Finance Committee on Oct. 2nd, 2018

[The Chair, Liberal, Wayne Easter]

Thank you, Stephen.

For members, I understand that the witnesses from Newfoundland and Labrador who are on our list, on the agenda, couldn't get out of St. John's. That wouldn't be unusual. There's usually fog.

With Maritime Launch Services Ltd., we have Stephen Matier, president and CEO.

Welcome, Stephen.

[Stephen Matier, President and Chief Executive Officer, Maritime Launch Services Ltd.]

Thank you, and good morning.

Thank you for the invitation to speak here today. I'll be happy to answer any questions I can.

I'm the president and CEO of the Nova Scotia start-up company Maritime Launch Services Ltd. My nearly 30-year background in the aerospace industry includes 16 years working at the NASA White Sands test facility in New Mexico, testing rocket engines for the space shuttle, which is kind of cool. During that time, I was honoured to receive several safety awards as part of my work there, including the astronauts' Silver Snoopy Award.

For the past 14 years, I've been an independent consultant, working directly in the U.S. commercial space industry on building and licensing spaceports, and working with launch vehicle operators from around the world.

In 2016, in partnership with two other small businesses, we started Maritime Launch Services Ltd. to provide launch services to the growing commercial satellite market. I'm now living in Nova Scotia with my wife, two daughters, five cats, and a dog. We just moved recently to the Halifax area.

We are focused on delivering on the development of what will be Canada's first-ever orbital launch capability.

There is a new space race across the globe. Ever since the retirement of the space shuttle in 2011, and coupled with the significant changes in technology that have miniaturized the typical satellite, private industry has stepped in to utilize low-earth orbit for a host of communication and science-related activities, to study our earth and its changing environment.

Many new start-up companies are developing and maturing their launch platforms to serve this growing market. These start-ups recognize that the global space industry is on the cusp of major change, one characterized by more frequent launches of smaller, short-lived satellites, many of which will go into what's called sun-synchronous polar orbits.

This appetite for space-based services and information is growing asymptotically. This is especially true for Internet-related developments, and there is a need for more precise information about specific localities, including agronomic, economic, meteorological, and hydrological data.

Perhaps most important, space-based remote sensing is now much more dynamic, with information becoming more perishable and the demand for frequent resampling growing geometrically. Being able to support the new demands of the market will require low-cost solutions that can be rapidly tailored to individual customer preferences—in other words, a customer-focused launch site in support of commercial satellite customer needs that could put the satellites where they're needed in space instead of just as ride-shares on government missions.

Moving quickly is the key to capitalizing on this market—in the areas of launch vehicle design and construction, launch services, and engineering—and expanding those programs as they currently exist in Canada, including in Nova Scotia. The rapid establishment of a brand/reputation, initially within the context of the first Canadian spaceport and eventually worldwide, will cement the positioning of Nova Scotia as a pathfinder model in the emerging scientific, economic, commercial, and strategic global relationships.

The global space economy reached $340 billion USD per year in 2016, and is growing at 2% to 3% per year. The launch industry segment of this economy—that's where the rockets launch and satellites get put on these payloads, which is the backbone of the industry—is only about $5 billion USD per year, and is the bottleneck for the industry.

MLS recognizes that the commercial global satellite market needs additional reliable launch capacity in a trajectory that the eastern shore of Nova Scotia can provide. We also recognize that the numerous start-ups developing rockets today will take time to fully mature, and that partnering with world-class, experienced, cost-effective, and reliable launch vehicle manufacturers—Yuzhnoye and Yuzhmash in Ukraine—will bootstrap our spaceport and deliver to our growing list of satellite customers in a timely manner. By maturing our launch service offering based on the Ukrainian technology first, we can then provide the opportunity for other launch vehicles, including Laboratoire Reaction Dynamics Inc., based in Montreal, to be folded into our global offering.

