Finance Committee on Sept. 26th, 2018

[The Vice-Chair, NDP, Peter Julian]

Good afternoon, everyone. Welcome to this meeting, which is part of the pre-budget consultations. As Mr. Easter, the regular chair, is absent, I will be replacing him over the next hour.

Many witnesses are here. We are hearing from: Morna Ballantyne, Executive Director of Child Care Now; Brendan Marshall, Vice-President of Economic and Northern Affairs of the Mining Association of Canada; Sarah Watts-Rynard, Chief Executive Officer of Polytechnics Canada, who appeared before us last week. We are also hearing from: Michael Gullo, Senior Director of Policy and Public Affairs at the Railway Association of Canada; Victor Wong, a member of that same association's Tax Committee; Ole Hendrickson and David Snider, both directors at the Sierra Club Canada Foundation; Victoria Lennox, Co-Founder and Chief Executive Officer of Startup Canada; and Richard Rémillard, Board Director of that same organization.

Without further ado, we will hear from the first witness.

I would like to pass the mike over to Child Care Now with Morna Ballantyne, Executive Director.

It's good to see you and thank you for coming.

[Morna Ballantyne, Executive Director, Child Care Now]

Thank you, Mr. Chair and members of the committee, for this invitation.

Child Care Now, which is also known as the Child Care Advocacy Association of Canada, acts on behalf of a broad range of voices across Canada who want high-quality, affordable, inclusive early learning and child care for families and all children. It's particularly fitting that we appear before you during Canada's first ever Gender Equality Week, which was established through an act of Parliament this year. In promoting this week, the Government of Canada has rightly said that, when we make progress toward gender equality, everyone benefits. We say, backed by mountains of evidence, that we can't make progress toward gender equality without a publicly funded, universally accessible system of early childhood education and child care.

In July 2017, the IMF reported that Canadian female labour force participation lags that of males by 10%, concluding that family policy change, particularly public spending on child care, is essential to realize women's full potential in the workforce.

In March 2018, the same message was echoed by the Governor of the Bank of Canada in a widely reported speech in which he outlined the economic benefits of helping more women, as well as other under-represented groups, to enter the job market. This could expand the labour force by half a million people, raising the country's output by $30 billion, or 1.5% annually. He pointed to affordable, accessible, publicly funded child care as the right tool to achieve this for women.

This year, the House of Commons Standing Committee on the Status of Women released its study of women's economic security and the future of the Canadian economy. Not surprisingly, it, too, identified child care as a first measure to increase women's access to the labour force and increase their economic security.

For decades, a multitude of voices have implored governments for action on child care. Study after study, including that of the Royal Commission on the Status of Women in Canada 50 years ago and this very committee's own report on last year's budget, recommended that the federal government assume leadership.

We applaud the current government for putting child care back in the federal budgets in 2016 and 2017 and for its commitment to long-term annual funding. We congratulate the federal, provincial and territorial governments for reaching a multilateral agreement on child care in 2017, all followed up with three-year bilateral agreements. We particularly welcome the announcement only last week of the agreement between the federal government and indigenous leaders setting a framework to address the urgent child care needs of Canada's indigenous peoples and communities.

However, this progress, while important, is only a beginning. It's not yet as ambitious as it could be, not as far-reaching as it should be and could therefore easily be rolled back. We know from the experience of other countries and the research conducted over many years that child care is essential to economic growth, to women's equality and economic security, and to the positive development of children and the well-being of families.

Not all types of child care will yield these positive and necessary outcomes. To move from Canada's current market approach to child care to a high-quality universal system is an enormous multi-year undertaking by all levels of government, including the indigenous governing structures as equal partners.

The multilateral framework and bilateral agreements now in place set out good principles, but the agreements fail to articulate steps with timelines for putting in place a child care system that can succeed. Also, the federal funding plan is not adequate to support the achievement of these principles.

We therefore ask this committee to recommend the following:

First, we recommend a boost in funding for the provincial and territorial transfers for child care. The current annual commitments do not ramp up enough each year to allow for the building of a high-quality, affordable child care system. We recommend instead an annual allocation of $1 billion for child care, starting in 2019 and adding an additional $1 billion each year that follows until annual spending reaches the international minimum benchmark of 1% of GDP.

