Evidence of meeting #132 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was smes.
A recording is available from Parliament.
4:30 p.m.
Liberal
The Chair Liberal Wayne Easter
We'll have to leave it there. We're two minutes over.
Mr. Grewal is next, then Mr. Julian, and then Mr. McLeod.
4:30 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Thank you, Mr. Chair, and thank you, Mr. Barton, for your service and for taking the time today.
My colleagues asked a lot of macro-level questions on business investment and what regulatory changes we could make to strengthen the Canadian economy and Canada's middle class.
You mentioned one thing that struck my interest, which was supporting our SMEs and ensuring they have better access to export markets. That's not always in our control, because the export market we're exporting to has to be open for free trade, etc.
However, you said we have to scale up organizations like BDC. Can you elaborate a little more on that and see what changes we can make to organizations like BDC and EDC to help Canadian SMEs expand?
4:35 p.m.
Chair, Advisory Council on Economic Growth
What we've found is that Canadian SMEs—as we've said before—export relatively less than our peers in the OECD. We're not as export-oriented, so there's an opportunity just from a benchmark point of view. There are some very good programs in place that the BDC is doing, but it doesn't get at enough of the population of SMEs, and it's fairly costly for them to be able to do it. They're making an investment. I think we should all be happy with what they're doing. It's not sustainable for them to be able to scale up in the way they do.
What we're saying is not all SMEs are equal in the sense of their potential. Some have higher potential because of a particular set of skills or capabilities, or because of where they're positioned in an industry business system or value chain. They may have more of an opportunity, and we should focus on those first. There has to be some prioritization of the hundreds of thousands of SMEs we have. We're saying, let's have a more targeted, segmented approach and then encourage the BDC and others to continue to do that.
We can also learn from these other programs I mentioned in Malaysia and New Zealand, where people in similar environments have been able to see very big results; they can then pay for themselves as opposed to it being a government cost.
February 12th, 2018 / 4:35 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Thank you.
Mr. Barton, my colleague Mr. Albas spoke about the automated car and about provincial regulations disappearing because of the rapid pace of innovation. At the same time, we'll also be cannibalizing industries. The automated car is going to threaten the taxi industry, and the automated truck really threatens the trucking industry. These are the backbone industries of places like Brampton East. They provide food for families and new immigrants with good-paying jobs to enable them to put their kids through school.
What do you think the government's role is in balancing innovation and ensuring that there's a transition in society? The rapid pace of innovation also has a disadvantage, which is the fact that certain workers are placed right out of the workforce.
4:35 p.m.
Chair, Advisory Council on Economic Growth
Yes. I agree with your approach that we have to be careful where the burden gets put. The way I'd look at it is that we need to embrace the fact that this technology is coming. There will be automated cars, electric vehicles, whether we like them or not. I don't think we should fight it, we have to embrace it and say this is going to happen. Then I think we also have to make sure there is a transition program for the people in those roles. You mentioned a great example of truck drivers.
That's an important job segment in Canada, and today there are driverless trucks in Utah; it's there. We have to think about what those truck drivers are going to do. I think we should involve the trucking companies, educational institutions, and the governments in asking what these people do next. If we say it's their issue, they have to deal with it, we're going to have a big problem because of the scale of what we're dealing with. I think there are things that a 45-year-old truck driver can do. As was mentioned before—I don't know if it was Mr. Albas or who—I don't think we're going to teach them code, but there are other roles they can play.
One advantage we have in Canada is that we're small enough that we can get these different groups together to do something. Stuttgart, Germany, has a big issue coming their way. It's diesel engines; it's an economy in its own right, and they're now saying they have to get together, because they know automated electric vehicles are going to be the future, their complete industry base is not built for that. How are they going to work together to figure out how to retool their workers who are making engines to be doing electric vehicles, which are a completely different technology? What safety net are they going to put in place?
We have to get all groups working together right now. We know that isn't rocket science; we know which jobs are going to be affected. Even financial services, high-paying jobs, some of the wealth managers are going to get automated, and what are we going to do with those people? I ask because if we just dump them on the street, we're going to have a bigger problem. We have to get education, business, and government together with—to your point—very practical.... In a specific region, what do we do specifically to help people that's real, not academic?
