Evidence of meeting #44 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pei.

On the agenda

MPs speaking

Also speaking

Oliver Technow  President, BioVectra Inc.
Penny Walsh McGuire  Executive Director, Greater Charlottetown Area Chamber of Commerce
Ron Keefe  Executive Board Member, PEI BioAlliance
Amanda Beazley  Executive Director, Atlantic Partnership for Literacy and Essential Skills, P.E.I. Literacy Alliance
Ian MacPherson  Executive Director, Prince Edward Island Fishermen's Association
Mary Robinson  President, Prince Edward Island Federation of Agriculture
Robert Godfrey  Executive Director, Prince Edward Island Federation of Agriculture
Jayne Hunter  Executive Director, Atlantic Partnership for Essential Skills, Literacy Nova Scotia
Craig Avery  President, Prince Edward Island Fishermen's Association
Shane Devenish  Executive Director, Canadian Camping and RV Council
Ann Wheatley  Coordinator, Cooper Institute
Josie Baker  Coordinator, Cooper Institute
Michael Pearson  President, CONTAX Inc.
Jenny Wright  Executive Director, St. John's Status of Women Council
Allen F. Roach  Minister of Finance, Province of Prince Edward Island
Lori MacKay  Chair, PEI Coalition For Fair EI
Leo Broderick  Representative, P.E.I. Health Coalition
Edith Perry  As an Individual
Joseph Byrne  As an Individual

9 a.m.

Liberal

The Chair Liberal Wayne Easter

We will call the meeting to order. As everyone knows, these are the pre-budget consultations of the federal finance committee, and we're doing hearings in advance of the 2017 budget.

Welcome, everyone. Thank you for coming. We have so many pairs of people appearing this morning that we've had to reset the room.

In any event, when we're on the road, we ask members to introduce themselves so that you at least know who we are, what parties we represent, and what region we come from.

I'm Wayne Easter, the chair of the committee, and my riding is next door. After you get around all of those roundabouts, you'll get to the riding of Malpeque.

Francesco, do you want to start?

9 a.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you, Mr. Chair.

Good morning, everyone. I'm Francesco Sorbara. I represent the riding of Vaughan—Woodbridge, which is right on top of Toronto, bordering the city of Toronto.

9 a.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

I'm Steve MacKinnon. I'm a proud graduate of Colonel Gray Senior High School, and now I'm a member of Parliament for Gatineau, Quebec.

9 a.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

Good morning. My name is Ziad Aboultaif. I'm from the riding of Edmonton Manning, on the north side of Edmonton.

9 a.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Good morning. I'm Dan Albas. I'm from the British Columbia interior, in the riding of Central Okanagan—Similkameen—Nicola. I'm a Conservative member. I look forward to hearing your views today.

9 a.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

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

9 a.m.

Liberal

The Chair Liberal Wayne Easter

Thanks to all of you.

We have the analysts and the clerk here as well.

To start, what we would hope for is that people can stick to five-minute presentations. There are six presentations, and I think one combined, and then we'll go to questions.

We'll start with BioVectra. Mr. Technow is the president, and Ms. Delage is the vice-president of business development.

Oliver, the floor is yours.

9 a.m.

Oliver Technow President, BioVectra Inc.

Thank you, Mr. Chairman, for the opportunity to address you and the finance committee today.

My name is Oliver Technow, and I'm accompanied by Ms. Heather Delage. The organization we lead, right here in Charlottetown, Prince Edward Island, can truly be considered a prime example of how an entrepreneurial vision can turn into global leadership in one of the most competitive areas: pharmaceutical ingredient manufacturing.

I have two objectives today with my five minutes. I would like to share a little of our BioVectra story with you so that you can envision how innovative clusters can help create and lead a knowledge-based economy, not only in what we consider the big centres in this country, such as Toronto, Montreal, Vancouver, or Calgary, but also right here in beautiful in Atlantic Canada, where we have some of the best universities and colleges in the country and a very talented and highly skilled workforce that is looking for ways to drive the economy here.

Second, as you know, BioVectra has provided a written submission and has developed alongside that a very compelling business case that would help operationalize a major facility in Windsor, Nova Scotia, which we've purchased and have started retrofitting. We are asking the finance committee to recommend federal government investment in BioVectra in its pre-budget report. I want to be very clear at this point that this is not a corporate handout. This is a very smart investment that will quickly pay dividends for many years to come and can lead to the creation of hundreds of jobs in the outskirts of Halifax.

