Evidence of meeting #29 for Industry, Science and Technology in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was atlantic.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Bruce Archibald  President, Federal Economic Development Agency for Southern Ontario
  • Paul LeBlanc  President, Atlantic Canada Opportunities Agency

8:45 a.m.

Conservative

The Chair David Sweet

Good morning, ladies and gentlemen. Bonjour à tous. Welcome to the 29th meeting of the Standing Committee on Industry, Science and Technology. We have the good fortune of having Minister Goodyear here, as well as the president of FedDev, Bruce Archibald.

We are first going to the opening remarks and then to our usual rotation. Generally, Minister, it's usually 10 minutes for opening remarks, but of course we give latitude to ministers who are before the committee, so please begin when you're ready.

8:45 a.m.

Cambridge
Ontario

Conservative

Gary Goodyear Minister of State (Science and Technology) (Federal Economic Development Agency for Southern Ontario)

Thank you very much, colleagues, ladies, and gentlemen.

Mr. Chair, I appreciate that. I'm very pleased to be here with this opportunity to speak to all of you about the main estimates for the Federal Economic Development Agency for Southern Ontario or, as we prefer to call it, FedDev Ontario.

Since its launch in the summer of 2009, FedDev Ontario has been working very hard to help the region recover from the global economic downturn, which hit us fairly hard, and to set in place the foundation for future prosperity. We began by delivering immediate assistance to communities and businesses though a number of different programs. Following our initial onslaught, if you will, of partnerships with reputable organizations who had a history of working in partnership with the government, we launched a series of new programs in 2010 after consulting with many stakeholders. In fact, seven specific initiatives were tailored on the advice we got from stakeholders to help position southern Ontario to compete in a global marketplace.

Our approach to this pattern of initiatives was basically wrapped around four key areas of focus. The first was our people advantage. We face a number of pressures in the country, certainly in Ontario, from an aging population. We have fewer workers in the skilled trades, and there is a strong need to retrain employees for more technologically driven and advanced jobs.

While we have world class post-secondary educational systems in Ontario and across the country, we do in fact fall behind the OECD and our peer countries in degrees that foster innovation—education that fosters innovation like science, technology, engineering, and mathematics, or what is commonly referred to as the STEM fields

We are addressing this problem by getting our children and our youth interested in science, technology, engineering, and math, and helping our post-secondary students and graduates who already have knowledge in the STEM fields, helping them to apply it to the business world and to improve its innovative capacity, not only immediately but also over the long term.

Through our youth STEM initiative, in particular, we are working with organizations like Let's Talk Science that teach children in the kindergarten to grade 12 range in these fields, not just to get them interested in science and technology but also to provide them a choice of fields that do in fact have rewarding jobs. I'm very thrilled to tell you that in the 18 to 20 months of this program we have already reached two million children in Ontario.

This brings me to the second area of focus, the knowledge advantage.

While it's important for small and medium sized businesses to have access to skilled and well-trained workers who generate new ideas, they also need the research and development capacity to get those ideas onto the factory floors, test them, and produce them, and successfully enter them into the marketplace. As a result of this, we have devoted significant attention to establishing partnerships between research institutions, our colleges and universities, and the private sector. A number of these programs include the applied research commercialization initiative and some other specific projects I'd be happy to discuss with you, such as the water consortium in southern Ontario, which now includes seven or eight universities working with seven or eight municipalities and somewhere in the neighbourhood of 70 private sector companies.

Through our third focus, the entrepreneurial advantage, we address the barrier faced by small businesses in southern Ontario, who have a lack of access to capital for new ventures and private sector investments in start-up businesses. We developed the investing in business innovation initiative where we are helping businesses to leverage investment and grow—companies such as Toronto's Nulogy corporation who have increased their capacity to research, develop, and market their innovative new packaging software. This program, I'm very happy to say, is around $29.5 million so far but has been leveraged up by other VC and angel investors to close to $100 million of new venture capital in southern Ontario.

Last but certainly not least, we are focused on the larger picture, that of making southern Ontario companies and communities competitive with international markets such as China and India. We saw the opportunity to push this envelope and invested in the Canadian Manufacturers and Exporters' SMART program, designed to support the vital manufacturing industry in southern Ontario and others, and help them become more competitive on a global scale. Our funding currently is supporting 300 different firms that would otherwise have been left waiting to increase their productivity—perhaps not having the ability to do it all given the global climate—and of course save jobs.

