Finance Committee on Sept. 25th, 2017

[Michael Atkinson]

It's all over the map. It's not all that different from other industries that are populated primarily by SMEs.

A lot of them are family-owned businesses, so a lot of them have generational succession, but just with Canada's aging demographic alone, we're finding that succession in family-owned businesses is much more challenging. I'm sure many other industries are as well.

It depends on the type of business they're in. It's certainly true that you will have a yard full of iron that's been partially depreciated, if you understood my other discussion about capital cost allowance, but it really depends on the kind of construction you're in and how big the company is, etc. We're seeing a lot of mergers and acquisitions in our industry, which I don't think is uncommon in other industries as well.

It's all over the map, but we tend to be the same as other industries populated by SMEs when it comes to succession and when a company winds up. It's very similar.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

In your presentation, you talked a lot about trying to make it easier for people to move for work, but also for them to take up apprenticeship and not have to bear some of the personal costs of moving, getting trained, and using that part of EI system. It obviously is difficult to convince people to get into construction. It's hard work. A lot of it is manual labour, especially when you're starting out.

How many people choose to start their own business early, when they're starting out in the field, versus those who choose to work for a large construction company that might be a unionized environment and might not? How does that decision-making happen?

[Michael Atkinson]

Again, it's all over the map, but it's one of the few industries left where you truly see a real entrepreneurial spirit, where somebody starts on the tools and ends up being the CEO of a multi-million dollar construction company. There are many examples of that. It really depends.

The industry is changing now, through technology advancements and innovation. It's no longer an industry of the past. It's very high tech. There's a lot of new innovation coming in.

More and more, we're seeing young people turned on to coming into the construction industry. One of our biggest problems is parental attitudes. Parents still think that their son or daughter is going to go to university and do this and do that, but very often we find that for young people, particularly when they have big school loans after coming out of university or college, it's one of the few industries where they find out very quickly that they can earn a very good and meaningful way of living.

[The Chair, Liberal, Wayne Easter]

Thanks to all of you.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair, and thanks to our witnesses.

I'm sorry to keep picking on you, Mr. Atkinson. Brampton East has a really thriving construction industry. New home growth is quite prevalent. When I was elected, the population was 100,000. In two years, it has grown to 122,000. It's projected to be 135,000 or 140,000 by the time I run for re-election.

As you know, the economy is doing really well this year, and 400,000 jobs have been created. What do you think the biggest challenge is for the construction industry right now in terms of what we can help to do for it in budget 2018? We heard a lot of feedback from a lot of developers locally, and the labour shortage is a major issue for them.

[Michael Atkinson]

That's true, and it's not just for our industry. When we talk about labour shortages, what we're really talking about is the skill and experience walking out the door. It's not a case of bodies. It's a case of knowledge and experience walking out the door.

To give you some indication of what we're looking at, BuildForce Canada says that in the next 10 years or so we're going to have to find another quarter of a million new workers just to replace those who are going to be retiring in the next little while. It is a constant challenge, but one, though, that I think our industry is up to. We are looking at innovation and other things that hopefully will help with that.

One of the biggest problems we have in our industry is with respect to knowing where the demand is coming from over lengthy periods of time. That's why it's so important for governments at all levels to have long-term infrastructure programs.

Yes, the program may change from one year to the next depending upon other fiscal realities, but at least if you have a long-term plan in place you can do those adjustments three, four, and five years out, hopefully, so that the construction industry doesn't find itself having to turn on a dime when programs are stopped, cease, or have to start up again.

I think what governments can do as major users of construction services at federal, provincial, and municipals levels is make sure that they have long-term capital plans that are capable of being massaged when needed, yes, but that are available to industry.

[Raj Grewal, Liberal, Brampton East, ON]

You spoke about skilled labour. How is the temporary foreign worker program being used by your industry?

[Michael Atkinson]

Until recently, the only reason we used the temporary foreign worker program was that the front door for permanent entry was closed to us, under the old points system. There was no way you were getting in as a tradesperson under the old points system, so what we would do is bring them in under the temporary foreign worker program and hopefully put them into a permanent entry program through one of the provinces, the provincial nominee program. Later on, when new programs became available, Canadian experience class, we could stream them into permanent entry. The main reason we used that was to get more permanent workers into Canada.

