Finance Committee on Sept. 22nd, 2016

[Lisa Raitt, Conservative, Milton, ON]

True.

[Gerry Salembier]

It used to be my job many years ago, by the way.

[Lisa Raitt, Conservative, Milton, ON]

Well, it becomes your problem when they ask you for your money, so I want to know if they've asked you for your money yet. If they haven't asked you for WD money, then that means they're not moving ahead very quickly.

[Gerry Salembier]

They haven't asked us for WD money for this particular project. The T2 expansion is of a scale that's far beyond WD's resources, frankly, so they probably wouldn't come to us for the project. I have some information on it, but it's a huge expansion and well beyond our resources. We have assisted projects at the port of metro Vancouver in the past, things like electrification for cruise ships, or shore power as they call it. We have assisted with that in the past.

[Lisa Raitt, Conservative, Milton, ON]

You mention it in your brief, so I thought perhaps you had a deal in on it.

On trade and investment, I'm really surprised that only 3% of businesses in B.C. export. I find that to be a surprisingly low number. I'm wondering what you have suggested as a good way to help firms become export ready. Do you think the trans-Pacific partnership would be beneficial to firms in B.C.?

[Gerry Salembier]

All of our trade agreements, and I think particularly the TPP, would open up opportunities in the Asia-Pacific region that are not necessarily there now. The free trade agreement with South Korea that was concluded recently has had exactly that effect. B.C. is located on the Pacific Rim, so there are plenty of companies in B.C. that have availed themselves of the new opportunities under the Canada-Korea Free Trade Agreement.

As I said earlier, one of the ways of addressing that low number of companies that export in B.C., and it's even smaller for small and medium-sized enterprises of which less than 1.5% export, is to come up with a coordinated suite of export readiness services. It's something we're actually thinking about and working on with the Province of British Columbia through this regional trade network. The Ministry of International Trade in the province is quite open to collaboration with the federal government. We and our colleagues at Global Affairs Canada are actively engaged with them to try to come up with some ideas to do this in a coordinated fashion so that different levels of government are not tripping over one another. When you're talking about presence in foreign markets, for example, nothing confuses them more than saying, “Oh well, I'm the federal government and that's a provincial issue.” People in foreign markets don't get that.

[Lisa Raitt, Conservative, Milton, ON]

Yes. Okay, thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

I have a quick question. In your brief you talked about how the lack of capital is constraining commercialization of new products. That is something we hear everywhere, about Canadians' lack of ability, it seems, to commercialize in many instances. There's not a bottomless pit of money, but you are saying that you're oversubscribed, so more money would make a difference.

Is there anything beyond more money that could help in that regard, whether it's collaboration with other federal departments, or with provinces, or whatever? Are there other things we can do in that area to get better commercialization and to assist in innovation?

[Gerry Salembier]

As you correctly identified, we are heavily oversubscribed, so more money would definitely make a big difference with the technology commercialization effort.

We could probably do a better job of the coordination of some of our efforts with those of other agencies involved, frankly. One benefit of WD working inside the broader innovation, science, and economic development portfolio is that we are doing exactly that. We are starting to do a better job of coordinating with agencies like the Business Development Bank and some of the other RDAs to that end, to try to get a better bang for the buck.

The Province of British Columbia has devoted $100 million to a venture capital fund. That fund will be operating on a fund-to-fund basis to support innovative companies in B.C. We could probably do a better job of lining up some of our efforts to make sure they're complementary to that.

We also work closely in consultations and in other fora with the venture capital industry in British Columbia. It was only recently that it was restored to a fairly dynamic state. VC in B.C, venture capital in B.C.—too many acronyms—is healthier than it was about five years ago.

We also have a strong network of angel investors in British Columbia. These angel investors are individual investors that support individual companies. We work closely with them.

One other area is either first or second in most tech sector conversations. The consultations the government has been running on the innovation agenda recently have produced, as either first or second, an emphasis on talent attraction and talent retention.

The tech sector in B.C. has deficits, although not so many, believe it or not, in science, technology, engineering, and math. Canada does a good job of producing graduates, skilled ones, in those areas. Where we need more flexibility is in the attraction of marketing, management, and C suite talent to tech companies. Tech companies can grow to a certain point of 10, 20, or 30 employees with the original founder involved. The original founder often is not a guy who has the necessary skills to take a company to the 500 and 1,500 employee stage. At that point you need serious professional managerial talent. A lot of that comes from Silicon Valley, let's face it.

Recently in Vancouver we had a conference called the Cascadia conference, which was jointly sponsored by the Business Council of B.C. and Microsoft Corporation. Microsoft has opened offices in B.C., and if anyone gets a chance to visit them, they are absolutely stunning. In the course of that conversation, a company like Microsoft sees potential in Vancouver and in the Lower Mainland in particular. The attraction of talent is something that needs to be done with a little more flexibility.