The final focus was our prosperity initiative. This is helping companies like Ivaco Rolling Mills in L'Orignal to expand, develop, and enter new products into a growing marketplace. This project, which I'd be m happy to discuss later, Mr. Chair, pretty much saved the company and ultimately the community. This company is now a leading edge technology steel producer with a vast opportunity in global markets.

Through various projects like this, we are improving the productivity of our workforce and helping our businesses and communities diversify.

I would like to address the fact that FedDev Ontario's 2012-13 main estimates do not reflect the decisions announced in the current budget 2012. We will utilize, however, the supplementary estimates and that process to adjust FedDev Ontario's authorities, and of course the quarterly financial reports, as our tools to provide Parliament with the regular and timely reporting on the applications of these measures yet to be decided upon.

Mr. Chair, as someone who was born and raised in southern Ontario, who was born and raised in my own community and went to school and owned businesses and raised a family in southern Ontario, I have seen first-hand the opportunities and potential that exist in southern Ontario. I believe that we are working in the right direction and I'm very proud to see the work of the federal government to create jobs in this area and long-term economic opportunities.

When the global economic downturn hit, our government took action by creating FedDev Ontario. This is a brand new economic development agency for southern Ontario. Since then, we've invested in hundreds of projects in southern Ontario to create jobs and grow the economy. Even in some of the hardest hit areas of southern Ontario, municipal leaders have noticed our approach.

Recently, in fact, the mayor of Windsor, Ontario, one of the hardest hit areas in the country and, prior to our intervention, the number one unemployment area in Canada—it no longer is—recognized FedDev and our government's success, when he said, “The feds have done a very good job of identifying the projects that require funding and directing funding to them.” That was Mayor Eddie Francis, of course, of Windsor.

Mr. Chair, I could continue. As you can tell I'm very excited about the work of FedDev. I believe we are on the right track and doing very good work to date. We will continue to do that, but I think it's an opportune time to end here and just open up for questions from my colleagues.

Mr. Chair, thank you for that opportunity and I await all of your questions.

8:55 a.m.

Conservative

The Chair David Sweet

Thank you very much, Minister.

My apologies, as I was remiss in not thanking all the members, as well as our witnesses, for their quick and flexible action in coming to this new room versus the other one. The other room had some serious meltdowns with the electronic equipment and that's why we're not there. It will need some significant repairs and, fortunately, ours is working well.

We'll go to our first round of questioning. These are seven-minute rounds.

We'll begin with Mr. Braid, for seven minutes.

8:55 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

Thank you, Mr. Chair.

Welcome, Minister, and Mr. Archibald. Thank you very much for being here. Congratulations, Minister, on the success of FedDev Ontario.

My first question is to you, Minister. Could you explain and elaborate, just at a high level, how FedDev Ontario has helped to foster and promote innovation in southern Ontario?

8:55 a.m.

Conservative

Gary Goodyear Cambridge, ON

First of all, innovation seems to be the buzzword around the globe right now. I will tell you that we fully recognize that innovation does not necessarily mean invention. Inventions are innovative in themselves.

Innovation is the process of taking something, perhaps a currently existing product, and improving it: perhaps finding a new market for that product; improving the line on which that product is made; improving the quality of the product by using newer, more advanced materials or software to advance the product; and improving productivity, which, as I’ve always said, is not working harder but working smarter.

FedDev has taken on the opportunity to make funding available to businesses to do those things that will improve that. For example, training of existing employees can be done with HRSDC, but we also have opportunities to fund businesses to upskill their employees. For example, when businesses adopt new technology to improve their process, we have funding available to help them purchase new, advanced equipment to make their process faster, easier for them or, in fact, to improve the bottom line.

I could go on about those applications using federal government help—with leveraged dollars, of course, because the private companies have to have money in the game. I will say, too, that in the case of profit-making companies, we require repayable contributions. We do not give money to profit-making enterprises. We loan them funding, which has worked out to be extremely important, especially in the depths of the economic downturn when banks were a little bit harder to get along with than they usually are. These companies came to us, literally by the hundreds, and we offered them ways to do everything.

I'll give you an example. One company came to us, concerned about the Canadian dollar. Of course, the federal government cannot do anything about that particular issue. But the owner found assistance to improve the insulation in his factory. With FedDev's help, he increased the insulation in his factory and saved enormously on his heating bill. That allowed his company to remain profitable. It saved jobs, in that particular situation.

We often see companies that want to expand and capture a greater market share. They have a product. They're not in the global market but with some help, with some new piece of equipment, they can get there. FedDev will look at that very carefully and determine whether there's an opportunity to help the company grow in that way and hire more people in Ontario.