4:40 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Yes, I think for policy-makers to achieve that balance is going to be the biggest challenge of our time. And I don't think that conversation is happening as much as it needs to.
Thank you, Mr. Barton.
4:40 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you, Mr. Grewal.
Mr. Julian, and then Mr. McLeod, and if either of the parliamentary secretaries have a question, we'll have time.
Mr. Julian.
4:40 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you, Mr. Chair.
We're getting into a lot of the nitty-gritty of really important policies. It's too bad we can't have six hours with you, but hopefully we'll be able to speak with you again.
I want to come back to the SMEs and exports because I've been with the trade committee and have seen the problems that we're having in providing support around trade promotion. I'll give you an example. I've spoken with trade commissioners who don't even have a budget for a cup of coffee to take a client out abroad, who is a potential buyer of Canadian goods. It's a fundamental problem, because Canada only spends about $14 million for trade promotion and supports. Our chief competitors, the European community, the United States, Australia, spend hundreds of millions of dollars to support their export industries. Canada doesn't do that, and SMEs of course then fall between the cracks because the supports are just not there.
How important is it for Canada to start to provide that significant trade promotion support? I'm talking about specific products, Canadian products, so SMEs can penetrate markets where we're non-existent now, not necessarily because there are barriers, but because we're not providing the supports that allow those products to go into those markets.
4:40 p.m.
Chair, Advisory Council on Economic Growth
I think you make a great point that we need to do much more to help support our SMEs and businesses going abroad. And to your point, I think, one, we probably do need to spend more to do that, but also maybe do some things differently as well.
If you look at Germany, where well over 50% of SMEs export globally, when a big German company goes overseas to do, let's say, a China trade road show with the chancellor, the big companies bring their SMEs with them. They bring their supply chain with them. I think we could be doing a lot more of that in Canada. When a large Canadian company goes over, they should bring the SMEs with them because, as you said, the SMEs can't afford to fly around to all these different places, but if they're actually good suppliers to this particular company, chances are they can.
I think, one, is there could be a lot more co-operation with the large companies. That doesn't happen as much as it could.
The second thing I think you're getting to is the focus as well, because we know from a macro point of view where some of the big growth opportunities are from a Canadian perspective, just given the businesses that we have. If you take the automotive sector or agricultural sector or financial services sector, we know, and I think we could be more targeted about, saying, look, here are six places that you should go to and let's match them with the companies that are there and be more proactive about matching people.
The third is that I think we could have much more of a diplomatic effort, if you will, to attaching ourselves to these technology-driven markets in China. The Taobao, that is for SMEs. It's for Chinese SMEs that have been attached to that system. There's no reason Canadian companies can't.
I think those are other elements of what we need to do, but I would agree—it's a long-winded way of saying it—we do need to do more. We're an export-driven country that will always, I think, be that way, but we are punching below our weight, especially on the SMEs, and there's no reason why not. We've got some amazing companies that are here. I would definitely be leaning forward on that.
4:45 p.m.
Liberal
4:45 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Very quick. How important is the diaspora? In my riding, 150 languages are spoken, and yet there are no links with them. We have Canadians of Chinese origin, of Korean origin, and they're not integrated into SMEs and export policy and making those links. How important is that?
4:45 p.m.
Chair, Advisory Council on Economic Growth
I think that's a huge asset for all of us. Also, by the way, I might say that with the number of people who have been educated in Canada and then gone back home, for example Indonesia, we've got effectively ambassadors there. The people who have gone to university or vocational schools here feel a very deep attachment, and we should connect with those people as well. And as you said, having that multicultural workforce that we have in Canada, that's a very big advantage. We can have people who speak the language, know the culture. I think there's a lot more we can do with that. We're naturally well-positioned to be more Asia-oriented, and eventually also Africa-oriented, which will be an opportunity even in the next five to ten years. I just look at Montreal and the linkages people have in these parts of the world. It's untapped.
4:45 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you. It's a very good point.
Mr. McLeod, and then who's next? Do I see some hands?
4:45 p.m.
Liberal
Michael McLeod Liberal Northwest Territories, NT
Thank you, Mr. Chair, and thank you for the presentation.
