Finance Committee on Sept. 20th, 2016

[Kent Estabrooks]

Yes, 205, and 25 or so here in Ottawa, so—

[The Chair, Liberal, Wayne Easter]

I have to ask the question: do any of those 205 actually meet with clients who are going to do investment? My worry is that bureaucracies take on a life of their own.

[Kent Estabrooks]

Right—

[The Chair, Liberal, Wayne Easter]

How can we get to results in the fastest way possible in terms of dealing with clients on the ground who, along with the assistance of ACOA, are going to provide some productivity and growth? Do any of those FTEs in that office actually meet with clients?

[Kent Estabrooks]

They do. There is a certain contingent of programs in head office that are pan-Atlantic-focused. For the international business development agreement, for example, the arrangement with provinces, those projects are administered out of head office, as well as some innovation programming for something called “Springboard Atlantic”—

[The Chair, Liberal, Wayne Easter]

That's in coordination with P.E.I., I guess.

[Kent Estabrooks]

Pardon?

[The Chair, Liberal, Wayne Easter]

Is the tourism one in coordination with P.E.I.?

[Kent Estabrooks]

That's correct.

I think what's important to underscore.... I must preface my comments by saying that for the 27 years I've worked in government, most of it has been in a regional office. However, I have spent eight years working in various capacities in ACOA's head office, and I can say, generally speaking, with respect to the work they do, mostly it is connected to the agency plugging into the government machinery.

You have units tasked with producing main estimates and supplementary estimates submissions, as well as Treasury Board submissions. We have units that are plugged into results measurement in making sure we produce accurate and reliable information for DPRs, RPPs, and reports in, as well as a number of back office functions. Within each one of the disciplines that operate in head office, there is someplace where they plug into government machinery. As they pursue that work, we are left in the region, then, to dedicate more of our time to client-facing activities.

[The Chair, Liberal, Wayne Easter]

My apologies for having to ask you that question, but you happen to be from New Brunswick, where that office is.

[Kent Estabrooks]

That's fine.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Estabrooks and Ms. Kilburn. We appreciate you taking the time to present the paper you did and to answer questions.

We'll suspend for about five minutes.

[The Chair, Liberal, Wayne Easter]

We'll reconvene, and welcome to the committee the Canada Economic Development for Quebec Regions, CED, a regional development agency. We have before the committee Madam Brassard, deputy minister, president; Mr. Lemieux, executive director and chief financial officer; and Mr. Mongeau, vice-president of operations.

Welcome. I believe you have a presentation, and then we'll go to questions.

[Manon Brassard, Deputy Minister – President , Economic Development Agency of Canada for the Regions of Quebec]

Thank you very much, Mr. Chair.

Ladies and gentlemen, members of the Standing Committee on Finance, thank you for your invitation. I am particularly happy to be here today.

I have now been in the position for three months, and this is a great opportunity to start a dialogue with you. I will take this time to draw a brief portrait of the situation in Quebec, and talk about what CED is doing, as well as its results and priorities.

First, allow me to outline CED's mandate, which involves supporting the regions of Quebec by focusing on their potential and by giving special attention to those regions where economic growth is slow or opportunities for employment are scarce.

This role is at the heart of the mandate given to the Minister of Innovation, Science and Economic Development, and the minister responsible for CED is first, to help businesses grow, innovate, and export so they can create good quality jobs; second, to make strategic investments that build on competitive regional advantages; and third, to support the transition of communities reliant on a single industrial sector.

Our challenge is to tailor our actions to the specific realities of each region. To do this, we rely on our 12 business offices located throughout Quebec to make sure the needs of businesses and the regions are well served. As you know, Quebec is an economy of small and medium-sized enterprises. We have over 257,000 of these, which together generate about 50% of the province's GDP; 80% of these SMEs have fewer than 10 employees.

There are three types of regional economy and dynamics in Quebec: resource-based, manufacturing, and urban. However, all of these regions, whatever the type, are facing certain key challenges: an aging labour force, a shortage of entrepreneurial carry-over; a decrease in productivity; a shift to digital, which is sometimes difficult; the development of new markets, which can also be hard work; and, of course, attracting skilled labour.

Among Quebec's advantages are a highly skilled workforce, but often not large enough; an abundance of natural resources; world-class research infrastructure, universities and technology clusters; and access to numerous markets.

Our main program at CED—the Quebec Economic Development Program, the QEDP—allows us to promote innovation in all regions, stimulate the creation of jobs and foster growth and prosperity. It is a flexible program that basically enables us to do three things.

First, we take care of business development and entrepreneurship support. CED is able to intervene by, among other things, providing assistance for start-up, growth and commercialization. We have a number of examples. The first one that comes to mind is the Kinova company that created JACO, the robotic arm that helps people with reduced mobility. In 2006, this company was incubated and, in 2009, CED helped with the commercialization of its product. In 2013, we also helped the company expand and increase its productivity, enabling it to repatriate its production from Asia to Quebec.

CED is therefore active in businesses and in regional export promotion organizations. It also plays a role through research centres, incubators and accelerators.

Second, QEDP allows us to support the economic development of the regions by facilitating the mobilization of local stakeholders and the promotion of regional assets, be they tourist attractions, their natural resources or localized specialization. I'm thinking of the Lower St. Lawrence with its maritime aspect.

Third, QEDP allows us to strengthen the community economy. This support, provided on an ad hoc or targeted basis, helps communities that are grappling with certain difficulties diversify their economy. That is our main program.

We also have the community futures program (CFP), which allows us to work with the community futures development corporations (CFDCs) and community business development centres (CBDCs) in rural areas where businesses are typically very small and where every job counts.

CED does not work alone. On the federal level we have many collaborators and they include the BDC, the NRC, for instance.

