Finance Committee on Oct. 23rd, 2012

[Elizabeth Aquin]

We're having difficulty employing or finding all types of workers. The services sector hires from professional engineers down to labourers and everybody in between, including the trades. There are so many different services, and some have more technology than others. There are a range of occupations, and we are having difficulty with all of them.

Our sector council, with a study, showed that between now and 2020, between low- and mid-range cases, we're not as high as oil and gas. We're mid-range. Between 40,000 and 140,000 people will be required in the sector, and the services sector alone will require between 18,000 and 72,000 of them. We're somewhere in the middle.

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

That's staggering.

Mr. Everson, have we failed as a country to produce the right kinds of workers? Mr. Awad has presented before us today. Should we do a better job at working with higher levels of education, be it colleges or universities, to inform them years ahead that we're going to need some specialty workers in these areas? As Mr. Awad said, there are students coming out of universities with degrees who are unable to get jobs, yet we're hearing repeatedly that there are huge needs in different fields. Is this something we need to address in the future?

[Warren Everson]

Absolutely. We spent a lot of time this year on human resources. The Canadian Chamber of Commerce made it its number one issue. We ran a very huge consultation exercise. It's a fascinating and extremely complex problem, which has come upon our country very abruptly.

I had a nice box in my mind that the resource industries were the ones that were really suffering because they had exploded in size, but when I went to Newfoundland and Labrador, I found shortages among boutiques and pizza joints and all manner of people.

We're going forward this year by saying that one of the key issues is the relationship between employers and educational institutions. We can do a lot more there.

[The Chair, Conservative, James Rajotte]

Okay. Thank you. Thank you, Mr. Van Kesteren.

Mr. Pacetti is next, please.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair. Thank you to the witnesses for appearing.

I'm just going to ask a quick question to the Canadian Chamber of Commerce and to the Canadian Federation of Students, because I think you guys were saying the same thing.

Mr. Everson, you were saying that government's not moving when it comes to innovation, and it has to do a bit of a better job. Mr. Awad, you were saying that Canada does not have the ability to compete, that Canada's not competing, and we see it in the statistics.

Are you both saying the same thing, or am I misinterpreting what is being said? I'd like your comments.

[Warren Everson]

I think we're close. I increasingly believe that innovation is a question of human resources. There's been some research I like a lot that suggests that overwhelmingly the real issue that makes an innovative country is how skilled and well educated your populace is. The fact that young people in Canada lost employment opportunity in the recession and have continued to lag well behind where they were before the recession is very disturbing. Older workers did pretty well after the recession and are continuing to do well.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Is it the students' fault, or is it the government's fault, or is the companies' fault? The Bank of Canada is saying that companies are not doing enough with the money they have. They're not putting enough money into innovation.

I've sat on this committee, although I'm no longer a member. The business groups have continued to come forward and say we need help from the government to innovate, but we haven't seen the results from it, even though both the Liberals and the Conservatives have put money into research and development and made quite generous programs available to companies. Now we're looking to the students. Are we blaming it on the students? What's the role here? You guys have to work together. You can't expect the government to do this.

[Warren Everson]

I agree with that. It would be convenient to blame it on the students, but I think there's blame enough to go around.

The Canadian economy, the Canadian culture, is not producing as innovative an entrepreneur as other countries. We have to get at this, and the government has a role; there's no question about that.

[Adam Awad]

What we're actually seeing is that Canada, as compared to other industrialized, developed countries, ranks quite low in terms of private sector spending on research and innovation. What we're seeing is people are trained in universities. They go through their master's, their Ph.D. They often have private-public partnerships for their research projects while they're in school, often funded through federal programs, and then they graduate and aren't able to find jobs because the companies that gave them the research funding while they were in school didn't continue that in doing their own in-house research. That's what we're seeing as the major issue.

There are two tables in particular, on page 16 of the document, that I would draw the attention of the members of the committee to. One highlights that Canada offers, as compared to other countries around the world, some of the largest business incentives for research and innovation, yet doesn't actually produce the same amount of private sector research as other countries.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What does the government have to do, or what can this committee recommend to have government change in what it's doing so that it works?