That creates improved competitiveness on a global scale, just through incremental innovation in the process of the company, indeed in the actual equipment or product they're making.

8:55 a.m.

Conservative

Peter Braid Kitchener—Waterloo, ON

One of the key themes, it seems, through all of the programs under the FedDev umbrella is that you endeavour to leverage the impact of programs through partnerships. Could you elaborate on why that is a constant theme?

8:55 a.m.

Conservative

Gary Goodyear Cambridge, ON

The first thing we did after getting out of the gate in August 2009 was to immediately partner with organizations that had a strong record of successful partnership with government entities in the past. These would include the Yves Landry Foundation, the CME SMART program, the Ontario Chamber of Commerce, the Business Development Bank, and the industrial research assistance program.

This allowed us to put money into existing programs to get it into the marketplace and immediately create jobs. The idea at that time, if you can remember back to the severity of the downturn, was to in fact get folks working, to protect their jobs, be they in construction or other fields. As we did that—quite successfully, by the way—we did want to evolve into having partnerships that didn't just create any jobs. That was important, of course, but we wanted to evolve into having longer term, better quality jobs.

In other files, in other reports that you will read, collaboration among businesses and academia and government probably involves some of the most successful partnerships. Indeed, businesses in Canada tend not to do as much R and D as some of our peer countries, and there are a lot of reasons for that. It's a very complicated matter. But one of the reasons is they don't have research capacity: they don't have Ph.D.s or microscopes on-site.

Most of our small businesses have fewer than 50 employees. So by recognizing that opportunity and creating partnerships with colleges and universities with significant research capacity, we were able to put out programs that basically said to universities and colleges, “Here's some funding, and how you get it is to go outside, go down the street, find a small business with a problem, solve it, and then we will pay half of that”. The applied research commercialization program was the impetus of that pilot program. It was so successful that there were 24 academic institutions with over 300 small companies joining up for that funding. We've extended the pilot program by an additional time slot.

These partnerships include everything from small businesses that have invented a wheelchair that can climb stairs, to folks who are making some of the finest luggage on the planet. The wheelchair in question was so light that it wobbled, and a college was able to figure out how to rivet it better so that it didn't wobble, making this company a winner by employing hundreds of people as it then opened and expanded its business.

Those are just some examples of how we evolved into various types of partnerships to gain those longer term globally competitive positions we are after in Ontario.

9 a.m.

Conservative

The Chair David Sweet

Thank you, Mr. Goodyear.

Thank you, Mr. Braid.

That's all the time we have for that one.

Now we'll go on to Mr. Marston, for seven minutes.

9 a.m.

NDP

Wayne Marston Hamilton East—Stoney Creek, ON

Thank you, Mr. Chair.

Good morning, Minister.

This is my first time at this committee so I'm looking forward to the opportunity to have this brief chat with you.

Research and development dollars—Mr. Richardson will remember this—were severely cut back in the nineties under a previous government, and so to have some impact in starting towards redeeming some of that is really important.

When we look at the job losses that we've had in the Hamilton area, where I'm from, and London and Windsor, and then look at these estimates, it seems that FedDev funding is being shifted from the southern part of the province to a more easterly part—and, of course, as you've indicated in your testimony, from community and business development to technological development.

What was the overall strategy behind that particular move? There is quite a bit of money being shifted around. When we looked at the estimates it was in the tens of millions of dollars. You started to speak about the strategic outcome in your presentation. If you could go into a little more depth about that, I'd appreciate it.

9 a.m.

Conservative

Gary Goodyear Cambridge, ON

Thank you very much, Mr. Marston. You're absolutely correct that a previous government did cut science and technology. I'm absolutely convinced that caused the brain drain in Canada that we all remember.

We have taken an entirely different approach. In every single budget of ours, we've increased science and technology. We are now at historic, record amounts, close to $12 billion. Indeed, this particular budget, I'm proud to say, had an additional $1.1 billion for science and technology.

I will let my friend, Bruce, respond to this shifting of funds, the millions of dollars, because there is a specific reason why. But just to set out the profile of FedDev Ontario now, the key is to focus a little more on, and give a little extra attention to, the hardest hit areas in the southern Ontario group of areas. Those would include, of course, places like Windsor where we focused very hard, Peterborough, the Niagara region, and others.

