HOUSE OF COMMONS CANADA A CANADIAN INNOVATION AGENDA FOR THE TWENTY-FIRST CENTURY Fifth Report of the Standing Committee on Industry, Science and Technology Susan Whelan, M.P. Chair June 2001 The Speaker of the House hereby grants permission to reproduce this document, in whole or in part, for use in schools and for other purposes such as private study, research, criticism, review or newspaper summary. Any commercial or other use or reproduction of this publication requires the express prior written authorization of the Speaker of the House of Commons. If this document contains excerpts or the full text of briefs presented to the Committee, permission to reproduce these briefs in whole or in part, must be obtained from their authors. Also available on the Parliamentary Internet Parlementaire: http://www.parl.gc.ca Available from Public Works and Government Services Canada — Publishing, Ottawa, Canada K1A 0S9 A CANADIAN INNOVATION AGENDA FOR THE TWENTY-FIRST CENTURY Fifth Report of the Standing Committee on Industry, Science and Technology Susan Whelan, M.P. Chair June 2001 STANDING COMMITTEE ON INDUSTRY, SCIENCE AND TECHNOLOGY CHAIR Susan Whelan VICE-CHAIRS Walt Lastewka Charlie Penson MEMBERS Reg Alcock Marlene Jennings Mauril Bélanger Preston Manning Pierre Brien Dan McTeague Scott Brison James Rajotte John Cannis Andy Savoy Beverly Desjarlais Paddy Torsney Jocelyne Girard-Bujold CLERK OF THE COMMITTEE Richard Dupuis RESEARCH STAFF Parliamentary Research Branch, Library of Parliament Daniel Shaw Daniel Brassard iii THE STANDING COMMITTEE ON INDUSTRY has the honour to present its FIFTH REPORT Pursuant to Standing Order 108(2), the Standing Committee on Industry, Science and Technology proceeded to a study on science and technology policies. After hearing evidence, the Committee has agreed to report to the House as follows: v TABLE OF CONTENTS CHAIR’S FOREWORD................................................................................................. xi PREFACE ................................................................................................................... xv LIST OF RECOMMENDATIONS ...............................................................................xvii INTRODUCTION ...........................................................................................................1 PART I: INNOVATION SYSTEMS AND POLICIES FOR A KNOWLEDGE-BASED SOCIETY ...............................................................5 CHAPTER 1: SCIENCE & TECHNOLOGY CONTRIBUTIONS TO A KNOWLEDGE-BASED ECONOMY.....................................................................7 Towards a Knowledge-based Society ........................................................................ 7 Innovation in a Knowledge-based Economy .............................................................. 9 S&T Contributions to Innovation............................................................................... 11 CHAPTER 2: THE INNOVATION RECORD ...............................................................15 Measuring Worldwide Innovation ............................................................................. 15 Ranking Canada’s Innovation Performance ............................................................. 20 CHAPTER 3: THE CANADIAN INNOVATION SYSTEM ............................................25 Knowledge Sources and Flows ................................................................................ 25 The Government-University-Industry Research Triangle.......................................... 29 The Natural Science and Engineering Innovation System in Canada ...................... 30 CHAPTER 4: THE INNOVATION POLICY FRAMEWORK ........................................35 A Federal Government Role and Strategy ............................................................... 35 Federal Governance: S&T Advice, Decision-Making and Management................... 39 Federal Government S&T and R&D Activity Levels ................................................. 41 vii PART II: THE POLICY INSTRUMENTS .....................................................................43 CHAPTER 5: STRATEGIC S&T INVESTMENT OPPORTUNITIES ...........................45 Astronomy — Long-Range Plan............................................................................... 46 Biotechnology........................................................................................................... 47 Genomics ................................................................................................................. 50 Nanotechnology........................................................................................................ 52 Neutron Facility......................................................................................................... 52 Light Source Synchrotron Project............................................................................. 54 CHAPTER 6: “VALUE FOR MONEY” FROM FEDERAL S&T SUPPORT PROGRAMS........................................................................................57 Industrial Research Assistance Program (IRAP)...................................................... 57 Technologies Partnerships Canada (TPC)............................................................... 59 Scientific Research & Experimental Development (SR&ED) Tax Credits ................ 61 CHAPTER 7: FEDERAL RESEARCH AGENCIES.....................................................65 National Research Council of Canada (NRC) .......................................................... 65 Networks of Centres of Excellence (NCE)................................................................ 69 Canadian Space Agency (CSA) ............................................................................... 70 CHAPTER 8: THE GRANTING COUNCILS AND THE CANADA FOUNDATION FOR INNOVATION ................................................................................................71 The Peer-Review Approach to Funding Research ................................................... 72 Natural Sciences and Engineering Research Council of Canada (NSERC)............. 74 Social Sciences and Humanities Research Council of Canada (SSHRC) ............... 75 Canadian Institute for Health Research (CIHR) ....................................................... 76 Canada Foundation for Innovation (CFI).................................................................. 77 CHAPTER 9: THE INTELLECTUAL PROPERTY RIGHTS REGIME.........................81 Intellectual Property Rights and Innovation .............................................................. 81 Patents and Patent Design....................................................................................... 86 Intellectual Property Rights, Patent Pools and Competition Policy........................... 88 viii CHAPTER 10: UNIVERSITY RESEARCH, R&D COSTS AND COMMERCIALIZATION..............................................................................................91 University R&D Activity............................................................................................. 91 Canada Research Chairs ......................................................................................... 95 Commercializing University R&D.............................................................................. 97 CHAPTER 11: FINANCING INNOVATION START-UP FIRMS................................101 Innovation Start-ups and Venture Capital............................................................... 101 Innovation Clusters and the Coordination of its Elements...................................... 104 Technology Transfer, Incubation and Spin-offs at the NRC................................... 105 CONCLUSION ..........................................................................................................109 APPENDIX 1: LIST OF WITNESSES .......................................................................113 REQUEST FOR GOVERNMENT RESPONSE .........................................................117 DISSENTING OPINION: CANADIAN ALLIANCE..................................................... 119 DISSENTING OPINION: PROGRESSIVE CONSERVATIVE PARTY ...................... 125 MINUTES OF PROCEEDINGS.................................................................................129 ix CHAIR’S FOREWORD In October 1997, the House of Commons Standing Committee on Industry began a long-term study leading to a series of reports on innovation, productivity and industrial competitiveness. This study was initiated in response to Sustaining Canada as an Innovative Society: An Action Agenda, a document written by several research groups for the Government of Canada and which had raised important questions on the quantity and quality of scientific research being undertaken in this country. The Association of Universities and Colleges of Canada, the Canadian Association of University Teachers, the Canadian Consortium for Research, the Humanities and Social Sciences Federation of Canada, and the Canadian Graduate Council described the situation as one of under- funding of basic research that presented a danger to Canada’s long-term innovative capacity and, ultimately, to its citizens’ standard of living. In June 1999, the Committee answered the challenge laid out by these groups in its report, entitled Research Funding: Strengthening the Sources of Innovation, wherein it made 16 recommendations for improving the planning, effectiveness and efficiency of research activities in Canada. Although the Committee