Finance Committee on Oct. 16th, 2017

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I certainly appreciate that. I wish my province would give a similar focus as well, because I take your comments seriously. It's nice to see that industry is actually saying, “Let's dial it up.” Especially with some cancellations to major projects, it's important for us to have a few bright spots in our economy.

Mr. Russell, you've painted a picture here of the U.K. enterprise scheme, as you called it, where it would be open to all British citizens. It's a great way to invest in small businesses. Here in Canada, we have different institutions. BDC, for example, occupies much of the space. I would also hope that credit unions and banks, as financial intermediaries, would also look at the importance of capitalization for small business.

When you say that the government should get involved in this end of the economy, I'm not necessarily opposed, but there are some difficulties when you take a unitary state's concept and apply it to a confederated state as large as Canada. What do you think are the advantages? Have there been any studies to back up a similar program here in Canada?

[Ian Russell]

One thing is that there have been studies that demonstrate a lack of sufficient equity capital for small and growing small businesses. You're right. There are schemes out there by government, but they're very small in relation to the size of the business sector and the need for risk capital. In fact, there's been a lot of evidence in terms of the shortage of an ability to expand and grow businesses, which in part is due to a lack of capital. The Bank of Canada and a number of private studies have talked about that.

In terms of the enterprise investment scheme itself, you're right to ask if there has been a comprehensive study on how that would work, whether it would add that much more, whether it would be incremental and not justifying expenditure. Those are legitimate questions. The only answer I would have is that there haven't been those studies. There probably is a need for some background work, but there's no reason that a scheme like that can't be put forward on a trial basis. Perhaps, as with the other proposal I mentioned, it could be put forward for maybe a year to see whether it has much impact.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

It does sound as if it hasn't been exactly elaborated whether this would be a co-operative structure or a government crown corporation. Could you maybe just say who would lead? Where would the creation be? Would it be a provincial co-op as a trial? I just want to get an idea of how it would apply in Canada.

[Ian Russell]

I can see where you're going on that. There is a difference in Canada, where you have another layer of government with significant taxing power.

The way I see the scheme working would be that, at least initially, it would be a federally driven scheme. As to the personal tax credits, as works with other tax credits, there may be the provinces that participate and there may not be. I would envision, as an initial step, that this would be a federally driven scheme, hopefully with provinces participating because they would all benefit, but I could understand the federal government's stepping out first to provide that tax expenditure and have it apply nationally. I think it's important that it apply nationally. In fact, the small business marketplace really is national. Whether it be angel networks through venture capital companies or public financing, it's national, so it makes the most sense for this scheme to be national.

To your point, it could be stronger if there were provincial participation as well. It could function as a federal model, at least in an initial stage.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Go ahead, Mr. Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

I thank all of you for being here. I have not come to Newfoundland and Labrador often, but it is always a great pleasure to be here.

I'd like to start with you, Mr. Lane.

My question concerns aquaculture in Newfoundland and Labrador. The use of aquaculture to increase Canada's production and capacity to feed people and export its products abroad makes a lot of sense, especially given the relatively small ecological footprint of these resources as compared to chicken, pork, and especially beef.

Given the industry's current situation here, do your strategic plans and vision for the future include genetically modified organisms, that is to say transgenic salmon that would be raised in Newfoundland and Labrador?

[Mark Lane]

Thank you for a great question.

I'll take my time. I tend to speak fast. May I speak English?

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Yes, no problem.

[Mark Lane]

Basically, we don't support GMOs in Newfoundland and Labrador, and the Canadian Aquaculture Industry Alliance, based in Ottawa and of which we're a member, doesn't endorse GMOs. There is no genetically modified salmon operator within that organization to date.

Just recently, as we know, we've heard that there is one company now selling GMO salmon in the Canadian marketplace, and we've discussed that at the industry association level in quite an amount of detail. We would really like that to be labelled as GMO, so that consumers have the information they need to make an informed decision about what they'll consume.

Again, to answer your question quite bluntly, no, there is no room for that right now in Newfoundland and Labrador.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you.

I share your opinion that there must be information on the label of the product that consumers buy, so that they may make reasonable and well-informed choices.

Farm-raised salmon raises certain fears with some people. They are concerned by the possibility that if a salmon escapes into the ocean, it may breed with wild salmon.

How do you view this from a technical point of view? How can you prevent this from happening? In your opinion, could this have a negative impact on the food we eat?

[Mark Lane]

That's another great question, and without controversy, I'm sure.

In Newfoundland and Labrador, we have had interbreeding with wild and farmed salmon. We've worked with the Department of Fisheries and Oceans and independent scientists. We have provided genetic material so that we know they can trace it back to a particular farm or to the industry. We've worked it because we want to know. We are also stewards of the sea. We operate in this province, and I think in most jurisdictions, as openly and transparently as possible.

Does it have an impact? We don't know, so we continue to work with those scientists to make a determination. If these fish are less fit, do they die off generation after generation, or if they're more fit, does it help a stocking assessment?

