Finance Committee on Sept. 20th, 2016

[Phil McColeman, Conservative, Brantford—Brant, ON]

Agreed, because the more competition the better, frankly, in the United States where they might select our products over other imports that they get. But again, it adds another perhaps wet blanket to the prediction that things might get better down the road, because the extended agreement is quickly coming to an end, and by all appearances we're not going to have a new softwood lumber deal, which means the United States will be closing the gates to those exports, which are probably important to many of your communities and many of your workers in Alberta as well.

That being said, let me move on to the importance of transporting the other major product that you produce, oil and gas, and the statements about pipelines to tidewaters. What puzzles me from time to time—and I'd just like your thoughts on this—is that when you see the predictions of an increase in production, that means it will have to be transported somehow. You also mentioned during your remarks the expansion of rail transportation to accommodate that growth. Am I correct that you were saying it's going to go somehow, and if it doesn't go by pipeline it's going to go by rail?

[Jim Saunderson]

There is some of it. We have already seen sharp increases in rail and there's certainly the potential for more to go by rail. We've also seen, perhaps somewhat surprisingly but not when you think about it, some increased efficiencies within the existing pipeline infrastructure, just by managing it, and there's probably room for a bit more of that, but ultimately you can only put so much through existing pipelines.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Exactly. Part of it, I think, for the health of Alberta, is the fact that we do recover capacity for transportation but also we get it to the export customers we need to get it to, and we're going to get it there one way or another, either by tanker car on rail lines that will go to tidewater and empty it into ships that will deliver it.... It's important to have those customers we need to develop in order to have a healthy economy for Alberta. Would you agree with that?

[Jim Saunderson]

My economist friends always tell me that products will find their way to a market, and rail has been a part of that.

Right now, only about 1% of Alberta's oil goes to non-Canadian and non-U.S. customers. It's really minimal. If you want to reduce that differential that we were talking about at the beginning of this meeting, it really is essential that we have much greater capacity to get the product to tidewater so that it can be run through refineries that are not in North America.

[Phil McColeman, Conservative, Brantford—Brant, ON]

You mentioned--

[The Chair, Liberal, Wayne Easter]

Phil, I'm going to have to cut you off there as you're out of time.

I do have one quick question though.

Along these lines, what would you say needs to be done to achieve greater growth in your area of responsibility with the WD? What things can be done to achieve that and to assist your agency in doing that, other than, as Mr. Grewal mentioned, giving it more money?

[Jim Saunderson]

Well, more money is always nice, and I guess that's the easy answer.

We'll continue to work as closely as we can. I think we have a very good working relationship with our provincial government colleagues and to maximize and leverage the funds that we have available to us with funds that are available through other government departments, such as NRCan and Sustainable Development Canada, for example. The key for us going forward is to work collaboratively.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you very much for your well-documented presentation, Mr. Saunderson.

Gentlemen, we appreciate having you here.

[Jim Saunderson]

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll suspend for a couple of minutes before we hear from ACOA and the vice-president for New Brunswick.

[The Chair, Liberal, Wayne Easter]

We'll reconvene. Next on the list of regional development agencies is the ACOA, Atlantic Canada Opportunities Agency, and we have the vice-president for New Brunswick, Mr. Estabrooks, and appearing with him is Ms. Kilburn, who is the director of policy, advocacy and coordination in New Brunswick.

Welcome. I understand you have a presentation and, as you already know, this committee is doing pre-budget consultations on economic growth.

[Kent Estabrooks, Vice-President, New Brunswick, Atlantic Canada Opportunities Agency]

Thank you, Mr. Chair. Committee members, good afternoon. Thank you for the opportunity to be here today. I'm joined by Kalie Hatt Kilburn, director general of policy, advocacy and coordination.

First, I would like to say a few words about ACOA's work in the Atlantic provinces.

Headquartered in Moncton, ACOA has an office in each capital, 23 field offices throughout the region, and an office in Ottawa.

ACOA works with a variety of partners to help businesses grow, innovate, and export so they can create quality jobs in vibrant communities. We do this in three key ways: supporting business with a focus on innovation; supporting infrastructure to enable economic growth and to build on the strength of our communities; and representing the region's interests in policy development and coordinating with partners.