In fact, our first option is always to hire locally, just based on cost alone.

[Raj Grewal, Liberal, Brampton East, ON]

On a practical example, some of the builders have been coming up to me and asking why we have a language requirement for construction workers. Construction workers speak a different language when they are on the site, and if they can do the job, they should be able to get a work permit to come to Canada. Do you have any thoughts on that?

[Michael Atkinson]

I think there is a safety concern, in being able to use materials or products, etc. Knowledge of one of the official languages is key, just for that purpose alone. I know a lot of examples of entire crews speaking Portuguese on the site, and they seem to get along well enough, but I think a lot of the concern about being able to speak one of the official languages on a construction site has to do with safety requirements.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you very much.

Mr. Helie, from Spirits Canada, how are you?

[C.J. Helie]

I am well, thank you.

[Raj Grewal, Liberal, Brampton East, ON]

Excellent.

The Bacardi building was a loss for the city of Brampton. We actually tried to reach out to the company to see what we could have done to save that factory in the riding, but they just said it was on an overall scale, that it was just cheaper to go somewhere else.

What do you think the government could do to keep these types of companies in Canada? We have a lot of incentives in Brampton. We have a lot of human talent. We are close to the airport. It's a great place to start up business, and we have a lot of manufacturing jobs, so we were really shocked to see them leave.

[C.J. Helie]

And they make great products.

[Raj Grewal, Liberal, Brampton East, ON]

Well, I don't drink it, but, yes, sure.

[C.J. Helie]

The biggest challenge facing the Canadian spirits industry is attracting our fair share of the global investment pool. The number one question that is raised is this. When a Canadian subsidiary puts its hand up and says, “I need $10 million to upgrade the Bacardi bottling line, to make it competitive with our other Bacardi plants around the world”, the question always comes back to what the return on that investment is.

The unfortunate fact is that, in Canada, our return on that investment is invariably less than in every other market.

[Raj Grewal, Liberal, Brampton East, ON]

I used to work at Pepsi, and Coca-Cola is headquartered in Brampton. We've toured their facility, and they have the biggest bottling plant in North America, in Brampton. When I used to work at Pepsi as a financial analyst, they would sell Canada as a test case. It just represents a very small portion of the Fortune 500 companies revenue model, and they used to use it launching new products, etc.

In your industry, how can we increase the foreign investment in our country so that we don't have that type of feedback and it's not based solely on return on investment? Obviously, businesses are there to make a profit, but a lot goes into making that profit in terms of human capital and natural resources, and Canada goes nine out of 10 on everything else.

[C.J. Helie]

In addition to the fiscal pressure, the other barrier we have in Canada, sad to say, is the Canadian liquor boards. If you have an innovative new product that you want to test market, they won't take it, because they want a track record for listing that product.

In an open market, you can go to one retailer and say, “Listen, can I make a deal with you? Can you try this new product, and we're both going to make some money on it?” You can't do that in Canada, other than in Alberta, with their private system.

[The Chair, Liberal, Wayne Easter]

Okay, we'll have to cut it there.

I have one question for the agriculture and veterinary institutions. In your second recommendation, you recommend that the federal government “support two programs to invest in employee training and development”. Mr. Atkinson brought up this issue as well, basically, employment training and labour markets.

I'm wondering where the federal government should be going in this area. We have labour market development agreements with provinces. We increased the spending in that area by $125 million, and now $2 billion is being transferred to the provinces from the federal government for labour market development. Can you or why don't you, or how come you can't, tap into that $2 billion that's being transferred from the federal government to the provinces? Is it working? Is it not? I know it's up for renegotiation at the moment. It may be something we want to think about. If anybody else wants to come in on this—Mr. Atkinson—they can come in.

[Dr. Jean-Claude Dufour]

First, it's certainly not working quite well because we have very few personnel coming for training in the university. It probably works for other levels like the secondary level or maybe the college level but not for the university.

The second thing is the fact that probably many companies do not have sufficient personnel able to work with the new technologies, so they need other types of personnel. This is why it is important that HQP be interested to buy small and medium-sized companies, and it happens. The question that you have asked is how many of our diplomas go to entrepreneurship. It is around 10% to 15% now. Most of them have a Ph.D., so they have their own start-up, or they invest with small and medium-sized companies to develop.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you.

