Finance Committee on Oct. 15th, 2012

[Patrick Duguay]

I must say that we have not seen many encouraging signs from the government in that respect. In the past year, we have seen the few paltry programs that existed disappear, in particular the Co-operative Development Initiative, a program that was used very little in Quebec, but a lot in the other provinces. Half the Canadian co-operatives are in Quebec, but Quebec doesn't have the relative demographic weight. This program helped a lot of provinces that wanted to develop their social economy sector. So they have been deprived of this tool.

Also, there have been significant tax setbacks. Over the years, requests have been made to support provincial governments wishing to implement a regime favourable to investing in individuals in their co-operatives. But that initiative was complicated by unfavourable tax rules.

[Judy Sgro, Liberal, York West, ON]

Mr. Bergeron, the issue of infrastructure is critically important in Canada in all of our major cities. The amount of time that is lost from getting from point A to point B very much requires further investment in the whole infrastructure fund, transit being a critical component of it.

Now, your suggestion was that the infrastructure fund have $1 million a year put into it. There's a huge shortfall already. Can you comment further on that?

[Daniel Bergeron]

Actually, all through Canada it costs us, with our large cities in Toronto, Calgary, Vancouver, and Montreal, more than $3.7 billion per year in losses in our economy from congestion. Congestion is a major problem.

We can enlarge our roads, but there's a limit to that. We can go to Los Angeles or a place like that to see why. Otherwise, we can invest in public transportation.

The federal government, over the last seven years, has already invested about $1 billion per year in public transportation through actual programs. These programs are very good. They focus on municipal infrastructure, and from that we already have $1 billion per year.

What we recommend for the next 10 years is to maintain those programs that are already very interesting, but also to add a dedicated fund that will add $1 billion per year for the next seven to 10 years for, again, public transportation. It will support the economy everywhere in Canada. This is very specific to public transportation. We have it through all our main cities in Canada. It created almost 80,000 jobs throughout Canada, and we want to sustain that and also sustain people going to work. An example, two out of three people going to work downtown in Montreal are going by transit already, so it's very important for the other workers also.

[The Vice-Chair, NDP, Peggy Nash]

Thank you very much. Thank you, Ms. Sgro.

Mr. Van Kesteren, you have five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, chair.

Thank you all for coming.

Mr. Lindsay, what do you think? Do you think we should be investing money in fast trains or freight trains?

[David Lindsay]

The infrastructure challenges across the country are not to be minimized or trivialized, but no matter how many trains you have, if they don't show up at your loading dock, you can't get your product on them.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I would agree that the difference is that the rail companies invest because there's money to be made.

I beg to differ with Mr. Bergeron. I live in Chatham in southwestern Ontario; I watch the trains go by and I see four trains and I see four people on them. I don't minimize the fact that there are maybe people in other centres wanting trains, but in Mr. Lindsay's case they're building these trains because there's industry there. It's an interesting discussion. I think we should have it another time.

One of the things that I learned—and I think we all learned in industry a number of years ago, Mr. Lindsay, when we studied the forestry industry and there were some severe challenges at the time—is that we've turned a corner, it seems. Would you agree that free trade agreements have been a large part of that?

As well, we've seen a significant downturn in the American economy, but that at least has been resolved too. Has that helped your industry? Is that one of the areas that has possibly made a difference?

[David Lindsay]

Not to go over sad news, but there were a series of severe hits on the forestry sector, broadly defined, in the last number of years, beginning with the change in the way people read their newspapers or read their newspapers online. The newsprint sector was hit.

U.S. housing starts started to go down even before the Lehman Brothers and the financial crisis hit. When we had a 68¢ Canadian dollar, our product was much easier to sell into the United States.

When all of those things started to hit, our individual companies realized they had to start looking for new markets. It was with the support of officials in many of our embassies and across the globe, not just free trade agreements, though free trade is something that we certainly would support. It was the infrastructure of our trade officials and trade missions in making sure that we were marketing our forest products.

The unique selling advantage we have is that in our forest sector we have the largest amount of third-party certified forest in the world. None of our members would support illegal logging. I could go down a list of the unique selling features of Canadian products. We'd like to work with all of our partners to help promote that around the world.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

All in all it's a success story, I think we can agree.