I truly hope that you see how our current business model and our future vision will help to answer all three of the finance committee's questions that have been posed: by boosting employment in rural Canada; by expanding an innovative and knowledge-based company that supports economic diversification in Atlantic Canada; and as well, as an organization, by providing cutting-edge technology and innovation and exporting that to the globe.

Let me introduce you briefly to what BioVectra does. We are a contract manufacturing and development organization applying world-leading technology in the pharmaceutical manufacturing sector. We have a speciality in the area of fermentation, which is a technology that is used in a lot of innovative drugs these days. We are headquartered here in Prince Edward Island. BioVectra can already be considered as the premier life sciences company in Atlantic Canada, which has a growing bioscience cluster. We have three active manufacturing and research and development facilities in total and we employ already a little over 300 people here in Atlantic Canada. I would strongly encourage you, if you fly out later today from the airport, to just turn your head to the left so you can see our biggest facility right there at Aviation Avenue, where we produce commercial-grade active pharmaceutical ingredients in both the synthetic and biologic products areas.

I'll give you a bit of the history as well. BioVectra is on a very impressive growth trajectory, which sets us quite apart from our competition. It started off very small, truly as an entrepreneurial dream and vision in the 1970s. The first couple of decades were clearly dedicated towards developing expertise in scaled chemical manufacturing, which then led in the 1990s to the first outreaches into the market as a contract manufacturing organization. Only in the last few years has BioVectra truly reached the stage of global competition where we consider ourselves one of the leading organizations in our space. We do have strong relationships, business relationships, and long-standing long-term contracts with probably most of the top 20 pharmaceutical and biotech companies in the world.

Now that you've heard a little about who we are and our outreach and our organization, I would like to share my vision for the organization and how to expand into eastern Canada.

Our operation in Windsor, Nova Scotia, has been the subject of a major retrofit. Our objective is to install large-scale fermentation there, which is an important addition to our manufacturing continuum and is important for our competitiveness in the global world. We have already invested $20 million for the retrofit of this facility over the last two years, which was acquired in 2014.

Today, we are at the point that to still have a viable business case that benefits the Canadian economy, we are looking to secure partnership government grant support so that we can complete the work and get the site up and running. We envision this to be possible in 12 to 18 months. I ask for an investment of $10 million from the Government of Canada. With this investment, this partnership grant, BioVectra would be able to get this operation up and going.

The key question, obviously, is why: why would the Canadian government consider this investment in this organization? I believe this is a very strong and simple case to make. If the plant is operationalized.... As I've said, we believe we could do this in 12 to 18 months. Please have a look at the binder we gave you, which shows that this site already exists; we have a couple of pictures that bring to life where this currently stands. If the plant is operationalized, it would create up to 70 new jobs. That is a rather conservative guess on our end. For both the commercial fermentation and laboratory process development at this site, we will require a very unique set of highly skilled talent. We need microbiologists, biochemists, and biochemical engineers, as well as highly trained and skilled operations staff.

While direct employment may add up to 70 jobs, it's the spinoff jobs that truly make a big difference in this investment. Based on experience, we know that once a facility and a manufacturing site of this scale becomes operational, hundreds of spinoff jobs are created in the immediate environment for vendors, suppliers, and everybody who has to help to keep this site going. This would create a significant economic boost to Nova Scotia. BioVectra would be committed to attracting and retaining workers in Nova Scotia's highly educated workforce and in driving the diversification of the local economy, consequently reducing unemployment in this area.

We believe this investment is directly aligned with and supports the federal government's innovation agenda and, equally, the Atlantic Canada growth strategy. A positive return on this investment of the federal contribution in terms of the spinoff jobs, the growing tax base for the province and the federal government, would be quickly realized—you can do the math—in a couple of years, and it would continue in perpetuity.

We have reached out to many stakeholders in Canada over the last few weeks to share our vision for expansion into eastern Canada. We spoke with the Atlantic Canada Opportunities Agency, ACOA, and to members of Finance Canada, Innovation Canada, and other federal organizations, and, as you would imagine, with the local and provincial governments in P.E.I. and Nova Scotia as well. Everyone is excited about this opportunity because it's such a compelling case to make.

This is truly about a knowledge-based company and a knowledge-based economy growing in Atlantic Canada, boosting exports into the globe. It's not only for the pharmaceutical cluster in New England and between the Ontario-Quebec corridor. This is truly about competing on the world stage out of Atlantic Canada. It would create a future for highly skilled Canadians and immigrants who you would have to attract to run this organization in Nova Scotia, in an area that probably needs growth like this more than other areas of the country. BioVectra is truly ready and wants to play a key role in that vision in close partnership with the Government of Canada.