I look at the report and I try to see how it affects my riding. I'm from the Northwest Territories. I have a small population, with a very high percentage of them being indigenous. I see the broader goal of increasing Canada's median household income by $15,000 by 2030. That's very important, but we need to make sure that the growth that is being experienced is not only by those who are already employed. There are many parts of Canada that are not doing that well. How does the advisory council envision these latest recommendations as addressing that issue, especially in our northern and indigenous communities?
4:45 p.m.
Chair, Advisory Council on Economic Growth
That's a great point. We tried to do so in the workforce participation report; that was in our second wave of recommendations. We felt that, with indigenous people, we have a long way to go on that front and we think that ensuring that there are incentives in place to enable a higher participation rate is key. Again, it's not a social or moral issue. We think it's an economic issue. It's in the interests of all Canadians that we have a higher workforce participation, so we're just trying to make that point. Having more aboriginal people participating will actually have a broader effect on all of us as we go through it. We've just tried to make that point. It's in all of our interests that we do that, because of our demographics.
The second point I'll make is that in more remote parts of the country, there are tourism opportunities. In fact, if you take the Northwest Territories, I think the tourism opportunity from Asia is very large. It's not about our necessarily exporting people, but there are opportunities to bring people in. We think there's a very large opportunity. There are 110 million Chinese tourists who are travelling outside of China every year. We get a very small proportion of that number, and when you actually look at the criteria of what people look for, you have to believe.... Again, we don't want to have a mass number of people coming in, but we think there's a very significant opportunity just in tourism. I'm just saying that's one element, a place that can create a lot of good jobs for people.
The third is on technology. We have to get the digital infrastructure in place so that people in remote areas can participate in the economy, and not because they're more distant. I've used that not-very-good example from Argentina before, but it's being shown in other parts of the world that we can have people in remote parts of the world participate in the global economy through the digital infrastructure. I think we need to look at that. I hope that's one of the areas the infrastructure bank will consider. That's obviously up to the leadership in that group, but providing a deeper digital infrastructure is going to be important, so that people in remote places can actually participate in the economy even though they're far away.
Those would be some of the areas we would think about.
4:50 p.m.
Liberal
Michael McLeod Liberal Northwest Territories, NT
With respect to the council's goal to increase the national median household income to $105,000 by 2030, in the Northwest Territories, the median household income already exceeds that number, and the 2015 figures put our territory as first in the country at $117,000. However, we have a high cost of living and declining employment rates year after year, especially amongst our indigenous people. Last year we saw a 1.9% decrease in employment rates, and for those who were outside our capital city, it was even higher at up to 4%.
Are you concerned that using the median household income as the primary economic indicator may not be the best way for the council to measure economic growth in the north?
4:50 p.m.
Chair, Advisory Council on Economic Growth
That's a very good push, I think you're saying, and that we should look at it. What we were trying to get away from, first of all, was just GDP growth itself. Minister Morneau and the Prime Minister were very tough on us in saying that, if we just went for GDP growth, that would just benefit the top 1% and that we should at least think about the median income in what we're doing. I think your push is a good one because the cost of living does vary according to where you live. I don't know if the net median income or some number like that is something we should look at. It's a very good push.
4:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you.
I have a couple of questions before I turn it over to you, Dan.
On the skills aspect, we now have employment insurance and the labour market development agreements with the provinces, which are fairly substantive in terms of skills development.
Are we getting enough value out of that funding both at the provincial level and under the employment insurance program, which includes skills? If not, what should we be doing? I guess I'm saying that a lot of money has been spent there, and when I look at my own region, I see we are not getting the skills for tomorrow.
4:50 p.m.
Chair, Advisory Council on Economic Growth
As you said, I think the good news is that we have in place a number of initiatives that are under way. I know that in Finance they're saying, “Make sure you understand some of these.” Even the ability people have to use some of their RRSP money for education is there, but it's not being taken up at scale.
To maybe get to your question, one part we would push more on is involving the business sector, the education sector, and the government together. When a program has only one element of that three-legged stool, if I might say so, it doesn't work as well. I think what you're getting at is that we've found a big mismatch between the skills that are being developed and what businesses actually need. Those sectors may be doing skills development, but it's not exactly what businesses need. I think that bringing those things closer together, and at a community level, not a national level, is much more important. Getting those three groups to work much closer together we think is key. Otherwise, we can have a lot of education programs without creating jobs.
4:50 p.m.
