Finance Committee on Oct. 17th, 2016

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'm Ziad Aboultaif, from Edmonton Manning, the northeast side of Edmonton.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I'm Pierre-Luc Dusseault, the member of Parliament for Sherbrooke in Quebec, in the Eastern Townships.

[The Chair, Liberal, Wayne Easter]

I should say as well that Mr. Albas will likely arrive some time while the panel is on. He had a funeral in his riding yesterday and I know he took the red-eye to try to get here, but isn't here yet.

Mr. Goetz, with the Canadian Beverage Association, the floor is yours.

[Jim Goetz, President, Canadian Beverage Association]

Thank you, Mr. Chair.

I appreciate the opportunity to be in front of the committee today to make my presentation on behalf of Canada's beverage industry.

The Canadian Beverage Association represents the manufacturers and distributors of the majority of the non-alcoholic, non-dairy beverages consumed in Canada. We are the national voice for more than 60 brands of juice, bottled water, sports drinks, ready-to-serve iced teas and coffees, enhanced beverages, carbonated soft drinks, energy drinks, and other non-alcoholic beverages.

The beverage industry, directly and indirectly, employs nearly 60,000 Canadians in 220 production facilities, offices, and distribution centres across the country. We generate $6.7 billion of economic activity and contribute over $500 million of federal tax revenue.

Given our location today, I would also like to take a moment to talk about our industry's footprint in Atlantic Canada. Our members are a significant economic driver in this region, providing over 3,000 people with well-paying jobs. Beverage industry employees earn more than the regional average in the manufacturing sector, and we have 31 facilities across the Atlantic provinces, including distribution centres for our largest members, Coca-Cola Canada and PepsiCo beverages. In fact, if you were to google “Coca-Cola or Pepsi employment” and ”Moncton” or “Fredericton”, you'd see job offerings coming up that are available right now in the region.

It is in that context that I am here to talk to you today. The food and beverage sector is highly regulated by the Government of Canada, which we appreciate. We support and work collaboratively with the government. The safety of Canadians through their consumption of food and beverages is our paramount responsibility.

That being said, our industry is highly susceptible to changes in federal regulation. Assuring a supportive and stable environment is critical for providing businesses with the opportunity to succeed and expand. There are multiple ways in which the Government of Canada can help us maintain this environment.

First, we recommend refraining from product-specific taxation. Our industry is under increased threat of product-specific taxes on sugar-sweetened beverages that are not based on evidence.

The consumption of sugar-sweetened beverages in Canada is declining. In fact, beverage calories overall have declined 20% in the last decade. At the same time, unfortunately, the incidence of obesity in Canada continues to rise. A tax on sugar-sweetened beverages is not a solution that reflects the reality of consumption patterns or the causes of obesity in Canada.

This type of taxation has been tried in multiple jurisdictions and the results have not been good. Mexico, which recently implemented a tax, saw an average reduction of only 4.7 calories in a diet of over 3,000 calories per capita. However, the instability the tax has created up and down the industry's value chain has led to a loss of 10,000 jobs.

Denmark implemented a much broader tax on sugar in the 1930s, and more recently on fat in 2014, and actually repealed both of those taxes due to how ineffectual they were.

Make no mistake, our members are committed to working with the government and the public to combat obesity, and we've been doing that by introducing new products with less sugar and fewer calories in them, but the reality is there is no magic bullet solution.

Experts, including those at Health Canada, agree that the factors associated with obesity are multi-faceted and complex and cannot be pinpointed to one single ingredient or action.

Beyond regulations or taxation around sugar, our industry also encourages the government to look at other methods that would help create a stable environment through regulatory modernization and removal of red tape. For example, our industry has spent more than two decades working with the government to remove the regulation requiring mandatory front-of-pack labelling for non-caloric sweeteners. No other jurisdiction in the world has this requirement.

Health Canada has stated on their own website that there are no risks associated with non-caloric sweeteners. And yet, we have spent more than 20 years talking to officials about removing this requirement with no movement. It is this type of over-regulation and red tape that has a negative effect on our members' ability to conduct business in Canada and bring new products to market that continue to drive those calories down in the beverages that Canadians consume.

The beverage industry is a little unknown but a significant economic driver in Canada, and we want to continue on that path. We welcome all opportunities to work with the federal government on legislation and policies while maintaining our industry's economic footprint across Canada.

Thank you again for this opportunity to appear. I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Jim.

We're turning to Choices for Youth, Mr. Pollett, executive director.

