Finance Committee on Oct. 17th, 2017

[Osborne Burke, National Committee Member, National Harbour Authority Advisory Committee]

Thank you, Mr. Chair and honourable members, for the opportunity to present here today.

My name is Osborne Burke, and I'm a volunteer member of our local harbour authority in Cape Breton. I'm an elected volunteer with the small craft harbours regional advisory committee and our national committee since its establishment in 2001. The small craft harbours program began in 1987 through the Department of Fisheries and Oceans and is supported by local harbour authorities, which are volunteer organizations that manage the day-to-day operations of these federal facilities across Canada.

The harbour authorities themselves and collection of fees contribute approximately $30 million annually to the program. It's a very successful program and it's worked very well. There are approximately 720 core harbours as of May 2017 that are being managed and 295 non-core harbours. In all these cases, there's public access to the waterways via these harbours, and in many cases, it's the only federal presence in a number of rural communities.

Ninety per cent of the commercial fishery use the small craft harbours facilities, with $3.3 billion in landings and the total value to Canada of $9.5 billion in the fishery. Atlantic Canada contributes 70% of the Canadian fishery exports out of this country. There are 42,500 jobs directly in the fishery, plus significant supporting industries that are there to support the fishery.

The program is basically running on a budget of approximately $95 million a year. Subtract $20 million for salaries and staffing, and we have $75 million for projects and infrastructure. The replacement value of the core harbours is about $5.2 billion. With asset deterioration and life-cycle management, the latest study last year indicated that small craft harbours would require an additional $75 million annually to maintain these facilities, just to bring them back to safe operation. Fifty-two per cent of the current assets are either in an unsafe, poor, or fair condition.

On operational needs and even beyond that, we have overcrowding, and we're having larger vessels. In the deck I've provided there are a few pictures of vessels. They're not 14 feet anymore. We chuckle sometimes when we say small craft harbours. The vessels are 28 feet wide. They're 65-plus feet long and take up a significant amount of space. They provide real challenges with dredging.

On dredging, in this budget we're running about $8.6 million annually, estimated to increase to $20 million because of increased dredging requirements. New environmental requirements in Nova Scotia and other provinces will have an impact on where you can dispose of dredge spoils.

We have major impact from climate change. We have limited ice cover. We have more intense storms more often, and with more impact on the infrastructure. We have increasing first nations access, which affects distribution of fishing effort and increases congestion at the harbours.

Over the last 18 years, we've had $946.7 million, or an average of $52.6 million annually, of B-base funding. These are one-time monies, typically with a two-year lifespan. We're very thankful for that, but it presents other challenges in trying to manage the program because of limited timing to do environmental assessments and planning. Truly, if you average it out to the $52.6 million, if that were in A-base funding, it would allow for more time and overall I think we'd have a better impact for our dollar.

In conclusion, the commercial fishing industry needs harbours that are safe and meet their operational needs. The small craft harbours A-base has not increased since 2007, which was the last increase in A-base. Despite the many B-base funding investments made by the government in the past 18 years, there's a significant funding gap. Investments in small craft harbours support the growth of the commercial fishing industry and provide economic opportunities for middle-class Canadians.

A number of core assets have exceeded or are about to exceed their life expectancy. Sizes of vessels have increased, and I mentioned climate change. We're doing our part as volunteers contributing $30 million annually. We have a significant section of non-core harbours, as I mentioned. These are very limited activity or recreational activity.

As of 1995, small craft harbours' mandate is to the core harbours only. The divestiture program, I think, is $123 million since 1995, which has divested over 1,000 harbours, facilities, or sites. If I use an example, I believe that in Port Dalhousie in Ontario there's interest in the municipality taking over some of these facilities, but they require, for that particular harbour alone, $27 million to bring it up to a certain standard before it could be divested.

Some will never be divested because of contamination, and a number of them have issues or discussions taking place with first nations and aboriginal interests.

Thank you, Mr. Chair, and I'll look forward to some questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Osborne, and thank you to all the witnesses.

I think we have time for seven-minute rounds, starting with you, Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair. I can only hope that my political career is as effective as yours is in this neck of the woods.

Thank you to all the witnesses who came today.

The Charlottetown Area Chamber of Commerce spoke about economic growth in Canada and that government policy should be focused on economic growth.

I'm sure you guys know that Canada is growing at the highest rate in the G7 at around 4%, which has been the best growth rate in the last 10 years. Our unemployment rate is on the decline from 7.5% to 6.2%, and 437,000 jobs have been created. But I have a feeling that this benefit isn't being felt as much in the Atlantic provinces.

What more can we do over and above the Atlantic growth strategy to made sure that Canadians on this side of the coast are feeling the success of the other side of the coast?

