Finance Committee on Sept. 22nd, 2016

[The Chair, Liberal, Wayne Easter]

Thank you both.

Ms. Raitt.

[Lisa Raitt, Conservative, Milton, ON]

I appreciate your coming in. The reality is that you're the economic development agency for Newfoundland and Labrador, and it's not really good there right now. The premier himself has referred to it as a basket case. It's never been this bad, with a $2-billion deficit in the budget. We're looking at a $25-billion net debt for 527,000 people in one province. The last time this happened, you had to join Canada in order to erase the debt from World War I. We can't go that route again. I mean, you guys are in a tough gig right now, doing economic development in a place that's just getting hammered by oil prices. There are lots of difficulties.

I appreciate the bright spots you've given us, but on the other side, I'd like to understand this. You put a lot in here on the long term, and the long term, you still say, will be about oil production. But I don't see policies that will be coming forward in the next couple of years that will be encouraging of that long-term growth in oil. Bearing all that in mind, and noting the fact that you guys say in here that one of the activities you engage in is “policy development and advocacy” in the energy sector, tell me what you think about a carbon price and what that will do to the revenues.

I would note for the record as well—like, this is shocking stuff—that at one point in time, oil revenues for the budget of Newfoundland and Labrador made up a third of the revenues. It's 9% right now. That's a drop that nobody can sustain, it doesn't matter how rich the province or what they have around them.

Talk to me a little bit about the difference between what you set out here as long term has to be the return of oil and offshore development and the notion of carbon pricing. What does that mean?

Finally, is there any glimmer of hope in the short term, because we're really looking at long term here, and is there anything you can do through these programs day to day to help spur on economic development?

[Ken Martin]

Well, I think there are bright spots in the short to medium term.

Our tourism industry remains very strong. It's a billion-dollar industry. We have half a million visitors annually, and 36% growth in non-resident visitation over the last six years.

The aquaculture sector is strong as well, and shows great promise, especially on the south coast.

Our tech sector, and particularly our ocean technology sector, which I spoke about a little earlier, is strong as well.

Oil, as I mentioned, shows promise in the long term, too, especially in the Flemish Pass basin, where I expect our next field will be, a field that Statoil is looking at developing with 300 to 600 million barrels.

I think there are quite a number of bright spots in the economy, notwithstanding some of the challenges we face.

I really can't offer an opinion on carbon pricing. It's really beyond my purview, but I do think that some of the areas where we are concentrating our efforts, areas where we have possibilities for growth and expansion, will help the economy in the short term. I know it's a long-term to medium-term possibility, but oil prices will eventually improve, though likely not anywhere near where they were in the past.

[Lisa Raitt, Conservative, Milton, ON]

Do you have a sense of what outmigration looks like right now, or are you experiencing in-migration, with people returning from Saskatchewan, Alberta, and Manitoba, the places that are no longer up and running in terms of oil production?

[Ken Martin]

That's a good question. The population has stabilized. We are pretty much stable at about the 527,000 to 528,000 you mentioned.

The economic slowdown particularly as it relates to oil prices has had an impact on worker flow. For quite some time we had somewhere in the order of.... How many people were actually involved in the remittance economy?

[Karen Skinner, Director General of Regional Operations, Newfoundland and Labrador, Atlantic Canada Opportunities Agency]

About 20,000.

[Ken Martin]

That was about 20,000 people who were commuting primarily to and from Alberta, but also Ontario. Those were the two biggest areas. That number has obviously petered off. It hit a high in 2012.

We've seen a lot of those folks come back, and that has impacted rural areas more particularly, because many of those folks tend to be from rural areas of the province. They're skilled tradesmen. A lot of them are from the south coast.

That presents some opportunities as well. I know an overheated economy in Newfoundland over the last number of years has resulted in some skills shortages. Having some of that pool of skilled tradesmen available has helped with some of the larger industrial development projects that are still under way, such as the Hebron development, as well as with the completion of the Lower Churchill project, and some other mining and aquaculture-related projects that are in the offing.

As I said, the population has stabilized, and I think we have seen a number of folks who were travelling to places like Alberta and Ontario return to the province.

[The Chair, Liberal, Wayne Easter]

We'll have to cut it there.

You said there were 20,000 from Newfoundland. I'm not sure whether it's 23 or 25, but there were 23 or 25 flights per week from Moncton directly to Fort McMurray. Now there are none.

[Ken Martin]

Yes.

[The Chair, Liberal, Wayne Easter]

That's the kind of impact we see all over Atlantic Canada.

Mr. Caron.

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

Thank you.

In your presentation, you did not really talk about how ACOA's work in Newfoundland differs from what it does in Labrador. You provided some information when you answered Mr. Ouelette but, more specifically, from a philosophical point of view, how do you approach development in Labrador as opposed to Newfoundland itself?

[Ken Martin]

Thank you for the question.

Newfoundland and Labrador is one province. What we try to do in our program delivery and our interventions is address the unique opportunities and challenges that each region of the province faces. It's not so much that we have a specific Labrador-focused strategy and a strategy for the rest of the province, it's really a matter of looking at opportunities and challenges that exist in each of our regions.