We also work very closely with our Quebec partners, the main economic government departments, lnvestissement Québec, and others such as the industrial clusters, municipalities, universities, and many more.

Now let me tell you a little about our results.

Over the past few years, CED has contributed to the renewal of Quebec's business pool thanks to its support of 115 start-up projects. Statistics Canada confirms that CED's support has helped increase the earnings, number of jobs and productivity of enterprises, and that the businesses we help are better off than the companies in the control group.

How have we done this? In 2015-2016, for instance, CED approved $218 million in grants and contributions. If we go back to April 1, 2012, when the QEDP was implemented, the amount was over $1 billion in authorized assistance and over 2,700 approved projects. Forty per cent of the funding we provided went to projects in communities with low growth potential representing around 20% of the population.

I will say a few words about the future. The Government of Canada has made the commitment to promote innovation, foster business growth, and build a clean economy.

To be sure we hit the nail squarely on the head, CED launched a dialogue in 2016 on the economic development of Quebec. This engagement strategy has allowed us to talk with over 1,000 participants, who were all eager to give their time to let us know what is important to them in terms of economic development. They said that we had to continue to support technology and equipment modernization, support incubators and accelerators, support businesses and their diversification as well as the economy of communities

The flexibility of our programs is crucial to business growth. Supporting the regions so that they can build on their competitive advantages is still a must.

The last budget also put key emphasis on the challenges of climate change and calls upon the agencies to double their efforts in this area.

CED is tackling this priority head-on by increasing to $25 million per year the assistance it provides to SMEs to help them develop and adopt clean technologies.

In terms of the growth of businesses, CED is implementing in Quebec the new accelerated growth service to support businesses whose potential is very high in terms of growing and innovating more quickly and being recognized worldwide in their field.

Of course, CED will continue to foster growth in the regions through its activities.

In a nutshell, that is what we are working to achieve.

That is the end of my presentation. I would be happy to take your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Madame Brossard.

We will start first with Steven MacKinnon for five minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Ms. Brassard, since you are new at the helm of the agency, welcome. We will have the pleasure of working together. My greetings also go to Mr. Lemieux and Mr. Mongeau.

We are in the process of gathering the comments and roadmaps from regional development agencies. CED plays a vital role in our economic development efforts all over Quebec.

I don't think it will surprise anyone when I say that the next budget is bound to be more heavily focused on growth and innovation. My first question is quite general.

How are you preparing for this and which Quebec realities would you like to see integrated in a budget geared toward growth and innovation in Canada?

[Manon Brassard]

First, I mentioned that Quebec is well structured. It has many research centres, great internationally recognized universities, technology centres called CCTT—which are a little less known—as well as incubators and accelerators. That's vital for innovation.

The fact that they are using increasingly innovative methods themselves to improve their performance is really encouraging. The Sherbrooke accelerator, which I visited recently, helps businesses not only develop by proposing the facilities and labs that they need, but also by providing them with the assistance of coaches and business experts. Just because you have a good idea, it doesn't mean you are good at doing business.

Furthermore, we bring together young management students and young people whose new projects are very innovative. The goal is to develop not only a product, but also a company. We then help them get settled in the regions. Whether in Sherbrooke or elsewhere in Quebec, the goal is to keep those jobs in the regions. They are good high-tech jobs.

Our interventions in incubators and accelerators will foster growth significantly. In addition, as I mentioned, we are working on the accelerated growth project. CED will work with federal government partners in Quebec and officials from the Quebec ministries who have similar growth objectives. The goal is to ensure that many of our businesses are able to develop.

Those are two good examples of the work we do on innovation.

[Steven MacKinnon, Liberal, Gatineau, QC]

Do I still have some time left, Mr. Chair?

[The Chair, Liberal, Wayne Easter]

You have two minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you.

In the Outaouais, since I represent the Gatineau riding, the capacity for company incubation and acceleration is poor and has even been identified as a need by entrepreneurs in my region.

You responded along the same lines as your counterparts from New Brunswick. They said that they are doing a lot of work with research centres and universities. You are sort of pairing the management capacity and innovation capacity, which is extraordinary.

There are regions in Quebec that depend mainly on natural resources, forestry, the mining sector, fishing and other sectors. I am aware that you are trying to help the regions that may have a lower growth potential. Could you describe the action you have taken toward that, in a context in which the next budget will encourage their growth?

[Manon Brassard]

In my presentation, I mentioned the need to help the regions that depend on a single enterprise or a major sector.

For example, take Saguenay, where I'm from. Forestry is very important there, and there are a lot of forestry businesses. Canada Economic Development has certainly done a lot of work on forestry, but also on the economic diversification of the region. Canada Economic Development has done the same in all regions in the same situation. Continuing with the Saguenay example, we have also invested a lot in the tourism and agriculture sectors, but also in the agri-food sector in the second and tertiary processing. Aluminum is another major business line in the region.

So we become less dependent when we don't put all of our eggs in one basket. Canada Economic Development helps with diversification in the various sectors of the economy and innovation of processes. Ultimately, what we are trying to do is to create products and develop markets, help with exportation, enable businesses to grow, help the regions to create good jobs and to keep their young people in the region as much as possible. That is what we are working on.

[The Chair, Liberal, Wayne Easter]

Merci.

Mr. Deltell.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you so much, Mr. Easter.

Thank you very much to the witnesses for their presentations.

[The Chair, Liberal, Wayne Easter]

It's good to have you here. You have five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Congratulations on your French.

Ladies and gentlemen, I would like to thank you for welcoming me to your committee. I would also like to welcome the witnesses to their House of Commons.

Canada Economic Development makes significant investments. That is its mandate.

Ms. Brassard, how do you assess the success rate of your investments?