[Rory Francis]

It's a really important question. I think Atlantic Canada has a lot of really good things going, so I'm not going to start with a doom and gloom picture of where we are. Survival is a very strong incentive, and I think we've realized, from the business community side of things, we have to step up and not depend on our government leaders to have all the answers. I think the business community across the region has shown a lot of leadership in identifying areas of opportunity for the region based on our natural resource base and our human resource base that allow us now to be establishing businesses that are competing nationally and internationally in markets that we have not been in traditionally.

Our traditional industries are a great platform, but we're now building on them, innovating in those areas, and diversifying into other areas across the region like the ICT sector, the bioscience sector, aerospace, advanced food manufacturing, and so on.

I'm going to start with a positive because I think we are positive about the future of Atlantic Canada, and we're seeing some very good results. Besides that, what can be done? I mentioned one particular area. I think we're getting better at supporting the development of early-stage companies in some of these new areas, like IT, bioscience, and so on, through the use of some tools that have been supported by the federal government, the incubators and accelerators that can help early-stage companies be successful. We operate one of them ourselves, but there are several in the region. Those are really key to helping companies get from an idea stage or that pre-commercial stage through to commercial success.

We're running out of the appropriate infrastructure, and this is not just a Prince Edward Island issue. While the federal government has put significant investment into infrastructure in the last few years, we would like to see that focus on infrastructure shift to what we would consider strategic infrastructure. Not that water and sewers and roads aren't important, but we need strategic infrastructure directly connected to economic development opportunities where there's a clear return on investment to the federal government, to the taxpayers of Canada, from those investments in some key sectors.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

You spoke about international students. A lot of people are surprised to know that international students contribute $12 billion to our economy across the country.

How has your experience been with international students and what percentage of them are staying here after graduation? What percentage are getting PRs through the PNP?

[Penny Walsh McGuire]

I had the opportunity to present as a witness last evening with the Standing Committee on Immigration and international students were an important topic that was discussed. I don't have any specific stats for you. I know that in Atlantic Canada we have the fastest growing international student population.

As a chamber of commerce and as the collective chambers of commerce, we are pleased to co-sponsor a resolution that focuses on some of the barriers that international students are seeing to access pre-grad work experience. That could be everything from not being eligible for the Canada summer jobs program to having to get additional work visas for co-op terms. More and more employers are looking for that pre-grad experience for employment.

The other barriers, post-grad, are related to accessing permanent residency and citizenship, whether it be time accounted for or.... But I think there's a lot of positive and I think it's one of the biggest opportunities that we have for retention and recruitment of international students in the region who are Canadian-educated. A few barriers still exist in encouraging them to stay, not just in the region.

I have to acknowledge, obviously, that the Atlantic immigration pilot has an international stream and I'm sure, although it was just launched in March, we hope to see some further results of that in the next school year.

[Raj Grewal, Liberal, Brampton East, ON]

You spoke about the tax proposals. Obviously, nobody is going to sit here and say that tax reform isn't something that the country needs. I think a lot of the debate and miscommunication, maybe, over the last few months has been rather unfortunate. I said this in a previous panel too. If the government is going to go out and talk to its citizens and get feedback, it's rather difficult when it comes to tax proposals, because the nature of it is that if you propose an idea on taxes, it's going to create uncertainty, even though it's just a discussion that's been going forward over the last three months. That's a unique challenge that will be felt by our government, and subsequent governments, and previous governments.

I hope you're happy that yesterday there was an announcement reducing the small business tax rate, a good day for small businesses across this country, and the benefit will be felt for all shops across the spectrum. I just wanted to comment on that. We are listening and we're taking that feedback right back to the minister and the Prime Minister as well.

The Atlantic Partnership for Literacy and Essential Skills, thank you for coming today. What percentage of the Canadian population is able to read and write at a high school level?

[Jayne Hunter]

Canadian...? I think it's a little higher, maybe, than the Atlantic. In the Atlantic, it's 50%.

[Raj Grewal, Liberal, Brampton East, ON]

What is it in Canada?

[Jayne Hunter]

It's 60%.

[Raj Grewal, Liberal, Brampton East, ON]

You probably don't have an answer to my next question. How does it compare to G7 countries? It's just for my own personal interest to see how we do against other G7 countries.

[Jayne Hunter]

We're about average.

[The Chair, Liberal, Wayne Easter]

This is your last question.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair. You're firm, but fair.

When it comes to the essential skills, one of the things that we've heard in testimony, and I've actually experienced in my riding, is that we're focused on immigration. When we focus on immigration, we focus on skilled labour, which requires you to pass an English test, an IELTS test, or a French test. That actually is sometimes a disconnect in terms of the job requirements that are needed. You don't need to have that much proficiency in English reading or writing to be able to complete some of the jobs that are essential for economic growth.

