Finance Committee on Sept. 21st, 2016

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Have you seen it?

[France Guimond]

Have we seen it? We've heard it. Do I have the evidence-based in terms of that? No, but when we talk to individuals on the ground, yes, absolutely.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you. We do have to go to a vote.

Thank you, Ms. Guimond.

Do you have any last points that you want to raise? I think we heard the question about how there's not enough funding to do everything you have to do. Is there any other thing you can think of that would be useful for us to know in terms of encouraging economic growth through WD Manitoba?

[France Guimond]

Well, if I had my last wish.... I guess when we're looking at opportunities for funding small and medium-sized businesses in the west, I look at them in this way. They're a vehicle and they bleed over into all sectors. If you talk about small and medium enterprises, you have indigenous, you have clean tech.... It affects clean tech, aerospace, and agriculture. Access to capital would help SMEs, and they need help with HR resources in terms of skills and access to HR resources, and they need help to reach new markets. If we're looking at a vehicle in terms of helping SMEs and the economy, I think that's where I'd put my number one.

I thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much for that input. We will suspend until after the vote.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order and reassume our hearings on pre-budget consultations.

We have the Atlantic Canada Opportunities Agency, Nova Scotia section, with us today. Peter Hogan is vice-president and Mr. Maillet is director general of regional operations for ACOA in Nova Scotia.

Welcome, gentlemen. I think it's been stated to you that we're looking at economic growth as part of our theme. Regional development agencies are an important part of that.

The floor is yours, and then we'll go to questions.

[Peter Hogan, Vice-President, Nova Scotia, Atlantic Canada Opportunities Agency]

Mr. Chairman, committee members, good evening.

Thank you for the opportunity to speak today.

I am joined by Mr. Chuck Maillet, the director general of regional operations.

As you heard from my colleagues yesterday, ACOA is the regional development agency responsible for building and promoting Atlantic Canada's economy. The agency provides programs and services that support innovation, productivity, and diversification. Through its proactive engagement, ACOA is able to respond swiftly to economic changes and emerging opportunities.

The region does, however, face a number of challenges, and ACOA is addressing them. Key among these are shifting demographics, labour force participation, the attraction and retention of immigrants, productivity and the commercialization of research, and also growing the base of exporters. There are no easy fixes, but sustained effort based on sound policy analysis is helping to make inroads.

I'd now like to turn to Nova Scotia specifically. At just under a million people, the province has the largest population in Atlantic Canada. With more universities per capita than any jurisdiction in the country, it is recognized internationally as a centre for higher learning. For example, Cape Breton University in Sydney welcomes about a thousand students per year—about 30% of its student body—from over 40 countries. There are similar situations at the other Nova Scotia post-secondary institutions.

The province is also becoming known more and more as a start-up hub. One thing I want to point out is that there's a direct link between high-quality education and a skilled workforce in information and communications technology, life sciences, and clean technology. Graduates are developing innovative solutions to real-world problems and driving growth.

This start-up ecosystem is connected to a national network, attracting funds and venture capital. In fact, Startup Canada just recently presented the agency with its Atlantic entrepreneur support award. It recognizes the work ACOA does with organizations such as Volta. Volta is a Halifax-based start-up house that helps develop businesses with high growth potential.

There's also a growing global awareness of the importance of our oceans. In the 1920s, Nova Scotia's Alistair J. Campbell coined a phrase concerning the province: “Canada's ocean playground”. It's had a very strong brand recognition ever since. But of course the ocean is much more. With one of the highest concentrations of oceans-related Ph.D.s in the world, this sector presents significant opportunities. Already the sector employs about 35,000 in Nova Scotia, and accounts for $4.5 billion, or about 12%, of the provincial GDP.

Recently the Ocean Frontier Institute received $94 million from the federal government, providing strong momentum to this sector. I might add that in addition to Dalhousie, Memorial University of Newfoundland and the University of P.E.I. are also key partners. This investment will help accelerate scientific understanding and the commercialization of new products and services.

