Finance Committee on Sept. 22nd, 2016

[Aime J. Dimatteo]

First, thank you for your kind comments about FedNor. We certainly believe we play a very important role in northern Ontario.

With respect to broadband, FedNor has historically been involved in broadband and has funded broadband development across northern Ontario. This most recent year the government announced a new broadband program, $500 million, that it is in the process of unveiling.

It's important that FedNor take a step back and not duplicate the efforts of a pan-Canada program, and we have done so previously. This is a reflection of what we're doing now. We had a number of broadband applications that we were in the process of reviewing and hopefully looking at making recommendations on support. But as a result of the new broadband program coming on stream, we felt it was more prudent for us to pass those applications on, again, within my own department for consideration.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you for that. I don't want to sound terse, but I only have five minutes.

I guess what's shocking to me is that we had rural broadband projects with matching provincial funds—we desperately need broadband and we need it now—but this Liberal government decided that it was going to take it over through a new program. I'm looking at this new program, and it's not up and running until sometime in 2017, so we've lost two years in our communities in terms of economic development. I would think that it would have been better to leave our northern businesses with FedNor, because you were ready to deliver those funds this year, but that's not being delivered. I want to move on.

In 2009 FedNor had 120 employees. The last I saw, you were down to 80. Are those numbers still roughly the same?

[Aime J. Dimatteo]

Yes, they are. Our current count is, I believe, 81 employees.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm looking at the overall FedNor funding over the last number of years. In the mid-2000s we were getting $76 million, $68 million, and $78 million a year. Are we down? Did you say that it's $31 million this year?

[Aime J. Dimatteo]

FedNor's base budget for its flagship program is $31.5 million. That's correct.

[Charlie Angus, NDP, Timmins—James Bay, ON]

You say that 75% of the money is already allocated at the beginning of the year so we're turning down projects. I think FedNor could have an extremely important role if it were a stand-alone agency, but it's always really difficult for us to find these numbers, because FedNor is the poor cousin of all the other economic development agencies.

If you were able to have the funding that you had in the 2000s, and even when the last Conservative government first came in before it started cutting the funds, would you be able to respond to many of these great projects that are not being funded right now?

[Aime J. Dimatteo]

Clearly, if we had an opportunity to receive additional resources, we would certainly then look to do more activity across northern Ontario. We do, within our current budget, try to maximize as best as we can all the good project work that's going to bring the results to northern Ontario.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I guess this is what's concerning to me, because I meet really smart innovation ideas all the time, and we just.... At FedNor, your staff are out on the ground. I can say that.

I notice that $8.5 million out of FedNor's much more diminished budget wasn't spent in 2013-14 and was returned to Treasury Board. Do you expect you'll spend all the money this year?

[Aime J. Dimatteo]

Absolutely. We have, over the last couple of years now, spent our full budget.

The $8.5 million that slipped in the fiscal year you referred to resulted from two particular initiatives that we were hoping to launch during the fiscal year but were delayed. In one case, it was a broadband initiative, and the government of the day introduced a pan-Canada broadband initiative, so we were asked to step back. That resulted in our not being able to fund a number of anticipated projects that we were hoping to fund, and that resulted in the slippage. We were fortunate in the following year to receive an additional $3 million to offset some of that slippage in the next fiscal year.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

I'll have to cut both of you off there. I'm sorry, Charlie.

Mr. Ouellette.

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

Thank you very much for coming here today, sir.

I was wondering if you could describe what you do with indigenous people specifically and also some of the projects that are not the 150th anniversary projects, but specific, actual, long-term-job projects.

[Aime J. Dimatteo]

We do a lot of business with indigenous communities. As I said, we have 110 first nation communities in northern Ontario, and we provide support to them from a perspective of doing a strategic plan, helping to establish an economic development office, industrial parks, or incubator malls, helping to build the community infrastructure necessary to promote economic development, and looking at airport development opportunities in some of our remote communities, where of course they're reliant on the airport, so they need the best infrastructure available at that site. There's a whole host of things that we do on a regular basis with our first nations partners.