That said, Minister Bains did hear from the board members of Microsoft that what Canada has already done in the way of flexibility around immigration of talented individuals is a world-leading example. Microsoft is operating in countries all over the world. They wish more countries had a system that's as flexible as ours, but there's clearly more to be done.

[The Chair, Liberal, Wayne Easter]

We will have to cut you off there. Thank you very much for your presentation and your openness in answering questions.

We will turn next to ACOA, Newfoundland and Labrador. We'll suspend for three or four minutes while we change witnesses.

[The Chair, Liberal, Wayne Easter]

We will reconvene.

We have before the committee, from the Atlantic Canada Opportunities Agency, Ken Martin, who is the vice-president for the Newfoundland and Labrador region, and Karen Skinner, who is the director general of regional operations, Newfoundland and Labrador as well.

Welcome to you both. I understand you have a presentation, and then we'll go to questions.

[Ken Martin, Vice-President, Newfoundland and Labrador, Atlantic Canada Opportunities Agency]

Thank you, Mr. Chairman.

Good afternoon, everybody. It’s both an honour and a privilege for Karen and I to be here today. It is our first appearance before a parliamentary committee, so I'd say we're looking forward to it but I know you wouldn't believe me.

Thank you for the opportunity to appear before you today. I'm joined by Ms. Karen Skinner, director general of regional operations with ACOA Newfoundland and Labrador.

Newfoundland and Labrador is a vast land with a small population of just over half a million, whose settlement patterns reflect a reliance on the fishery, but also on mining and forestry. The collapse of the cod fishery in 1992 marked a turning point in the province, creating record unemployment and a dramatic population decrease, but first oil in 1997 marked the start of an economic turnaround. Oil prices reached record highs; unemployment decreased; the population stabilized, and gross domestic product grew. The province enjoyed record budget surpluses, losing its have-not status by 2008.

Following the boom and bust cycle typical of resource-dependent economies, the province is now being impacted by the downturn in oil and other commodity prices. Where oil once represented nearly one-third of provincial revenues, it now stands at 9%. This affects incomes, business investment, and the province’s fiscal capacity.

While the short- to medium-term economic outlook appears challenging, long-term potential, particularly in the energy sector, remains strong. While the agency’s mandate has always been to create better and more employment in Atlantic Canada, its programs have evolved to address specific challenges and realities, and with the Atlantic growth strategy, ACOA is committed to supporting a federal-provincial homegrown, prosperity-focused and evidence-based strategy to stimulate economic growth.

ACOA’s work reflects the government’s innovation agenda, including support for high growth and clean tech firms, as well as international business development. This alignment is reflected in strategic sectors. They are sectors like our information and ocean technology sector, and energy, mining, fisheries, aquaculture, and tourism. Just to look at a few of these, Newfoundland and Labrador’s ICT sector is mature, with approximately 130 companies, 3,500 employees, and annual revenues in excess of $1.62 billion.

I mentioned earlier Newfoundland and Labrador’s historic reliance on the sea, and while many residents have left their boats, they never left the water. Centuries of experience and expertise in harsh marine environments is now advancing the ocean technology, or OT, sector in several marine-related subsectors, including oil and gas, defence and security, fisheries and aquaculture, and marine transport, in areas such as weather forecasting, ice management, and ocean observation.

There are over 1,700 direct employees in the OT sector, which generates about $528 million in annual revenues and more than $30 million in public and private sector R and D expenditures.

ACOA recently invested just over $3 million to develop the Fisheries and Marine Institute of Memorial University of Newfoundland’s $19-million Holyrood Marine Base, a rural facility that will allow the institute to consolidate at-sea operations and R and D in one location. A spinoff is the town of Holyrood’s work to diversify its economy and capitalize on growing OT activity. Once a community reliant on the fishery, Holyrood is positioning itself as a place to conduct oceans-related business.

The province’s energy activities focus on offshore oil and hydroelectricity. Since 1997, the oil industry has contributed about $9 billion, or 28%, annually to nominal GDP and provided direct employment to approximately 9,200, including support workers.

The province has three major offshore projects, with a fourth under construction, and despite price uncertainty, exploration is increasing. The future of offshore oil development is dependent on several factors: exploration attraction, competitiveness with other jurisdictions for project development, and innovation, particularly in developing technology for Arctic and harsh marine environments.

To help ensure that long-term, sustainable, and local economic benefits are achieved from the energy sector, ACOA engages in a wide range of activities, including policy development and advocacy, strengthening supply and service capacity, and investing in R and D.

Newfoundland and Labrador's traditional fishery and growing aquaculture sector continue to be relevant and important. In 2015, the total value of production in the seafood industry reached a record high, exceeding $1.2 billion, employing approximately 17,500 people in harvesting, processing, and aquaculture operations. ACOA's investment in the fishery focuses on value-added processing and R and D to improve productivity. In aquaculture, the focus is on key publicly owned industrial infrastructure, training, and support for applied scientific research.

