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.