the future of Canada's forest industry. We believe there are a number of concrete, pragmatic steps we can take to build a more sustainable, competitive and innovative sector as we plan for our recovery.
First, we believe we need urgent action to help producers weather the COVID storm. In the short term, we need support, and we support the call for producers' financial support and liquidity measures from the federal government, including loan guarantees and other measures. In the mid- and long term, we need to continue to work to build a comprehensive, coordinated and sustainable forest sector at the federal and provincial levels.
We support the call for a focus on new products and emerging markets, with an emphasis on sustainability and renewability for the industry. This must include incentives from government for investment and research. New developments in timber frame construction, along with biofuel development, are just a few areas of great opportunity as we continue to build the capacity to develop personal protective equipment, which is needed more than ever.
Finally, there is also hope that the Biden election will lead to less volatility with the U.S., our biggest trader. Simply put, the time has come for a fair and reasonable solution to the softwood lumber dispute. For years, people have referred to this industry as a sunset industry. Unifor will never agree to such a comment. It's a ridiculous assessment. The industry is a sunrise industry, with enormous opportunity for transformational change and growth. When governments, employers and labour work together, there is opportunity to invest in our future and build a more green, sustainable, inclusive and stable sector.
Thank you.
View Alistair MacGregor Profile
NDP (BC)
Do you think that there is a little bit more of that encouragement now from COVID-19, given the experiences that we've had over the last 10 months?
Jason Aitken
View Jason Aitken Profile
Jason Aitken
2021-01-28 16:10
Absolutely it's encouraged, but I also want to explain that in the beef industry, in particular, where it's so concentrated.... I gave you the PlayStation example where there are loss leaders in beef. You need that global reach because, whether it's crown-cut tongues or mountain chain tripe, if you can't sell the other parts of the animal at some kind of profitability factor, you're going to get killed by the two economies-of-scale packers.
The model won't work unless you have an anchor tenant that's providing the throughput and the basic economies to allow you to pursue the craft elements of the local authentic strategy.
Dennis Prouse
View Dennis Prouse Profile
Dennis Prouse
2020-12-08 15:35
Excellent. Thank you, Mr. Chair.
My name is Dennis Prouse, and I am the vice president of government affairs for CropLife Canada. With me is my colleague, Ian Affleck, vice president, biotechnology.
CropLife Canada represents the Canadian manufacturers, developers and distributors of pest control and modern plant breeding products. Our organization's primary focus is on providing tools to help farmers be more productive and more sustainable. We also develop products for use in urban green spaces, public health settings and transportation corridors.
Last week, this committee heard from Mr. Jim Everson, president of the Canola Council of Canada. We feel that he provided some excellent comments and context for the committee, and some of his points are ones on which we hope to build and expand today.
This study is a timely one, as it speaks to the broader economic challenges we have and the post-COVID-19 future for Canadian agriculture. Specifically, how can Canadian agriculture and agri-food act as a driver for investment, jobs and growth at a time when Canada will need it more than ever?
Fortunately, a road map to this future already exists in the form of both the Barton report and the agri-food economic strategy table report. Both outline the tremendous promise of Canadian agriculture and how we are now falling short of meeting that promise.
The Barton report, for instance, sets as a goal of having Canada as the number two agriculture and agri-food exporter in the world. Currently, we are number five. That's simply not good enough for a country with Canada's potential. The economic challenge post-COVID-19 is going to be making Canada's critical industries more competitive, and agriculture and agri-food is at the top of that list.
The road to growth in agriculture and agri-food lies in replacing out-of-date and globally unaligned regulatory regimes with new enabling regulatory frameworks that leverage global best practices. These points are also being stressed by the Canadian Chamber of Commerce, the Canadian Federation of Independent Business and the Business Council of Canada.
For governments, regulatory modernization is relatively easy to implement in that it often doesn't require legislation or even regulatory change. Often, new policy is all that is needed. It also does not require new money—an important consideration in the years to come—and it delivers fast results. It should be a top priority for government across the economy, particularly in agriculture and agri-food. Regulators need to be given a growth mandate—as they are in the U.K.—with clear, measurable targets on regulatory modernization.