I echo the comments of some of my colleagues from ACOA who appeared before me that ACOA's greatest strength lies in its on-the-ground presence and in-depth local knowledge. The agency benefits from solid government programming, coupled with the flexibility to find solutions that deliver results. It has developed critical networks with provincial, municipal, academic, business, other federal and not-for-profit partners in order to focus on Government of Canada objectives.

Many clients, particularly small business and community-based ones, tell us that while the dollar investments are important, it's more often our staff's time, counsel, and guidance that they value most. ACOA's employees across the agency are deeply passionate about the work they do, have a genuine concern for their clients and communities, and are committed to helping them succeed.

I'll conclude by saying that ACOA works with companies, communities, aboriginal leaders, and institutions to help advance a strong and diversified economy and to help deliver Government of Canada priorities. There are shared themes across the Atlantic region that shape ACOA's programs and services, but the ability to provide local context and knowledge allows us to deliver a nimble, responsive approach to address unique challenges, leverage strengths to build a more innovative and inclusive regional economy, and maximize opportunities in each of our four Atlantic provinces.

Thank you again for your time today, Mr. Chair. I'll be happy to try to answer any questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Martin.

Just as one added point maybe, with ACOA Newfoundland, because of the geography of the province, I understand you do have quite a number of...we wouldn't call them regional offices, but sub-offices. I don't know what you call them.

[Ken Martin]

We call them satellite offices.

[The Chair, Liberal, Wayne Easter]

How many satellite offices do you have? I think they're scattered across the province due to geography. Are they?

[Ken Martin]

Yes, that's right. We have a regional office in St. John's, and we have six satellite offices throughout both the island and Labrador.

[The Chair, Liberal, Wayne Easter]

Okay, thank you.

Turning to Mr. Ouellette, the floor is yours.

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

Thank you very much, Mr. Martin and Ms. Skinner, for coming here today.

I have a couple of quick questions. I'm not going to be long. I wonder if you could describe, apart from the 150th anniversary projects, some of the other projects you're working on with indigenous communities and tell us the number of them.

[Ken Martin]

Sure. We have a long history of working closely with key indigenous communities: the Innu, the Nunatsiavut, the NunatuKavut in Labrador, the Conne River Band, and the Qalipu Band on the island of Newfoundland and Labrador. In fact, I've had the good fortune of having spent time, about a year, earlier in my career with ACOA, actually working with a Nunatsiavut subsidiary to help them back in the days when Voisey's Bay was in its exploration stage.

We work with all of these groups and their members and beneficiaries in a number of key areas. Building business capacity is an important part of the work we do with them, and that's to assist with business planning and mentoring; supporting community business infrastructure, enabling infrastructure that allows indigenous communities to take advantage of industrial development and business opportunities; and investing directly in businesses as well. It's an approach that's very much hands-on.

We've had also the good fortune of having strong business development activities occurring near some of our aboriginal communities: aquaculture development on the south coast of Newfoundland and Labrador, the Voisey's Bay and Lower Churchill projects happening in Labrador. All of these are in close proximity to aboriginal communities.

Over the last five years, we've supported about 66 projects with indigenous communities, totalling just short of $9 million. As I said, we take a very hands-on approach in all three of those areas.

This is interesting, too. I visited the Conne River Band a couple of months ago and met with Chief Mi'sel Joe, and when he referred to our field officer as “our guy getting things done for us”, that was quite heartening and it's really good to hear. We've really worked hard to build our relationship with our aboriginal clients and our aboriginal communities.

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

I'm wondering how many of the jobs have been long term. Apart from a construction project, say, where you build some infrastructure and do some renovations in the community, how many of the jobs are long term?

[Ken Martin]

The bulk of the projects we initiate or support oftentimes may be during a construction phase, but in most of those cases the supply and service opportunities actually spill over into the operation phase. A good example is Sikumiut Environmental. They have been directly involved in supporting some of the work around both Voisey's Bay and Lower Churchill. That company will continue to provide supply and support services, environmental services, to both of those major developments in Labrador.

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

I have a few final questions, and they should be very short.

How does your Newfoundland budget for indigenous peoples compare with other ACOA budgets for indigenous peoples?

[Ken Martin]

I can't speak for the other regions, but I can tell you that in our case, when we go through an operational planning process, we identify areas of intervention and activities and projects that we want to undertake with indigenous communities. Those projects and initiatives will be built directly into our operational planning, and by extension into our budgets.

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

The reason I ask this is that a number of years ago, in fact a very few short years ago, there was an increase in the number of self-declared indigenous peoples in Newfoundland, almost one in five at one point. Then it was brought back down, according to band membership.

I'm just wondering if that budget would have been increased at all, compared with other provinces, if ACOA was handing out money on a per capita basis. I'm also wondering, when you see an increase in your indigenous population, what type of impact that might have on you.

[Ken Martin]

It wouldn't be on a per capita basis. It would really be opportunity driven, based upon the engagement and discussions and consultations we would have with indigenous clients. Some of those numbers creeping up or creeping down really would not have had any impact specifically on our budget. We don't advance it on a per capita basis.