I thank this distinguished committee for giving me the opportunity to be part of this discussion. I'm looking forward to your questions.

9:10 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Oliver.

I should have mentioned it before, but you'll notice members on their iPads from time to time. People find it distracting. but all the briefs that have been presented are on electronic technology now. We're supposed to be paperless, although I'm not.

I'll turn now to the Greater Charlottetown Area Chamber of Commerce, with Penny Walsh McGuire, executive director.

9:10 a.m.

Penny Walsh McGuire Executive Director, Greater Charlottetown Area Chamber of Commerce

Good morning, Chair and members of the Standing Committee on Finance. Thank you for the opportunity to speak to the committee on the topic of the 2017 federal budget.

The chamber serves as the voice of business in the greater Charlottetown area, and that takes in Stratford, Cornwall, and Charlottetown. We are a very active provincial chamber, and we provide services, opportunities, and advocacy support for members to enhance their ability to do business. We have close to 1,000 members, and we reflect a diverse network of businesses from almost every industry sector and profession in our region.

It is our philosophy that Prince Edward Island, if it is to prosper, must have a business development strategy that is private sector driven, export oriented, and focused on innovation. We also must possess the quality and quantity of human capital and strategic infrastructure appropriate to the task. This is a core message of the chamber and drives our advocacy efforts on behalf of our membership.

With these principles in mind, we initially provided written recommendations to the committee on August 5, addressing five issues that could be influenced by the federal government's actions. Today, I will highlight some specific recommendations that pertain to the following five issues: strategic physical infrastructure, innovation and commercialization, access to capital, taxation, and demographic and labour issues.

To begin, I'm sure you would all agree that the quality and quantity of local infrastructure are essential to advancing the Island economy. Infrastructure such as roads, water and sewer, electrical power, and broadband Internet are basic requirements for the prosperity of Island communities. It is worth recognizing that phase one of the new federal infrastructure program has made important investments in public transit, clean water, and affordable housing; however, it is still unclear where phase two funding will be allocated.

With this in mind, we emphasize the importance of federal investments in innovation and commercialization projects that will accelerate new product development, local manufacturing, and scaling of export-oriented businesses. Strong inroads have been made with past strategic investments in physical infrastructure at our post-secondary institutions and scientific research institutions. Additional investment in these areas is critical for the growth of P.E.I.'s existing knowledge-based industries.

Further to this, financial infrastructure must also be in place for individual firms to realize innovation and commercialization success. In this case, the importance of federal R and D financial assistance programs, such as ACOA's Atlantic innovation fund, SR and ED, and the NRC's IRAP cannot be underestimated.

Still on the topic of strategic infrastructure, the chamber continues to actively pursue the issue of the federal airports capital assistance program, or ACAP. I think you might be hearing more about that this week. Because of its location on federal land, the Charlottetown Airport is one of six small airports in the national airport system that is currently ineligible for funding through ACAP for safety-related maintenance and upgrades. Members of the Canadian Chamber of Commerce, representing over 200,000 Canadian businesses, recently approved and support a resolution to pursue this issue further with the federal government. We do urge you to consider the connection between the prosperity of P.E.l.'s business community and adequate access to our country's transportation network through a safe and financially viable airport.

Access to capital is another crucial aspect of an effective business development strategy for P.E.I. A range of programs is available for new businesses seeking financing, but gaps still remain. Through its Island advance initiative, the chamber is expanding connections among potential investors and entrepreneurs. I want to recognize our Island Advance advisory board chair Ron Keefe, who is very actively involved in the Island Advance initiative. The chamber recommends that the federal government continue to pursue initiatives to support entrepreneur development, whether it be through a specific venture capital strategy or a combination of taxation measures to promote venture capital investments and encourage first-time entrepreneurs.

Finally, a significant priority of the chamber has been to stress the central role that international immigration plays in P.E.l.'s economic growth. We spoke to a number of demographic and labour market issues in our written submission, but today I want to highlight the efforts of the chamber's PEI Connectors program, which is supported through federal funding from Immigration, Refugees and Citizenship Canada.