In my background, in addition to being a traditional wild harvester, I worked in salmon enhancement under a conservation corps for four years as an undergraduate student, and I'm an angler, so it's close and dear to my heart.

First and foremost, as an industry and as individual companies, we have invested tens and tens of millions of dollars to prevent it from happening. Second, we have a rapid reaction response plan, in case there is some type of catastrophic event as they saw in Washington a number of weeks ago. If it happens, then we have a plan to deal with that for recapture.

Yes, it has happened in Newfoundland, and we're working with scientists to determine the facts based on science.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much, Mr. Lane.

My next question is for you, Mr. Foley. You spoke about the negative repercussions of the abusive use of Airbnb on the Newfoundland and Labrador hotel industry. That phenomenon is happening everywhere, and Montreal is no exception. Over the Formula 1 Grand Prix weekend in Montreal, to mention only that, the government lost at least $200,000 in GST revenue alone.

Certain provincial elected members like Amir Khadir, from Québec solidaire, are proposing bills, not to forbid the sharing economy and the renting of apartments, but to provide a good framework for it. For instance, we need to make sure that the person lives in the apartment he or she rents to a tourist or another person. To ensure that this is a marginal activity and that the apartment rented to a third party should not be considered a hotel, we could limit its rental to 60 days a year.

Would your association see that in a positive light?

[Craig Foley]

I think 60 days is probably high season in Newfoundland and Labrador and that would really put you in the business. Our members are comfortable with home sharing and the sharing economy. When it becomes unfair and borders direct competition, we have an issue. You're right. Legislation is being drafted in different parts of the world to deal with this and we're struggling here to find out how best to address that. Sixty days wouldn't do it for us.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Foley.

Mr. Bonnell, I found many of your comments and interventions very interesting. I was struck by the fact that they were very similar to what Mr. Butler told us earlier today, especially regarding a possibility of deriving as much value as possible from fishing, and not only through traditional means.

You also spoke about the issue of retaining workers, that is the possibility of keeping qualified and talented people in the industry here. I understood the problem but I did not hear clearly the solutions you proposed to keep your workers or attract new ones.

[Carey Bonnell]

That's a very good question and we talk a lot about it.

In my view the solution is probably a three-pronged approach for maintaining an available workforce for the industry of the future. One is to attract and retain to the degree that we can the existing workforce in the local communities in which we operate. Additional work is needed there. The challenge is that we have a structural problem in our seafood industry in that many of our fisheries are highly seasonal. It's very difficult to attract labour into a 12-, 14-, or 16-week fishery with relatively low wages, generally speaking. No young people are going to choose that as a career option when they have other options. There's an opportunity cost associated with that, but there's work to be done to extend seasons and to extend operations.

I'm just back from Iceland. I visited a plant in Reykjavik. It's a modern processing operation run by HB Grandi where 80% of the workforce in that operation are what would be considered former immigrants; that is, they would be Filipinos. In some cases they are second generation and in some cases third generation, where you have mothers and daughters or fathers and sons and siblings working together. That's a year-round operation. They work Monday to Friday with eight-hour shifts and great lifestyles. The minimum salary there, if you take it on an annual basis—I think the cost of living in Iceland is much higher than it would be here—is about $50,000. Even then, they have a significant foreign workforce, or formerly foreign workforce, and through immigration they've addressed it.

Here we need a three-pronged approach. We need to attract and retain to the degree that we can. We need to innovate and automate. Mark made the point earlier about feeding mechanisms and having a young student using something that would be comparable to gaming technology. We're doing work now in automation. We have three engineers in one of our research facilities, and we think there's room there through the automation of the industry to provide some really good, highly skilled employment opportunities that would attract people. That's number two.

Part of the solution is going to be an immigrant workforce. That's the reality. The challenge we have is that we don't have the value proposition in the seafood sector right now. For the most part, temporary foreign workers are the stopgap measure. In the long term we're probably going to need a model similar to what Iceland has and other jurisdictions like Norway, where they have longer operating seasons and they can attract a workforce in these operations that is able to become part of the communities and societies.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

I have a suggestion.

Can we go to Iceland too?

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Wayne Easter]

We've heard a lot about Iceland today.

That's good advice. We'll have to talk to the whips.

Ms. O'Connell.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

Thank you all for your presentations.

I am going to start with Mr. Foley and the hospitality industry. In your presentation you spoke about long-term predictable funding. Can you be specific on the types of federal programs or support that you'd like to see recommended for the 2018 budget?

[Craig Foley]

My comments about long-term sustainable funding were in particular around Marine Atlantic.

It may take me a minute to put together my laundry list of things where I see opportunity.

In preparing for this submission we looked at four main points that would help grow the industry. These are the four points that we presented given the limited time. Certainly access, getting here, is a problem for Newfoundland and Labrador. It not only includes Marine Atlantic but also airplanes. The labour force and the sharing economy are big challenges to us. These are the key areas where any changes, additions, or enhancements in the federal budget would help grow the industry.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

I see. Thank you.