Second, we recommend an implementation plan developed by governments and indigenous organizations with input from the child care sector and others to operationalize the principles and intentions set out in the multilateral framework agreement.

Third, we recommend the development and implementation of a Canada-wide system-building strategy, again, one that's developed by the provinces, territories, indigenous organizations, and the Government of Canada, with the full input from the child care sector and communities. This strategy must include funding to develop and support an early childhood education workforce strategy, funding to create the infrastructure needed to develop public and not-for-profit child care services across Canada and the reinstatement of funding to rebuild the child care sector's infrastructure, including child care organizations. We appreciate that a fourth system-building element, funds for a day care and child care data strategy have already been allocated.

Thank you very much.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much, Ms. Ballantyne.

Next we go to Mr. Marshall from the Mining Association of Canada. You have five minutes.

[Brendan Marshall, Vice-President, Economic and Northern Affairs, Mining Association of Canada]

Thank you for the opportunity to participate in this consultation process.

I'm Brendan Marshall, vice-president, economic and northern affairs at the Mining Association of Canada. MAC is the national voice of Canada's mining and mineral-processing industry, representing more than 40 members engaged in exploration, mining, smelting and semi-fabrication across a host of commodities.

Mining contributes 3.4% of Canada's GDP annually, employs just under 600,000 workers, and accounted for 19% of Canada's total overall export value in 2016. Proportionally, mining is the leading heavy-industry employer of indigenous peoples. Canada leads global mining finance with the majority of the world's public mining companies listed on the TSX.

In some respects, the government has contributed positively in recent years with policy developments and investments supporting the growth of Canada's mining sector, including in exploration, via the extension of the mineral exploration tax credit, though we support PDAC in advocating that this be renewed on a three-year rolling basis, and in northern infrastructure through road investments in the Yukon and the NWT.

In other respects, however, domestic legislative and regulatory processes with implications for project permitting and costs persist, while recent supply chain failures have damaged Canada' s reputation as a reliable trade partner. Internationally, these challenges are amplified by an increasingly unpredictable trade relationship with the U.S., whose comprehensive tax reform has significantly enhanced that jurisdiction's investment competitiveness over Canada's.

Since 2014, according to NRCan, total projected investment into Canada's mining industry has dropped more than 50% from $160 billion to $72 billion. Immediate action by government to quell increasing investment leakage and minimize the impacts of projected low-growth scenarios is needed.

Canada's mining tax regime has been falling behind international competitors for years. Budgets 2012 and 2013 reduced or eliminated several direct and indirect mining-related tax credits in areas such as dividend withholding tax and corporate restructuring rules. Other jurisdictions have amended their fiscal regimes to better attract foreign direct investment, while Canada has not. Most recently, the Tax Cuts and Jobs Act reforms have significantly reduced Canada's mining tax competitiveness vis-à-vis the U.S. As a result, the same mine in the United States now has an approximate 40% to 50% reduction in the effective tax rate compared to Canada.

Action is required to reduce Canada's waning international mining tax competitiveness. Specifically, government should consider the following:

One, it should consider reversing, reinstating and enhancing mining tax reforms from budgets 2012 and 2013, including augmenting the ACCA to include zero declining balance to match the U.S.

Two, it should consider phasing out dividend withholding tax. Canada stands out as the only rich country that taxes all dividends paid to foreigners. Other countries' rates are 0%, such as in the U.K., or they have rules that relax or exempt from this tax, such as in Australia, Canada's primary competitor for mineral investment.

Three, it should consider enabling corporate reorganization performed by Canadian or foreign groups to be tax-free. Canada taxes 50% of capital gains realized by corporations reorganizing their businesses to concentrate on value generation, while in the U.K., for example, capital gains tax is 0% if basic criteria are met.

Four, it should consider modernizing the tax treatment of QETs, qualified environmental trusts, by extending the carry-back period from three to seven years, allowing reclamation to be deducted at the consolidated level when incurred, regardless of which mine is being reclaimed, and by making QETs tax exempt until the distribution of funds.

