Finance Committee on Sept. 26th, 2018

[David Snider]

Canada is a bit behind the other countries in that respect. A lot of work will need to be done to improve the situation. There are subsidies such as

the accelerated capital cost allowance for liquefied natural gas projects, Canadian development expense claims and Canadian exploration expense claims, including unsuccessful exploration. There are remaining flowthrough share deductions for the oil and gas sector, Canadian oil and gas project expense claims and foreign resource expense claims.

Those are the ones that have been identified. Then there are the more subtle ones that perhaps don't jump right off the page at you, so there's still work to be done.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much, Mr. Dusseault, from the New Democratic Party.

I now give the floor to Mr. McLeod, from the Liberal Party.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

My question is for Brendan Marshall from the Mining Association of Canada.

First of all, thank you for dedicating so much of your submission to improving opportunities in the north. I think many of us know that in order to improve the economy in the north and to make our economy competitive, our communities and our businesses need access to reliable all-season transportation infrastructure. We also need cost-effective energy solutions to get off diesel.

Given our geography, could you speak to the importance of expanding federal support for northern projects of all sizes to address this infrastructure gap?

[Brendan Marshall]

Yes, absolutely.

MAC recently was working with CanNor to identify how many projects are in the northern projects management office pipeline and what their remoteness is. If I remember the numbers correctly, I believe that 13 of the 22 projects listed in that registry were without access to an all-season road. Some of those expansion projects are mines that are currently operating at significantly higher costs and will have shorter mine lives because they don't have access to the infrastructure that you mention.

Infrastructure is critical in the north for a couple of reasons. MAC did a study in partnership with other industry organizations about quantifying what the cost differential is between doing mining in the south versus doing mining in the north. Our research suggests that it is two to two and a half times more expensive to build the same mine off-grid in the north than it would be in a centrally located jurisdiction in southern Canada.

Seventy per cent of that cost differential is attributed exclusively to the infrastructure deficit. Acknowledging that mining is the largest private sector employer of Canadians and indigenous Canadians in the north, there is a significant opportunity to enhance social and economic development by stimulating mineral investment into the territories, and not just the territories, but also the near north and the northern regions of the provinces.

[Michael McLeod, Liberal, Northwest Territories, NT]

I want to touch on the indigenous involvement. We all know that the mining industry has been the backbone of our economy in the Northwest Territories, and it's really done well in terms of indigenous participation in mining.

You've raised a lot of key points, but maybe you could specify what some of the concrete steps are that our government can take in the next budget to assist indigenous people and communities to take part, or take an increasing part, in this whole sector.

[Brendan Marshall]

In the Northwest Territories, I believe that 60% of the population demographic are indigenous Canadians. When I say that one in six jobs in the north is provided by the mining industry, the vast majority of those jobs would be benefiting, directly or indirectly, indigenous communities whether they were working at the mine site or working in some sort of supply capacity, in an entrepreneurial capacity, servicing the mine in one of many respects.

How can we further benefit the government's indigenous reconciliation agenda?

I would suggest that growing the pie is probably the single most important component of achieving greater levels of indigenous economic reconciliation in the north. We have a fleet of mines right now, some of which are up for investment renewal decisions, others of which have determined what their closure date is going to be. There is a real opportunity to generate the next edition of mines in that pipeline, but there's also a potential cost of not doing so. The reversion of economic agency and independence of the territory onto Ottawa is something that I don't think anyone in the north wants to see. I don't think it's something that indigenous communities want to see either.

[Michael McLeod, Liberal, Northwest Territories, NT]

I have one more question.

How has the mineral exploration tax credit benefited the industry? Can you give us a quick response on that?

[Brendan Marshall]

Exploration is the front end of the minerals business. You have to find the minerals in the ground before you can develop a project into a viable mine. Let's say there's a needle in a haystack. Exploration is finding that needle in the haystack. The ratio of deposits that are economically developable is very small and it's an extremely high-risk business proposition. The mineral exploration tax credit provides an incentive for investors to move their money into this industry, to locate and identify the next generation of Canadian mines. In the event that the exploration project is unsuccessful, or doesn't identify a deposit that's developable at this time, there is a softer landing for that individual.

From our standpoint, we won't see the next generation of mines in Canada if we don't have a strong, competitive exploration industry.

[The Vice-Chair, NDP, Peter Julian]

You have two minutes left, Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Okay.

