Finance Committee on Sept. 21st, 2016

[Doug Zolinsky]

It was Lockheed Martin.

It is recognized as the right thing to do.

[James Meddings, Assistant Deputy Minister, Policy and Strategic Direction (Ottawa), Department of Western Economic Diversification]

Could I add to that?

[Doug Zolinsky]

Please.

[James Meddings]

In terms of the $25 million in the budget, there was an expectation that regional development agencies as a collectivity would double their investments in clean tech, from a baseline in 2015-16 of just under $50 million to $100 million.

WED has a relatively small budget in comparison. If you add the envelope of all the RDAs together, we have less than 13% of the funding, but we are big in responding to the strength of clean tech across western Canada. In 2016-17 we think we'll be able to identify some $25 million in clean tech projects, which is a quarter of the $100-million commitment.

That's the point we're trying to get across. The west is well positioned to engage in what we think is a strong clean tech sector, if you can call it a sector. Of course, investments in clean tech can overlap many sectors in western Canada in terms of efficiency.

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

Mr. Chair, I'm finished.

[The Chair, Liberal, Wayne Easter]

Okay. Does anyone have one quick question they wish to ask?

Raj.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you for attending today. When you gave your opening statement, you spoke about your relationship in terms of Saskatchewan's trade with India. I know that Saskatchewan is a big producer of lentils, canola oil, and stuff like that. What is the biggest single thing the federal government could do to enhance that trade relationship? That's a massive market, and you mentioned that getting exports to market would benefit the economy.

[Doug Zolinsky]

Simply, I guess, Saskatchewan would need further support from Global Affairs Canada, for example. Making the right connections, introducing the companies to the right people and the right companies, and just helping to create those pathfinding and convening roles would be a great help. There are some highly successful producers who are doing that already, but there are other people in the game, as I understand it, who are looking for that level of support.

[Raj Grewal, Liberal, Brampton East, ON]

Has Saskatchewan, your department, or any of the other economic agencies gone out there to build relationships on the ground? Sixteen per cent of your export market is pretty big.

[Doug Zolinsky]

Right. WED has not, based on conversations we've had with companies that are out there. For example, Saskatchewan is the largest importer of a particular foodstuff into Mumbai, by far. That was created, as I understand it, by some personal connections being developed through Global Affairs Canada, along with some people on the ground in Saskatchewan.

[James Meddings]

We don't have a dedicated program for trade and investment and market expansion, but we do receive projects and proposals from time to time in and around helping SMEs get to international markets and international shows, not in terms of the specific example or the specific question you're asking. We have done it in other areas, but it's small in the overall distribution of our funding.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

I know that ACOA does trade missions. You're telling me that you don't do that at WED?

[James Meddings]

No.

[Doug Zolinsky]

No, we do not.

[James Meddings]

We have no dedicated program in that area. Funds we take in for supporting those areas, which are only a small number of projects, come off the funds that we could be directing to other priorities.

[The Chair, Liberal, Wayne Easter]

Maybe we need to be looking at Team Canada missions or some such thing again.

[James Meddings]

Yes.

[The Chair, Liberal, Wayne Easter]

I will say one thing about the regional development agencies. By having each of you before us, I think we're all gaining a better understanding of the country as a whole in terms of some of the things that are happening across the country, and I think that's good.

Mr. Zolinsky, I want to thank all three of you for your presentation.

We'll suspend for a few minutes while the Manitoba region of WED comes forward, and probably Mr. Meddings again.

[The Vice-Chair, Conservative, Ron Liepert]

We'll resume with a presentation on Manitoba.

We welcome Ms. Guimond and Mr. Dunford, who is back again today.

Please go ahead with your presentation.

[France Guimond, Acting Assistant Deputy Minister, Manitoba Region, Department of Western Economic Diversification]

Thank you, Mr. Chair.

Good afternoon, ladies and gentlemen.