I posed this question when I was in industry and I'm wondering if there has been a change there. The Swedes seem to recognize that everybody has forests, but not everybody has equipment. Are they still the leading country for manufacturing of forest products, or are we starting to make some inroads now?

[David Lindsay]

Concerning the products in the mills, the Scandinavian countries have a very good supply chain and many of our mills would purchase from them.

We are making aggressive investments and FPInnovations is working very cooperatively with the academic community, the research community, and industry to come up with new products. Nanocrystalline technology is something I mentioned in my presentation. That's a product coming out of the forests that can be used for that high-sheen gloss you see on flat-screen TVs. Imagine when you're sitting at home watching your TV, knowing that it has a forest product in it.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I congratulate you and I think it's worth noting that this is something that the forest industry did on its own. They saw markets, they saw the challenge, and they reached out.

Prior to that, would you agree that there were too many companies that were unhealthy and that one of the reasons they were unhealthy was that there was propping up? Once that was lost—it seems a little crass—those that were the best managed to surge forward, and what we have today is a very strong and healthy forest industry with some good companies that are able to compete in the world.

[The Vice-Chair, NDP, Peggy Nash]

Mr. Lindsay, we're out of time. Please give a very brief response.

[David Lindsay]

I appreciate that we are out of time.

[The Vice-Chair, NDP, Peggy Nash]

Okay, thank you very much.

Mr. Côté, you have five minutes.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Madam Chair.

Mr. Péloquin, I am going to give you the opportunity to answer an intelligent question, based on facts. I found a letter from Anthony Pollard, the president of the Hotel Association of Canada, with whom I have had numerous exchanges. The letter was addressed to the association's members and was entitled "Canada's tourism industry is in crisis; plain and simple". After describing the cuts imposed on the Canadian Tourism Commission in recent years, he says:

“Due to lack of funding, the CTC has been forced to exit many markets including Italy, the Netherlands, Spain, Switzerland and major cuts in Japan and the United States. Quite simply, Canada is not keeping up globally.”

Mr. Pollard made comparisons internationally with respect to support for tourism. Canada has no reason to be proud. A simple state like Hawaii spends $73 million to promote its tourism around the world, while Canada spends $72 million. California, which has significant economic problems, dedicates $51 million.

Do you want to comment on that?

[Claude Péloquin]

Thank you.

Indeed, the Canadian Tourism Commission's decreased budget has been criticized in the hotel industry across Canada. This has led to difficult choices concerning adjoining markets. We have abandoned the American market, which provides the greatest number of tourists to Canada. As you mentioned, in the past four or five years, we have had to abandon initiatives in several countries.

Doing business in tourism requires an enormous amount of work. We are talking here about several years. Pulling out of a country where we are doing marketing shows us—and it is clear when it comes to costs—that our performance, tourism-wise, is lower. Yet, Canada is one of the countries that people are interested in visiting because they see it as a safe and beautiful country. But we are not capitalizing on that opportunity.

Needless to say, increasing the Canadian Tourism Commission's budget is very important.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

During my time as the critic for small business and tourism, I learned that Canada had a great image worldwide. That means we are killing the goose that lays the golden eggs. Mr. Pollard has encouraged his members to write to all the House of Commons MPs to raise their awareness regarding this situation.

Are you considering doing that or have you heard that other associations are considering it?

[Claude Péloquin]

That has been an ongoing action because we have already been told there would be budget cuts over the next two years. In fact, the government intends to cut the CTC's budget to $58 million. That amount was $99 million in 2001. So the whole tourism industry is mobilizing to convince you to increase funding. We would like it to be somewhere between $120 million and $130 million a year.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

We have heard you.

Mr. Duguay, in my riding of Beauport—Limoilou, we had the case of White Birch Paper Stadacona Division. A group of former managers tried to save that large paper manufacturer by setting out a plan to turn it into a co-operative.

I contacted BDC in an attempt to help them, but I was surprised to learn that the bank did not support co-operatives, as that was not part of its tradition and was too complicated to deal with. However, had the managers been willing to take over the factory as a corporation, BDC would have supported them.