[Sheldon Pollett, Executive Director, Choices for Youth]

Thank you very much for the opportunity to be here this morning. My name is Sheldon Pollett. I represent an organization in St. John's, Newfoundland, called Choices for Youth. It's been in existence for about 25 years. We were created with the clergy of the Mount Cashel orphanage in St. John's. The reason I tell that story is when that happened, obviously tragic circumstances around that event with youth who required support didn't disappear along with that facility. For 25 years we focused on providing youth with choice and opportunity to effect the changes in their own lives.

Although I can talk about any number of things related to at-risk and homeless youth in this country and certainly in our province, what I want to talk about this morning is the growing conversation around how to prevent and end youth homelessness in Canada.

I'm also a part of A Way Home Canada, which is a new national coalition that was launched this past January. It's a collection of agencies and partners across the country working to end youth homelessness, which has also spawned A Way Home in the United States and some efforts on A Way in Europe around the same approach.

I want to talk this morning along the same lines of what I brought to the recent national housing strategy consultations around how the federal government can prioritize the creation of plans across this country to end youth homelessness. We live and work in a world, in communities, in provinces across this country, in a very fragmented systems approach to providing supports and services to at-risk youth at great expense to government at the same time for very poor outcomes. I can't stress that enough.

Although many of the policy areas governing the issues that come to bear on youth homelessness are governed by the provinces, how can the federal government play that role? The federal government has played a huge role in homeless partnering strategy over the last 15 years and now in the significant shift to housing first principles. For those of you who are not familiar with that language, it's a very simple concept: help someone with complex needs find a place to live and then do everything in your power to help them maintain a place to live.

Based on that principle, the federal government certainly has played a key role in seeing that approach, which is really a global approach at this point, being implemented in every community across the country receiving homelessness funding from the federal government.

Many of my colleagues and I would like to see a growing move toward provincial-level plans to end youth homelessness. Many groups like ours can be very innovative, very resourceful. We can draw on many partners from the private sector as well, but we cannot change the systems that dump young people into homelessness in the first place. These systems fundamentally have to change. The only way to do that is to have truly integrated public policy that weaves together both the policy implications and the funding investments that come to bear on that.

Some examples are the federal government's push toward a national housing strategy. For many years in this country, the federal government has been investing in crime prevention strategies, youth employment strategies, homelessness strategies. The shocking or not shocking thing about this is that you are all targeting the same young people with very distinct, separate, unaligned, unintegrated approaches.

In short, we're advocating federal prioritization of provincial-level plans around the issue of youth homelessness. Who does that involve? It involves health, justice, education, child welfare, income support, any system or policy that comes to bear on changing the outcomes for homeless and at-risk people.

Behind all this is a lot of work done by the Canadian Observatory On Homelessness in conjunction with A Way Home Canada that looks at.... Right now, we have what I call a system addicted to crisis. The only way and only time they know how to respond is in a crisis: emergency shelter, hospitalization, child apprehension, incarceration. Those are all exceptionally expensive crisis responses, which also come with very poor outcomes later in life.

The appropriate response at this point is to shrink the crisis response system. You're always going to need a crisis response system, just as someone is always going to break a leg in the middle of the night. You need an emergency room, but the trick is preventing people from ending up there in the first place and then, when they do, getting them out of there in a healthy way as quickly as possible. So with the shrinkage of the crisis response system, you increase the prevention work that you do around ending youth homelessness, and then you also up the housing and support options required to lead to good outcomes for young people later in life.

We all live in a world of limited resources for any number of key pieces of public policy. Everyone looks at the cost of investing now, but rarely do we have the conversation about the cost of doing nothing. I can tell you the cost of doing nothing, both in terms of human lives and in terms of finances, is exponentially higher. You look at what it costs to incarcerate someone, what it costs to apprehend a child. Doing nothing is invariably 10 times the financial cost of that.

If you look at our organization alone, you'll see that we serve a small city, but a growing number of young people in our city are facing homelessness or risk of homelessness. You'll see that 63% of the young people we see on a daily basis have past or current experience with the child welfare system, and 75% have past or current experience with the justice system. With regard to housing and stability, 70% are experiencing recurring homelessness, they're not in school, and they're not employed.

When I talk about integrated public policy, you have to understand that they live their lives. Those are not distinct young people showing up in each of those categories. They are the same young people showing up primarily in each and every one of those categories. So the policy and the system environment you need to respond to appropriately needs to reflect that. Right now and for many years, it has not.

