Finance Committee on Sept. 22nd, 2016

[Gerry Salembier]

That is correct, sir.

[The Chair, Liberal, Wayne Easter]

You cannot do that under regular WD programming.

[Gerry Salembier]

No.

[The Chair, Liberal, Wayne Easter]

It would have to be a new government initiative, over all government. Okay. That's good for us to know.

Mr. Sorbara.

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

Welcome.

I do want to personalize this for a minute, with apologies to my colleagues. I'm a British Columbian transplanted into Ontario. I always get this question: why would you want to leave Vancouver to come to Ontario? For the scenery, of course. Honestly, I love the riding of Vaughan, where I live and where I'm raising my family.

I was raised in Prince Rupert. There are some comments here on the Pacific LNG and port proposals. I have a lot of high school friends who work at the coal port, the grain elevator, and so forth. Focusing away from the Lower Mainland, because the Lower Mainland is doing quite well, I'd like you to provide some colour.

Having grown up in Prince Rupert, I know there's a very diverse and very rich indigenous population, which, as I've said, I'm still very connected with through a lot of good friends. What programs or initiatives have you done to work with the indigenous community, the aboriginal community outside of the Lower Mainland, in those areas of Prince Rupert, Terrace, Smithers, and northeast B.C., programs and initiatives that are making a difference? There is a skills shortage in B.C., but you have a very young aboriginal population there that needs to be involved in the job market and to be provided those skills and training. I think that would make a huge difference for the economy.

[Gerry Salembier]

Thank you for that.

One of the finest parts of my job is that I get the opportunity to visit places like Prince Rupert. I understand your attachment to the area.

You're correct in saying that there's a lot of activity and there's a lot of hope in Prince Rupert surrounding things like the Pacific Northwest natural gas project. On the expansion of the port, as I noted, the expansion of the Fairview container terminal is one of those really significant developments on the horizon for Prince Rupert. WD was actually involved in delivering the federal government's contribution towards the establishment of the Fairview container terminal. That was just before my time at WD, but there was some $30 million contributed by the federal government via WD.

One of the things we had to do in connection with that was secure the agreement of the local first nations, who, as you know, were not all united on the expansion of the Fairview container terminal. It impacted different first nations communities differently. As well, it is an area of overlapping land claims, so it complicates the...frankly, that's common throughout British Columbia. The five major first nations organizations, bands, represented around the Prince Rupert area all had different views on Fairview, and it was a complex and difficult process to get them to the point where the benefits associated with that project were enough to offset some of the concerns.

That's the calculus for a lot of first nations communities, right? It's the economic benefits associated with these communities. Yes, first nations communities, most of them, are deeply interested in economic development, but it has to be done in a way that's environmentally sustainable and respects their traditional practices and cultures in their communities. There's been quite a bit of work already done in association with the Pacific Northwest project. It's not one that we're directly involved in at this point. Other government agencies are involved in it, but I know from my participation in interdepartmental meetings in B.C., for example, that they're working hard on addressing the concerns of first nations associated with it.

I did have another answer about what we've done for aboriginal youth. We have funded a whole variety of mobile trades training trailers, one of which we did with Northwest Community College. The idea of that is to bring some of the training opportunities directly into first nations communities. For some of these youths, moving out of their communities, moving out of a small community and going to a place like Smithers or Terrace, is a really big dislocation. If you can bring some of the training to them, you stand a better chance of their actually getting involved in the economy.

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

I'll ask a quick follow-up. The fishing industry on the north coast—really, along the entire coast—has witnessed a large downsizing over the last decade. In the retraining programs you've provided, is that part of your mandate or not? For instance, a large cannery in Prince Rupert closed down, and I think a few hundred jobs were lost two or three years ago.

I've always thought to myself that those workers need to be retrained and get the skills they need to succeed. Is that part and parcel of your mandate? Excuse my ignorance if it is and I don't know. It's something that's important. It's something to get for those workers if they need to relocate but need the skills in order to even do so.

[Gerry Salembier]

The actual providing of training opportunity is not within WD's mandate. That's Employment and Social Development Canada. We work quite closely with them and we're trying to get to a point where we can work even more closely with them, because their funding provides training spots. The expression, if the committee would excuse me, is “bums in seats”. They have funding and quite a lot of it for what is called the aboriginal skills and employment training strategy, ASETS. TRICORP is the organization that provides that training with funding from ESDC in the northwest.