The importance of attracting international immigrants to the Atlantic region was underscored by the recently launched Atlantic growth strategy. Retention through integration is the key aspect of building on this goal, and the PEI Connectors program has been at the forefront of this work by helping entrepreneurial immigrants make connections and establish themselves on P.E.I. As such, the chamber would like to reinforce the importance of federal government support for this program as an effective method of ensuring the future economic prosperity of P.E.I.

I want to thank you for the opportunity to provide comments on behalf of the business community. l look forward to your questions.

Thank you.

9:15 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Penny.

The Prince Edward Island BioAlliance is next, with Mr. Keefe and Mr. Yuill.

9:15 a.m.

Ron Keefe Executive Board Member, PEI BioAlliance

Honourable Wayne Easter and members of the committee, good morning. It is a privilege to welcome you to Prince Edward Island, and to welcome a couple of you back to Prince Edward Island, and to offer comments on economic infrastructure as you carry out your consultations.

As Penny has indicated, one of the main themes we are looking at is innovative economic infrastructure in the province. That is my purpose here today. With me today is Martin Yuill. Martin is the director of incubation for the PEI BioAlliance and head of the Emergence bioscience business incubator program.

The Prince Edward Island BioAlliance was incorporated as a private sector-led not-for-profit in 2005 to coordinate and accelerate the development of the P.E.I. bioscience cluster. Since that time, the BioAlliance has been the catalyst in aligning the efforts of government partners, research and academic organizations, and bioscience business leaders to build a new economic pillar for the province and, indeed, for the Atlantic region. Since the incorporation of the BioAlliance, the bioscience industry in Prince Edward Island has grown from 16 companies to more than 45. Private sector revenue has tripled to more than $200 million in export sales, and employment in the sector has risen from about 450 jobs to more than 1,500 jobs.

About half the companies in the cluster are locally grown from early entrepreneurial efforts, and we witnessed one being discussed this morning—BioVectra. The other half of them are from other parts of Canada and the world. We are home to business units of three multinationals, all of which are here because they invested in local small and medium-sized enterprises, and they continue to invest. Our companies produce human, animal, and fish health products, including cosmetic ingredients, natural health products, feed additives, vaccines, diagnostics, and pharmaceuticals.

Early on, we recognized, as others have, that Canada needed to improve its commercialization efforts from new technologies developed in academia and the start-up companies. This has been a core part of our development strategy: to become a Canadian leader in commercialization. We’ve done this through our collaborative partnership model. As a result, we have established a winning environment for early-stage businesses in P.E.I.

Key partners in our cluster, which support strategic implementation and business growth in a variety of ways, include: Holland College; the University of Prince Edward Island and other regional universities such as Dalhousie, Mount Allison, UNB, and St. Francis Xavier, etc.; Innovation PEI; the NRC; Ag Canada research; ACOA; and NSERC.

With our recent successes in two important federal competitions—the Canadian accelerator and incubator program and the Centres of Excellence for Commercialization and Research—we have established both the Emergence Bioscience Business Incubator and Natural Products Canada. These entities are exponentially increasing business development and business attraction opportunities and are assisting in building our reputation in Canada and the world as an innovation leader with the experience and infrastructure to commercialize new products and new ideas.

One of the consequences we are now facing is that we are exceeding the capacity of our incubation and acceleration infrastructure in the province, in the region, and in Canada. This is, as you can appreciate, a good consequence. We must, as an urgent priority, establish strategic infrastructure—something that Penny also mentioned—including laboratory, manufacturing, and scale-up facilities and the services necessary to exploit this opportunity and grow our economy.

I chair the multi-stakeholder steering committee of the BioAlliance, which has worked for the past few years on the conceptual design and business plan for a solution to our space and service needs. The solution is what we call the “centre for bioscience commercialization” or, simply, the “BioAccelerator”.

It is a 70,000-square-foot facility that incorporates technical and business services, accelerator space for early-stage businesses, and manufacturing space that allows companies to scale to global markets. It would be located at the BioCommons Research Park in Prince Edward Island. The current cost estimate is $38 million. Its construction will allow for the establishment of 30 new companies within the cluster and the capacity to initiate commercialization and ultimately lead to expansion of stand-alone facilities across the province, the region, and Canada.

The BioAccelerator will be part of Canada's national innovation connectivity, supporting new product development and commercialization in biosciences. There is no reason why Canada can't be a leading nation in the manufacturing of innovative science-based products. Our competitive advantages are our people and infrastructure. We have spent significant dollars on research and innovative institutions. We now need to commercialize these innovations and reap the economic rewards in this country.