[The Chair, Liberal, Wayne Easter]

I need you to wrap up in a minute, if you could.

[Sheldon Pollett]

I have one more point to make. In terms of the mental health and addictions conversation in this country, I think many of us are well aware at this point of the good work done on reducing stigma around mental health and addictions. Many of us in this country are beginning now to turn our attention to the fact that, unless that 100,000-foot conversation begins to play out on the ground affecting the lives of individuals, it's of limited value. It actually does need to lead to systemic change for people we're most concerned with.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Sheldon.

A joint presentation is next, from Mr. Seabrook with the City of Fredericton and Mr. Shaw with Ignite Fredericton.

The floor is yours, David.

[David Seabrook, Assistant Director, Growth and Community Services, Manager of Tourism, City of Fredericton]

Thank you, Mr. Chair.

My name is David Seabrook. I'm the assistant director of growth and community services for the City of Fredericton and responsible for economic development and tourism.

The City of Fredericton thanks the Standing Committee on Finance for the opportunity to present to you today. We believe it's very timely because we would like to address a strategic focus, which is investing in small and medium-sized cities. We believe strongly that a significant portion of Canada's economic growth will come from these small and medium-sized cities. We have a lower cost of living, lower cost of doing business, lower housing costs, and excellent quality of life, all of which can drive economic growth in Canada's future.

It's also worth noting that small and medium-sized cities are great opportunities for the federal government to pilot programs and investments as we have seen with the world-leading Siemens smart grid investments with New Brunswick Power.

Here in Fredericton, we are indeed growing. Our economy is expanding, our population is growing. Studies indicate very significant growth in our population over the next two decades. Immigration will be a key factor in our growth and it's essential that we understand the profound linkages between immigration and economic growth as they pertain to small and medium-sized cities in Atlantic Canada.

We need to invest to ensure that we create the correct conditions for immigrants and newcomers to adapt to our culture, find jobs, and buy businesses. In fact, the federal government just recently funded a succession planning matching program here in Fredericton with the Chamber of Commerce, which you probably heard about when our Chamber of Commerce CEO presented. It is key to matching immigrants with Canadians who are looking to retire and sell their businesses. That's one way we can support immigration in Atlantic Canada.

Jobs and economic growth in our area will largely be driven by a dynamic culture of innovation and entrepreneurship in our community. We are one of Canada's leading start-up communities, and it is essential that the federal government invest to facilitate the growth of these entrepreneurial companies that are prepared to export beyond New Brunswick to the rest of Canada, and in fact, the rest of the world.

We believe this first means investing in infrastructure, transportation infrastructure in particular, and investments aimed at expanding the Fredericton International Airport. Again, I believe our CEO from the Chamber of Commerce has already discussed this, but the city of Fredericton's international airport is one of six NAS airports across the country currently ineligible for federal funding to expand. It's currently 75% over capacity. We anticipate further growth. We have new airlines coming into the marketplace, and essentially we have a bureaucratic barrier to prevent funding of that expansion, which is shovel ready and ready to go now. It's essential for the growth of this community, so we would ask that you pay particular attention to the barriers in that particular funding scenario.

Just as important is investment into our digital infrastructure to ensure our knowledge-based companies have the ability to work with, and export to, the world. We need to invest in the innovation infrastructure at our universities. This includes research chairs and applied research institutes.

Such investments should recognize that communities can become clusters of targeted economic growth in specific communities with specific clusters, and recognizing where we have expertise. In Fredericton, that's knowledge industries, innovation associated with natural resources, and the developing cybersecurity cluster.

It's also tourism. We would advocate that continued investment in Destination Canada, allowing it to expand its current U.S. program beyond a select number of cities to provide a wider range of cross-border travel, is key, and also investment in Canada's festival and events sector through the application by Festivals and Major Events Canada for $30 million to support that sector. There were great investments recently in culture, but they didn't come down to those that actually generate tourism and economic activity through the festival sector.

With that, I'll pass it over to my colleague, Larry Shaw, from Ignite Fredericton.

[Larry Shaw, Chief Executive Officer, Knowledge Park Inc., Ignite Fredericton]

Thank you.

Good morning. As Dave mentioned, we appreciate the opportunity to be here. I'm the CEO of Ignite Fredericton, but also Knowledge Park, the only research park in eastern Canada. I also hold the position of president of the Association of University Research Parks, and I represent 26 research parks across Canada.

I'm going to slip by some of my early comments based on Dave's excellent coverage of some of the notes we made, and I encourage you to read those. They're in the package. I did go into some background in terms of a framework for economic development growth here in our region, so I do encourage you to read that.