Clearly, money is a key consideration. I assume that this type of shortcoming does not surprise you. Do you have any examples to give us or would you like to comment on the funding issue?

[Patrick Duguay]

The biggest prejudice collective entrepreneurship faces is ignorance. Unfortunately, ignorance among financial institutions can also be found in private banks and across our society.

Initiatives like this one are covered under supportive public policies in certain countries. France is currently adopting an amendment to its legislation on co-operatives as part of a major project on social economy, specifically to facilitate the transfer in the absence of a successor, or even in cases where there is a potential buyer outside the country, so that companies would first be offered to their workers.

So we are talking about an advanced piece of legislation.

[The Vice-Chair, NDP, Peggy Nash]

Mr. Hoback, you have five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, gentlemen, for being here this afternoon. I appreciate you staying late here with us as we do the pre-budget work. I'd like to talk to all of you, but unfortunately we only have five minutes, and she's very close on the watch.

[Voices]

Oh, oh!

[Randy Hoback, Conservative, Prince Albert, SK]

I think I'll go with you, Mr. Lindsay, because I come from Prince Albert and the forestry sector is huge in Prince Albert. It's going to be huge again.

In 2005 we had an NDP government and we had a pulp mill shutdown. Because of the pulp mill shutdown, the sawmill in Big River shut down and the mill in Carrot River shut down.

You can look at Saskatchewan—it'd be a really interesting case study that I'm sure some economists will do—and at what happens when you have bad policy and then you put a government in place that brings in good policy. You can see what happens. In 2005 we were looking for jobs. We're lucky Brian's area in Fort McMurray was hiring people, because the guys who worked in the mill went to Fort McMurray. They stayed in Prince Albert and worked back and forth.

As we now go forward into 2012, it's a really interesting scenario: we have the mill reopening. In fact, it has already started up and they're running it as cogeneration. They're producing green power, which is something we all like to hear, but we have a huge problem. The huge problem now is that I need 300 workers to run the plant and I need 400 construction workers to get it back going. I have an investor who has money, who wants to do it, and who has bought it. It's Prince Albert Pulp and Paper Excellence, and they've worked with the first nations to start getting the people out in the field to cut the trees and do all that work.

The labour shortage is a huge issue in Saskatchewan. Of course, it shows what can happen when you have good policies such as you have with the Saskatchewan Party and a good, strong federal government, and also what can happen when you have the bad policies that we had with the previous NDP government in 2005. The impact it has had on their regions has been phenomenal. In fact, the Carrot River mill is starting up. It looks like the Big River mill will be starting up pretty quickly. We've seen reinvestment in the forestry sector.

Mr. Lindsay, you really touched a nerve when you talked about the exciting new products you're making with forestry fibre. Maybe I'll just ask you about the severity of the skilled labour shortage and how it's affecting your sector.

[David Lindsay]

Thank you very much, Mr. Hoback. That's an excellent question.

I think it's a challenge for all of Canada and all industries with the aging demographics of baby boomers, but particularly in the forestry sector. Because we did face those down periods due to layoffs, our workforce is somewhat older than the average. They will be coming up for retirement. We have a rough estimate of some 40,000 workers who need to be replaced due to retirements, and then an additional 20,000-plus for our new products and our new markets. That's where we come up with the number of 60,000 over the next decade.

That won't come from one source. It has to come from all sources. There are many people who live in these communities close to the mills who traditionally haven't thought of themselves as forestry workers: women, new Canadians, our aboriginal population, our first nations. We are creating programs with all of our employers and with the Forest Products Association to promote forestry as a quality-of-life, good, green job to have.

We will do our part to promote forestry in particular. We need the help of all of our partners—the provincial governments, the federal government, and others—to make sure we have that skilled workforce coming in, whether it's through immigration policy or through making sure there's enriched training and support programs for first nations and transferability of skills across jurisdictions. It's not just skilled labour but unskilled labour, so it's both a volume and a quality challenge. It's not going to be solved with one tool. We're going to need a whole basket of tools. We're working with our partners to develop those right now.

With regard to first nations communities, we just gave an award to a wonderful young woman who is of Métis background. She's developing new and wonderful technologies for the forestry sector. She is a skilled worker from the Métis community. You celebrate successes and try to bring more people into the industry.