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Speaking Notes

The Honourable David L. Emerson
Minister of Industry

Address to e-Commerce to e-Economy:
Strategies for the 21st Century

Ottawa, Ontario
September 27, 2004

Check Against Delivery

It’s great to see the quality of the people attending this conference.

I see we have brought together early pioneers as well as today’s heavy hitters of the e-economy. A testament to the speed of this industry’s evolution, many of the heavy hitters are also the pioneers.

Ten years ago, we spoke about the “Information Highway” as a bold new transformative technology. Today, we don’t talk much about “information highways.” According to Wired magazine, even the word Internet no longer deserves to be capitalized. The Internet is just another generic class of infrastructure — like telephones, roads or electricity.

Loss of that capital “I” and the fact that “Internet” is now a household word is a great credit to many of you and to how far you have brought us along in a few short years.

I am early in my mandate as Minister of Industry and still haven’t reached the inflection point on my learning curve. I have been assessing the broader economic context we face as a country, and I’m trying to identify and anticipate trends, threats, opportunities and weaknesses. And I’m trying to define the role that Industry Canada should play in shaping the future.

It is clear that the Government of Canada has done a lot of things right over the past few years. The books are balanced. Our debt burden is declining. Consumer and business confidence are in good shape. And we are seeing consistently strong macroeconomic performance.

Because of our fiscal accomplishments, we have been able to inject new funds and new life into our health care system — witness the agreement struck with the provinces earlier this month. We still have work to do, but we have passed another watershed, and I believe we will see a decade of innovation and improved health care outcomes as a result.

Looking forward, we’re expecting the economy to do some heavy lifting, and we have to be sure it remains strong enough to withstand the inevitable stresses.

In my scan, I see Canada as a relatively small, highly trade-dependent economy, bobbing along in a turbulent sea of global change — change over which we have little control. We are, by far, the most trade-dependent country in the G-7. And since NAFTA, we are overwhelmingly tied to the U.S. economy.

While our strongest economic ties are within North America, we are also doing business around the world and are very much part of the globalizing process that has fundamentally altered our economy and the way we live. Globalization is leading to corporate consolidations. It’s leading to global supply chains. And it’s creating new pressures on our global markets and trade arrangements.

A unified Europe is showing its strength. New technologies and economies of scale are transforming traditional manufacturing in an Asia that is becoming a dominant trading area in its own right. Children born today will graduate into a world where China, not the United States, is likely to be the largest economy. And information technology is transforming India much the way it did Singapore over recent decades.

Because of information and communications technologies, the role of international borders in this globalized economy has changed.

Innovations in transportation and ICT opened the world. Borders have become less relevant for digital content transactions. Cyberspace has no border patrols. And knowledge-based products, such as software, games and music, cross borders with relative ease.

In this borderless world, financial capital travels the world, going to wherever it can earn the highest return. Human capital is now mobile, and it’s increasingly behaving like financial capital… following the highest expected return. As you know all too well, the major assets of knowledge-based companies walk out the door every night.

These are realities that governments cannot change.

What we can do is create an environment in which Canada gains advantage, in which we can attract and retain even more graduate students, researchers, engineers, financial experts and marketing managers. We can create the climate in which highly qualified people make considered decisions to build businesses here, to invest their human capital here and to build a family future here.

To succeed, we’re going to have to deal with border issues and any impediments to full participation in the global economy from a Canadian location.

We’ll have to work with our trading partners, especially the United States, to make it easier for people to cross borders in conducting their business.

That brings me to the other aspect of globalization. Even though borders have faded as a barrier to the transmission of ideas and products of the e-economy, they remain a significant barrier to the free flow of some goods, services and people.

Think about industries consolidating through mergers and acquisitions, and corporate nerve centres consolidating in fewer locations — something many of you have experienced first-hand. With corporate nerve centres often go research programs, innovation strategies and clusters of strategic resources and talent that enrich the economies and communities in which they operate.

Small and medium-sized enterprises are also affected. They may not run global supply chains, but their customers are likely part of one and they, too, become part of one.

The policy decisions made by Industry Canada can have a major impact on how this country fares. Whether our companies are small firms or transnational giants; whether our research is conducted in government facilities or in universities and private sector labs; whether we are talking about the place-of-work and place-of-residence decisions of CEOs, or our own children on graduation — Canada’s place in the global economy 10 years from now will depend on policies and actions initiated today.

We should aim to make Canada a fully ICT-enabled economy — a world-leading e-economy that will foster growth and wealth creation across and throughout the country.

We have come a long way in a short time. We can take our place with pride in being at the forefront of the connected nations of the world. But we’ll have to work hard to stay ahead of the curve.

We must continue building partnerships for innovation. Our competitive success depends on our ability to create synergy among industry, government and the academic community.

Canada’s private sector research and innovation performance has been weak compared to our international peers. To some degree, we have made up for the deficiency with a major government-assisted research push in universities and research institutes. Interesting stories and anecdotes show up almost daily in the newspapers, but are we getting a systematic, far-reaching transformation of the economy? I think we have more work to do.

Business must do its part to build on the partnership potential of university research and government bodies, such as the Communications Research Centre, the Canadian Space Agency and the National Research Council.

We need to ensure the scientific and technological advances made possible by university and government research find their way into the private sector. We need to ensure that the benefits of innovation translate into improved competitiveness and productivity, and we need to ensure that new technologies are broadly disseminated throughout the economy.

