Finance Committee on Oct. 16th, 2017

[Ed Moriarity]

It's pretty tremendous, actually. I mentioned in my comments that we have about 33,000 new claims being staked. A lot of that was staked in central Newfoundland. As an anecdote, we had a gentleman come down from Yukon. He was a very promising prospector. He walked the ground, saw something that he liked, and came forward and did a little initial staking. That attracted other players and suddenly we have a resurgence in our industry.

Gold is certainly very popular right now in terms of exploration work. We have a company in central west Newfoundland, Marathon Gold, with very promising returns right now, and it's advancing forward.

We have other minerals as well. We've just had a new mine open in the St. Lawrence area, Canada Fluorspar, which is a reactivation of a mineral deposit and the expansion of a mineral deposit in the industrial space down there.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Are there dollar amounts related to how much potential investment there is in the province?

[Ed Moriarity]

How much potential investment...? That is hard to quantify, to be quite honest, because it's commodity-driven and market-driven.

The consensus in the industry right now is that we're ticking back up in the right direction in terms of overall valuations that are reflected in the market and in terms of interest, but as a country, we have to compete. We have to compete very well with other jurisdictions.

Australia has become a little bit more resurgent in—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Is Australia a big competitor to you?

[Ed Moriarity]

Yes. Everything we produce here is generally sold on the world market, so we have to have, in our own backyard, the mechanisms and means to be competitive.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

When you talked about regulatory certainty, I'm from Calgary, so the big thing is energy east, which was cancelled. However, regulatory certainty is the issue of the day for mining and energy back home. You mentioned it.

How big an issue is it to actually develop all of these potential mines?

[Ed Moriarity]

We hear from companies all the time, and both orders of government, in terms of the regulatory aspect. In terms of compliance costs, I saw a study out of the United States that showed that in some cases, 20% or 25% of the costs of a project can be tied to compliance. If we as a country want to be competitive, and we reduce our compliance costs as a proportion of the costs of a project to move it forward.....

We don't control the price of markets and we don't control the price of gold or iron ore, but we can control within our own regulatory system, where we can, greater efficiency, or at least we can strive for that. In the review of the environmental assessment work that went on over the summer and the call for consultations with respect to that, we would certainly support and look for, as MAC and others have said, transparency, greater certainty, and greater capacity within the federal system to respond to projects and to provide companies with that sort of thing. If we have a window of opportunity to get investment for a project and to advance it, and we miss that window of opportunity because market conditions change or other things come across, then we lose that opportunity. Let's try to keep a line out there.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

In a—

[The Chair, Liberal, Wayne Easter]

We're a little over, Tom.

Mr. Boulerice, can you go to your Butler questions? Then we'll go to Ms. O'Connell, and then we'll come back to your regular round.

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

Thank you, Mr. Chair.

Mr. Butler, it's a pleasure to hear from you. I'm sorry; I'm from Montreal, so I have a lot of things to learn about fisheries. Perhaps you can help me a little bit here.

As I understand it, there are three models: harvest- or producer-driven, market-driven, and innovation- or value-driven. I have two questions on that. First, how could the third model be more sustainable for resources and the ecosystem than the model with regulations and quotas? Second, what exactly is the difference between the value model, as compared with the market model?

[Derek Butler]

Those are two good questions.

You are from Montreal and you are learning a lot about fishery. The same goes for me; I do not know French well since I am from Newfoundland and Labrador.

How can the third model be a better model of sustainability as compared with the quota model? Number one, we wouldn't get rid of the quota model. We would always have quotas. We have to do the science and we have to ensure that the level of fishing mortality, what we call “F” in fishery science, is the sustainable level for removals. You never take more than the stock is able to reproduce—all things being equal, based on ecosystem management—so that you ensure an ongoing sustainability. The benefit of the third model, I think, and even the second model, is that you're deriving more value per kilo from the catch.

To make it simple, instead of having to catch 10 fish and get $1 per pound for $10 in return, let's catch five fish but get $5 per value from the marketplace—through pharmaceuticals, binary processing systems, or whatever—and produce $50 worth of landed catch value in the marketplace, so we have to take less fish.

The challenge in our model, which we hear all the time and are familiar with, is that every time the challenge of declining quotas presents itself based on the science, the outcry of industry—because we're on that thin knife edge of economic viability—is “You can't. The consequences are too grave. The impacts will be too severe. Too many people will be impacted.” That is real, and we should be concerned, but is the model to ask the fish to pay the price? Why not ask the marketplace? Why not change the model and produce greater wealth so that we can be more sustainable on the front end? I think that answers the first question.

Regarding the difference in the value- versus market-driven model, I can provide you with some information. In fact, if you're interested, there will be a professor of business from the University of Akureyri from Iceland in Ottawa later this week. I head to Ottawa tomorrow for the Fisheries Council of Canada annual meeting. He'll be presenting at the luncheon on Wednesday. He first defined these three models.

I would say that the market-driven model simply asks what the consumer wants—the head on, gutted, or raw? As we know, lobster goes live. The idea is to just focus on the market consumer, but that might not be the best value.

There is another model. In this one, we ask as an industry what we want from the resource. Well, we want higher value so that we can take less fish from the water. We ask what the market wants. The market will still be buying our products, but now let's consider leather coats from cod skin. I've seen that in Iceland. Let's consider the enzyme extractions. Let's consider the skin grafts, which are about $500 per kilo. Don't quote me on the math, but it's high value.