My name is France Guimond, and I am the acting assistant deputy minister for the Manitoba region. With me today are James Meddings, whom you have met, our ADM for policy and strategic direction, and Ryan Dunford, acting director general for policy and strategic direction.

You have just heard from my Saskatchewan colleagues. I recognize that we have some similarities in our social and economic structure, and consequently there may be some overlap in our discussions. I will, however, focus on the unique aspects of the Manitoba economy.

I will focus on the unique aspects of the Manitoba economy.

Manitoba is home to 1.3 million people. It has a balanced economy across industries, a growing population, a vibrant indigenous community, and the largest francophone community west of Quebec.

As diverse as the economy is with respect to industries, Manitoba is unique in that almost two-thirds of the population and economic activity are concentrated in one city, and that's Winnipeg.

In terms of our current economic conditions, Manitoba is recognized as the western province with the greatest diversity of industrial sectors. No single industry holds more than a 12% share of the approximately $54.8-billion provincial GDP. This diversity is credited with providing the basis for slow and steady growth in good economic times. In addition, it has enabled Manitoba to ride out economic recessions. Manitoba is the least resource-dependent province in western Canada, and its private sector is dominated by small and medium-sized firms.

At the same time, Manitoba has a small number of large firms with well-developed supply chains, in industries such as aerospace, bus manufacturing, food processing, financial and insurance services, agriculture, and transportation.

With commodity prices expected to remain volatile, forecasters are predicting that Manitoba will continue to experience GDP growth above the Canadian average for the next couple of years.

Manitoba's economic growth of 2.3% last year can be attributed to various factors: large capital infrastructure investments made by Manitoba Hydro, several commercial projects in downtown Winnipeg, and a recovering economy in the United States boosting demand in our manufacturing sector.

Exports are critical to Manitoba's economic success. Outside of Winnipeg, the closest communities with significant consumer markets are in the Midwestern United States. Minneapolis, Omaha, and Kansas City are all closer than Calgary or cities in southern Ontario.

Last year, Manitoba's international exports were valued at $13.8 billion, up 2.2% from the previous year. Manitoba's key export markets include the United States, China, and Japan, but the province is equally reliant on interprovincial trade, with most of the goods produced heading to Alberta or Ontario.

Manitoba had the best employment growth in the country last year, at 1.5%, and one of the lowest unemployment rates, at 5.6%. This is the first time in decades that Manitoba has seen employment growth that led the country.

With respect to the current socio-economic challenges in Manitoba, while Manitoba is seeing a short- to medium-term surge in economic output and employment growth, the province faces many socio-economic challenges. For example, a number of recent events in northern Manitoba—OmniTRAX and Tolko—have heightened concerns in a region where there are high rates of unemployment, numerous social issues, isolation, and a lack of alternative employment opportunities.

For decades, Manitoba has seen a steady stream of interprovincial outward migration to other provinces. Families and highly skilled individuals are moving to provinces such as B.C., Alberta, and Ontario to take advantage of the higher wages and diverse employment opportunities, so in Manitoba we constantly hear of labour shortages in both skilled and unskilled occupations.

A surge in new immigrants, primarily through the provincial nominee program, has helped reduce some of the labour shortages.

At the same time, Manitoba has an underutilized young indigenous population. The median age for the provincial population is 38.4 years, while it's only 24.4 for the indigenous population. By 2026 it is projected that one in five Manitoba workers will be indigenous; therefore, the integration of Manitoba's indigenous community into the workforce is key to the long-term prosperity of the province.

Manitoba innovators also face challenges when accessing capital. Investments required to grow beyond the medium size are difficult to attract. The result is that companies remain small and often lack the resources to improve productivity, deepen their expertise, or expand their markets beyond the United States.

I'll now tell you a bit about the scope of WD operations.

Our core activity is to promote and advocate for the interests of western Canada. We achieve this partly through the western diversification program. We strategically operate under four priorities: innovation, trade and investment, indigenous economic growth, and federal defence procurement.