With the launch vehicle offering defined and planned, that leaves finding the best location as the other key piece, and not just any location will do. The key attributes that our location near Canso, Nova Scotia, provides are a launch trajectory in the direction desired by our clients, our satellite customers; an expanse of several thousand kilometres of open ocean underneath that trajectory; and available land that is both remote from the general public and close to seaports, airports, roads, power, water and infrastructure. Most importantly, it is a location with local community support.

The best site is preferred to be in North America, where the largest satellite manufacturing community exists globally, and in a country with a mature space industry and robust global partnerships. The site in Canso has all of these key determinants, above more than a dozen other sites that we studied across North America before selecting this location.

We believe this commercial spaceport development to be a groundbreaking and timely addition to Nova Scotia and Canada as a whole, and it fits in directly with many federal government initiatives. Your progress on the Canadian innovation agenda, the Atlantic growth strategy, connect to innovate, the strategic innovation fund, the implementation of the Canada Infrastructure Bank, and the revised space policy initiative through ISED all align perfectly with our goals of introducing a new industry to Atlantic Canada and the economic benefits it will bring to the rural community and economy in the municipality of Guysborough.

The communities of Canso, Hazel Hill and Little Dover, where we'll be located within the municipality, played a vital role in transatlantic cable communication over a hundred years ago, and are now at another key intersection for Canada. We will be a pivotal part of the solution to provide broadband service across Canada and the globe, with the constellation platforms being developed by industry, including corporations in Canada. It will offer a natural priority to domestic launches, in part due to our location and in part due to our launch capacity matching our clients' needs.

With our medium-class rocket launch vehicle based on heritage proven technology manufactured in Ukraine, and with a satellite payload capacity of over three tonnes, we're positioned to meet the global market demands. Our vision intersects key initiatives in Canada, with global broadband, high-end employment in a rural community in Atlantic Canada, supporting Canada's growing role in the commercial space world community, and showcasing the strong ties between Canada and Ukraine.

The other key aspect of the collective initiative to build rockets and launch them is the effect it has on our youth. The enthusiasm for Canada's space program has always been strong, and many of our youth are seeking opportunities in science and engineering as a result. Unfortunately, to date, most of them have had to leave Canada in order to pursue their careers.

Imagine an operational domestic launch site that has internships and employment, domestic CubeSats being launched, domestic broadband satellites being launched, domestic rockets delivering them to space, domestic student rocketry programs holding annual competitions, and more.

Once it is operational, payload customers from across the globe will be bringing their satellites to Canada. Then the anchor tenancy that we offer and that the spaceport represents will be surrounded by other economic opportunity and employment for our youth. There will be opportunities to design, develop, test and manufacture satellites, adding to the existing segment of job opportunity for our students to grow into.

Our collective request of the Government of Canada is to actively focus its support on the budding industry so that Canada can capture the market share that is obviously ours for the taking. Spaceport development and launch vehicle development initiatives in other countries, including New Zealand, the U.K., Australia, Mexico and others, are just now gearing up, and those governments are finding ways to support the infrastructure development and launch vehicle development. All the assets are here and in place, except for active and streamlined government support for this global opportunity.

As with the other countries and programs mentioned, there are significant numbers of investors ready to participate in the development of the opportunity, now that their governments have openly supported and seeded the initiatives with investment dollars. For Maritime Launch Services, and as was defined in the connect to innovate program that I researched, we see ourselves as part of a new backbone infrastructure in rural and remote communities across Canada for our launch site development and our mission to support global broadband priorities.

Building this initiative, this infrastructure, is the modern equivalent of building roads or railway spurs into rural and remote areas, connecting them to the global economy.

This backbone infrastructure is the basis for the launch vehicles and satellites that are needed in today's connected world. For our budding launch vehicle development initiatives, more streamlined opportunities to seed their development through NSERC, the strategic innovation fund and others are needed.

In all aspects, MLS has been glad for the positive response to our initiative to date across the country, and we look forward to collaborating with the government and industry to see our vision succeed.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Stephen.

We'll now turn to our first round of questions.

Mr. Fragiskatos, go ahead.