We just focus on the fillet. If you're Alaska, 70% of your pollock goes to China for processing. If you're Norway, it's 70% of your groundfish. That's a volume model. Is that the model we want? Are we going to go back to that? Once we lose workers, which we are now losing because we've had a certain model, there is nowhere else for it to go. We have to do something better, I think.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Next we'll have Ms. O'Connell.

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

Thank you.

Mr. Butler, I found your presentation really interesting.

I was here in July. I went cod jigging with my family, but my family has never been in the fishing industry. It was all for personal consumption. I have to admit that I don't know a lot on the commercial side.

I am following up on Mr. Boulerice's question, because I had a similar line of thinking. As the finance committee, after we finish all of our hearings, we'll go back and make recommendations to the Minister of Finance. After hearing your recommendations for changing the model, what would be the type of recommendation...? If you have a brief, I didn't see it, or maybe you don't have a brief. What would be the types of recommendations to the Minister of Finance that would start to shift this model?

What you're saying all sounds very interesting, but we have to make specific recommendations. Do you have something we should consider?

[Derek Butler]

Those are excellent questions, and being focused on the fishery consumption side is nothing to be denigrated for at all for. I heartily endorse it and recommend it. We think we are fish-eaters in Canada. We are not fish-eaters in the volumes that we could and should be, as some other jurisdictions are. It's healthy food. I often throw up a picture of a very young, good-looking couple when I make presentations and say, “Look, this is a couple that has eaten fish; they know the benefits, and those are my grandparents.”

In terms of recommendations, after I spoke I wondered whether I had made it clear enough as to why I would address such comments to the finance committee. It is because of the lost opportunity costs. The opportunity cost is great in terms of the value that the fishery could provide to the economy, so as a committee, as you look at productivity and what businesses might do—and the fishery is a business, and at the same time, there are aspects of it that are less focused on the business side—there are things we could recommend. I'd be happy to provide a more detailed brief.

The seafood value chain round table, part of Agriculture Canada, has done work on this. The Conference Board of Canada issued the report “From Fin to Fork” a few years ago, which detailed a number of recommendations I could go into. There was “The Sunken Billions” report from the FAO and the World Bank in 2008, which also detailed how fleet buyout programs may produce more value in the industry by allowing capital accumulation for harvesters to reinvest and change the technology in terms of gear and vessels.

There are a number of precise things I could recommend, which I will be happy to provide to all committee members.

[The Chair, Liberal, Wayne Easter]

Could you do that? I might say I've looked at the Icelandic fishery. I spent three days there a few years ago, and I'd certainly highly recommend that the fisheries committee be the vehicle that should look at the Icelandic model. There is a lot of government involvement, but it is an amazing model. They get the value out of it and try to maintain a very sustainable fish stock as well in the way they do it.

Are there any other quick questions for Mr. Butler before he goes? No?

Okay. With that, we'll thank you very much for your responses, Derek.

[Derek Butler]

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll come back to you, Mr. Boulerice. You have another four minutes left.

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

Thank you, Mr. Chair.

I have a question now for Mr. Miller.

I must admit that I'm particularly sensitive to what you said, since I come from the social sciences milieu. I agree entirely that we cannot have good public policy if we do not have good research on the labour market, immigration, workforce skills, and so on.

Recently, I was in Saguenay—Lac-Saint-Jean. I met with some people from a group called Agrinova, which does research in agricultural innovation. Farms and small businesses ask the government to invest in this sector. However, these people told us that despite what we hear in official speeches, our country invests three to four times less than Japan, South Korea and Sweden in agricultural innovation.

In your presentation, you said that Canada was beginning to lag behind. Do you have any comparative international data showing that our country does not do enough social sciences and humanities research to improve our understanding of Canadian society?

[Gabriel Miller]

I do.

I'm going to answer this part in English, if you don't mind. When it gets too technical, my French becomes even more difficult to listen to.

In terms of Canada's research investments in the higher education sector—and this is across disciplines—between 2007 and 2014 Canada fell from fourth in the OECD to seventh. Seventh is still pretty good, but it certainly shows a dramatic decline in terms of our performance relative to that of other countries.

It is very important to acknowledge that Canada does well when it comes to investments in universities, as the major part of investments in research are investments in university research.

We invest relatively little through other mechanisms in research and development, so, for instance—and I stand to be corrected—based on the Naylor report, we're not in the top 30 OECD countries any longer for total R and D investment.

We do better in the amount we invest in universities as a share of that, but if we see a decline there and if we see our ranking falling there, it means that the most important leg on our research and development tool is starting to weaken.

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

Since you've talked about it, do you agree with most of the recommendations of the Naylor report?

[Gabriel Miller]

Yes.

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

Okay.

[The Chair, Liberal, Wayne Easter]

Go ahead.

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

Ms. Rowe, thank you very much for your presentation.

I liked that you emphasized the fact that all jobs are not to be found in the private and public sectors, but that there is a third sector that we call the “social economy”. I have heard others say similar things before.

Can you give us some examples of social sciences enterprises or non-profit organizations that were not able to respond to federal government calls for tender because they were not for-profit businesses? Have you in the past not been able to obtain certain government contracts or projects because you could not apply?