Five, it should consider ensuring the deductibility of mining tax payable regardless of the year in which it is paid. MAC has worked constructively with Finance and CRA officials on a solution to our challenge, which they accepted, but we continue to wait for its implementation after almost three years of engagement, and are still without a firm commitment on a timeline.

These policies and the inability to implement solutions in a timely manner are reducing the attractiveness of Canadian investment projects, increasing financing costs and administrative burdens and putting Canadian firms at a disadvantage relative to their competitors.

Infrastructure investment decisions that recognize northern challenges and opportunities through the trade and transportation corridors initiative and the investing in Canada plan have been welcomed, though the need is greater than the funds allocated. MAC is aware the northern allocation of $400 million under the TTCI was oversubscribed by greater than five times. Also concerning is that the Canada Infrastructure Bank may not recognize remote and northern challenges, potentially limiting the utility of this institution to address northern priorities.

Enabling additional mining development in remote and northern Canada is inextricably linked to the government's indigenous reconciliation and climate change agendas. The government should renew the TTCI, including the $400-million allocation to northern Canada, and recognize the unique challenges of remote and northern regions through a dedicated northern fund in the Canada Infrastructure Bank.

My final point is with respect to accelerating indigenous inclusion in mining.

The mining industry is the largest employer of indigenous Canadians on a proportional basis. Since 1974, more than 375 voluntary company-community agreements have been signed detailing shared benefits in resource development, including direct and indirect benefits such as procurement. For example, the oil sands spend with 399 indigenous businesses exceeded $3.3 billion in 2016 alone.

To strengthen and enhance indigenous participation in mining, governments should increase funding for skills training and entrepreneurship to assist indigenous peoples in securing opportunities generated by the industry. They should establish and improve mechanisms through which governments share a portion of the revenues generated from royalties, mining taxes, and/or fees in their jurisdiction. Finally, they should strategically deploy government procurement as a tool to drive indigenous economic reconciliation.

Thank you for your consideration. I would be happy to take any questions.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much, Mr. Marshall.

Now we are going to Polytechnics Canada and Ms. Watts-Rynard.

[Sarah Watts-Rynard, Chief Executive Officer, Polytechnics Canada]

Thank you, Mr. Chairman and committee members, for inviting me today.

The committee's focus to create and identify levers for growth in a turbulent economic landscape is well-chosen. The Canadian economy is undergoing significant change and government must be proactive, particularly given how these forces stand to affect both industry and individuals.

Change factors topmost on our minds at Polytechnics Canada are technology, including artificial intelligence and automation; the reality of an aging workforce and new skill requirements; and the impact of trade on global supply chains. All require Canadians to have the skills and knowledge to compete in a complex and evolving landscape. All call for continued investment in human capital and Canadian business.

Investing in human capital will ensure that Canadians have the right skills to succeed in a digital economy. As jobs are created and transformed, our primary goal should be to ensure that Canadians are well-prepared. Similarly, investing in Canadian businesses ensures that they have access to the latest technologies, top talent and international markets, enhancing their ability to innovate, commercialize, grow and be globally competitive.

Canada's polytechnics play a differentiated role in our post-secondary education landscape. They're industry responsive and flexible, delivering demand-driven applied education that transforms to suit the needs of their industry partners. As innovation intermediaries they supply the technology and the talent to help firms get their ideas up and running and their products to market.

Polytechnics develop next-generation talent in collaboration with business, placing them at the nexus of Canada's changing economy. Learners attending our institutions gain practical credentials that are valued by industry, but they also build real-world connections with the people who will hire them. Equally important, given the speed of change, polytechnics are delivering training to individuals who find themselves in transition by offering opportunity for upskilling and reskilling, again, focused on the practical, recognizing existing skills and filling in gaps.

Canada has committed to inclusive growth, but we realize that this requires an equally inclusive vision for talent. The new economy will require technicians, technologists and skilled tradespeople to the same degree as Ph.D.s and engineers. With this in mind, let me outline a few of the specific actions that we're proposing as a part of this pre-budget consultation.

In budget 2018, the government made a multi-year investment in the college and community innovation program, the only federal program that supports applied research ecologists. Applied research capacity allows local businesses to partner with expert instructors, project managers and students who can help address their R and D needs.