Mr. Lane, you spoke about small craft harbours. I gave a look to the chair because I was talking to him about that earlier. One of my colleagues, Chris Bittle, who is the member for St. Catharines, actually raised it and asked if it's come up in these hearings, and I said no. I don't know too much about it, so I was hoping someone would bring it up. I'm glad you did.

Could you elaborate on some of the challenges, for those who don't know, including me? It's my understanding that the issue is a challenge of increasing funding from the federal government since we maintain and operate these. Can you elaborate on what those challenges are and what you think is needed?

[Mark Lane]

I'm quite familiar with small craft harbours; it's a passion of mine. I served on municipal council a few years ago, and we were trying to lobby to have a small craft harbours establishment established in my town of Holyrood.

One of the biggest issues is that the federal government has a huge inventory of infrastructure that needs to be maintained. Newfoundland's climate is not necessarily conducive to breakwaters and wharf infrastructure, so one big thing that small craft harbours should look at is a divestiture program, potentially, of places where they're not utilized. I think a lot of the investment is made, and rightly so to some degree, on the landings—specifically landings—for the most part, for wild capture fisheries, not necessarily aquaculture, which is the industry we work in.

One challenge is the limited pot of funds. I think the last time I looked, it was somewhere around $25 million or $30 million for Newfoundland and Labrador. If you look at the landing ports for cod only in Newfoundland, I think you'd see about 300 around the province. There's a huge inventory of property. They need to look at the total market value of the species. The fishery's changed so much in the last number of years. Some of these wharves are decades old.

I think we really need to take a look at a strategic investment, not just for today but for tomorrow. What do we see upcoming? We know, for example, that salmon aquaculture and shellfish aquaculture are increasing, but because of the limited funding available to maintain such a huge inventory, some of which may not be used at all, the government really needs to look strategically at future investments.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

That's interesting. Thank you.

Mr. Bonnell, in the earlier panel we heard a lot about changing value. I mentioned at the outset that my family is from here. My experience with cod is that people eat everything. My grandfather eats everything. I'm not that brave, but I think it's a generational mentality. He grew up here with 10 brothers and sisters and was extremely poor, so when you have any food source you utilize it.

On the commercial side, and obviously with cod in particular, but I'm sure this is the case for other species as well, are you essentially...? For example, I don't think I could convince somebody to eat cod tongues, but my grandfather loves them. Are you helping to create the market? I'm not talking specifically about tongues, but in terms of utilizing the entire fish, are you helping to advocate to create a wider market, or does the market exist and it's now changing not only the way it's caught and processed here?

Then whether it's overseas or across the country, how are you working toward changing that model? Really, specifically, are we creating the market or advocating for the market, or does the market already exist and we're just trying to enter into it?

[Carey Bonnell]

The market already exists for cod. Norway produces almost one million tonnes of cod per year, Iceland about 230,000 tonnes of cod. I've always advocated, and I think most would agree with me, that there is always a market for good-quality seafood. The key differential is the value proposition. We produce 15,000 to 20,000 tonnes right now because it is a re-emerging industry. Right here, right now, our industry, because we don't have scale, is highly seasonal. You're operating for two to three months of the year.

We still use a lot of past practices like gillnets, as an example. In Iceland, about 7% of cod production comes from gillnets. Long-line production is growing. That's what we're advocating here, shifting to a value-based approach, a quality-based approach. The market opportunities are there.

Is there a need for an investment in market intelligence and market research? Absolutely. I've indicated that in my statement, but that's not the overwhelming consideration. The overwhelming consideration is to look at that market and work your way back through the value chain to see what steps we need to take to ensure we're maximizing value. We're doing a lot of work on that front, and I'm encouraged by the dialogue that's taking place on this right now. As we scale up, how do we become more scalable as the industry rebounds?

The one final point I'll mention is utilization. We discard, in Canada, about 450,000 metric tons of seafood per year. That's in both wild capture fisheries and aquaculture. That's shell products. That's fish frames. That offal. That's what we don't utilize. There is a tremendous opportunity to derive value from that, and again, I would encourage a visit to Iceland to see what they're doing because they are doing an amazing job.

We spoke earlier and I told them I would advocate for them—no, I'm joking. I'm joking.

There is an amazing job occurring there but it's not focusing on food grade. We're talking about pharmaceutical, nutraceutical, biomedical types of applications.

There is a group in Iceland called the Iceland Ocean Cluster. They have a building on the waterfront with 70 businesses, young start-up entrepreneurs, the fishing industry, universities, technology companies, all collaborating and working together under the same roof to increase value from cod in Iceland. That's the strategy they're on now, to get more value from the traditional waste stream than from the actual fillet. It is achievable but it takes a lot of R and D. It takes a lot of time, a lot of effort, and we need to create that enabling environment here.

I'll stop there. That's what we need to create here.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Just as a follow-up to that, do you also think there has to be a bit of a mentality shift here as well? When I was here in July out jigging with my family, the discarded fish were everywhere. That's just a big mentality issue too.

What work...or do you think if the jobs come, it won't even matter and it will go in line? Do you see a mentality shift in terms of getting people here to see the opportunity in the industry?