Some of the programs also had criteria that focused on areas with fewer than 500,000 people. The reason we would do that is the diversification of the local economy angle. Some towns, as you well know, are one industry towns and we felt that if we were going to make a long-term impact.... Obviously, in the beginning we worked very hard to save the jobs in those one industry towns, but as we moved forward, we wanted to make sure that if we could, we would have two or three industries in a town to protect it in the long-term and more solidly in the event of another economic downturn 10 years from now or, hopefully, never.

Those were two reasons that some areas may not have seen the funding from a particular program that others did, but overall I think there's been a great balance of funding between things like the KIP program, the community adjustment fund, the RInC program, and the programs FedDev operates.

With respect, in a few seconds, Bruce can explain to you why the numbers were shifted around. Most of it's due to Treasury Board suggestions.

May 8th, 2012 / 9:05 a.m.

Dr. Bruce Archibald President, Federal Economic Development Agency for Southern Ontario

Thank you, minister.

In terms of reporting on the main estimates, when the agency was first created, it was the southern Ontario development program, which the minister had spoken about. Into our second year of operation, the minister announced a series of new initiatives, the seven initiatives he mentioned, called the southern Ontario advantage initiatives.

When we redesigned our program activity architecture, we realigned the various program activities to better reflect those seven programs. That's why, for example, in the community economic development you saw a shift in the number from 2011-12 to 2012-13, because some of those programs in the new suite actually fit better in things like technology innovation or business development.

On the advice of Treasury Board, we moved some of the internal activities, like policy advocacy and coordination, into internal services. So with the change to the program activity architecture, we've really tried to align the seven programs under the southern Ontario advantage initiative with the actual activity and the dollars attributed to those.

9:05 a.m.

NDP

Wayne Marston Hamilton East—Stoney Creek, ON

In my community of Hamilton there's a real concern about capacity in places where there's a lack of expertise in the building trades. When we look at the community development dollars moving—and I would note here that I'm new to this file—was there something in place before, such as additional training or cooperation perhaps with the building trade unions in their apprenticeships, that would have developed people who came out of some of the plants that had been shut down and prepared them for advancement?

If you're in a technical trade today, it's not like the old days where you could go in there with grade 8, 9, or 10 and do a job. You have to have the competencies today that, quite likely, people could expand upon to go to a more technical level. Has there been anything in place to look at that and to try to deal with it?

9:05 a.m.

Conservative

Gary Goodyear Cambridge, ON

I'll answer that quite quickly. Clearly, any organization—not-for-profit or for-profit—can apply to any of these FedDev programs. So where there is in fact the opportunity to receive funding to upskill a certain group of employees, that will be available in FedDev as well. We obviously can't say yes to applications that we don't have, but it is available.

I will also say that in terms of places like McMaster University in Hamilton, there has been significant funding there. One that I'm very proud of was a participation between FedDev and the science and tech file where we advanced the automotive research facility at McMaster, which I would think is approaching the largest, most technologically advanced research facility in the world on energy and energy storage for the transportation industry. We're very proud of that. The goal there, of course, is to create a hub, a centre that will in fact attract businesses to create more employment and grow that particular economy. We're already seeing that with partnerships in some of the major automotive industries.

The ARC initiative was also available to the colleges in and around that, exactly for that reason, where businesses would apply to upskill and have funding to assist that upskilling.

If I could just say one more thing—and I know we're running out of time, for which I apologize—but the graduate enterprise internship initiative is another program designed specifically to help move the highly skilled folks that are coming out of universities and colleges into the businesses of their choice and not lose that skill set to McDonald's or another place during the economic downturn. This is an internship program that was developed to support the movement of skill and knowledge into the businesses that lacked that capacity.

So in this overarching way, I think all of that is available to all communities.

9:10 a.m.

Conservative

The Chair David Sweet

Thank you, Minister Goodyear, and thank you, Mr. Marston.

Mr. McColeman, for seven minutes.

9:10 a.m.

Conservative

Phil McColeman Brant, ON

Thank you, Chair, and thank you, Minister, for being here today and to you, Mr. Archibald, for being here and giving us the backdrop.

Recollecting where we were in 2008 in southern Ontario, and where my riding exists in southwestern Ontario, some of the initial investments made through the establishment of FedDev dealt with large infrastructure projects, with investments in municipal infrastructure, and the like. The one I want to focus on is the knowledge infrastructure fund, how it in some ways transformed certain facilities of academia and upgraded them to be able to go to the next level.

I would like you to make some comments perhaps on some of the feedback you've received from the institutions, the universities, colleges, polytechnics, and maybe even provide one or two examples of how this has actually moved them, I believe, from having seen the evolution in breaking down some of their barriers—so that they can co-operate with business and help create jobs in this economy.