We recommend a new $40-million envelope dedicated to the colleges to deliver industry-driven applied research. Predictable and sustainable overhead funding will allow the polytechnics to hire and train permanent staff to undertake business development, knowledge mobilization and implementation support. This funding will do more than keep the lights on. The very firms in Canada's race for global competitiveness are the ones that are seeking innovation solutions from colleges and polytechnics. Predictable support will minimize the delay on new projects, increase collaboration and ensure access to critical databases and cutting-edge facilities. In short, it supports the capacity to deliver on the research investments that were made in budget 2018.

We have also proposed a number of workforce development solutions, including the need to build out better skills data. The transformation of jobs makes it critical to understand the skills needed today and develop a forward-focused vision for tomorrow. By surveying employers using common terminology and definitions, we can help young people and their parents navigate through the post-secondary programs where there will be labour market demand. This also helps institutions to craft industry-responsive curricula and employers to make connections between their specific needs and the graduates who will fill them.

Further, Polytechnics Canada recognizes the importance of work-integrated learning to successful school-to-work transitions and would suggest that colleges and polytechnics excel at providing these hands-on opportunities for students. Work-integrated learning is taking place in the form of co-ops, internships, capstone projects, applied research and apprenticeship training, just to name a few. As a result, we're pleased to support stronger and smarter federal investments in this area.

Again, thank you for having me here today. Focusing our efforts on creating growth in an evolving economy is a critical challenge, and I'm confident that Canada's polytechnics are a key player in addressing it.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much, Ms. Watts-Rynard.

We'll now go to Mr. Gullo and Mr. Wong from the Railway Association of Canada.

[Michael Gullo, Senior Director, Policy and Public Affairs, Railway Association of Canada]

Thank you. I'm pleased to be here on behalf of the Railway Association of Canada. I'm joined today by Victor Wong, a member of the RAC's tax committee and assistant vice-president of taxation at Canadian Pacific.

Canada's freight railway network consists of two Canadian-owned and -operated class I railways, and more than 50 local and regional railways. Railways move approximately 200 billion dollars' worth of Canadian-originated goods each year, which account for 50% of the country's goods destined for export and 70% of all intercity freight traffic. In addition to the movement of goods, nearly 85 million people use railways to travel to and from work or for leisure, reducing emissions, congestion and wear and tear on Canada's roads and highways.

Prior to providing an overview of our key recommendations, I want to take a moment to highlight the critical role that Canada's railways play in supporting trade. Without railways, Canadian industries would be challenged to compete in the global economy as they fully do today. Conversely, railways depend on trade as a principal driver to create a demand that necessitates their services. In fact, 65% of all railway revenues are derived from trade-related traffic, of which the majority of these revenues flow between Canada and the United States.

Railways support trade through their unwavering commitment to invest significant levels of capital back into their network each year. Currently, class I railways invest more than 50% of their net income, or 18% of their revenues, back into their capital, which unlocks the trade potential of Canadian industry. Since 1994, Canadian-owned railways have invested nearly $50 billion to establish a tri-coastal continental railway network that is fully integrated into a North American supply chain required to facilitate the trade of raw materials, industry products and consumer goods. In 2018, the industry is expected to invest more than $5 billion, an industry record.

Capital investments are critical for replacing and enhancing track infrastructure and for the renewal of rail, ties, ballast, signals and bridges. They also fund strategic initiatives to enhance rail capacity through newer extended sidings, high-clearance tunnels, the continued implementation of centralized traffic control, and the development of inland ports across the railway network. Simply put, these investments allow railways to grow in concert with customer demands and ensure that their operations remain safe.

Our recommendations for the 2019 federal budget aim to encourage competitiveness by addressing several barriers to investment for our members. First, U.S. tax reform has introduced significant changes, resulting in a lower federal tax rate, the introduction of the BEAT minimum tax on transactions between U.S. taxpayers and foreign-related parties, and 100% tax depreciation or writeoff on capital expenditures, all of which is either a catalyst for growth of the U.S. economy or a protection of the U.S. tax base.