Our role is to do things that ESDC can't do. That's things like providing capital equipment for mobile trade training. We've managed within our budget on several occasions to come up with mobile skills trade training options in the province. In fact, my last meeting just before coming to this committee was with a committee of provincial government assistant deputy ministers on labour market priorities. It is exactly that sort of opportunity they're looking to collaborate on with us.

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

Thank you for—

[The Chair, Liberal, Wayne Easter]

Thank you, and sorry, Francesco, but you are one minute over.

We are going to Mr. McColeman.

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

Thanks to the witnesses for being here.

I want to drill down to the risk factors, because this committee is doing pre-budget consultations, and these factors will inform our recommendations as a committee to the minister.

Let's look forward. We know that the likelihood of a softwood lumber agreement is zero to nil, so there are going to be major adjustments in that sector of your economy. That's layered on, as you have said, the reductions in timber available for harvest and what I would call, from being a builder my whole life, a distorted market condition in Vancouver. I've heard many analysts describe how it's come to be that way, but it is that way. We're looking at household debt above the national average.

I'm painting a bit of a gloomy picture here, but there might be light at the end of tunnel in the form of the two pipeline projects under consideration by this government, if they see favourable approval. That could offset some of the downside risk that you have accurately articulated and I've just tried to summarize.

What are your views on that larger picture, in particular, the potential effects of pipelines, should they be approved?

[Gerry Salembier]

I should start with one small point about softwood lumber. My experience on this goes back quite a way, and it's not entirely doom and gloom. The industry is a little better positioned in two important respects than it was, say, in 2001, the last time we faced countervailing and anti-dumping duty suits. The most important thing is that back then there was almost no market in Asia. Now about one-third of the exports of the wood products industry go to Asia. That will be a mitigating factor in the impact of a U.S. countervailing or anti-dumping suit.

Some of the firms involved in Canada have also made significant investments in the U.S. Canfor, Interfor, and West Fraser have made investments in the U.S. to buffer their corporate experience.

On the two pipeline projects, it's not WD's role in the government apparatus to have any impact on that—

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

I don't want to make it political. I'm giving you a hypothetical, because you mentioned them in your remarks. You put them in your presentation as potential risks. I've asked this of every regional organization that's come before us in these last few days. I won't give you exactly what they said. If you look at the testimony, you'll find out.

What would it mean to British Columbia in pure economic terms? Take the politics out of it. Pure economics, that's what we're asking you. That's what you do;you conduct economic analyses and make decisions for the budgets you get. What would the effect be?

[Gerry Salembier]

I think you heard from my Alberta colleague Jim Saunderson on this question of potential oil price declines and oil price impact.

Essentially, the biggest impact for the country as a whole would be a decline in the spread that oil exported from Alberta faces relative to a world benchmark. Right now there's a pretty large spread, although it's smaller than it used to be. A pipeline to tidewater in either direction would have a pretty major impact on shrinking that spread, so the value of exports would go up quite considerably even without a volume increase in exports. That would translate into a major economic benefit for Canada's GNP as a whole.

In addition, the construction of a pipeline would have some pretty major economic impacts for communities all along the route. Pipeline infrastructure is what we call linear infrastructure, because it's a point-to-point affair, has an impact on a great many people along the way. One of the areas where we have focused some effort is on the potential opportunities for first nations communities associated with pipeline projects and other major energy projects.

As I mentioned in my remarks, there are some capacity constraints that sometimes block a community's ability to access those opportunities. We've done some work in co-operation with the Province of British Columbia and with other federal government departments on establishing a workable inventory of business development programs for aboriginal entrepreneurs with businesses. Often they're unincorporated businesses. In order to do business with a major corporation that's building a pipeline, you're better off being incorporated. Just explaining some of the basics of business development can often be a contributor to unblocking some of that capacity in first nations communities.

[The Chair, Liberal, Wayne Easter]

Thank you both.

We'll go to four minutes so we can get both Ms. O'Connell and Ms. Raitt done.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you for your presentation.