Our request today is that the federal government ensure that strategic economic infrastructure, such as the BioAccelerator, is a priority for funding under phase two of the federal infrastructure program. Infrastructure such as the BioAccelerator, when placed in the midst of a successful cluster partnership, will ensure that the federal government achieves a full return on its investment of public funds. It supports Canada's innovation agenda, enables commercialization of technologies for global markets, attracts talented immigrants, increases foreign direct investment, and mobilizes Canadian capital for investment in Canadian business.

We wish to thank you today for your time. I would be pleased to answer any questions you might have. Thank you.

9:20 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Ron.

We have a joint presentation, I believe, of the P.E.I. Literacy Alliance and Literacy Nova Scotia, with Ms. Beazley and Ms. Hunter.

Amanda, I believe you're first. Go ahead.

9:20 a.m.

Amanda Beazley Executive Director, Atlantic Partnership for Literacy and Essential Skills, P.E.I. Literacy Alliance

Good morning, everyone.

On behalf of the the literacy coalitions in P.E.I., Nova Scotia, and New Brunswick, I'd like to thank you for the opportunity to appear before you today.

We have a lot to say on the issue of low literacy in Atlantic Canada and in Canada at large. In the interests of time, we've decided to review the highlights of the brief that all of you received.

To realize a stronger, more prosperous Canada, we need to strengthen the skills of Canadians across all regions. Literacy and the other essential skills are the foundations for all learning and involve not only reading but interpreting information in all forms. Literacy, numeracy, and problem-solving skills are key to the ability of Canadians to fully participate in our society and to contribute to economic growth. However, 49% of the working-age population in Canada is ranked below level 3, the level that workers in many Canadian occupations need to perform effectively.

The problem isn't necessarily about not being able to read. All but 15% of these workers have mastered the act of reading, a skill that allows them to apply routine procedural knowledge. What these workers cannot do is read well enough to be efficient problem-solvers and to apply their technical skills and knowledge in non-routine ways.

Atlantic Canada has some of the lowest literacy and essential skills levels in the country. The percentage of working-age adults in Atlantic Canada with low literacy is 46% in P.E.I., 50% in Nova Scotia, 54% in New Brunswick, and 56% in Newfoundland and Labrador. Since people of low literacy skills are more than twice as likely to be unemployed, it's not surprising that Atlantic Canada also has some of the highest unemployment rates in the country.

As organizations that provide much-needed literacy services, programs, and supports, we see the difference that literacy makes in the lives of individuals and their families. We would like to tell you the story of Kim, a learner in one of our adult literacy programs.

Kim began our program unable to read, due in part to a learning disability. Her early life in school was very challenging. Despite her desire to learn and despite her best efforts, she believed herself to be inadequate. To put it in her terms, she felt “stupid and unable to learn”. In Grade 10, Kim dropped out of school.

She worked at manual labour jobs for many years. After sustaining an injury that left her unable to continue working in labour jobs, and with no skills to secure another line of work, she had to rely on social assistance to provide for herself and her two children. Her confidence was shattered, and she spiralled into a cycle of addictions, poverty, and reliance on social assistance.

When Kim decided that she wanted a better life for herself and her family, she sought treatment and joined an adult literacy program. It was a big step toward her goal of independence. In less than a year, and with the help of the literacy tutor, she is well on her way to achieving her goals. With her new skills, she is now helping her children with their reading, for the first time since they began school.

Kim no longer feels as though she's inadequate or worthless. She believes in herself. With the continued support of the program and her tutor, Kim wants to write her GED test nd pursue a college diploma that will enable her to gain steady employment.

Each of our coalitions has stories of success like Kim's. Each story is unique, but given the statistics, Kim is typical of a woman who has low literacy skills and who is more likely to be unemployed, or employed in the lowest-paying jobs, and a single parent. There are many others like her who need access to supports in order to be successful and contribute to growth in Atlantic Canada.

Overall, Canada's opportunity for economic growth is hindered by the fact that 51% of workers have literacy skill levels below those needed to do their jobs well. These skill gaps hinder our opportunity for economic growth and cost our health, justice, political, and social systems. The hidden cost of low literacy in Canada is estimated at over $32 billion U.S.

A highly skilled workforce may not be the only contributor to economic growth in Canada, but it certainly plays a very large role. An investment in human capital—that is, in education and skills training—is three times as important to economic growth over the long term as investment in physical capital such as machinery and equipment. A 1% increase in literacy and essential skills in Canada would create a workforce that is 2.5% more productive and would increase Canada's GDP by 1.5%.