Of greatest interest to Canadian railways is to have the same ability as U.S. railways to fully depreciate or write off its capital expenditures in the year of spend. This ability would provide significant after-tax dollars for all railways in Canada to reinvest back into the Canadian economy through increased employment and purchasing power of both products and services.

In light of these measures and to ensure that the Canadian economy can continue to benefit from a competitive and resilient railway network, RAC recommends that the government allow railways to deduct the full amount of capital expenditures immediately; that is, allow full depreciation in the year of acquisition for new and used capital expenditures, such as rolling stock like railcars and locomotives, track infrastructure and work equipment. This would be a fundamental shift from our current depreciation system for railway track assets, which requires more than 20 years before 90% of the capital can be written off.

I would like to take the opportunity to highlight the importance of short-line railways to Canada's rail-based supply chain. Short-line railways are privately owned companies that play an integral first-mile/last-mile function to customers in rural and remote locations. Their business model allows them to link Canadian customers to the services provided by CN and CP. However, they are constrained by their limited ability to borrow against their capital and generate the revenues that allow them to compete against their principal competitor: a subsidized trucking sector.

While Canadian class I railways can invest substantive amounts of capital back into their networks each year, short-line railways are not able to match similar levels of investment. To date, neither the new building Canada plan nor the national trade corridors fund have been a significant source of funding for short-lines. In comparison, U.S. short-lines have the advantage of accessing a variety of innovative federal funding programs that include grants, low-interest loans and tax credits.

As a means to improving the competitiveness of short-line railways, RAC recommends that the government create a capital funding program of $365 million over six years, effective in 2019. This program would support short-line infrastructure investment and reduce the costs associated with federal regulatory requirements for railways. This program should leverage private sector investments.

In addition, the RAC strongly encourages the government to support the Huron Central Railway, a short-line that provides a critical rail service for customers from Sault Ste. Marie to Sudbury and requires immediate support to continue operations beyond 2018. This railway forecasts that a federal-provincial contribution of $42 million is required over a five-year period to maintain the line in operation.

In addition, the railway itself has committed to investing more than $4.6 million in the railway. RAC recommends that budget 2019 leverage private sector investment and include a federal contribution to maintain the HCR operations beyond 2018.

Finally, earlier this year, VIA Rail took a substantive step forward in its efforts to ensure that Canadians benefit from travelling in a passenger rail fleet that is efficient, safe, accessible and affordable. Budget 2018 provided funds to replace VIA's aging fleet in the Quebec City-Windsor corridor, and included $8 million for Transport Canada to undertake more work to advance VIA's proposed high-frequency rail project.

To build on the success of government support to date, the RAC recommends that the government empower VIA Rail to leverage the investments in fleet renewal to allow the railway to secure an additional $4 billion from financial markets for the HFR project.

Thank you for the opportunity to appear.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much, Mr. Gullo.

Now we'll go to Mr. Hendrickson and Mr. Snider from the Sierra Club Canada Foundation.

[David Snider, Director, Sierra Club Canada Foundation]

Mr. Chair, I'd like to thank the committee for inviting Sierra Club Canada Foundation to present today.

My name is David Snider. I sit on the board of directors of the Sierra Club Canada Foundation, and I have served as president and vice-president, in that order. With me today is Dr. Ole Hendrickson, who recently joined our board of directors.

Sierra Club Canada Foundation is a national environmental organization with a grassroots mandate: empowering people in their communities to tackle issues that affect the environment, with an aim of protecting, restoring and enjoying a safe and healthy planet.

We are members of the Green Budget Coalition and are proud to support their budget 2019 recommendations.

We have three recommendations that we wish to highlight for budget 2019 which we feel are important to achieving a sustainable economy, protecting wildlife and stabilizing our climate.

Recommendation one is to support a national wildlife collision reporting system and mitigation strategy. The consequences of wildlife-vehicle collisions include significant socio-economic, traffic safety, health and environment costs, including impacts on endangered species.

There is no doubt that collisions with wildlife across Canada are on the rise. Wildlife-vehicle collisions are a serious burden to our society, costing an estimated $200 million per year in Alberta alone in direct and indirect costs, according to an Alberta transportation study in 2015. A study commissioned in 2003 by Transport Canada recommended that a national collision data system was needed then, and that was 15 years ago.