There were three questions submitted in the documentation leading into this, so I'm going to jump very directly to those three questions, expand on some of the thoughts and ideas that David has put on the table, and give you some specific recommendations regarding each side of those three questions.

The first question was what federal measures would help Canadians in general and in specific groups such as unemployed indigenous people, etc., and how could they expand the economic growth within the country?

A cornerstone of economic growth has been and will continue to be small and medium-sized enterprises that have been launched through entrepreneurial leadership. Federal and provincial strategies are required to expand entrepreneurial programming and support organizations that deliver it, such as Ignite Fredericton. In the same manner that access to technology has opened global markets, start-up entrepreneurs can emerge from all regions and demographics within our nation. This strategy, enabled nationally, will empower all regions, sectors, communities, and groups to become engaged, create economic growth, and have an impact on a national basis.

The second point to this first question is that the knowledge economy is in itself a career path, but when it is combined with the cultural shift of the current generation away from the traditional achievements and recognition-reward systems, we must adopt new educational models. We need educational awareness programs from K through 12 on the knowledge economy that tie skill development of the future to the educational and training pathways that we are experiencing today. These are required. Experiential learning should be at the basis of an educational program going forward as it develops and expands the support for career choices of individuals going into the marketplace.

Academic institutions demonstrate their leadership through the strength and depth they achieve through research. Programs and policies that support and promote commercialization and entrepreneurial activity following from applied research and corporate research and development should be valued in the same manner and should receive appropriate investment.

Finally, the intellectual experience that resides within the aging population is in fact a valuable asset that can be used to foster the next generation of entrepreneurs. Investment in economic growth is not limited to capital, but also requires execution. An aging population also reflects an aging current demographic of business ownership. As David mentioned, the succession planning that has been launched here locally is a pilot program that we believe should be expanded rapidly. A program of this nature can also improve immigration retention in small urban centres and rural communities.

The second question was what federal action would assist Canadian businesses in all regions and sectors to meet their expansion and prosperity goals? A shortage of skilled and qualified labour is a critical factor that restricts growth nationally, and specifically in the knowledge sector. It is also highlighted in specific groups, such as unemployed youth, and in industries under change, such as value-added manufacturing. Programs and supports should focus on addressing these gaps and promoting specific skills development in areas such as cybersecurity. Global markets are fundamental to regional and national growth, yet export development and leadership programs are too generic and require more customized programming, and direct in-market partnerships. In-nation trade barriers continue to prevent growth, and interprovincial certification requirements restrict the flow of labour. We need to support both a national and an international growth agenda and expansion. Although there is significant focus on and support for innovation provincially and federally, we need to address some basic fundamentals in order to unleash the commercialization of innovation and the inventions. Seed capital is a barrier and scaling capital is complex, both of which stall growth.

Applied research needs to be the fundamental outcome of core research, and incentives should align with this concept.

General positioning of corporate tax and red-tape reduction is required to change our national productivity standing and the R and D investments being made. On projects of national interest, exposing capital investors to such items as not having a harmonized provincial and federal environmental assessment process restricts investment not only in this province, but also in Canada as a whole.

Economic development is itself a clustering strategy, and with this, regions should develop models that use these principles. Strong urban centres create demand for tertiary markets and draw rural communities into the logistics and supply chains. Federal strategies should support and promote the model.

The last point that I'll highlight is infrastructure access. Whether it's physical such as rail, road, air, or port local on the local front, we should allow markets to be accessed from all communities. Digital infrastructure, Internet, and data transport enable this globalization. To enable access to skill and innovation emerging from these locations, we need the investments made in this infrastructure to be dramatically increased. Fredericton airport, as I mentioned before, is the first handshake that most visitors receive when coming to our communities, and it speaks to the capabilities of our communities.

I appreciate the opportunity to submit, and I encourage you to read the remaining part of the document we submitted.

[The Chair, Liberal, Wayne Easter]

Just so you are aware, we have received all the briefs. That's why you'll find people looking at their IPad; all the briefs that have come in are on the IPad.

Next, from the National Farmers Union, we have Ms. Wildeman and Mr. Wiggans.

Amanda, you're up.

[Amanda Wildeman, Executive Director, Region 1 New Brunswick, National Farmers Union]

My name is Amanda Wildeman. I'm the Executive Director, and this is Ted Wiggans, President of the National Farmers Union in New Brunswick.