All levels of government would realize significant benefits from such an investment: for example, higher tax revenue, reduced income supports and payment of EI, social assistance, and workers' compensation, totalling over $2 billion per year, and reduced health expenditures, totalling $688 million per year.

An increasingly knowledge-based economy demands that our population grow and adapt to an evolving society. In Atlantic Canada, for example, because of the automation of traditional industries such as fisheries and aquaculture, forestry, and agriculture, employers are facing labour shortages as they attempt to hire and retain employees with the appropriate skills.

There are other populations of Atlantic Canadians, including first nations and immigrants, who are especially vulnerable to low literacy. Their needs must be met on an urgent basis, since these two groups will account for much of the growth in the labour force in the next few decades. It's also crucial to ensure that rural populations have access to literacy and essential skills supports.

There is clearly a need for literacy and essential skills services and supports in our country. In order to meet this need in Atlantic Canada, we must have the opportunity to leverage the strengths of our coalitions and community literacy organizations to grow supports for our residents. We are aligned with provincial and federal visions to form partnerships that will be more efficient and effective. We have the expertise to address the adverse impact that low literacy has on our communities, civic engagement, health, crime rates, and the economy. Each coalition plays a crucial role in our respective provinces and, by working together, we will strengthen our region as a whole.

As we collaborate to form the Atlantic partnership for literacy and essential skills, we are asking for funding from our federal government in the amount of $600,000 per year over four years. This funding will provide us with the stability we need to develop a collaborative approach with all stakeholders to ensure that quality and accessible programming is in place in our region.

This will enable Atlantic Canadians to have opportunities to participate fully at work, at home, and in their community. It will also sustain and grow our ability to identify needs and gaps in services and develop an effective strategy that responds to the needs of our communities, and to share knowledge and successful models of literacy, training, and supports in areas such as workforce development and also in the area of youth, early years, family, and adult literacy in our region, as well as other jurisdictions in Canada.

A minimum investment in literacy and essential skills will allow us to make a broader impact in the our region and to produce measurable outcomes that will have a positive and lasting impact on the lives of all Atlantic Canadians.

On behalf of the literacy coalitions in P.E.I., Nova Scotia, and New Brunswick, I would like to once again thank you for the opportunity to share how, together, we can change lives and communities in Atlantic Canada by investing in literacy, essential skills, and lifelong learning.

9:30 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Amanda.

We now turn to the Prince Edward Island Fishermen's Association, with Mr. Avry, president, and Mr. MacPherson, executive director.

Ian.

9:30 a.m.

Ian MacPherson Executive Director, Prince Edward Island Fishermen's Association

Thank you, Chairman Easter, for the opportunity for the Prince Edward Island Fishermen's Association to present to the Standing Committee on Finance this morning.

My name is Ian MacPherson. I'm the executive director of the PEIFA. Today I am joined by our association president, Mr. Craig Avery, who has over 40 years' experience in the fisheries for commercial lobster and various other species.

In terms of the mandate of the House of Commons Standing Order 83.1, we would like to expand on item two, which asks what federal actions would assist Canada's businesses to meet their expansion, innovation, and prosperity goals, and also on item three, which asks what identifying federal measures in rural and remote communities would encourage expansion and prosperity in serving domestic and international customers.

The Prince Edward Island Fishermen's Association represents the interests of 1,300 core fishers on Prince Edward Island. The association is dedicated to making positive changes in the fishery so that current and future generations can remain active and financially viable in the fishing sector for many years to come.

In Atlantic Canada, the owner-operator model, which works well in many countries around the world, is strong and effective. Organizations such as the PEIFA strongly support the continuation of this independent business model. Each of our captains has a significant financial investment in their fleets, which translates into a direct connection with our fishery and a desire to improve it.

Our fishery, along with agriculture and tourism, is one of the top three economic drivers of the Prince Edward Island economy. Our organization supports the diversification of export markets and has made this position recently known to the standing committee dealing with the Trans-Pacific Partnership agreement. In addition to market diversification, we also feel that the rationalization of licences is an effective way to increase the financial viability of fishing fleets in Atlantic Canada. Fleet rationalization will be the focus of our presentation today.

One of the most impactful and effective methods to improve our multiple-species fishery is the permanent retirement of licences, which allows those who want to exit the fishery the ability to do so in a dignified and planned manner.