In undertaking these efforts, ACOA is supported by three core programs. The business development program helps businesses improve their competitiveness with an emphasis on strengthening innovation, improving productivity, and boosting international business development. The Atlantic innovation fund encourages partnerships among private sector firms, universities, colleges, and research institutes to develop and commercialize products and services. The innovative communities fund invests in strategic projects that build on the strengths of Atlantic Canada's communities. It provides assistance to support sustainable economic growth.

ACOA's programming is aligned with the government's commitments on innovation, high-growth firms, clean technology, and inclusive economic development. The agency is working to achieve commitments outlined in budget 2016.

ACOA also works to support the priorities established through the Atlantic growth strategy, which will see new projects announced as the provincial and federal governments move forward with initiatives around common priorities.

Now I’d like to provide you with some information specific to New Brunswick.

It is the only officially bilingual province in Canada, with just over a third of its 750,000 residents reporting French as their first official language. It has a highly dispersed population, with nearly half of its residents in rural communities while the other half live in and around Fredericton, Saint John and Moncton.

New Brunswick has an aging population and a shrinking labour force, with 89,000 fewer people under age 45, in fact, than it had in 2000. This has challenged businesses to access the skilled labour they need to grow.

It is within this dynamic and complex environment that ACOA operates every day.

The province's abundant resources have long supported traditional industries and value-added manufacturers in forestry, fisheries, and agriculture. Indeed, the province is home to global companies in these fields including McCain Foods and J.D. Irving Ltd.

As New Brunswick is one of the most export-intensive provinces in the country, ACOA is placing an important focus on supporting the global competitiveness of New Brunswick's exporters by helping them to innovate, improve productivity, and expand into new markets.

ACOA investments in research and development are helping to identify new products for global markets, including new and novel uses for our abundant natural resources.

For example, ACOA's support has enabled the Coastal Zones Research Institute to work with a fish-processing company to develop a value-added product from shrimp-processing waste—an oil that can be used as a feed supplement. And the company is working with its partners to take this new product to market.

In recent years, the province's knowledge sectors have become important growth contributors. New Brunswick has a strong track record for developing globally competitive technologies that have attracted the investment of international farms like IBM, Siemens, and Salesforce.com.

Radian6 is often noted as a New Brunswick success story. ACOA was instrumental in supporting the early growth of this social media monitoring company, which sold to Salesforce.com for a very significant sum, garnering international attention. The resulting wealth injected new venture capital into the start-up ecosystem while also retaining the company as an important employer in the region.

New Brunswick's startup ecosystem is emerging as an important strength for the province. Anchored by dynamic incubators, accelerators, and research institutions, including the University of New Brunswick, which was recently recognized by Startup Canada as the country's most entrepreneurial university. ACOA is an important supporter of this ecosystem and of the services it provides to promising new companies.

A recent success in the start-up ecosystem area is Eigen Innovations, which received ACOA's support to develop software offering real-time solutions for industrial manufacturers. Founded in 2012, the company has received international acclaim, placing third in the prestigious Cisco Innovation Grand Challenge for companies leading in the development of disruptive technologies.

As countries work to minimize their carbon footprint, clean energy is emerging as a significant growth opportunity. New Brunswick is attracting international attention for its leadership in the development of a smart energy grid. ACOA is a key partner in this effort. The agency's $2-million investment to establish a smart grid research lab at the University of New Brunswick has allowed the university to partner with Siemens Canada and NB Power to create a Smart Grid Innovation Network. Working with this network, companies have the potential to become part of an international smart grid supply chain, bringing local innovation to the world.

As we work throughout the region, ACOA hears that, aside from its investments, what matters as well is the interaction clients have with our staff, who work closely with them to find solutions to the challenges they face. This engagement is facilitated by the agency's place-based approach to economic development, which builds our in-depth understanding of local businesses and communities, their strengths, opportunities, and challenges. We then use this knowledge to adapt our support to best suit these realities.

First and foremost, ACOA has passionate, dedicated employees who live in the communities they serve and who are committed to helping the region realize its economic potential.

Thank you for your time, Mr. Chair. I would be pleased to take questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Estabrooks.

We'll start with Mr. Sorbara. We'll go to five-minute rounds to try to get more people in, rather than seven, if that's okay?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Thank you for being here, and welcome.