We are making this presentation today on behalf of our national organization. The National Farmers Union, NFU, welcomes the opportunity to contribute to the finance committee's pre-budget consultations. The NFU is a voluntary, direct-membership, non-partisan, national farm organization made up of thousands of farm families who produce a wide variety of commodities across Canada.

The NFU recommendations aim to advance the individual and collective prosperity of family farmers and promote the valuable contribution of farmers to the economic, social, and ecological health of Canada and Canadians. The priorities appear in full detail in our longer submission, but we have some highlights here. They comprise rebuilding agricultural research capacity and adding new capacity to address climate change, including a national extension program; prioritizing public interest agricultural research; returning the Port of Churchill to public ownership; restoring the Canadian Grain Commission's funding to pre-2012 levels; implementing a producer-car receiver program under the Canadian Grain Commission's authority; reducing demand for safety net payments by championing orderly marketing institutions; assisting young farmers to become the next generation of family farmers; improving quality of life in rural communities; and reopening all prison farms and restoring funding to prison farm programs.

[Ted Wiggans, President, Region 1 New Brunswick, National Farmers Union]

The previous government eliminated over 500 agricultural research positions between 2012 and 2015. Valuable research institutions and field research stations were closed in every region, impairing Canada's ability to respond to urgent challenges and opportunities. Budget 2017 should restore Agriculture and Agri-Food Canada's research funding at least to pre-2012 levels, adjusted for inflation.

The NFU recognizes recent federal investments in research facilities, and we urge the government to also increase investment in the people who work in those buildings. Additional funding is required to rebuild scientific, technical, and support staff capacity in the face of generational turnover, past layoffs, and lack of hiring over the past decade.

Budget 2016 provided considerable support for agricultural economic research. The information generated from this investment needs to be kept in the public domain, not subject to intellectual property rights claims that would be a barrier to researchers using the data.

We would also recommend that budget 2017 add a public interest research surcharge to funds provided by corporations that participate with universities and the AAFC.

[Amanda Wildeman]

The average age of farmers in Canada is rising, and the number of farmers under the age of 35 is falling. For example, in New Brunswick we have only 235 farmers under the age of 35.

We are in the midst of a crisis in intergenerational farm transfer. There is an urgent need for measures to assist young people to begin and to continue farming. Measures to promote sustainable incomes for all farmers will help young people choose farming as an economically viable career.

Beginning farmers require mentorship and training, as well as assistance in gaining access to land, especially in options for secure land tenure that do not involve crippling debt. The NFU recommends that the federal government develop mechanisms for family farm intergenerational land transfers that do not rely on loans and interest payments.

Canada also needs an income assurance plan for beginning farmers to assist them in becoming established and to support their long-term success. A retirement savings plan or a pension plan specifically designed for farmers would reduce their need to rely on selling their land at high prices to fund their retirement.

[Ted Wiggans]

Farmers depend upon a favourable climate and weather conditions to earn a livelihood. We need climate stability to produce our crops, raise our livestock, and maintain the health of our agricultural ecosystem, and to provide the food Canadians eat.

We are also in a position to make a significant impact on Canada's carbon footprint by changing our agricultural practices. Both adaptation and mitigation are required for agriculture to play its part in preventing catastrophic climate change and for food production and farmer livelihoods to be maintained in the increasingly uncertain climate future.

Programs should be created to assist farms facing long-term climate-related problems. Budget 2017 should give priority to funding effective research and extension programs to reduce emissions from livestock production, promote adoption of low-input production methods, including soil carbon enhancement, and promote on-farm energy conservation practices. Currently, farmers get much of their information from the companies that sell farm inputs. Farmers need an alternative source of practical information, since the commercial agricultural sector has no incentive to provide this.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

From Universities Canada, we have Mr. Davidson, president and CEO. Welcome.

[Paul Davidson, President and Chief Executive Officer, Universities Canada]

Good morning, Mr. Chair.

Thank you for the invitation to be in Fredericton this morning. Thank you also for travelling across the country to conduct your hearings.

I really appreciate the invitation. I listened in on the last panel, and I was struck that the farmers, foresters, and fishers who presented all made the point about the importance of research in their future.

As this is my first time before this committee since the last election, let me congratulate each of you for your election to Parliament and your dedication to serving your constituents and building a better Canada.

My name is Paul Davidson and I am the president and chief executive officer of Universities Canada. Our association speaks for 97 universities that work to advance the cause of higher education, research and innovation in Canada.