I have a question for Startup Canada.

Earlier this year, I had the pleasure of presenting Jeff Philipp of SSI Micro with a Startup Canada high-growth award for the north, in my hometown of Fort Providence. There are only 800 people there, so it was a huge achievement. SSI Micro is a very good success story in our territory and across Canada.

I was hoping you'd be able to quickly discuss, based on your recommendations, how you can help other northern entrepreneurs and small businesses reach their potential.

[Richard Rémillard]

Thank you very much for your question.

I think I'll turn this over to my colleague Victoria, who ducked out of an event that we're running in Halifax today to be here, and who has direct ownership as CEO of our suite of programs everywhere across the country.

I'm sorry to do this to you, Victoria.

[Victoria Lennox, Co-Founder and Chief Executive Officer, Startup Canada]

Thank you so much for the question.

We're so excited to be celebrating SSI Mobile and their amazing achievement. Congratulations to you and the community.

Startup Canada now has 50 communities across Canada, but we only have one in the north, and that's in Whitehorse. Through building more start-up communities that are entrepreneur-led, with entrepreneurs like Jeff, or Sarah at Erasmus Apparel, we can begin to transfer the knowledge of these entrepreneurs on how to go global and how to use e-commerce to do it.

If we can take 1.4 million businesses, which are employer businesses in Canada, and help them to get online, help them become more likely to employ, with essentially every business in Canada adding one more employee, that would be our goal with this digital skills program through Startup Canada.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much.

We'll now go to five-minute rounds, starting with Mr. Richards.

[Blake Richards, Banff—Airdrie, CPC]

Thank you.

You may have just answered the first question I had, but I want to be certain that it was the answer I was looking for, so I'll ask it anyway. You talked in your presentation about the $3 million you were asking for that you would match through private sector matching to help small and medium-sized enterprises to digitize or address the digital skills gap.

What exactly is the digital skills gap? What does it mean for them to become digitized? I think that was the answer you just gave. You were talking about an online presence and e-commerce. Is that what we're talking about there?

[Victoria Lennox]

Yes.

[Blake Richards]

Would you say that's the biggest issue facing—and I'll ask this in two parts—those trying to start up and the biggest issue facing our small and medium-sized business that are already under way in Canada? Would you say that's the biggest issue? If so, why would you say it is, and if not, what would you say is the biggest issue, and how should we address that?

[Richard Rémillard]

Several thoughts come to mind. This gap, I believe, affects many sectors, if not most sectors, of the economy, be they tech or non-traditional tech, smaller start-ups or what are increasingly called scale-ups. It's maybe not so much the very large Canadian nationals and multinationals, but it's certainly where most jobs are, most employment is and the most number of companies are. That's a big one.

It might be very difficult to quantify whether or not this is the biggest single gap. What has my attention is the fact that the yardsticks keep moving. Look south of the border and look over the Pacific to China. Right now, those two countries are in a war—not a trade war or a tariff war—for dominance in e-commerce. If we don't up our game significantly, we're going to be—and I hate to take the word from my friends at the Sierra Club—roadkill on the information highway. That's where we're coming from.

I think there has been considerable progress in recent years in Canada in trying to address this gap. Is it sufficient? No. Is it necessary and has it been necessary? Yes. Is more required? Yes.

[Blake Richards]

Thank you.

Let me turn now to Ms. Watts-Rynard from Polytechnics.

One of the priorities you identified in your opening remarks was workforce development. You specifically talked about being able to match the skills needed in today's economy with the students who are entering. That was music to my ears, because it's something I've said many times. I think sometimes governments tend to focus a little too much on whatever it is they might believe is the answer, but don't seek the input of industry. That's how we determine the needs, right? The industry can tell us what their needs are going to be in the workforce. That was music to my ears.

Could you tell us a bit more about how you see that best happening in terms of matching not only the needs of today but also the needs of the future by engaging industry in that conversation? How do we best include them and make sure that we are, in fact, doing the right things to ensure that the needs in the workforce are best being addressed through our institutions?

[Sarah Watts-Rynard]

The polytechnic institutions are to some degree doing some of that work now. They are very much connected with industry, and they're providing that linkage.

One of the recommendations we've really suggested is to go back to employers and ask them to reflect on the skills they need today and the skills they see themselves needing over the next five or 10 years. It's important to get to terminology that is consistent so that we're not talking about human skills one minute and employability skills or essential skills the next, and nobody remembers what skill they're talking about anymore, or everybody is talking about the same skills but they're using different terminology.