Increasing the number of Nova Scotian export-ready businesses is critical. Opportunities exist across a broad spectrum, including such traditional sectors as fisheries and agrifood, where the focus really is on productivity improvements and value-added product lines.

There are, of course, some new sectors, such as clean tech, building an international presence and capturing market share. One example is CarbonCure, based out of Nova Scotia, which is in the process of signing deals with industry leaders. They're essentially a technology firm. They retrofit concrete plants with a technology that recycles carbon dioxide waste to make stronger, affordable, greener products.

Membertou First Nation has created a strong business foundation that is paying significant social and economic dividends for the community in Cape Breton and beyond. In fact, later this month Membertou is hosting the Nova Scotia Mi’kmaq Energy and Innovation Summit. Here businesses will be able to speak directly with representatives from all 13 of Nova Scotia's Mi'kmaq communities.

In the tourism sector, a new dynamic is emerging that resonates with travellers seeking authentic cultural experiences. Visitors with discerning palates can experience locally produced foods prepared by acclaimed chefs and paired with award-winning Nova Scotia wines. This culinary tourism, while relatively new, is showing great promise.

Through direct financial assistance, advocacy, and the ability to leverage knowledge and resources, ACOA is making a difference.

For instance, with the agency's recent contributions to L'Arche, both in Cape Breton and in Wolfville, those two projects are strengthening inclusive social enterprises. With community support, adults with developmental disabilities are participating more fully in the economy.

With the recent introduction of the Atlantic growth strategy back in July, the region is ready for concerted action. Its five pillars—skilled workforce and immigration, innovation, clean growth and climate change, trade and investment, and infrastructure—will support the agency's activities and engagements going forward.

The agency will continue to build on its strong relationships with communities, businesses, and provincial and municipal governments to develop the province's competitive advantages and make a real difference to the economic landscape.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Hogan.

Turning the first series of questions, we have Mr. Sorbara, for five minutes.

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

Thank you, Mr. Chair.

Welcome.

I want to make a personal comment. Nova Scotia is dear to my heart because my parents came through Pier 21 when they first immigrated to Canada. I look forward to visiting Pier 21 when I have an opportunity in the not-so-distant future.

At the beginning of your presentation, you spoke about innovation, productivity, and diversification. I want to get some broad commentary on how you feel you're progressing within the province and in ACOA in helping to diversify the economy. You pointed to CarbonCure and the Ocean Frontier Institute. Is there anything that you feel you would like to add that is of value?

[Peter Hogan]

Just to expand on that, innovation, productivity, and diversification are very much at the forefront of the work that ACOA does. Through our various programs, that's the focus: improving a firm's productivity and helping them diversify into new markets. That's really a thrust of a lot of the work that ACOA does. We have some independent studies and evidence as well, which shows that ACOA-assisted firms are in fact significantly better in terms of their labour productivity and the outcomes they're achieving.

That includes some support in some of the traditional sectors, such as agriculture and the fishery. The support we're providing to the companies in those sectors is really helping them improve their productivity so that they can capture new markets and grow beyond where they are. As well, a lot of those enterprises are based in rural areas, which means that we help to create additional employment opportunities for individuals in the rural areas.

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

I'm curious. What is your time horizon to stay with an SME? Is it a multi-year commitment that you'll make with them, or a single two-year commitment? If it's an accredited facility, will you just renew the commitment over a two- or three-year period?

[Peter Hogan]

It varies, but typically it's a long-term commitment. We might provide some assistance up front in terms of helping a company to acquire new equipment, maybe undertake some marketing activities, or perhaps get certification to enable them to bid on other contracts. Typically, they might come in initially and we might support them on one or more of those initiatives. Then our account managers, who work very closely with those companies, continue to engage with them on a regular basis. As they progress they might approach us at some later date to take on a new initiative.

One of the key things that our staff do—and our account managers are very skilled—is to focus on building a very strong relationship with their clients so they can really understand what their needs are, provide some advice, and help them better identify some of the tools that not only ACOA has. They also work in concert with the Province of Nova Scotia and other federal agencies. It is very much an ongoing relationship.

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

Last, what would be your planned spending for this fiscal year?