[Peter Fragiskatos]

Thank you very much to all the witnesses. I want to begin with Mr. Hierlihy.

Sir, you've laid out a number of recommendations in your brief. Thank you very much for that. I do want to address those, but first I want to put on the table something that I'm very interested in and that I think our country should be interested in: pilot shortages.

Can you speak to that? To what extent is that impacting the situation here in Atlantic Canada? On an entirely different but related note, I suppose, yesterday we heard that there are mass shortages of truck drivers here in the region. The problem also exists in the country, generally speaking. Needless to say, that has tremendous impacts on our economy as a whole. When we lack pilots, that has an impact on the economy as a whole.

Could you speak to the situation in Atlantic Canada?

[Greg Hierlihy]

Certainly. At Saint John Airport, we see it on a daily basis. We feel the effect of a significant pilot shortage. Our main connecting point to many places is the Halifax airport, and the pilot shortage is very acute in those short-haul flights from Saint John to Halifax. I'm sure Charlottetown and Fredericton are feeling the same pinch to get to that hub.

This year, we've had probably double the number of flight cancellations due to pilot shortage. We're definitely feeling it.

[Peter Fragiskatos]

Thank you very much.

As a federal government, we have really stood by airports in the Atlantic region and have invested heavily, as you know—and this all just came in July. There was $5 million for the resurfacing of a runway and related work at the Gander International Airport and, as you know very well, there was $10 million to rehabilitate two runways and related work here in Saint John. There was $8.1 million to rehabilitate Charlottetown's airport, along with the runway and connecting taxiways, and there was $9 million for the Fredericton International Airport, which saw a 33% jump in passenger traffic in the past five years.

We certainly take very seriously the challenges that exist here in the region and in other airports across the country. The London International Airport actually received a sizeable contribution in July as well.

I note that your recommendations—and this is not to take anything away from your brief—do call for increased funding. Every one of them actually calls for an increase in funding.

Are there other ways that the federal government can assist airports here in the Atlantic region, without spending more money? Are there policy changes, for example, or regulation issues that we could look at? Is there anything along those lines that would make airports more competitive as well?

[Greg Hierlihy]

That's a good question.

There are some of the fees that are on passengers, the security fees and the excise taxes. I know that's really about spending, but those are some of the things that are impacting us.

From a policy perspective, I don't want to take away from any safety aspects, but I guess there are things that could be looked at there in terms of the continuing costs that will be put on airports if additional requirements are added on a policy basis.

[Peter Fragiskatos]

Thank you very much.

Mr. Beerman and Mr. White, I certainly read your brief with great interest. I had a family in my constituency that was impacted by drowning recently, a very tragic situation.

In your brief, you pointed specifically to the risk of drowning among new Canadians. In fact, the family that I'm speaking of recently arrived in Canada, so that point particularly resonated with me for that reason. In your brief, you also point out that there is, for a variety of reasons, an increased risk of drowning among indigenous peoples and populations.

With all that said, I wonder if your organization is or would be open to working with immigrant settlement organizations that are on the ground in communities, which know the newcomer populations very well, and with territorial governments and indigenous communities as a way of getting to the outcome that you're so nobly and ably fighting for.

[Dr. Stephen Beerman]

Thank you for the question. It's a good question.

The increase in drowning among indigenous Canadians and new Canadians is a staggering data point. It's not just slightly more; it's many times more than in the non-indigenous and non-new Canadian population.

Collaboration and co-operation with existing service-delivering agencies and with partners who are already on the ground and connected to this issue is really the objective of our implementation plan. We have met with organizations and groups to try to engage them, not just in the delivery but in the decision-making in terms of what programs and what things would stop the tragedy that you have described. It is a complex scenario, but there are people who are close to those communities in all communities in Canada and who will need to be engaged from the point of view of both decision-making and an implementation plan.

[Peter Fragiskatos]

Yes, sir, go ahead.

[Robert White, Member of the Board of Directors, Canadian Drowning Prevention Coalition]

I am the CEO of Lifesaving Society Canada. Lifesaving Society Ontario has just launched an awareness package in 63 dialects in Ontario. We piggyback on that for the rest of Canada. We are reaching out to all of those communities.