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

I was wondering if you ever help first nations negotiate, for instance, resource extraction deals with other companies. You talked about capacity. A lot of agencies have come here and talked about lack of capacity, so you create a training program. I was wondering if you ever fund the actual negotiation of these resource extraction deals or help with first nations that are doing that.

[Aime J. Dimatteo]

No, we don't, and we haven't been asked to do so. The first nations communities, in my history of working with them, shy away from wanting the government to be involved in the negotiations of what are termed IBAs, impact and benefit agreements with companies. They do that themselves.

When I talk about capacity building, I'm talking about the economic capacity building of communities. How are we supposed to work with the community if they don't have an economic development office or if they don't have a strategic plan? How do we ever expect to make a difference in those communities and spur on economic development opportunities without that kind of basic capacity in play?

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

My fear was where you talked also about the Ring of Fire, how it has great potential, but what if you are a first nation or community trying to negotiate on your traditional territory a certain level of ristourne or an amount of money that comes back to the community in the long term in jobs and long-term benefits for your education sector or economic development, and not just jobs cleaning the toilets or dropping off food and things like that but really good long-term jobs?

You say they don't have the capacity. I'm a little confused. Are you allowed to help them with those things? Maybe they don't know you could.

[Aime J. Dimatteo]

If we were asked to provide funding to hire lawyers to negotiate those kinds of agreements, no, we would not. These first nation communities receive funding from INAC, as you would be aware, and their funding is given to them in bundles, if I can use that word. They have an opportunity to take the money provided for administration and determine how they're going to use it. There is some flexibility within the funding envelope they get from INAC for those purposes, but as FedNor, we try to stay away from those negotiations.

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

It's always interesting. I wasn't a participant in this but I watched very closely as one community negotiated a gold mine, and literally the chief said to the gold company, “I don't really understand what you're saying. I hope you just give me a fair deal.” He didn't receive any funding or any help from INAC. He didn't receive any funding or any help from any other agency. He was just out there essentially signing away his rights. My fear is that in 30 years we will still be at the same situation we are today. It seems you have an agency that could be perhaps at arm's length from INAC. You're not really INAC, so you have more of a distance from that relationship in which a lot of indigenous peoples really don't like Indigenous and Northern Affairs Canada or Indian and Northern Affairs Canada, and perhaps you have a potential role you could play in the future.

[Aime J. Dimatteo]

Thank you. We'll certainly take that under advisement.

I'm just being reminded here that we have funded more than 111 projects with indigenous communities across this broad spectrum that I defined to you earlier. So again, the question is where we put our limited resources to make sure we get the best outcomes. It's not to say that negotiating these impact and benefit agreements, whether they're with a mining company or forestry company or whatever it might be, is not important; it's just an area that FedNor has not played in.

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

Thank you very much. I appreciate it.

[The Chair, Liberal, Wayne Easter]

Thank you.

Yes, Lisa.

[Lisa Setlakwe]

Sometimes it's not about just the money. I know that FedNor has been, for example, on the Ring of Fire doing some work to understand what the economics are of that value proposition and equipping those communities that may be benefiting from that with that kind of knowledge and helping them position themselves to have those kinds of negotiations. So while we wouldn't be directly involved in those negotiations, the work we do helps to kind of lay the groundwork and enables those communities to understand ultimately what they should be asking for in those negotiations.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. McColeman.

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

Thank you, witnesses, for being here.

I want to go down two avenues.

First of all, I appreciate your presentation on softwood lumber. You've turned what possibly will be a very negative thing happening to the economic areas that rely on forestry to something that's marketable going forward. That's one project, but on balance, do you feel that, if there are tariffs thrown up against softwood lumber as a result of not having a deal this fall, that is going to affect other players in the softwood business in your area?

[Aime J. Dimatteo]

I'm not an expert when it comes to the softwood lumber agreement, but I can tell you the example I gave you and I can give you some other examples. We helped the Kenora Forest Products sawmill, which is a softwood lumber company. We worked with it to explore a new market in Japan for what's called stress rated lumber. It is still producing two-by-fours and two-by-sixes, but it's now found a market for a very particular niche product called stress rated lumber, and that relates to.... The more direct, the more clear the grain is in a piece of wood, the stronger it is. Of course, think about Japan and all of the activity that occurs there with respect to ground movement—