Finance Committee on Sept. 20th, 2016

[Lynne Beairsto, Director of Corporate Programs and Services, Prince Edward Island, Atlantic Canada Opportunities Agency]

We've approved $2.4 million to date, and we have applications in-house for another $1.4 million. We have just under $1 million for which we have applications we'll be working on.

[Lisa Raitt, Conservative, Milton, ON]

Is there a lag, Mr. Dorsey, between decisions taken at ACOA P.E.I. and approval from the minister's office, bearing in mind that the minister is from Mississauga, Ontario, and not from Prince Edward Island or Nova Scotia or New Brunswick or Newfoundland and Labrador?

[Patrick Dorsey]

That's not what the data would suggest. We took a look at a snapshot of projects that were approved since November of last year to the end of August, and on average it's about the same that had been approved during the previous five years. We've been meeting our service standard in that regard. Projects are going up to the minister's office on a weekly basis, and they're being returned efficiently.

[Lisa Raitt, Conservative, Milton, ON]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Raitt.

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

I'd like to thank the witnesses for being here today. I'll continue sort of along the same lines as what was said previously.

I am the NDP critic for the Atlantic Canada Opportunities Agency. During consultations I held over the summer in Atlantic Canada, I saw that public servants were really concerned about the impact of eliminating secretaries of sate for the agencies, including ACOA.

ACOA's role was to define regional economic development needs. Until now, there was a list of local needs, and those files were sent to a minister in Ottawa. But there is concern that there is a role reversal, that the minister and Ottawa are making the decisions and the agency is responsible for implementing the programs devised in Ottawa.

Could you confirm that concerns like this have not been expressed by your staff?

[Patrick Dorsey]

I have not heard that concern expressed to me. I think that ACOA continues to be the lead economic development agency in Atlantic Canada.

In Prince Edward Island, we spend about $35 million in grants and contributions in the province each year. So it's an important cog in the wheel of economic development.

We provide advice to the minister to seek his direction on projects. To date there has not been an issue with respect to a difference between the advice the agency provides and what he's willing to do.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Right.

In the plans and priorities for ACOA, when comparing the amounts allocated this year to those to be allocated in two years, we can see a marked decrease. There might be changes in the meantime, but this is what is expected for now. It's almost a 10% decrease.

If this 10% decrease should materialize, could you achieve the goals you've set for yourself?

[Patrick Dorsey]

I think the public accounts would suggest that our grants and contributions budget is increasing from last year to this year as a result of the government's decision in budget 2016 to double the allotment for the CIP 150 program. We continue to be well financed.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Planning and priorities for 2016-17 is forecasting that in 2018-19 there will be a decrease of about 10% in funding.

[Patrick Dorsey]

That's the result of CIP 150 sunsetting.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

That's about $8 million. But if you're looking at the main line for developing enterprises, you see a significant reduction as well.

[Patrick Dorsey]

Right. Every year we do an operational planning process at the regional level to set priorities to target key investments. We continue to be well financed. At this point we have no concern that we can't accomplish what the government has mandated us to do within the envelope they've given us.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

We've come to the same conclusion that P.E.I. is mainly a rural province, and that this makes diversification a bit trickier than in other provinces. Most of the investments I've seen in the months I've been critic have been in culture, tourism, fisheries.

You mentioned a few examples of innovation in other sectors such as aerospace. Could you tell us if you have made diversification plans, despite the difficulties this might represent? What are the priorities in diversification? What would be your advice to the government on the eve of the budget? Of course, we are now in pre-budget consultations.

[Patrick Dorsey]

Economic diversification is very important. It's more than just getting into more sectors in a small province. It's about building capacity and adding value to existing sectors.

Take the food sector. We've increasingly done more. That's a rural-based sector that 10,15, 20 years ago was based on the primary production of goods. The chair would know this. Now we've moved the chains and we're in product development. We're packaging and exporting goods from Prince Edward Island.

These are examples of areas the government has asked us to pursue, and I think they will have positive effects on growth.

[The Chair, Liberal, Wayne Easter]

We'll have to cut you off there, Guy.

I went and looked 10 years back. On the 2005-06 fiscal year, ACOA was voted an expropriation of $456 million. They spent $427 million. ACOA's current budget is about $298 million. That's not Prince Edward Island's allocation, but that's for ACOA, so it is substantially less. We put the question to some other regional development agencies in here: would more money be helpful? We're looking at making recommendations to the Minister of Finance.

There are two questions: would more money be helpful, and are our regional development agencies achieving the results we want them to?

I asked New Brunswick earlier and Prince Edward Island is even worse. We've had ACOA in place for quite a number of years, yet our productivity in Prince Edward Island is the lowest in the country. We're not retaining immigrants. We're losing young people to out-migration. Our small business sector in terms of export is one of the lowest in the country.

You mentioned a number of good things in your presentation. I agree with you 100% on those, but if we don't improve, then we're going to continue to fall behind. What does ACOA or the federal government have to do to get the results we need to attain so our kids and grandkids will come back to Atlantic Canada and work there?