[Peter Fragiskatos]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

We have lots of time. We can come back to you again. We have more time because we have fewer witnesses.

We'll go to Ms. Alleslev.

[Leona Alleslev]

Thank you very much.

Mr. Matier, I'd like to focus on the spaceport. For those of us who don't know, because this is a highly knowledge-specific expertise area, could you give us an overview of low-earth orbit, mid-earth orbit and high-earth orbit, and what that sort of environment looks like from a satellite perspective? What part are you looking to target? What is the potential in terms of market, and where is that market in terms of maturity?

Why could Canada now be exceptionally well positioned to take advantage of that? That's part of why you're asking for what you're asking.

[Stephen Matier]

The people of Canso asked, “Why Canso?” It's a great place to start in answering your question.

They describe the place as, “It's not the end of the earth, but you can see it from here.” It's a great description when you want to launch a rocket over thousands of kilometres of open ocean.

On low-earth orbit, our highest altitude is 700 kilometres. The key differentiator I would point out is the sun-synchronous polar orbit. Most launches that have been happening over the decades have been equatorial launches, where you're launching around earth and you're staying over one place and communicating up and down.

When you have the earth spinning in this direction, and you're coming from the other direction, you have much more coverage over the entire earth. A couple of times a day you have these satellites that are going over the same spot on earth and providing data down. If you could build a constellation, then that is meshed and surrounds the earth. Now you have an inter-network. You are providing global coverage, not only nearly real-time, but actually real-time data, real-time communication and real-time Internet in that sense.

That's what the real opportunity is. It's also really great for near-earth imaging. When you're monitoring a forest fire, an earthquake zone or a hurricane, you are able to get that real-time data and observe our earth, not have that satellite go away and have this big gap. You have the ability to track that.

[Leona Alleslev]

Further to that, could you expand a bit on Canada's expertise in satellite technology and how its history of command and control systems and space strategy is also feeding into this being a great place to launch, because you have those two parts of the equation here?

Is that fair statement?

[Stephen Matier]

Oh yes, it's absolutely a fair statement. MDA and Telesat, for example, are two potential key clients. We're in discussions with Telesat in particular. They are a potential answer for the 5G from our previous discussion. You don't need towers with 5G; 5G is satellite-based.

Telesat already has a satellite that they're developing. They already have one flying. They already have an FCC-approved licence for the communication band that they're talking about for providing broadband.

[Leona Alleslev]

Where would they have to launch? They can't—

[Stephen Matier]

Exactly. Would you rather write a $65-million cheque and send it to SpaceX in the U.S., or a $45-million cheque for really proven technology launching from the site in Canada?

It can be put in fairly simple terms like that, but there are also subtleties about the payload capacities. We can get up to five or six of their satellites on board each of our rockets, so when they're looking at 120 satellites in their first fleet and 300 total, now we've become a real go-to for them.

In the launch world, you want to spread your risk among as many launch operators as you can, but there's a real lack of launch operators. SpaceX has its own plans, so if there is any way for a global broadband—

[Leona Alleslev]

We get in the back of the line.

[Stephen Matier]

We get in the back of the bus, so to speak. You're absolutely right.

[Leona Alleslev]

Excellent. We built this space strategy in Canada 25 years ago. It was incredible. We did great things, and then we ran out of runway. Now we have no national or federal space strategy.

Are you finding that's an inhibitor, in terms of what you want to do for the next 25 to 50 years?

[Stephen Matier]

I've found that enthusiasm is hard to refresh with a 20-year-old document, to put it politely. There is some real interest in doing this on the part of the federal government, and certainly in the provincial governments in my work over the last couple of years, but there is certainly some catching up to do.

[Leona Alleslev]

Do we need to create a focus on space strategy from a federal perspective and make sure that's in the budget, in addition to what you're looking for from NSERC?

[Stephen Matier]

That's correct.