Through our western innovation initiative we are making a small but significant contribution to helping small and medium enterprises commercialize to get their ideas to market.

We support rural economic development and entrepreneurs, including women, indigenous peoples, francophones and persons with disabilities, through the Western Canada Business Service Network.

As a regional development agency we are called upon to deliver a number of programs and initiatives outside of our core funding. For example, in Manitoba we're currently delivering on a number of federal budget commitments, such as the Canada 150 infrastructure program.

One of our strengths is our ability to convene and partner with key stakeholders on a number of issues. I have an example.

We worked in partnership with provincial and local governments, as well as the private sector, to tackle our distances to markets with the establishment of an inland port, CentrePort Canada in Winnipeg, which offers truck, rail and air access and connections to the Pacific Gateway, the east via Thunder Bay, the United States and Mexico via the mid-continent corridor.

Our cold weather is now a competitive business advantage. We have worked with key aerospace companies to establish two cold weather testing facilities, one in Thompson and the other in Winnipeg. This has led to an expansion of test capabilities in the creation of an aerospace engine redesign facility. GE Aviation, StandardAero, Rolls-Royce, and Pratt & Whitney have made significant investments in the province and, along with our post-secondary education, research, and local business partners, have developed expertise here that's unique in North America.

Labour shortages are being addressed in partnership with industry and our indigenous training providers. The Neeginan aerospace training centre works closely with local industry to determine labour and skills needs. Training is tailored and developed to meet those needs. On average, about 80 indigenous students graduate from Neeginan each year, and 85% secure employment with participating employers.

In innovation and manufacturing, the abundance of agricultural biomass is being transformed from a waste material to wealth. This serves as a foundation for the biocomposites industry, which supplies biofibre materials to fabricate stronger and lighter vehicles, including a sustainable supply for Manitoba's vehicle manufacturing and aerospace sector. WD's investments in the Composites Innovation Centre supported innovation in advanced composite research. There are opportunities in Manitoba.

One of WD's greatest strengths is its flexibility to respond to the vastly different economic realities, business opportunities, and economic barriers in each of the four western provinces. We maintain strong, responsive relationships and engage local leaders and decision-makers in creating projects and building partnerships collectively. We call this our “convening and pathfinding” role. Our success is underpinned by our ability to bring the difference-makers in our community together to strengthen key sectors, ensuring they remain competitive internationally.

We will continue to take advantage of opportunities and address Manitoba's challenges by continuing to develop value-added to our natural resources; to invest in our labour market and in initiatives that address the needs of employers and increase participation in our vibrant and young indigenous population; to support economic development in northern and rural communities; to support initiatives that improve business productivity and innovation; to support Manitoba's small and medium enterprises in their efforts to diversify and deepen their export markets; and, to advocate on behalf of western Canadians.

We have accomplished a great deal and we have more to do.

WD Manitoba will continue to work with partners moving forward to provide a prosperous future for Manitobans.

Thank you.

[The Vice-Chair, Conservative, Ron Liepert]

Thank you very much.

I believe we're going to start with Mr. Falcon-Ouellette for five minutes.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Ms. Guimond, thank you for coming here today. It is greatly appreciated.

I will ask some questions about the indigenous companies that you have funded. Apart from the Canada 150 component, how many companies have you really funded over the past years?

[France Guimond]

I will answer your question, but I would first like to say why the issue of the indigenous population in Manitoba is so important. Sixty per cent of young people live out west, but 17% of Manitoba's population are young indigenous people. So we cannot afford to ignore those young people.

We have invested in job creation through the Community Futures Development Corporation. We have six indigenous community futures development projects. In 2015-16, we created and maintained 226 jobs. We made 55 loans to the tune of $2 million. They are small loans, but they are very important to the rural and indigenous communities.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I was just wondering how long those—