We've heard quite a lot about diversification and clean energy, and we have had conversations, too, in the sense that it seems as if everybody is looking to be the leader in this area of clean tech, clean energy. What makes you stand out? What is going to be the factor in this competitive model not only in Canada but around the world? Where are you positioning yourselves, might be a better way of asking it, to really be a leader in that regard.

[Gerry Salembier]

Thanks for the question.

You're right. Everybody is positioning themselves to be a leader in this area, so you're going to hear from me very much what you've heard from others. I'm going to back it up with some really hard facts, not that some of my colleagues necessarily haven't done that.

I'm talking clean tech generally but clean energy as well. The data on clean tech are hard to come by. It's not a sector in Stats Canada's national accounts, but some work is under way right now, which we are participating in at WD interdepartmentally. The best data source we have now is a report that showed 40% of the clean tech companies in Canada are in western Canada. Twenty-five per cent of them are in British Columbia, so the economic geography of British Columbia is highly favourable to clean technology.

Our WINN program is not targeted to a particular sector. The first three intakes of WINN have been open to any sector that has technology commercialization potential. Over half the money that we have ended up spending has gone to clean tech, not because we directed it there, but because that's where the opportunities lie.

In addition to being able to visit Prince Rupert, one of the best parts of my job is in looking over these applications that we get in for the WINN program from the clean tech companies in particular. When I see the entrepreneurial spirit and the smarts that are on display in western Canada, it blows me away.

Probably one of the best signs of that is clean tech projects that we haven't been able to fund. We've funded quite a few that I'm quite proud of, but we've also not been able to fund the clean tech projects that were, in my view, quite deserving of funding and have scored very highly in our assessment project in things like ore sorting, new materials based on biomass, landfill gas recapture, and in capturing waste from waste streams from agricultural activities. We've had a number of really fantastic applications in areas like that, which we haven't been able to fund.

What we have funded is a good sign of why B.C. in particular and the west in general is a clean tech hotbed. What we haven't funded is also a really good sign.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

To follow up on that, because we are in pre-budget consultations, would one of your asks then be further investment so you could fund, especially in the realm of clean tech and diversification in this regard?

[Gerry Salembier]

Let me give you another hard statistical piece of evidence in support of that, and, yes, you're absolutely right; that is an area where we would see a great deal of potential given additional resources. Under our WINN program, we are able to fund about one in 12 of the projects that we get in. Now, I'm not going to tell you that all 12 of those projects are worth funding. They're not. Some of the applications are actually not that strong. But I can tell you that if we were able to fund one in six of those applications instead, every single one of those additional projects would be strong projects, particularly in clean tech. As I said, the economic geography of the west absolutely favours it. It's partly due to the overwhelming presence of natural resource industries. Natural resource industries and the connection of small businesses to the large companies that extract natural resources present one of the best opportunities for making contributions to things like GHG reductions. Mining companies would hate me for saying this, but after all, most mining companies are really in the business of burning rocks. They burn rocks for a living. Rocks don't burn very well. They take a lot of fuel, so if you can find technologies that reduce the need for consumption of fossil fuels to smelt ores and to refine ores, you can make some really serious GHG reduction contributions.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Ms. Raitt.

[Lisa Raitt, Conservative, Milton, ON]

I'm sorry that I missed the first part of your presentation. I took the time to read it, and I want to commend you on it. It's a very tight presentation. You gave some good facts and figures. It's a good brief, and I thank you for the time you put into it.

I have some specific questions about some specific projects. You can give me an update. There are no trick answers, by the way. I'm just looking for the information. I don't have the information, and I've lost track of some projects that I am curious about.

On the Roberts Bank T2, do you know the state we are at in terms of moving forward? When last I left it, they were waiting for the government to allow them to change their borrowing limits. I know there was an issue with their being able to secure investment, and that's what they wanted. If you don't have it off the top of your head, I'm curious to know if they've been able to do that.

[Gerry Salembier]

On the specific question of the increase in the borrowing limits for the Port of Vancouver, I'm sorry but I don't have that off the top of my head. There were some changes made to the Canada Transportation Act some time ago to expand the financing capabilities of organizations like the Port of Vancouver.

[Lisa Raitt, Conservative, Milton, ON]

That's true. They needed it to be done again in order to take T2 into consideration.

[Gerry Salembier]

I think that would be the responsibility of my colleagues and me. They're at Treasury Board and the Department of Finance.