The collision data is needed to plan mitigation measures and habitat connectivity. The federal government has shown some leadership on this issue with its work on wildlife crossings in Banff National Park. Provinces, including Alberta, B.C. and Quebec, are working on this issue. Alberta implemented a smart phone-based system for collecting wildlife collision data. The Sierra Club Canada Foundation has a program, Watch for Wildlife, in Nova Scotia and New Brunswick.

We're asking the federal government to work with the provinces and territories and environmental groups to develop and implement this strategy. We recommend that the government earmark a modest $1.5 million in budget 2019 to develop and implement a national wildlife collision reporting system and mitigation strategy with a national wildlife collision data collection system that will provide the data needed to plan collision mitigation infrastructure and create habitat connectivity plans.

Recommendation two is to continue and strengthen efforts to combat climate change by putting a price on pollution. Ottawa-Gatineau and the surrounding region was struck by six tornadoes last week. Western Canada was swathed in smoke from forest fires over the summer. Last spring, New Brunswickers endured record-breaking floods. The international scientific consensus is that these impacts are only going to worsen as global greenhouse gas emissions rise.

The carbon tax is a much-needed step, as it puts a price on pollution that is affecting all of us, and it will help steer our economy in the direction that it needs to go to shift away from fossil fuels. Economists agree that it's one of the most efficient ways of creating a shift away from fossil fuels.

Recommendation three is to identify and phase out inefficient fossil fuel subsidies, saving hundreds of millions to billions of dollars. Subsidizing the fossil fuel industry makes it harder for us to make the much-needed switch to an economy based on renewable energy and energy efficiency.

In 2016 as part of the G20, Canada agreed to phase out fossil fuel subsidies. The current government committed to phase them out as part of its election platform. Canada's Auditor General examined these subsidies in 2017 and recommended greater assessment to identify all the subsidies in place. He also found that there was no plan for phasing out subsidies.

A recent estimate put our subsidies to the fossil fuel industry in the hundreds of millions of dollars. Although clearly more work is needed to identify and quantify all subsidies, we commend the government for committing to conduct a peer review of these subsidies in 2017 following a voluntary G20 process. However, there are identified subsidies that could be phased out in budget 2019.

The purchase of the Trans Mountain pipeline represents a giant step in the wrong direction with regard to our commitment to eliminate subsidies and tackle climate change. As you know, the cost of this decision could balloon from $4.5 billion to $11 billion. We are against this purchase, but if it proceeds, we call for complete transparency so that the government's investment does not become yet another subsidy by virtue of selling this infrastructure at a reduced cost in the future.

The expansion of the pipeline should not happen because that will make the emissions go beyond what Canada's climate commitments allow.

Thank you for having Sierra Club Canada Foundation here today to present its recommendations.

[The Vice-Chair, NDP, Peter Julian]

Thank you very, Mr. Snider.

Last, but not least, we have Ms. Lennox and Mr. Rémillard from Startup Canada.

[Richard Rémillard, Board Director, Startup Canada]

Thank you very much, Mr. Chair.

Good afternoon, ladies and gentlemen.

On behalf of Startup Canada and its board of directors, it is a pleasure to be here for the pre-budget consultations with my colleague Victoria Lennox, CEO and co-founder of Startup Canada.

Startup Canada, for those who may not know us, is the sole national not-for-profit in Canada dedicated to promoting entrepreneurialism, period, full stop. We pursue our mandate through a variety of means, including our very robust digital presence, with boots on the ground in 50 local communities from B.C.

to Quebec and the Atlantic provinces,

and seminal research into the challenges and opportunities facing entrepreneurs today. I'm going to get right to the point and the point is simple. We're proposing that budget 2019 include an allocation of $3 million over three years to Startup Canada to improve entrepreneurs' rapid adoption of everything digital. Furthermore, Startup Canada will commit to securing dollar-for-dollar matching funding for this initiative from the private sector, which brings the total capital

to $6 million over three years.

This funding will enable us to make a sustained—not one time and not one shot, but sustained—initiative to meet the real pressing needs of Canadian SMEs.