It's about getting to the point of an employer survey asking employers what their needs are now and into the future, and then really ensuring that, not only are parents and young people aware of that information in terms of if those are the skills the employers are looking for, then the programs that offer someone the opportunity to connect those skills. That becomes really practical for students and our post-secondary education institutions, thinking about how we ensure that our programs and curricula respond to the things employers are looking for now and into the future. It also allows businesses, when they start to reach back out, to know which programs have those skills in their graduates.

[The Vice-Chair, NDP, Peter Julian]

We'll move to Madam Rudd.

[Kim Rudd, Northumberland—Peterborough South, Lib.]

Thank you very much, Mr. Chair.

Thank you all for coming.

I'm going to try to get in as many questions as I can.

Morna, I just reflected that I was sitting in that chair 25 years ago when I was chair of the Ontario Coalition for Better Child Care talking about this very thing. As you mentioned, we did have hope when in 2005-06 there was a decision to move forward. Unfortunately, for lots of reasons we won't go into here, that didn't happen.

You mentioned the $7.5 billion in 2016-17 over the period of time and as you may know right now, the government is trying to create three-year bilateral agreements with provinces and territories to get that money out.

One of the challenges—you mentioned a recent election and I am from the province of Ontario—is there is a concern about the movement toward opening up child care from the not-for-profit sector to the profit sector and having the profit sector being able to access government dollars going into child care.

Can you talk about any of the concerns you might have of how that may slow down this process and what the ramifications of that would be?

[Morna Ballantyne]

Yes, sure. I too was sitting in this chair 32 years ago when I had just become a parent for the first time. I'm a grandmother, and here we are still addressing the same problems. It's frustrating.

We will see what happens in Ontario but I think it's going to be very instructive to the federal government and to Parliament because the bilateral agreements were signed. They set out certain commitments and there's every indication that the new Government of Ontario will walk away from those commitments.

It's going to be very interesting to see what the federal government does in that case. We're already starting to see that the provincial government intends to use the federal government to replace spending that it would otherwise have made. That is what I mean about taking steps backwards.

There's nothing in the multilateral framework agreement that makes a firm commitment to expansion in the not-for-profit sector, and we're not happy with that.

The fear is that there's going to be public money without restrictions on how that money is spent. We're very nervous about large corporate child care chains from outside Canada—for the most part they're all outside Canada—moving in. It's not the small, what we call the mom-and-pop operations that we're nervous about. They're doing the best they can. Once the chains comes in, we know how they operate. We saw it in Australia. We've seen it in other economies.

[Kim Rudd]

Thank you very much.

I want to go to you, Mr. Gullo, on the railway.

I'm one of those MPs who takes advantage of the complimentary VIA and I ride the train for three and a half hours back to my riding every week. There's absolutely no question there has been improvement in rail. The $8 million to revitalize the fleet, as you mentioned, is extremely important.

You also mentioned high-frequency rail in your brief. Can you talk about what that would mean in getting VIA off the main track of CN and CP to some degree, which slows us down so often, but also what it means in economic development for that transit to be so fast and so frequent?

[Michael Gullo]

Absolutely, and thanks for taking VIA Rail.

Essentially, the HFR project addresses dedicated track in Toronto, Ottawa, Montreal and Quebec. The estimated costs are $4 billion. It's a four-year deployment. Estimates of corridor ridership of 9.9 million and the potential of GHG reductions are about 10.3 million tonnes of CO2 equivalents by 2050, which is equivalent to taking 2.3 million cars off the road. That is with the existing diesel fleets. If the project proposal is approved and they move to electrification, there will be an estimated 13.9 million tonnes of CO2 equivalents by 2050, which is equivalent to about 3.1 million cars off the road.

In terms of the economic impacts, it's roughly 50,000 person years of construction-related jobs and 334,000 permanent person years of jobs resulting from improved economic growth over the project's life cycle. On time improvement, performance is expected to be over 94% and trip times are supposed to be reduced by about a quarter.

[The Vice-Chair, NDP, Peter Julian]

Thank you very much.

We will move on to the last person to ask questions, Mr. Nater. I apologize to Mr. Fergus, who will not have time to ask questions before the meeting ends.

Mr. Nater, go ahead.