Specific to processing and value-added products, we have a number of examples of innovations in the form of new plant varieties that have either moved to the United States already or are in danger of doing so simply because Canada lacks a clear regulatory framework for plant-breeding innovations broadly. A key example of that is products of gene editing. These are value-added products that could be grown and processed in Canada, giving benefits to both Canadian consumers and our export markets. In short, processing plants will get built wherever the innovative technologies hit critical acreage first, which is where they get planted first, and unfortunately, right now that is not in Canada.
It's unfortunate that Canada is lagging behind many of its like-minded, science-based global competitors, including Australia, New Zealand, Japan, Brazil, Argentina and the United States, which have found a reasonable path forward for gene editing and are already reaping the benefits.
The Treasury Board Secretariat's regulatory road maps highlighted this as a priority two years ago. We would be pleased to talk about these examples in detail in the question and answer period, but we sincerely hope that, with the announced public consultations on the relevant policies slated to begin in January 2021, Canada can align with these countries quickly and put us back in the game.
This is why the government needs to act quickly on the concept articulated in budget 2019 of placing a competitive lens on regulatory agencies.
I want to confront one issue head-on. Whenever regulatory modernization comes up, there are instantly accusations that this involves industry's somehow skirting or attacking health and safety standards. That's not the case at all. Our members are deeply proud of the role that our technologies have played and will continue to play in making Canadian agriculture more sustainable than ever. This improved sustainability is not a slogan. It's a scientific fact.
Farmers also care strongly for the stewardship of their land, and they are determined to leave a better environmental future for the next generation. Sustainability has been, and remains, a cornerstone of what we do.
What that means in practice is that regulators acknowledge and embrace their role in helping to facilitate innovation and competitiveness for Canadian companies, all while maintaining their focus on science-based regulation and the health and safety of Canadians. This is about allowing regulators to focus on their core mandates by being more efficient and focusing on actual risks.
Securing market access and growing trade markets will also be a vital part of our recovery. Canada consumes only 30% of what it produces, and agriculture and agri-food create a net $10-billion surplus in our trade balance. Protectionist forces, however, will be strong around the world in the coming months and years. Canada needs to work with like-minded nations to fight for science-based regulation, and against non-tariff trade barriers wherever and whenever they pop up.
Despite our current challenges, we believe the future is bright. We have tremendous natural advantages and a smart, strong workforce. Give Canadian farmers and agri-food producers a competitive regulatory environment and access to global markets and we can help lead the post-COVID-19 recovery. Making this happen, though, requires bold, decisive action by government. There is nothing preventing expediting implementation of the road map that has already been broadly consulted on, and nothing preventing starting today.
Thank you. We'd welcome any questions the committee might have.
View Lianne Rood Profile
CPC (ON)
Thank you very much, Mr. Chair, and thank you to all of the witnesses for appearing here today.
Mr. Prouse, I'm glad you decided to bring up regulatory approvals. I want to ask you about producers who supply processors and their ability to bring products to new markets. You did touch on that. It is my understanding that Canadian innovators of new crops and varieties find it really difficult to receive regulatory approvals in Canada.
Could you tell us about the innovators and the products they have recently attempted to bring to market in Canada?
Ian Affleck
View Ian Affleck Profile
Ian Affleck
2020-12-08 15:50
Thank you, and thank you to the committee for having us here today.
Excuse me if I get a little impassioned with the answer. I grew up on a potato farm in P.E.I. and studied plant breeding at the University of Guelph, so new plant varieties are probably more exciting to me than many.
There are a lot of examples of where new varieties could have come to market in Canada and then didn't. Linking back to what Dennis said in his opening statement and how this relates to processing capacity, I'm sure you've heard from many folks about what it takes to get a processing plant built and how you create an environment that is ripe for investment in this space, but part of that is that you have the product to process in your country that is desired by the person investing in the plant.
I can give you a couple of examples of where opportunities have passed us by.