[Peter Hogan]

For ACOA Nova Scotia, our grants and contributions, that is, our assistance to both communities and companies, commercial enterprises, are approximately $70 million. That's consistent with where it has been over the past couple of years.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Sorbara.

We're turning to Ms. Raitt.

[Lisa Raitt, Conservative, Milton, ON]

Thank you very much for coming. I'm glad that you feel an attraction to Nova Scotia. I have one as well. I was raised in Cape Breton.

I have a few specific questions and then a general philosophical question, if you would help me out on that.

On the specifics, it has to do with some program files. You'll forgive me if I ask you whether or not you're any closer to making decisions on these files. They were brought up to me when I was out east this summer.

The first one is the Port Hawkesbury Airport. I understand they're still waiting to see whether or not they're going to be getting their navaids. The second one is the Cape Breton Drag Racing Association, which is still waiting to hear from you regarding a lease. The third one is the Margaree Airport in regard to the proposed paving of the strip up by Inverness.

For those three, perhaps you can give me an update, and then I'll ask the larger philosophical question.

[Peter Hogan]

Sure. On a number of those particular projects that you mentioned, we continue to have discussions with the principals involved. We'll continue to work with them and hopefully come to a decision fairly soon.

[Lisa Raitt, Conservative, Milton, ON]

That would be very helpful, because all of them feed into greater infrastructure, as you know, including transportation. Infrastructure really is the bedrock of making sure that we can get people in and out of Cape Breton and having those pieces is really important.

The bigger philosophical question comes from an anecdote. I've grown up all my life with ECBC, DEVCO, and ACOA, and now it's ACOA, and ACOA has control of everything. My concern is that when I talk to people who want to start a small business, bring forward an innovative idea, or start a service company, everything starts with the first question, “How much money did you get from ACOA to start this business?”

Are you stifling private investment in that part of the country? Does everything have to start with an ACOA grant before the private sector decides to come to the table? Is it your yes or no that determines which are winners and losers in investment? This is going back long years, but I'd love to get your perspective on whether or not you're seeing private sector investment actually increase in Nova Scotia companies over the period of time that ACOA has been extremely active.

[Peter Hogan]

Thank you.

It's our experience with virtually all the projects from the companies that we support that our financing is one part of the package. It might be 50% or it might be 25% depending on the individual project. In many cases, either the business itself has provided the additional financing, or it would be getting private sector sources of financing, be it from a bank or elsewhere. Also, some of the start-up companies in the ICT sector in particular have been very successful at raising outside capital.

In a lot of cases, those dollars would just be matching what we're providing, and angel investors or venture capital are providing assistance. They're demonstrating their comfort and support for the company's product or service.

[Lisa Raitt, Conservative, Milton, ON]

So you don't think government investment squeezes out private investment in Nova Scotia? What you told me, which makes sense because that's all you probably know, is that in your experience the deals that you're involved in have private sector investment. I think that's true, but my point is that there' are a lot of deals that don't get ACOA investment.

Are there 100% private interest or private investment companies that can make it in Nova Scotia without ACOA giving them the nod?

[Peter Hogan]

We're not involved in every project, every company, or every initiative that happens. There are a number of cases, certainly, where it might be totally privately funded. Yes, companies and organizations do look to ACOA for support, but we're not funding every project or initiative that's out there. I don't have figures on the total number of deals, but it would be a smaller subset that we're participating in.

[Lisa Raitt, Conservative, Milton, ON]

Is there a body or an organization in Halifax that would keep track of deal churn, of how many deals are actually happening? I'd like to know what percentage of these deals start and end with ACOA funding. Is there an investment group? I know that Entrevestor does some stuff like that, but I don't know whether or not they keep tables.

[Peter Hogan]

Yes, they keep track. Entrevestor very much focuses on the start-up sector and ICT in particular. They track the number of start-ups. Peter Moreira looks after that. A number of the companies that he portrays in his columns and in his annual analysis are not all necessarily ACOA clients. They're getting private sector investment from venture capitalists, angel investors, or other sources.

[Lisa Raitt, Conservative, Milton, ON]

Thank you. That's it.