[Adam Awad]

Often we see research institutions that rely more heavily on private funding for research because they don't receive enough core funding to operate research on their own, so they're forced to turn to other sources to make that happen. Business incentives that come from the government to encourage those private-public partnerships simply make it worse, because it's easier for a private corporation to get graduate students, who are much cheaper, to do the research, rather than pay them a full salary and benefits once they graduate.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Everson, what could this committee recommend to the government?

[Warren Everson]

As you've said, innovation's been in a quandary for a long time. Canada's position is actually slipping. I'm putting a heavy emphasis on the human resource side of it, which certainly includes funding and relationships between post-secondary education and employers. I think the decision to cut the—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What's the government's role? The federal government subsidized post-secondary education. Do you actually want the government to train your students?

[Warren Everson]

I think the provision of scholarships, such as was done in a government you served in, was a very impressive effort. We're spending a lot of time on this issue. Like you, I find it a very difficult issue to evaluate. It does seem clear that cutting financial support is not the right way to go.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

You said that P3s are actually a hindrance because they don't motivate private industry and the public sector to work together. Can you just expand on that?

[Adam Awad]

Public funding is provided to these research projects if companies will invest a certain portion, but we're not seeing a continued investment in their own in-house research once that project is done. Students actually have no access to jobs once they finish their education and their training.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

Colleagues, I'm going to suggest, with your consent, that we have Mr. Jean's round and then go vote. I've had a request to resume the meeting after the vote. I know that does impose some time on our witnesses, but if they can stay, I'd ask them to do so.

We'll go to Mr. Jean for a five-minute round, and then we'll go vote.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair, and thank you witnesses for attending today.

Three of my favourite groups in the world are the Canadian Chamber of Commerce, the Petroleum Services Association, and the Mining Association. I'm from Fort McMurray; I can't help myself.

I was reading Canadian Chamber of Commerce material. How many businesses in Canada do you represent?

[Warren Everson]

We represent maybe 200,000, depending on how you count them.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

It's most of them. In fact, you represented several of my businesses over the years and did a great job.

You enunciate four principles in here: inflation control, fiscal prudence, trade openness, and structural reform. I think we're doing a good job on all those fronts. Wouldn't you agree? Is it a good start by this government?

[Warren Everson]

Yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

You also talk about reducing high and uncompetitive marginal personal income tax rates that discourage people from working, saving, and upgrading their skills. I agree with you 100%. In fact, most of the things that you put forward in this brief I agree with.

What I want to talk about with the three groups that I've mentioned is labour mobility. Let's just leave the foreign workers issue out completely. I want to talk about how we can get improvements in labour productivity, which you mention in paragraph 4 specifically, and how it can mitigate the negative impact of aging populations and a declining workforce, which we have. In Fort McMurray, we have a very declining workforce; we have a lot of people retiring and a lot of problems.

I'm going to start with Ms. Aquin. Could give me your top three initiatives that this government could concentrate on to get labour from one part of this country to another? I mean things like a travel tax credit, which you've mentioned, or an educational achievement outcome tax credit for universities, etc. What do you think are the three most important?

[Elizabeth Aquin]

Certainly one is the taxable benefits. Many of our member companies are looking to other provinces to encourage Canadians to come and work in the oil patch. If their travel and accommodation are going to be taxed, it impacts their paycheque. They'd just as soon stay home and collect employment insurance. We need to look at that to encourage more Canadians to come and move out here or at least take work here.

The other thing is the training credits. Most oil patch companies have to train because universities and colleges do not have the courses for many of the occupations that are in the oil patch, so the companies do the training themselves as they look more broadly to other Canadians who come potentially with transferable skills but definitely no oil patch experience. In some cases, they're just looking for people they will train themselves. Having some kind of tax credit that could be offset in some way would greatly assist.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Are there any others ?