Liberal
The Chair Liberal Wayne Easter
The other area I have a question on is the expert panel on regulatory agility. I do think that's a good idea, but is it just the regulations that are the problem? I submit that we have probably one of the best public services in the world, but I also have a bias, which is that I think we have far too many managers, who are mostly in Ottawa, and not enough workers on the ground, where the work really gets done. Everybody has their little turf, so they need to have their little say, and something that should take 10 days takes 10 months.
That's where I'm coming from on that issue. We tend to, in this country, say that one size fits all. I can give you an example that we're fighting over with Transport Canada at the moment: pilot fatigue. Their proposal will deal with the major airlines, which is fine, but what about the ones in the outlying areas and up north and the medevacs and helicopters? That policy is going to cripple them. Do you have anything to say on those points and on where we can go?
4:55 p.m.
Chair, Advisory Council on Economic Growth
Yes, I think you make a number of great points there. On that time thought, I think that has to be an essential part. There are timeboxes. Again, in the work we looked at, one thing you can say consistently across the board is that we take a long time to get decisions made, whether it be on the regulatory front or not. That just doesn't work with the speed of the way that the world and business are moving. I think there needs to be some notion of a timebox.
Second, to your point on resource reallocation, I do think that there's an opportunity to rethink where all the people are. One thing I would say, too, is that I also have a huge amount of respect for our public service. I think we have some fantastic people. One of the things that we did not consider at the growth council—you may think this is probably the time to fire us on this one—is that it is kind of odd that we've not thought about reallocating our government resources in any sort of significant way over time.
Most companies—and I'm not saying the world should do things as how companies do them—think about reallocating or shifting their capital and people in the order of 5% to 7% a year. That means you're taking away resources from some places and putting them elsewhere. Businesses don't like doing that either; I've never met a business unit that's volunteered to have less capital and people. But if you think about our distribution of public resources, when's the last time we did that? I may be way off base, and this may be why we haven't looked at it, but there is a notion of how we think about allocation of resources given where economic activity is and so forth.
There's that and there's the other one, and then you're really going to unplug the TV. We've talked a little bit about this. In our federal system, with the levels of government that were talked about before, make no mistake: it costs us. Right? It may be a good thing to do, but I'm just saying that it costs us. It's maybe not how one would design something from scratch. I know I'm going way off on a tangent, but it's something—
4:55 p.m.
Liberal
4:55 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Going back to sunsetting, I think you've made a very helpful contribution—and the growth council as well—in suggesting that maybe sunsetting might be a better use of it. Not to “commit sociology”, so to speak, but social psychology does show that it's only when you have a deadline that a team will necessarily work together on performing. It's not until the midpoint that they actually start working and get final results.
In the Texas legislative assembly, they meet only once every two years, so people are only scared when they're sitting apparently, but there's a bipartisan panel of Democrats and Republicans, five on each side, and they will then sunset programs. The programs will come forward, and if they have not achieved the goals that were originally set, then they basically kill the program. Then it has to go back to the government to start over again with a new proposal. What that does is it creates a refresh on ideas. It creates a refresh and a timeline on things, and then, ultimately, it's accountable to the people because you have, again, not a majority, but have both sides coming into it. The same thing could probably be done for regulations.
Are you suggesting the government start to look at these kinds of things, to force these refreshes in a way that is consistent, and again, has oversight by the people?
4:55 p.m.
Chair, Advisory Council on Economic Growth
Yes, very much so. We very much like the sunset clauses. We talked about that too in a previous way about innovation, because we have a lot of innovation programs, and some have worked well, but it's hard to stop them. It's not necessarily as if a program that was developed in 1955 still has relevance today. We very much liked sunset clauses just to force that discussion.
In fact, some members of the council, Mark Wiseman and Michael Sabia, were always saying to be careful that we're not adding stuff, that we should have a stop-do list. Sometimes it's stopping doing things that will create more activity than trying to add more things.
5 p.m.
Liberal
The Chair Liberal Wayne Easter
With that, we are going to adjourn.
It's five o'clock our time, Mr. Barton. On behalf of the committee, I want to thank you for this enlightened discussion, with some ideas out of the box, and to thank you and all of the other members of the advisory council for the work they do.
There's a good road map in your report for this and future governments to follow, so thank you very much for that, and have a safe flight.
We have one item to deal with before we adjourn.