The primary objectives of our proposed rationalization program are as follows: to enhance the sustainability of our multi-species resources; to add additional conservation measures to existing conservation programs; to ensure we have sustainable fisheries that can meet the demands of the global seafood markets; to ensure eco-certifications are obtained and maintained; to ensure effective fishing efforts are achieved; to create higher-income opportunities for those remaining in the fishery; and, to create and enhance existing jobs, particularly in coastal communities.

These goals are consistent with the recommendations of the Fisheries Resource Conservation Council, the FRCC, which stated that one of the main goals in improving various fisheries is the reduction of fleet numbers. The FRCC also recommended that the following outcomes be outcomes be sought through fleet reductions, and many of these initiatives have taken place or are planned in the near future: increasing the viability of the fleets; increased biological viability of the area; increased use of electronic monitoring and data collection; reduction of gear being fished; shorter fishing seasons; and finally, combining licences to reduce environmental footprints.

The PEIFA has been one of the leading organizations in Atlantic Canada in fleet reductions. For example, one of three lobster fishing areas on P.E.I., LFA 26A, has achieved the following results over the past five years: 33 lobster licences have been retired, at 300 traps per licence, and in addition, each individual fisher in this area also gave up an additional 28 traps per active licence. These two reductions resulted in over 19,800 traps being removed from the water.

These reductions were part of a detailed and comprehensive program that considered seven key components. These were: overcapacity in an area; core licence retirement; multi-species retirement; residual viability of the core fishing enterprise; location of the licence activity; fisher age; and, fisher health.

The reduction in traps and licences has increased catches for many harvesters and has increased their overall economic viability in a positive manner. Positive environmental impacts were also significant as a result of this rationalization program.

As noted above, the PEIFA has an effective, proven, and implementation-ready program that can be applied to other species. Now that the industry is trending in a positive direction, a joint PEIFA-Department of Fisheries and Oceans Canada rationalization document has set priorities to also rationalize groundfish, herring, mackerel, and tuna licences.

This does not mean the lobster fleet rationalization has been completed. However, a focus on these additional species will achieve two goals: one, to bring the number of licences much more in line with available quota and, two, to further increase the economic viability of those captains remaining in the fishery. At present, many secondary fisheries only last several weeks or just a few days before the quota is caught by the large number of harvesters licensed in those fisheries. It is important to note that active participation may be as low as 30% of the eligible licence-holders in some of these fisheries.

Fleet rationalization will reduce operating costs and carbon footprints will be reduced significantly when trips result in increased catches and a reduction in the number of trips.

I realize that I'm just about out of time, so I'll paraphrase here.

9:35 a.m.

Liberal

The Chair Liberal Wayne Easter

That's good. I thought I was going to have to slow you down because the translators are having a hard time keeping up.

9:35 a.m.

Executive Director, Prince Edward Island Fishermen's Association

Ian MacPherson

Okay. I'll summarize. I apologize.

At any rate, we have embarked on a rationalization program to eliminate groundfish and other licences, but we're having limited success. A federal contribution of $3 million toward the retirement of these licences, and $7.5 million toward the retirement of tuna licences, would have a significant positive impact on these fisheries. In terms of order of magnitude, if we could retire 400 to 500 groundfish licences out of 872, and 180 out of 363 tuna licences, this would have a huge impact.

We feel that this is an investment in our fishery. These retirement programs have taken place in areas such as tobacco and hog production in the agricultural sector. This would be a significant positive investment in the future, and we would get away from the crisis management that we've pretty well operated our fishery with in the last number of years.

9:35 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Ian.

We are moving now to the Prince Edward Island Federation of Agriculture, with Mary Robinson, president, and Robert Godfrey, executive director.

Mary.

9:35 a.m.

Mary Robinson President, Prince Edward Island Federation of Agriculture

Good morning, Mr. Chair and committee members.

My name is Mary Robinson. I am president of the Prince Edward Island Federation of Agriculture. With me today is Robert Godfrey, our executive director.

Thank you for this opportunity to present here today in beautiful Charlottetown. Welcome to our province.

The PEIFA is Prince Edward Island's largest general farm organization, representing 80% to 85% of farms across the Island. The federation is comprised of approximately 600 farms and 15 different commodity member associations. Our membership is made up of family farms, many of which have been farmed for generations. Canada's agrifood sector employs one in eight Canadians and provided $108 billion to Canadian GDP in 2014.

In Prince Edward Island, agriculture is the largest industry. Provincially, in 2014 it provided 4,000 direct jobs and more than $435 million to GDP. Our industry is working to meet the opportunities presented by a changing climate, a rising global population, and a domestic consumer base looking for diverse agrifood products. P.E.I. agriculture continues to suffer economic limitations due to a shortage of labour, as well as access to deepwater ports.