Because we're here in Fredericton, I have to mention that the University of New Brunswick was named as the most entrepreneurial university in the country by Startup Canada in 2014.

But just in the last week, think about the news that UNB has shared. It's opened a new maker space, open to engineers and arts students, to help create the new economy. It's received $1 million from RBC to advance entrepreneurial activity among students. And IBM has selected UNB as one of only eight universities in North America to advance its cybersecurity project with Watson. That's pretty good for a small, mid-class city with a world-class university.

It's also home to St. Thomas University, one of Canada's outstanding liberal arts universities. One of your House of Commons colleagues, Matt DeCourcey, an alum from there, has written extensively about the importance of the liberal arts, a view we share.

All Canadian universities have stories of excellence like this to share, and on their behalf, I invite you to visit our campuses to see the phenomenal work being done by students, faculty, and researchers, and to give you a glimpse into Canada's future.

I'm very lucky. I spend about 100 days a year on Canada's campuses, and whenever I go, I feel 30 years younger and I can see 50 years into the future of Canada.

Before talking about budget 2017, I want to note the really important investments that budget 2016 made: the biggest investments in discovery research in over a decade that will let discovery lead, which in turn leads to dramatic innovation; changes in student financial assistance to make post-secondary education more attainable; and finally, the new strategic investment fund, a smart investment in university infrastructure that pays dividends now and in the future. It was turned around quickly by our members, and we now have work under way right across the country.

But this is about budget 2017. Over the course of the summer, we have been pleased to be involved in a number of the consultations the government has been holding, including on the new innovation agenda, the review of fundamental science, the finance minister's advisory council on economic growth, the immigration consultation, and the international assistance review.

I make this point because universities touch Canadians all across the country and in all these policy areas, and across all these submissions you'll see our consistent message that universities mobilize people and ideas for an innovative, inclusive, and prosperous Canada.

Budget 2017 presents an opportunity for Canada to position itself as an international centre for discovery and innovation, to invest in our youth, and to advance reconciliation between indigenous and non-indigenous people.

Let's talk about research and innovation for a moment. Again, I note the theme right across the panel about the importance of investing in research for an innovative future. Our recommendations in this regard include providing sustained and transformative investments in discovery research through the federal research granting councils. The previous government did make investments in research, but we have to note that over the last decade we've fallen from third in the world to eighth in the world in terms of research investment. We have to get back to third, and we have to get back to globally competitive research levels.

We also need to provide sustained support for the Canada Foundation for Innovation to address operation and maintenance pressures on existing research facilities and to allow for better planning horizons for bold transformative initiatives. We're also asking that the CFI be given a mandate to lead a national big science strategy.

Finally, with regard to research, we ask that the government provide support to address gaps in Canada's research and innovation ecosystem, including a new fund to support international research collaboration with partner countries. Previous panellists have talked about the impact of TPP and CETA. There are research opportunities that we can take advantage of in a globalized world.

Our second area of interest is around mobilizing Canadian talent. The investments we make in students today will determine Canada's prosperity for decades to come. To succeed in the ever-changing and competitive global economy, Canada's next generation of entrepreneurs, researchers, and innovators must be bold, well educated, flexible, and open minded. Global study and work-integrated learning opportunities are fundamental to developing Canadian talent.

We heard just a few moments ago about the importance of experiential education. We strongly endorse that theme. We're proud that more than half of all university undergraduates have some form of work experience in the course of their studies, but we simply don't have enough placements with employers, especially with small and medium-sized enterprises.

We're pleased that RBC president Dave McKay and other business leaders have set an ambitious goal of co-ops and internships for 100% of students. He sees the compelling benefits of engaging students in the big challenges facing the future. For this we recommend that government invest in new measures to incentivize the private and not-for-profit sectors to create more paid co-op and internship placements for university students across all academic disciplines. To mobilize our talent we also recommend an investment in opportunities to double the number of Canadian students participating annually in the study of broad experiences. We have to do that. We've done a very good job in attracting international students to Canada and we do need to do more on that, but the percentage of Canadian students who have international experience hasn't changed in 30 years. We are in a global economy, but our trading numbers are actually softening. We need to equip a generation that knows about the new economic opportunities around the world.

The third area of our recommendations fall within the orbit of indigenous education. Universities are helping develop tomorrow's indigenous leaders and for this we recommend that the government commit to additional direct financial assistance for indigenous students pursuing a university education, invest in new scholarships to support more indigenous students to pursue graduate and post-doctoral studies, and provide new support to scale up successful institutional programs and to create new programs on and off-campus, and support indigenous student access, retention, and success at university.