Whether the research is done in government labs, in publicly funded institutions or in universities, it is essential that research outcomes do not remain trapped beyond reach of private sector enterprises that can commercialize them and deliver broad-based benefits for Canadians.

That may require changes to how we fund research, but it will almost certainly require better ways to harvest and commercialize the great advances that scientists and technologists are making. We believe venture capital markets in Canada are too thin, and improvements are needed. Budget 2004 provides for $270 million to be directed toward increased venture capital funding.

Ideally, our universities would produce a Research In Motion-type success story every year for the next five years. Realistically, the intersection of graduate research, capital financing and a willing market isn’t that easy, and it’s clearly not automatic. We will need to help fund key enabling technologies, such as nanotechnology, microelectronics, genetics and biotechnology. We’ll need information linkages between publicly funded research initiatives. We will need a growing population of knowledge-based companies that will specialize in commercialization of science and technology.

While some Canadian firms are global leaders in the generation and production of ICT, too many Canadian firms, mostly in the small and medium-sized enterprise sector, have been slow to adopt powerful new technologies. More evidence of this came in the recent report of the Canadian e-Business Initiative.

This has negative implications for Canadian competitiveness. We need to assess how we can accelerate technological adaptation by the growing number of firms in the SME category. Tax incentives and/or lower taxes may have a role to play here, as the report noted.

And we must help ensure that businesses, both large and small, as well as institutions, such as schools and libraries, and individuals in every corner of Canada are also agents of knowledge and technology dispersion. They need access to an e-economy infrastructure that takes down barriers and connects them to global opportunities, and that infuses technology into virtually all aspects of their social and economic life.

But government has another key role to play in supporting economic transformation, and that is our role as regulator. Our regulatory framework will affect our ability to attract investment, and it will affect the confidence consumers must have if they are to buy and take full advantage of e-economy products.

The most recent example of the power of regulation to affect the future was before us today, as the CRTC concluded hearings into voice-over-IP.

We need to protect intellectual capital and come to grips with the impact instant copying and transmission has on the creators of knowledge assets.

We need to ensure that our approach to regulating industry and markets reinforces the development of an economy built on technological leadership, a strong base of human capital and environmental responsibility. We need to modernize the regulatory regime to produce the least economic drag and disruption, while still protecting the health and safety of Canadians and the environment.

This means government working with industry to eliminate uncertainty and to allow orderly forward planning and investment by the private sector. We must make clear, timely decisions on issues such as foreign ownership. Governments must also work together to eliminate duplication and regulatory conflict.

We continue to promote non-interventionary regulations. One example is the new marketplace rules for protecting privacy through the Personal Information Protection and Electronic Documents Act. The Act is based on a voluntary code worked out between government, consumers and industry.

We have also developed a Canadian Code of Practice for Consumer Protection in Electronic Commerce, or the OCA Electronic Commerce Guidelines. Here again, the intent is to protect consumers while facilitating the e-economy marketplace in a non-intrusive way.

The Code was endorsed last January by governments across Canada. It addresses issues such as security, privacy and dispute resolution.

Another threat to the realization of e-economy potential is spam… the cancer of the e-economy. A few years ago, spam was a mild irritant. Today, it is a public nuisance, an impediment to business, an invasion of privacy and a threat to our networked infrastructure.

So far, we have not found a silver bullet, and it is unlikely we will find one decisive solution to spam. That’s why the government’s Spam Task Force draws on expertise from all sectors. If we combine the right legislation, the right enforcement, the right technology and the right education programs, we may get spam under control. Frankly, we must succeed or risk a backlash against the very tools that will drive our future competitive success.

Regulatory improvements are going to have to reach well beyond Canada. Better cooperation and coordination with regulators in other countries, where the public policy imperative is essentially the same, is essential. Bilateral, regional and multilateral trade agreements covering ICT goods and services are deepening. As a country, we will continue to adhere to the primary trade agreements under the World Trade Organization. The WTO is a powerful force for establishing key principles that will guide our trading relationship with all WTO member states.

Recently, I have been saying that Canada needs to shockproof itself competitively. We have to build a competitive edge, a margin of safety. We have to be the best.

That is why we are engaged at Industry Canada in a strategic rethink. We are asking ourselves where we want to see the Canadian economy 10 years from now, and what policy levers can be best applied to get us there.

The focus must be on larger, more fundamental themes, where research and innovation, unleashed in large part by the private sector, but nurtured by good public policy, can lead to transformative change — much of it unknown and unpredictable from where we sit today.

It means ensuring that our human capital base is constantly renewed and upgraded. It means investment in networks and linkages, so that teams of experts across Canada and internationally are efficiently exchanging information and coordinating their efforts.

It means having a world-leading capability to pull new scientific developments out of the “institutional traps,” where they too often get stuck. We will need a large population of enterprises, with the knowledge and capital necessary to identify the scientific and technological advances being made daily across this country, and to turn them into commercial success stories. Great science is only a first step if we are to reward Canadians for the investments they are making. Great science must infuse the economy and drive better living standards for all.

There will be scientific dead ends. But there will be the occasional home run. We must be ready to hit those home runs for Canada.

We must put Canada on a robust trajectory of prosperity for the next generation.

In my short time as Minister of Industry, I have explored the tangled, complex web of departments, players and interests. To affect change here requires patience, persistence and consistent commitment to a distant beacon. But a few degrees of change can produce a wide turn if you sustain it long enough.

That is our goal. That is our commitment.

Thank you very much.

Government of Canada

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Date Modified: 2004-09-28 Top of Page Important Notices