Recently, a company working out of Saskatchewan, Yield10, developed four canola varieties with a higher oil content. This is a great processing opportunity and it has benefits for more than just the processor. The farmers are getting more oil per acre, so their greenhouse and carbon footprint is going down. Their farm gate values are going up, and also, then, a processor is able to produce canola oil more efficiently because they're crushing less canola per minute to get the same amount of oil. What that comes back to is that it helps the processor decide that Canada is where they're going to put their capital investment.
Unfortunately, they've taken those varieties to the United States first. Those are new canola varieties developed in Canada and commercialized in the U.S. first. As that gets to critical mass acreage and you're a processing company trying to decide where you're going to build that plant, things are leaning in the direction of the other jurisdiction. We have other examples that follow along.
Coming to future examples, the protein industry supercluster has invested $30 million in some high-protein varieties that are really exciting and have a lot of opportunity for Canada, but if we don't have a clear pathway to commercialization in Canada, you could also see those be commercialized elsewhere. There's a high-oil soybean in the United States developed by Calyxt, and we still don't have approvals for that in Canada.
More so than just getting the approvals, it's the idea that they're needed at all for certain products in Canada. In many countries, the standard food safety requirements are all that is needed and no special reviews of these new products. While at times we talk about gene editing, which is the interesting and exciting new kid on the block for technology, this is really about plant breeding at large, and the plant breeding industry in Canada has seen the impact of our regulatory system over the years. We're falling behind the rest of the world.
If we can catch up, if we can make Canada competitive for new varieties that are either specialty for processing or provide the farmer the ability to produce that variety more efficiently per acre, more sustainably per acre and with higher value per acre, it just continues to create the environment where building processing capacity continues to make more and more sense.
I hope that responds to your question.
John Yakabuski
View John Yakabuski Profile
Hon. John Yakabuski
2020-12-07 11:21
Thank you very much, Chair. It's a pleasure and an honour to appear before your committee today.
As with almost every industry in Canada, operations in Ontario's forest sector stalled at the outset of the pandemic, due to widespread uncertainties in the early days.
Our government responded quickly. We were one of the first jurisdictions to include forest product producers on the list of essential workplaces. The essential status was justified and demonstrated by the surging demand for Ontario's forest products being needed from everything from hygiene to packaging for food to medical supplies. And of course, Ontario's forest products fed demand from our other key industries, like construction and the housing sector. Healthy demand levels meant that forest companies were able to overcome the initial lag very quickly, pushing themselves towards full capacity despite the operating challenges presented by the pandemic.
To offset the financial impact of COVID-19, Ontario implemented several measures to help the forest sector get back on its feet.
We expedited the implementation of this year's provincial forest access roads funding program to allow for infrastructure expenses to be reimbursed months sooner than normal. This helped forest companies cope with cash flow concerns.
We announced a six-month deferral of crown stumpage fees for the very same reason.
We made $3.5 million in funding available to forest companies to help them put protective measures in place for tree-planting workers, to keep workers and communities safe from COVID-19 and to ensure planning of this sustainable, renewable resource could be carried out last spring.
In addition, we are currently working with Natural Resources Canada to finalize and launch the $5.3 million forest sector safety measures fund, which will assist Ontario's small and medium-sized forest sector companies with the additional cost of putting COVID-19 protective measures in place.
In May, I convened an advisory committee made up of forest industry leaders to provide insight on how the pandemic was affecting their operations. Through the work of this committee, my government heard several suggestions to help the sector. Their number one suggestion was to finalize and release our forest sector strategy. In August, we launched our strategy after two years of development and consultation.
“Sustainable Growth: Ontario's Forest Sector Strategy” has a sweeping, 10-year horizon that will help the forest sector reach its full potential, especially as we work towards recovery from the pandemic. The strategy is intended to promote economic growth and development, but it's also aimed at protecting our forests to make sure they're there for future generations. This is a whole-of-government plan. Almost half the ministries in our government will undertake actions in support of the strategy.
To achieve its objectives, our forest sector strategy has four pillars: promoting stewardship and sustainability; putting more wood to work; improving our cost competitiveness; and fostering innovation, markets and talent.