Labrador has a substantial aboriginal population, so a significant portion of our work in Labrador is focused on dealing with indigenous communities, and our programming and interventions are tailored to specific opportunities and challenges that those communities face. As I say, it's not so much about focusing on a Labrador and a Newfoundland strategy; rather, it's about dealing with the specific challenges and opportunities that exist in the various regions of the province.

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

Still with respect to Labrador, what role has ACOA played thus far in the Lower Churchill hydroelectric project? What is your outlook for the coming months and years as to ACOA's involvement in this project?

[Ken Martin]

The Muskrat Falls project clearly has some challenges as it moves forward. I think it's widely known that the first electricity will be delayed until 2019-20 and that the project is over budget. ACOA's preoccupation and ACOA's involvement has been similar to the work that we do with other major industrial development projects. That means working with our small and medium-sized enterprise community and the supply and service community to ensure that they have accurate and up-to-date information on tendering opportunities and supply and service opportunities.

As the project continues to proceed, we will continue to work with our small and medium-sized enterprise community and our indigenous community to ensure that business opportunities related to the project are taken full advantage of.

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

I have one last question because I do not have much time left.

I asked your colleagues from the other Atlantic provinces and I have to ask you the same question. Before the meeting, I told you that I had toured Newfoundland. Actually, I toured the Atlantic provinces. Various ACOA officials shared their concern about the restructuring of agencies owing to centralization. It seems that this centralization could create a situation in which agencies such as ACOA will become responsible for implementing priorities that are determined higher up, in Ottawa, rather than the opposite, namely, being a strong voice to represent the Atlantic provinces to Ottawa, the department and the minister.

The loss of dedicated ministers of states for agencies is seen as a risk in this regard. I would like to know if you have heard the same concerns. How do you see ACOA's role in light of the structural changes that have been made?

[Ken Martin]

First, the agency remains the lead economic development agency for the Government of Canada in Atlantic Canada. We continue to operate under a separate act of Parliament, the ACOA Act. All of our programming remains intact and in place.

There really has not been any appreciable change from a client service point of view. I have not heard any specific concerns. I think, if anything, the opportunity to engage with our regional development agencies elsewhere in the country is enhanced through the portfolio approach. We've already seen some evidence of that.

Just as an example, the accelerated growth service that's been initiated by Innovation, Science and Economic Development is an initiative that includes engagement of all of the regional development agencies, Export Development Canada, the Business Development Bank, and others.

The portfolio approach has allowed us to strengthen the level of coordination that happens between the various agencies and departments in the portfolio and ultimately to be able to provide better service to our clients. In the case of the accelerated growth services program, there's better coordination and focus on support, bringing federal programming and federal intervention to bear on high-growth companies to ensure that we give them the best service and the best coordinated approach that we can.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Just on that question, I was going through some of the other ACOA presentations last night, related to what Guy raised, what is the decision-making within ACOA at the regional level now? Is there delegated authority under a certain amount of funding for a proposal to those within the region, or does every application no matter how small or how big have to go up the line to the federal minister under INAC?

[Ken Martin]

In terms of delegations, we do have delegated authorities within the agency from the regional level up to the president, our deputy, and the minister.

We follow a process where we provide insight or information on projects under consideration for the minister. That process works, and it's very similar to processes that have existed within the agency for some time now. That process works very smoothly. It has never been something that's created any kind of delay in terms of affecting decisions.

My experience has been that the process works very well, and we're meeting time frames or turnaround times, service standards that we've set for considering project evaluations of 75 days the vast majority of the time. The process works very well.

[The Chair, Liberal, Wayne Easter]

That was my next question. Seventy-five days 90% of the time, that's the standard. Are those calendar days or working days? If you're the person out there waiting for the flow of money, 75 days 90% of the time is quite a while. Is it calendar days or working days?

[Ken Martin]

The standard is 75 business days.

[The Chair, Liberal, Wayne Easter]

Okay, so that's a heck of a lot longer than 75 days.

The area that I get a lot of questions on is whether ACOA is ever going to make a decision. I get lots of those calls. I guess my thing would be—it's not a criticism—maybe ACOA has to be more results oriented in a speedier fashion.

My own thought on it is that the regional vice-president or at least the president should be able to make a decision on x number of dollars, $100,000 per application, or whatever it might be. Then it's made at the regional level and reported up to the top. If there are some serious mistakes made, well, you make a change in personnel.

Is there any level at which you can make a decision at the regional level, or does everything have to go to the minister?

[Ken Martin]

As I say, we seek direction from the minister on all projects, but it has not been a significant contributor to the time to complete an evaluation.

In all of our projects, we have to conduct due diligence, a business case analysis, an assessment of economic benefits, an assessment of need. We consult with other departments. Oftentimes that involves consulting with sector experts. We're required to complete an environmental assessment. All of those steps take time. Some projects are very complex; others are very small and routine. The ones that are much more routine we can turn around quite a bit more quickly.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Mr. Martin and Madam Skinner, welcome to Ottawa. You're not doing too badly for your first appearance. We don't bite.

It's often said, for Newfoundland specifically, if not for Labrador, that there are two Newfoundlands. There is St. John's and area, and then there is the rest of the province; they are two very different economic realities. You alluded to it a bit in your opening statement.

I wouldn't want to go as far as to ask if you adjust your behaviours, but do you take account of this fact in delivering programming?