As I said, we conduct our own research and in 2017, we surveyed more than 400 small business owners. That survey concretely and conclusively showed that Canadian start-ups and scale-ups are facing several gaps that are hindering their ability to compete in today's very tough world. Twenty-nine per cent of small business owners surveyed don't believe that their current workforce has the right digital skills to grow their companies. This is the largest challenge facing Canadian small and medium-sized enterprises today. It's particularly acute in five big areas: digital marketing, social media, data analytics, programming and web development and design.

Furthermore, roughly half of small business owners stress the importance of taking part in digital training and professional development workshops. As such, our research dovetails with that of Business Development Canada, which earlier this week noted that a survey of its own recently showed that digital technology adoption remains quite low among small business with less than a quarter of small businesses having fewer than 20 employees currently using e-commerce platforms. Less than a quarter—wow. In BDC's own words, quoting from it's press release of a few days ago, “Canada's SMEs have to digitize now.”

These additional public and private sector resources will enable Startup Canada to significantly build up and build out its current suite of offerings and reach a much larger number of entrepreneurs than we can at present. It will enable us to make a measurable, significant reduction in the digital skills gap that's holding back our entrepreneurs.

We believe that the Government of Canada has already identified digital literacy as an area that needs to be addressed. We are honoured and pleased to have been able to participate in the consultation process launched by ISED Minister Bains on this matter.

Why us? Are we right? Even if the job has to be done, are we the right people to do it? I think we are. First, we have acknowledged expertise in the digital space. The Minister for Small Business and Export Promotion, Minister Ng, wrote on Twitter in mid-July that while being the number one digital presence in Canada for entrepreneurs, Startup Canada is doing some great work to bring more people into the fold. Our position employs the support of key stakeholders in the entrepreneurial ecosystem, more than 25, and that includes EDC, Export Development Canada, the Canada Learning Code, Mitacs, etc. I'd be happy to give you a list of those that my colleague Victoria has handy.

To date, in 2018, we have hosted over 150 practical entrepreneur-led digital training sessions that are pulling in a thousand new entrepreneurs every month. Our digital programs, five in all, support 35,000 entrepreneurs every year. To do this, we work closely with 75 major public and private sector partners. I've already mentioned BDC and EDC. It also includes Amazon, Google, Microsoft, Bank of Montreal, etc. We can do a lot more with the appropriate resources.

Thank you for your time.

[The Vice-Chair, NDP, Peter Julian]

I thank all the witnesses. Your presentations have been very insightful. I am sure that they will lead to many questions.

We will now move on to the question and answer period, in which all the parties will participate. We will begin with the Liberal members.

Mr. Fragiskatos, you have seven minutes.

[Peter Fragiskatos, London North Centre, Lib.]

Thank you.

Thank you very much to all of you for presenting today.

My first question will go to Mr. Snider.

I noted, sir, that you talked about putting a price on pollution. You spoke about it from an economic lens. I promise you that I'm not fishing here, but I wonder what you would say to those who say that putting a price on pollution would have a detrimental impact on the economy. There has been some debate on this, but even conservative commentators, Preston Manning and others, for example, have come around to the view that putting a price on pollution is necessary to combat the effects of climate change. Also, it can actually produce a net benefit for the economy.

What do you think about the whole debate?

[David Snider]

The experience from jurisdictions that have implemented carbon prices shows the policy does reduce emissions. B.C. saw per capita fuel use covered by the tax dropping 16% by 2014, relative to 2008. It works by sending market signals that guide both consumption choices and long-term investment decisions towards low-carbon alternatives; and it gives the province the opportunity to invest the revenues into green energy programs, renewable energy projects and programs to reduce the consumption of energy. There's also the option of providing rebates, particularly to lower income people who might be unduly impacted by it. On the whole, from studies in about 40 countries and 20 subnational regions, things are going very well.

[Peter Fragiskatos]

Thank you for that evidence.

I want to put a question to the Mining Association and to the Railway Association.

I'm from London, Ontario, so I don't have mines. I have a rail line that certainly passes through. We have VIA in the community.

It's a constant for members of Parliament, I think, to hear that there is a need for skilled people. There are jobs that need to be filled and they can't be filled because young people have not been encouraged to take to the trades.