We're working to promote innovative uses for Ontario's wood resources so companies can tap into growing international markets for the products we produce today, and those we will produce 10 years from now. A good example of this innovation is the growing field of mass timber construction, where we believe that Ontario can establish itself as a global leader. I applaud Natural Resources Canada for making investments in advancing the use of wood in building and bridge infrastructure. This initiative aligns perfectly with our efforts to promote mass timber construction.
We're also taking action to increase the use of sustainable and renewable biochemicals and biofuels in Ontario. This innovative use of forest products represents a tremendous opportunity to diversify the sector even further. We don't want to miss this opportunity. We look to the federal clean fuel standard to recognize Ontario as a leader in the sustainability of all forest products, including biofuels.
And while on the subject of Ontario's leadership in sustainability, I would like to point out that Ontario, like the federal government and other jurisdictions in our country, is fully committed to sustainably manage its forest and its inhabitants. We might go about it in different ways, but we follow a scientifically based policy framework that is designed to meet the conditions and circumstances of our province. When there are differences in approach, it is important that we have mutual respect and remember that Canada is world renowned for its sustainable practices, and Ontario has contributed to this reputation. If the merits of the province's scientifically based approach are not recognized, we are concerned that the market will be confused about the sustainability of our forests and forest products.
On a more positive note, thanks to cutting-edge engineering, modern bioheat systems are as efficient as fossil fuel and electrically based heating systems. This provides another heating option for rural, northern and indigenous communities that currently depend on fossil fuels for heat.
As we look ahead to what's required for recovery, my ministry encourages Natural Resources Canada to renew its commitments to invest in valuable federal programs like Green Construction through Wood. These programs have a proven track record of promoting innovation in the forest sector and helping to expand the market for Ontario's forest products while supporting job creation and economic growth.
Finally, I would like to say a few words about our ongoing trade dispute with the United States over softwood lumber.
Recently, as a result of an administrative review, the duty rates for most of Ontario's mills were significantly reduced, which is positive news, but we still feel the duties are unfair and we appreciate the federal government's ongoing efforts to fight against these unwarranted trade barriers.
I'm grateful for this opportunity to address the standing committee. The forest industry, one of Canada's most renewable and sustainable economic sectors, will be needed now more than ever to support economic recovery from this crisis.
Thank you.
View Paul Lefebvre Profile
Lib. (ON)
View Paul Lefebvre Profile
2020-12-07 12:06
Exactly. I think it was very successful.
Now, I want to talk a bit about the forest sector investment and innovation program, FSIIP, that you have in the province.
What is the budget for that? What is the uptake?
Is that each year? You said that's around $10 million each year.
Which companies? Can you describe some of the projects that you've been able to help?
John Yakabuski
View John Yakabuski Profile
Hon. John Yakabuski
2020-12-07 12:07
It is $10 million a year. It replaces a previous program.
We had our first recipients this year. It actually was an operation in southern Ontario that produces pallets and recycles—more recycling than anything else. It's quite an operation. It should maintain about 66 jobs and provide 20 more jobs for a very sustainable and environmentally conscious business, which is recycling material that would otherwise be thrown onto a scrap heap or a landfill or burned.
Also, the new technology that they'll be using in improvements in that operation will make it even more environmentally sustainable.
That's the kind of thing we want to see. It used to be substantially a loan program. Now there's potential for some of it to be a grant, if they meet all of the benchmarks throughout the term of the contract.
John Yakabuski
View John Yakabuski Profile
Hon. John Yakabuski
2020-12-07 12:08
Other than that, it's a fifty-fifty loan.
View Mario Simard Profile
BQ (QC)
View Mario Simard Profile
2020-12-07 12:11
Thank you, Mr. Chair.
I may not follow your recommendations. It's not that I don't like Ontario, but I think I'm going to go after Ms. Nicholls again. It's not every day you get to talk to a chief forester who probably has a little more knowledge.
You know, Ms. Nicholls, I come from a forested region. I feel like I'm hearing about the potential of cellulose fibres and all the developments that can be made from wood chemistry and biomass. I feel like I've been hearing about this for the last 15 years. Unfortunately, we have the impression that there is a lot of delay in the emergence of the forestry sector.