Thank you for your attention. I would be pleased to discuss these recommendations in further detail.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Paul.

There's a change in the agenda, committee members, there is one other witness. Mr. Robert Watson with the Information Technology Association of Canada. Welcome, Robert.

[Robert Watson, President and Chief Executive Officer, Information Technology Association of Canada]

Thank you, Mr. Chairman, and thank you, ladies and gentlemen, for inviting me to appear today.

As stated, my name is Robert Watson. I'm the CEO of Canada's national Information communications technology business association, the Information Technology Association of Canada, ITAC. ITAC has over 330 member companies that represent a full spectrum of the ICT industry. We have large, medium-sized, and small companies that do everything from cloud and computing applications, to hardware and cybersecurity. The ICT sector generates over one million jobs directly and indirectly, and it invests over $4.9 billion annually in R and D.

Today, I will be briefly setting out our seven recommendations for the 2017 budget. They are categorized under the four themes of digital government, digital economy, talent and skills development, and trade and competitiveness.

Under the theme of digital government, ITAC has long been an advocate for improving Canada's procurement policies in order to deliver the best services to Canadians through cutting-edge digital solutions. We also know that a sound procurement policy allows successful access to companies of all sizes, and it presents the most innovative solutions to the government's challenges.

Our first recommendation to this committee is to create digital services Canada. The governments of the United States, the United Kingdom, South Australia, and others have realized the benefits that a central authority over digital service delivery can afford to their citizens. These governments have created digital services to maximize efficiency, save taxpayer dollars, and reduce wasteful duplication. By contrast, Canada continues to use a decentralized approach to delivering digital services to Canadians. A decentralized approach makes it difficult for industry to present fresh ideas and offer improved ways of delivering services digitally to Canadians. This in turn leads to less choice and higher prices for everybody.

Creating digital services Canada would be a legacy item for the Prime Minster and his government, while echoing his message from the World Economic Forum that Canada has a knowledge-based economy built on the foundation of a digital revolution.

Forging successful digital services in Canada will require gaining insight from those who have experience with digital services in other countries. This isn't a standard consultation, but rather a collaborative process whereby the government can seek assistance from people who have built digital services for President Obama and others. This is why ITAC recommends a creation of a digital leadership advisory council composed of academic, government, and industry experts. This council would discuss the mandate priorities for digital services Canada, identify major projects, and set a clear path forward.

Under the theme of digital economy, it is important to recognize that Canada has some of the most challenging geography on the planet in which to deploy digital infrastructure. As a former CEO of SaskTel, I know this all too well. As a result of these challenges, Canada has fostered some of the most innovative telecommunications companies in the world. This network infrastructure is the interactive backbone that supports and connects all sectors of the economy while delivering social benefits such as e-leaning and telehealth. Without this infrastructure, this would simply mean no modern economy in Canada.

The second recommendation we have is to change the capital cost allowance rate to incent companies to deploy digital infrastructure. The government clearly understands the linkage between technology investment and productivity growth. This idea underpins the 2007 introduction of an accelerated capital cost allowance to encourage investment in machinery and equipment to use in manufacturing.

Our second recommendation uses the same logic that applies to all participants in the economy seeking to boost productivity and spur innovation growth through the broader adoption of technology. Capital cost allowance generally favours adoption of information and communications technology. ICT is spread across a broad swath of investment classes, and understanding allowance for a full package of ICT tools from service to applications can be challenging, particularly for small businesses. Rationalization in the standardization of a CCA for ICT classes of assets would help encourage technology adaptation.

ITAC recommends that the government standardize and increase its CCA from the current rate to 50% for ICT classes of assets, including those that relate to communication, networks, equipment, and broadband networks. This will accelerate the rate at which the private sectors invest in digital delivery structure and fuel the Canadian economy.

Next is recommendation number three, develop partnerships, funding vehicles, and policy initiatives to enable 5G technology. The next generation of 5G technology offers transformational opportunities for Canada. And 5G will propel research, power smart cities, produce immense quantities of open data, and usher in a new wave of telecommunications expertise. As other countries begin testing technology to enable 5G, Canada has an opportunity to become a world leader and develop the best 5G company research assistant talent in the world. It is not often we can foresee a disruptive technology coming, but we do know 5G is coming, and the question is whether we will be prepared to seize on the opportunity.

Therefore, ITAC recommends that the government seek out industry and government partners in order to develop talent, funding vehicles, and policies necessary to enable 5G in Canada.