Mr. Atkinson, did you have anything you wanted to add?

[Michael Atkinson]

Some of our provincial associations do utilize the provincial governments through those types of funding, so they're certainly aware of it. But, as you probably are well aware, it's a different kettle of fish right across the country.

[The Chair, Liberal, Wayne Easter]

Yes, very much so.

With that I'd like to thank everyone for their presentations and answering committee members' questions.

We will suspend for five minutes and go to the next panel.

[The Chair, Liberal, Wayne Easter]

I call to order the meeting on pre-budget consultations in advance of the 2018 budget.

Welcome to the witnesses. Also, thank you for your submissions prior to mid-August.

Let's try to hold it, if we can, to five minutes. We'll start with the Association of Faculties of Medicine of Canada.

Ms. Moineau, welcome.

[Dr. Geneviève Moineau, President and Chief Executive Officer, Association of Faculties of Medicine of Canada]

Mr. Chair, members of the committee, thank you for making it possible for me to speak to you today.

I'm Geneviève Moineau. I am a practising pediatrician here at the Children's Hospital of Eastern Ontario. I'm also a full professor at the University of Ottawa. I'm here as president and CEO of the Association of Faculties of Medicine of Canada, which is the voice of academic medicine in our country and represents our 17 faculties of medicine.

We train tomorrow's doctors and health researchers, and we represent thousands of health researchers, Ph.D. holders, and trainees across the country.

Canada must reinvest in health research and innovation, and better support the future leaders in these fields. This will result in better health and economic benefits for Canadians, and help Canada regain a leading role in health research and innovation on the world stage. Ninety-six percent of Canadians surveyed in an Abacus poll that came out this last weekend consider it important for the federal government to support discovering medicines and breakthrough health innovations. Nine out of 10 Canadians consider it important that the federal government support young researchers to obtain funding.

The financial benefits of health research are tremendous. A study we performed in 2014 on the economic impact of academic health science networks—our faculties of medicine, teaching hospitals, research hospitals—found that that network accounts for $66 billion of total economic impact, which is 3.5% of the GDP and helps us develop over 300,000 jobs across the country.

Canada has been at the forefront of discoveries in innovation and health. As a pediatric trainee in the late 1980s, I had patients dying of cystic fibrosis under my care. I had children dying of HIV. We don't see that anymore in pediatrics, mainly due to discoveries and treatments that have been developed by Canadian researchers.

Our researchers now are trying to find a way to treat heart disease and to find a cure for Alzheimer's through stem cell research.

In recent years, Canada has fallen behind. In Europe, many countries have reinvested heavily in health research and development. Even in the United States in 2017, the U.S. Congress supported a $2-billion increase in NIH funding, bringing the U.S. to a $110 per capita investment in research while Canada only provides one-third of that amount per capita.

That is why it is important to implement the recommendations in the Naylor report, namely to invest $485 million over four years for investigator-led research, to provide funding of $300 million per year for the Canadian Foundation for Innovation, and to enhance support for trainees and young researchers.

A key group of these trainees who require our support are MD-Ph.D. trainees who have been shown to be the most successful in maintaining robust careers in health research and have led to innovations for better care for Canadians. These are the future leaders of health research and innovation in Canada.

Under the previous government, the Canadian Institutes of Health Research, CIHR, cut the programs supporting these trainees by $2.6 million, eliminating the program completely, in fact. These funds were being used to help support only the Ph.D. part of their training. As we know, MD training is already well supported by the provincial governments. Funding those three years of Ph.D. study means that these very bright individuals don't have to try to seek funding elsewhere and can focus their energies on the training that they need. It supports their room and board, and any other schooling expenses. Losing the federal funding for this program will reduce the number of such students, while some programs may need to shut down completely.

In conclusion, AFMC calls on the federal government to support the future of fundamental science and health research, discovery, and innovation by restoring the $2.6 million annually to fund the MD-Ph.D. program. Investing in the training and development of these young clinician researchers will stimulate our research and innovation. Not only will it lead to better health and more prosperity for all Canadians, but it will enhance Canada's reputation on the world stage.

Thank you very much.