[Patrick Dorsey]

I think there are a couple of things. The government has asked us to pursue an agenda around high growth, around high-impact firms, and around clean technology investments, and I think that's key. I pointed out a couple of examples in the P.E.I. context that are accomplishing that. Mr. Chair, I think there can always be more of that work done, and we need to focus on those firms that continue to increase your exports.

You're quite right, Prince Edward Island's traditional record on exports had not been good since about 2011 to now. That has increased by 70%. Things are moving the markers. I think research would suggest that ACOA supported firms that are better off after five years versus firms that have not been. Our challenge is to get to those firms early enough and to come with a comprehensive tool box to enable growth with them.

The minister has asked us to participate in the accelerated growth initiative, and I think that is going to be positive. We're going to nominate seven Prince Edward Island firms to that. It will be a multi-dimensional Government of Canada family involved in economic development that'll sit around with those firms and propose solutions for their growth and economic prosperity into the future.

[The Chair, Liberal, Wayne Easter]

I'll make one last comment before I turn to Jen and that is that the Prime Minister likes to say we can always do better. This committee would like to show him a way that we could do better through the regional development agencies to gain better results.

Jen.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

I asked the question earlier, but I have been informed that I should be directing the question to you in regard to tourism, the Atlantic Canada Tourism Partnership, and the extension.

I understand it's only been extended one year. Can you speak about this a little? What does that mean? Is this going to impact the ability...?

Without having all the statistics from this past summer—but I know with family in Newfoundland, for example—tourism was extremely busy this year. Locals could not rent a car or go to anything because it was flooded by tourism. Assuming P.E.I. had a successful summer, as well, what can you speak to in regard to the agreement and those impacts?

[Patrick Dorsey]

The Atlantic Canada Tourism Partnership was renewed last year for a three-year term. It's a $20-million three-year agreement financed 50% by ACOA, roughly 30% by the provincial governments in Atlantic Canada, and roughly 20% by industry. A management committee has been established that includes senior officials from the governments and the industry associations. Our markets of interest currently are the northeastern United States and the mid-Atlantic, as well as the U.K.

It's been a very successful partnership. It's been around since 1991 or 1992 and has been renewed on a three-year basis each time. I think it's deemed a best practice with respect to regional collaboration around marketing, and we try to measure our results accurately on that. The last evaluation of the ACTP suggested that there was a 15:1 return on investment for every dollar spent in those markets. So I think it's been quite right.

With respect to your question about the tourism sector and its importance, I like to say tourism is twice as important to Prince Edward Island as it is to anywhere else because it represents 6% of our GDP, whereas it is about 3%, I think, Canada-wide. It's a dynamic industry and there's renewal and growth in the industry.

This season, early indications are that it's been quite robust. Traffic across the Confederation Bridge was up 12% in July, year over year. Airport traffic was up about 16%. Those are great indications that people are coming. They're tending to stay longer. I think the American dollar has had a positive impact in two respects: one, keeping Canadians at home and not necessarily going to the United States for their vacation, and two, giving increased access to Americans to visit Prince Edward Island.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Do you focus mainly on smaller local businesses or are you targeting investment from larger firms? For example, I know that for a province with a smaller population, obviously, maintaining a workforce, as you mentioned, can be a challenge at times, but are you trying to attract businesses to come and not just supporting those that are there and focusing on the export market?

[Patrick Dorsey]

Yes, we are. We obviously work with the established businesses and the established entrepreneurs in Prince Edward Island to grow, expand, and set up their own businesses. We have an agreement with the Province of Prince Edward Island called Invest PEI, which is a joint project between ACOA and the provincial government. Its mandate is to do international prospecting for direct investment. We've had some success, particularly in the emerging ICT and bioscience sectors, so that's an active agenda that ACOA continues to pursue in partnership with the government.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Do you have facts and figures or statistics about not only its success but its longevity? I would assume that it also goes hand in hand with attracting, as the chair mentioned, those who maybe have left to come back, certainly young people, and attracting jobs with new investment. It's not just about bringing a company in, but about how it will expand once it's there to attract those jobs. Do you have those stats and figures of what's happened to date to see if it's incrementally growing, or is it still very new in terms of the overall impacts?

[Patrick Dorsey]

On the sector basis, aerospace is a sector that wasn't really initiated in Prince Edward Island until the early 1990s. I think it currently has 15 companies. About 900 people are involved directly in the industry as well as another 500 in supply chain development. The bioscience sector was almost non-existent before 2005. Now there are 45 companies that represent about 3% of our GDP. It has 1,200 or so employees directly involved.

The ICT industry in Prince Edward Island has about 150 companies, about 10,000 employees. What's interesting about these sectors is they tend to pay more than the traditional sectors do, and I think that is key to maintaining prosperity and ensuring that, something the chair was concerned about, younger people have an opportunity in Prince Edward Island.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.