I'm very supportive of your organization and I think that everybody should have the basic skills, but I feel like there's almost a disconnect. At a certain age we're not going to invest in teaching because they're happy, they're moving forward, they're able to work and put food on the table, and this isn't their number one focus.

From an earlier life stage, in terms of making sure that new Canadians who have children are making sure that they have the opportunity to complete their high school education, I think that's where our focus should be as a government.

[Jayne Hunter]

There's a huge area of productivity that's lost. There are people who have the physical skills but they don't have the literacy skills in order to get the certification, for instance, Red Seal approval, so they're working under the level that they could be so that affects the business possibility, and it affects their own life circumstances, although I think we need to be focusing on cradle to grave for literacy improvement. I don't think we should be giving up on adults as well, or even the seniors who can improve their literacy to help manage their health. We can't just wait for people to die off and think, oh, the problem will be solved.

[Raj Grewal, Liberal, Brampton East, ON]

Sorry, I didn't mean it like that. I do not want to say that I want people to die.

[The Chair, Liberal, Wayne Easter]

We'll cut you there. Thank you, all.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

For my comments I'll stick to the two chambers. I'm a former chamber guy, so I'm going to stick to what I know best. I'll ask you questions about the small business tax changes and about energy east. On the small business taxes, it's been said that whoever drafted the proposals doesn't have a clue of what goes into establishing or running a business.

I was going to ask specifically on some of the rhetoric used inside the document. I used to also work for Alberta Finance. I ran consultations for the ministry through the minister's office and I've never seen a tax document have so much populous language implying that small business owners are tax cheats or tax dodgers, implying that they're not paying their fair share, implying that somehow they're cheating the system, or they've taken advantage of loopholes.

I want to hear from the Atlantic organizations first, and then specifically from the biggest chamber on P.E.I. What kind of feedback did you get from the members on that populist rhetoric inside the tax proposal or tax consultation document itself? Typically, when these documents are put out, they have very little edits made to them afterwards because they're well thought out, well thought through by finance department officials, but this one was different. I saw the Atlantic chamber in P.E.I. using quite a few letters and submissions to different MPs and ministers on this issue.

[Glenn Davis]

Absolutely. Across Atlantic Canada, there were several thousand letters that were sent to MPs from the 95 chambers. We would agree with you that there was a certain tenor in the way the tax proposals were presented that indicated there was not a clear understanding of exactly who small businesses are, what they represent, the types of incomes they're earning, and how these tax proposals would impact them.

To that end, I would say there are numerous examples of Canadian legislation where government has tried to solve a narrow problem with a big, broad hammer. Another example would be the temporary foreign workers program with the previous government, where we were trying to stop a small number of individuals from gaming the system and ended by creating a whole expensive bureaucracy that limited access to a very necessary labour market in Atlantic Canada.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

For greater Charlottetown, have you ever seen a tax consultation document with this much populist rhetoric in it?

[Rory Francis]

It's all in your definitions, I guess.

I think there are a lot of folks who would love to pull some of the process back and start it again. The process certainly had its shortcomings. Frankly, at this stage we're mostly concerned about where to go from here. The communications were absolutely lacking. We know that. It's about what to do now. We're waiting this week to see whether or not the next level of details around the various elements of that policy.... The proof will be in the pudding.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Twenty-two thousand submissions were given by organizations on behalf of their members, and by individuals as well. That's over 22,000 submissions in 11 days. That's about 1,000 or 2,000 a day to go through. Do you think that was a comprehensive enough review of the feedback received?

You mentioned that we need a comprehensive review. Do you think there was a comprehensive review of the feedback by Finance Canada and the Minister of Finance?

[Penny Walsh McGuire]

As a chamber, we didn't make any recommendation in our submission on this topic to extend the consultation. We recommended a comprehensive review that actually involved tax specialists and businesses versus legislation being drafted and, frankly, rushed through.

I would say for the consultation period we weren't suggesting an extension, but a more comprehensive review and perhaps an economic impact assessment on the proposal is needed.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Back to the Atlantic Chamber, I was going to ask about energy east, the project that was cancelled by TransCanada due to the regulatory burden. They actually referenced it directly in their letter as the reason why they cancelled it.

In an environment where although prices are low, other projects are going ahead and have been approved to go ahead. What does the cancellation of energy east mean for business in Atlantic Canada?

[Glenn Davis]

The impact is enormous. We're talking about billions of dollars of lost GDP to the Atlantic region, and especially New Brunswick. We're very concerned that there has not been a balance established where we can get both economic growth and environmental protection. While the objectives of the current government tend to make you believe that is the end point, the most recent experiences tell us there's more to be done and that we do need to have a dialogue between the stakeholders to sort this out.

We cannot afford, certainly in this region alone, to play an all-or-nothing game when it comes to projects of this magnitude.