I had the experience of growing up in northern British Columbia, in a small town called Prince Rupert. I worked at a pulp mill in high school, and the pulp mill is no longer there. It shut down. It was actually owned by a company by the name of Repap industries, which was from Miramichi, New Brunswick. I also had the enjoyment of working in a fish-processing plant for two summers, and the fish-processing plant is no longer there. So I do recognize the transition that's gone on in both the economies in eastern Canada and the economy in northern British Columbia, and also in many small towns across Canada.

The situation faced by New Brunswick and much of eastern Canada in terms of a shrinking labour force is one that our government is well aware of and addressing.

My question is this. Because it's a shrinking labour force, in your support of SMEs specifically and the ability to attract talent back to New Brunswick, can you comment on the successes that you've seen? We know in Canada we have more people over 65 and below 15, and the ability to attract talent to an area is important.

[Kent Estabrooks]

From our perspective, it's a two-pronged problem.

With respect to the mandate of ACOA, which is to build and improve the state of SMEs and improve their ability to grow, first and foremost we believe talent will come to jobs, so if we have strong SMEs that are globally competitive, that are productive, and that see sales growth, we will be able to attract individuals to fill those jobs.

Beyond that as well, though, immigration fills what we see as an increasingly important role in terms of developing and building up the labour force within the province.

Through the Atlantic growth strategy that we recently announced, a pilot has recently been started in collaboration with the provinces of the Atlantic, as well as the federal government departments that are mandated for immigration and skills development. We've seen a pilot launch whereby the target is to attract some additional 2,000 primary immigrants into the region to fill very specific niche skill needs. That's driven by business and identified by business as being required, so we're hopeful that this pilot will see some returns on that, and we'll be able to build from the experience of that going forward.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

With respect to tangible successes, do you think your staff can continue to hit some singles and doubles, if I can use a sports analogy? Do you need more resources from the federal government?

[Kent Estabrooks]

At the present time, our programs are fully subscribed. We feel confident that the investments that we make are sound. In New Brunswick, I haven't seen any important projects that we wouldn't have the ability to fund. So from that perspective, I would say we're properly resourced.

Over the years, the government has seen fit to provide funding to ACOA and other RDAs to deliver niche programs. We have had some success in the past. We have the capacity to deliver more if there are additional priorities that the government hopes to achieve. We're there and we have a presence on the ground.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Aboultaif.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you very much. You mentioned that you have the Atlantic innovation fund, the innovative communities fund, and then the business development program. I guess all these require budgets. What's your budget?

[Kent Estabrooks]

In the New Brunswick region, our annual budget for grants and contributions fluctuates from year to year. This year it's approximately $70 million. It fluctuates generally between $60 million and $70 million per year. About two-thirds of that is directed towards business, and about one-third of it is directed towards community development activities.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Have you seen any increase to your 2015 budget?

[Kent Estabrooks]

We have some temporary programs. The CIP 150 program is aimed at enhancing community infrastructure for various small communities across the country in anticipation of Canada's 150th anniversary. We have some money in our budget related to that. It sunsets in March 2018. In budget 2014, we saw a top-up to fund a research and development project for lowering the risk that spruce budworm may pose to the New Brunswick forest industry. There are all these temporary programs that we are managing in addition to our base budget. This brings us to the $70-million range in our budget.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Under the business development program, you're aiming to improve productivity and boost international business development. If productivity is to be improved, are there any procedures in place to measure this improvement? If so, to which sectors are these improvements targeted? I know it is important to bring some of the regions to an acceptable level of economic growth.

[Kent Estabrooks]

We measure the impact of our programs' performance. We took an extensive look at this in our last five-year report to Parliament, which ran from 2008 to 2013.

With respect to our macro impact on labour productivity, we worked with Statistics Canada to distinguish the firms that have received ACOA assistance from similar firms that did not receive ACOA assistance. As a result of this analysis, we concluded that labour productivity among ACOA-assisted firms was 7.3% higher than it was in non-assisted firms. Additionally, sales growth for ACOA-assisted firms was 3.9% higher than it was in non-assisted firms. These two factors combined to improve the overall survival rate of the firms we assisted. We also measured the five-year survival rate of firms. We found that longevity of SMEs was 9% higher in ACOA-assisted firms than it was in non-assisted firms.