In that sense, I'd like to hear your thoughts on government measures that could be put forward to support what is being done in research and development, which is still fantastic. Just think about what FP Innovations is doing. Even back home, there are many college centres working specifically on this issue. I see all the potential for innovation that's there, but I can't see how it's taking shape in the markets.
Given your expertise, what do you think could be done to facilitate the emergence of this sector, which would be very beneficial in the fight against climate change?
Diane Nicholls
View Diane Nicholls Profile
Diane Nicholls
2020-12-07 12:12
Okay. That's a big question.
You are right. People have been talking about these new products for quite some time, and we're not seeing commercialization to the fundamental level that we're needing.
When you look at Scandinavia, however, they have been successful in producing some of these products, and when you think about what wood chemicals are being used in the cosmetic industry, that's a multi-billion dollar opportunity.
However, most people don't know how to take it to that level, and that's the commercialization. We have good research, we have good technology and we're starting to see some start-ups, but the piece we're missing, certainly in British Columbia, is that next step of taking that research and putting it into a commercial enterprise and showing the pathway forward.
How can we do that? Government has a lot of different programs. A lot of those programs can really help to move the dial in the sense of maybe focusing on commercialization, or giving incentives to commercialization in the sense that if you go into these new venues, there is an opportunity to have government support for a period of time, whether it be a loan or a grant or a combination of loan and grant, with parameters—
View Maninder Sidhu Profile
Lib. (ON)
Thank you for that.
Your department runs an interesting program, the forest sector investment and innovation program, the manufacturing and processing of wood products. Can you share more about the uptake and the impact of this interesting program?
John Yakabuski
View John Yakabuski Profile
Hon. John Yakabuski
2020-12-07 12:27
Yes, as I did with MP Lefebvre, we had Oxford Pallet, which was a big one. We also have CRIBE, which is another very innovative organization that we've recently worked with on agreement. I'm not a hundred per cent sure if the agreement has been finalized yet, but this is, as I say, a forest innovation and investment program, and it's designed to create employment and also broaden the industry.
In the previous funding program, we did deal with a mass timber production facility that should be opening this spring, which we think will put Ontario on the cutting edge of that very important part of this forestry sector. I think there are tremendous opportunities for mass timber.
I've had the opportunity to be under more than a few bridges. People may not know that they are supported by timbers as opposed to concrete and steel. It's amazing how sturdy and solid these structures are. They've been in existence for some time.
We see great opportunities in tall buildings, mass timber buildings, and also in the construction of bridges and that kind of infrastructure that hasn't been traditional for some time. As for mass timber, we've got the highest quality wood in the world here and, with all respect to Alberta and B.C.... We're among the highest quality, we'll say that.
We're looking forward to opportunities from that. Those are the kinds of things that we're trying to support in those programs.
John Yakabuski
View John Yakabuski Profile
Hon. John Yakabuski
2020-12-07 12:29
We're already there in our industry. Part of our forest sector strategy, putting more wood to work and investing in innovation, markets and talents speaks to exactly that, the uses of wood that can be broadened in so many different ways that we're not currently using but have opportunities. Wood is used in a lot more things than most people see, understand and recognize, but there are still other opportunities out there.
The United Nations has forecasted that the demand for wood products is going to increase by 30% by 2030. We want to make sure that we're right there here in Ontario and, of course, in Canada to be able to supply that global demand. Some of it, of course, will be in traditional uses of wood, but much of it will be in non-traditional uses or ones where innovation has allowed us to fill that need in a marketplace with wood, whereas previously it was some synthetic. We're looking forward to those opportunities.
View Mario Simard Profile
BQ (QC)
View Mario Simard Profile
2020-12-07 12:43
Thank you, Mr. Chair.
Unfortunately, Ms. Nicholls, you didn't have time to finish your answer earlier. I was asking you what makes it difficult to commercialize bioproducts. You gave us the example of some Scandinavian countries that have done it.
I'd like to hear the rest of your answer on that.
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