Our remarks today will echo many of the same things you've heard from our national counterpart, the Canadian Federation of Agriculture: one, income tax revisions to enable family farm transfers; two, clean technologies in an era of carbon pricing; and three, market access opportunities.

9:40 a.m.

Robert Godfrey Executive Director, Prince Edward Island Federation of Agriculture

Prince Edward Island farm operators are aging. The average age of a farmer on P.E.I., according to the 2011 census of agriculture, is 54.2 years, which is slightly higher than the rest of Canada. This means many farmers are looking for a way to transfer their capital-intensive farms over the next decade.

This poses new challenges to the continuation of family farming in Canada. As you heard from the Canadian Federation of Agriculture, effective tax planning is essential to the viability of the next generation of farmers, as well as those retiring. As part of this planning, family farms continue to incorporate, while changing demographics means they're unable to rely on their children, necessarily, to stay on the farm.

These pressures also reduce the efficacy of existing provisions within the Income Tax Act established to enable family farm transfers. To ensure the industry is well positioned to continue its growth, we support the Canadian Federation of Agriculture's recommendations in terms of what has been asked for: one, that rollover provisions be amended to recognize the full breadth of family relations relied upon to maintain family farms across Canada; and two, that family farm corporations be provided with a level playing field when transferring their businesses to the next generation, including access to the capital gains exemption and ensuring siblings can access the same provisions as other family members.

9:40 a.m.

President, Prince Edward Island Federation of Agriculture

Mary Robinson

On October 3, our federal government made it known that there will be a price on carbon by 2018 in order to reduce our emissions as a country. Clean technology and innovation will be required to meet that objective. The PEI Federation of Agriculture views renewable energy as an opportunity for our members. Wind, solar, and biomass are some of the options being explored for producer investments. However, many of these proven technologies are capital intensive. They struggle to break even, let alone be profitable.

Investments in clean technology, including tax- or rebate-based incentives, are needed to make technology more accessible to farmers to sequester carbon, feed this energy back into the grid, and improve other environmental incomes. With the introduction of the carbon tax, the federal government needs to ensure that Canadian farmers are not unfairly penalized. We need to remain internationally competitive, as the vast majority of our product is exported beyond domestic borders and is reliant on those foreign buyers in order to remain economically viable.

Canada has the potential to be an innovator and a global leader in this area. National strategies, coupled with federal investments and research commercialization and incentives, are needed.

9:40 a.m.

Executive Director, Prince Edward Island Federation of Agriculture

Robert Godfrey

Now we'll address the third area, which deals with market access opportunities.

To leverage the trade opportunities currently available to producers, industry and government must invest in the development of a strategic market access vision for the sector. This would include a review of the emerging market opportunities and regulatory and non-regulatory barriers to achieving this access, and a comprehensive look at the infrastructure and broader industry capacity.

One example would be labour. The Agriculture and Agri-food workforce action plan is an example of how to meet long-term trade objectives. By strategically identifying how we can meet these opportunities, we can align efforts through clearly defined roles and timelines for all involved. The investments required to develop such a vision pale in comparison to the long-term benefits that would occur from the increases in tangible market access.

In closing, we want to assure you that the PEI Federation of Agriculture and our national partner, the Canadian Federation of Agriculture, remain ready to work in collaboration in partnership with you to further the interests of Canadian farmers.

Thank you.

9:40 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Ms. Robinson and Mr. Godfrey.

I'll now turn to questions. We'll try to go with six-minute rounds, given the that time frame is a little tighter.

Mr. MacKinnon.

9:45 a.m.

Liberal

Steven MacKinnon Liberal Gatineau, QC

Thank you, Mr. Chairman.

Welcome, everyone. It's great to be here to hear about all of the interesting work that's being done in so many sectors of the economy, both traditional and emerging, here in Prince Edward Island.

I want to start with a theme that we have commonly run up against as we've gone across the country literally from British Columbia to Prince Edward Island. That's the issue of skills, and the issue of immigration, tangentially, and the ability of the workforce today to keep generating the kind of opportunity that Canadians expect of themselves and that our economy requires in order to keep growing.

Perhaps I'll start with the Chamber of Commerce, Ms. Walsh McGuire. You mentioned the Connectors program, which is, I take it, a program aimed at retaining immigrants here in the region.