Next is recommendation number four, fund telehealth services in both urban and remote communities. One of the most transformative ways in which technology can impact our community is through telehealth. Telehealth benefits urban Canadians by offering a convenient and efficient alternative to traditional touch-points with medical practitioners. Telehealth is particularly important for Canadians who are using home care or have mobility challenges. For Canadians who live in rural or remote communities, including first nations and indigenous populations, telehealth bridges an important gap and brings medical practitioners into unserviced areas. Telehealth also presents a huge opportunity to the mental health area where many communities are critically underserved.

Therefore, ITAC recommends an investment of $30 million over three years to the Canada Health Infoway to ensure that telehealth delivers preventive and therapeutic benefits to Canadians in all communities.

Next is talent. Switching gears, I'm sure many of you are aware that Canada faces a significant rate of youth unemployment, which according to Statistics Canada has not yet rebounded from the 2008 recession levels. Shockingly, at the same time, the technology sector has a growing skills gap with over 200,000 vacancies expected by 2020.

ITAC would like to recommend some concrete measures that would see Canadian youth fill the skills gap and use their innovative ideas to power a modern economy.

Next is talent recommendation. Fund CareerMash and get more high school students ready for technology jobs. Digital skills are vital for everyone's lives. It is estimated that around 90% of all jobs over the next 20 years will require some level of digital skills so we need to make sure they are at the heart of our education system.

[The Chair, Liberal, Wayne Easter]

Robert, I'll have to ask you to wrap up fairly quickly. We do have your main brief.

[Robert Watson]

We have already reached over 80,000 students and would like to reach more.

Therefore, we recommend a $2.5-million funding over the next five years to continue with CareerMash.

Next is funding experiential learning opportunities in the technology sector. It is, again, something that is required. Even our Governor General, David Johnston, said that he wouldn't start a university if he didn't have an experiential learner in every student. Therefore, ITAC recommends $7 million funding over the next five years to develop a broad and inclusive experiential learning program under the ITT sector.

Last is a holistic approach to consultation, taxation, and innovation. We need to find a way to scale our companies in Canada, and the way to do that is a holistic approach to R and D and innovation in Canada. Therefore, we recommend a comprehensive consultation and tax consultation that fosters R and D spending and innovation in Canada.

Those are my comments, Mr. Chairman. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Watson.

I do expect there will probably be questions. Some of us live in rural areas, and we're not exactly happy about the speed of broadband we get.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

It's great to be in Fredericton to hear this group. One of the great things about this panel is the interesting juxtaposition, of course. You have some national organizations here and a local perspective with respect to economic development.

One of the very common refrains, and to be honest one of the most confounding things, we have encountered as we go across the country—in Mr. Albas' home province, Mr. Aboultaif's home province, and I expect all over the country—is the skills gap.

Mr. Shaw and Mr. Seabrook, you addressed this to some extent locally. Perhaps I would like to start quickly by having you describe for us the Fredericton or the New Brunswick perspective on people without jobs and jobs without people, and perhaps illustrate for us how that problem is felt here.

[Larry Shaw]

From the ICT perspective, currently there's somewhere in the magnitude of 3,000 jobs going unfilled in the province of New Brunswick right now. That number changes weekly because, obviously, people come in and out of the job market but it's holding about the same, it's around 3,000. If you look at all of our strategic initiatives, whether they be at a federal or provincial level—certainly on federal from the folks on innovation, and locally in the province of New Brunswick with its current government focus on innovation—we are only going to exacerbate that problem.

Today, if we made substantial changes to the education platform, we would only have an impact four years from now, generally speaking. This problem is not a problem that will go away in a short period of time. It's a problem that we have identified for a number of years already and we are going to continue to compound that. That isn't necessarily to say that this is all grey, or doom and gloom. There are an awful lot of things that are happening to try to offset that. One of the most effective ones we're investing in is the experiential learning aspects. We've heard that a number of times around the table.

Some of these skills can be filled with not necessarily a degree program. They can be filled with an existing degree program combined with an experiential learning certificate program, or something of that nature. We're tackling that particular problem around experiential learning. We formed a relationship just recently, as was mentioned, around the business faculty where we're going to be bringing business faculty third-year and fourth-year students into our start-up community. They will participate in start-up companies, going at acceleration in the incubation period as experiential learners. The business gets highly trained third-year and fourth-year students. The business gets that skill set, but also the student gains first-hand experience inside a new start-up organization.