To the mining folks and to the Railway Association, is this something that is impacting your industry in a dramatic way right now? Where do you stand on that?

[Brendan Marshall]

Thanks for the question.

We have a Mining Industry Human Resources Council that does annual forecasts for the subsequent 10 years to give industry important data about the number of new employees that we're going to need to meet demand for the production of the Canadian mining industry. This government funds that organization and we're grateful for that funding.

We think there's a real opportunity particularly to increase indigenous participation in the industry through targeted training programs. Mining has a natural relationship with indigenous communities largely because many mines are located in remote and northern areas. To your point about concerns over addressing the human resources gap, yes, we're aware of that. We do a lot of work in that area and we think there's opportunity for progress to be made, particularly with indigenous communities.

[Peter Fragiskatos]

Mr. Gullo, could you speak to labour shortages and rail?

[Michael Gullo]

I'll be very brief.

The gap for us is a lot narrower than other sectors. There are established programs in place with community colleges where we're constantly recruiting and finding a new workforce. Of course, we're coupled with the challenges that many sectors of the economy are in attrition and turnover, but our rate to replenish is fairly solid. When people join the railway workforce, they're usually there for the long haul.

[Peter Fragiskatos]

Thank you.

It pivots well to the questions I want to put to Polytechnics Canada.

We talk about apprenticeships. As you know, in 2018, there was the pre-apprenticeship program which encouraged under-represented groups—indigenous peoples, for example, women, newcomers, individuals living with disabilities—to take to the trades. There was the apprenticeship incentive grant for women. Over $50 million was committed in that budget to those initiatives. I noted, though, that you mentioned a $40-million envelope that would go to community colleges.

Can you go into a little more detail about how exactly that money would be used and why it's needed at this time?

[Sarah Watts-Rynard]

Sure.

I think that perhaps it gets away a little from the question around some of the apprenticeship training, because that funding envelope is being proposed to cover overhead and the continuing ability of the colleges to provide applied research support to business.

Then it is the matter of businesses coming into the polytechnic institutions and asking for support when it comes to commercialization, taking products to market, tech adoption, really thinking about some of their R and D challenges as small and medium-sized businesses that they might not be able to undertake on their own.

These applied research offices operate on a grant system. It comes out of NSERC and the college and community innovation program. They don't have access to ongoing funds to keep staff employed and to ensure they're doing the business development and knowledge mobilization work.

[Peter Fragiskatos]

I have one minute left, and I've left until the end probably the most seminal question when it comes to the trades, but I'm going to ask it anyway.

What else can the federal government do? How can we work in partnership with you and others to promote the idea among young people that the trades offer a path worth pursuing, a bright career?

The perception around the trades unfortunately has been quite the opposite. I wonder if you can speak to that. I think we really need to champion the trades and make it clear to young people that this is a worthwhile endeavour career-wise.

[Sarah Watts-Rynard]

While I think that the answer is probably more complex than this, I would start with a lot more career awareness work that tells young people about what those career opportunities look like. There's some really fantastic research that has recently been done out of George Brown College around what tradespeople see in terms of their long-term career options.

You'd find that tradespeople are some of the most satisfied, happiest workers in the country. They believe the reason there aren't people lining up to do their jobs is that they can't. It's not because they've chosen it. They've said that university is the preferred option. They simply believe that the work they do, the problem solving, the dynamic nature of their work, the hands-on application of those skills, is too complicated for people who have more academic....

If we told people that and we talked about the technology that was in the trades, I have a feeling we'd have a lot more kids lining up to do those jobs.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much.

I will now give the floor to Mr. Anderson, from the Conservative Party.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

Thank you to our witnesses for being here today.

I want to follow up a bit with Polytechnics on I think what Peter was asking. You mentioned there needs to be an opportunity for upskilling and reskilling. I think we all understand that.

Do you have any contact with the government about initiatives to try to close that link between polytechnics and universities, so people can upskill or reskill? Is there any consistency across Canada in this area?

The reason I ask is that I'm from Saskatchewan, and it seems to me that we have small enough numbers of people that it's something we could really do well.

Are there any initiatives to do that, recognizing that education can be just as silo oriented as government? I'm wondering about that.