Finance Committee on Oct. 18th, 2016

[Penny Walsh McGuire]

Just to add to that from a tourism perspective, we've see what the increased capacity can do for a place that relies heavily on tourism.

[The Chair, Liberal, Wayne Easter]

We will cut you off there.

Mr. Albas, I give you an official welcome to the committee, now that you're officially a member of the committee. Lisa Raitt left for some reason. I can't understand why.

[Voices]

Oh, oh!

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair. I certainly appreciate the warm welcome. I would not describe your chairmanship as severe, but I would say tough but fair.

I like the fact that we're talking about Kelowna, but I'm going to start with agriculture here in P.E.I.

In regard to the suggestions that perhaps there could be some further criteria change, I do know that the process for crystallizing a piece of property and then transferring it to a family member can be quite cumbersome. There are a lot of steps involved. Are you talking about changing the criteria in terms of how it can be a more distant relative who could seek that?

[Robert Godfrey]

Yes. Specifically, we were asking for a language change in the Income Tax Act—and if I'm going to get really technical, under subsection 73(3)—to replace the word “child” with “family member”. If I want to transfer that piece of land to my nephew or my uncle, I'm—

[Mary Robinson]

Or your daughter or your sister.

[Robert Godfrey]

—yes, or my daughter or my sister, that's right—I would face tax implications if I were to do that, if I were to transfer to my daughter or my sister. That's simply what we're saying there.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Yes. I'm from the Okanagan, and we have a lot of small family wineries, vineyards, and whatnot.

The question I have for you is from a public policy perspective. Farming is becoming something different from the old family farm. In order to be able to compete internationally with some of these trade deals that the Fishermen's Association has related, obviously consolidation is an important factor. Do you see this as being more of a “it would be nice to have this”? To me, I would imagine that the consolidation of your industry, where you have ones who've proven that they can succeed in the global market....

Is that not the direction your industry is heading?

[Robert Godfrey]

Well, with regard to consolidation, 97% of my members are still family farms. Yes, a growing number of those are incorporated corporations, but they are still family-run farms. In terms of the larger successful farms you're speaking of, I think everybody takes advantage of the trade deals where they can, but there are very large farms in this province that are family farms. There are multi-family households supporting them.

One of the largest farms here in P.E.I. is three brothers and a father, only about 20 minutes down the road from us. They have land throughout the United States as well as here, and compete internationally on a daily basis. But they are a family-run farm.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

You believe by offering a little more wiggle room on the criteria it will allow for the integrity of the tax code but also allow for the more traditional in that your membership, as you say, is more family-driven. Is that correct? Okay. Great.

I'd like to go to the association now on the rationalization of licences. It's the same kind of thing; consolidation-wise, can you just go through the mechanics of it? Let's just say he has a licence and I'd like to buy his licence. Obviously he wants to get as much money as he can. I'm going to try to pay the least amount I can. If I have to get financing, is financing just not eligible due to the risky nature of fishing, where sometimes you may not get a return that year, or is it just to try to help move along this process so that these licences can be consolidated and business activity go on?

[Craig Avery, President, Prince Edward Island Fishermen's Association]

I guess the answer to your question is that basically, as far as the transfer goes, that still can happen in any fishery. But on the rationalization idea of it, I'll give you an example. Ian spoke about groundfish. We have over 800 groundfish licences. This year you had to register to be part of the groundfishery. I think we had about 250 fishermen out of the 800 licence-holders who registered. Each fisherman was able to go out and catch 270 pounds of halibut. So it's not even a fishery. It's basically just to get out in the boat for the fun of it. To make it viable for anybody to be into it, we need to retire licence.

Tuna is the same way. We have 350 tuna fishermen right now, tuna licence-holders, out of our approximately 1,300 core fishermen. Most of those tuna fishermen are only allowed one tuna. The way tuna works is that it's in an auction when you bring that fish in. Some guys got as low as $1 a pound. So they went in the hole fishing tuna again. If we could rationalize that fleet....

DFO keeps telling us we have to take licences out, we have to rationalize. We're prepared to put money into it, but we need help from government to be able to rationalize our fleets. Right now lobster probably doesn't need to be rationalized in most areas. It's doing fairly well as of now. We want to keep it that way. But we have a lot of side fisheries that we could make a lot more viable and have a lot more extra income for fishermen if we could rationalize some of the fleets.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay. Great.

I'd like to turn to literacy now. I believe in answer to Mr. MacKinnon's question you said that some of the existing work you do right now will not continue due to the fact that you're not receiving funding from other sources, and that this request you've had is to pick up where that left off. Is that correct?

[Jayne Hunter]

Yes. Without this funding, we won't exist anymore as an organization. We're the only ones doing the work that we're doing, so who will pick that up? I listened to everyone speak across the table here, and I can identify that essential skills in literacy is an issue with each and every one.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

The province is not supporting local.... City councils aren't supporting this right now, is that the...?

[Jayne Hunter]

To be sustainable, we need various revenue sources, and we do that, but the way it works is that it's project-based funding. We do projects in Nova Scotia for the provincial government there, but it doesn't cover all the costs of the organization.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Before I turn to Raj, I have a quick question for Mr. Keefe and Mr. Technow.

Ron, you said in your presentation that an urgent priority is to establish strategic infrastructure, including laboratories, manufacturing, etc. What can the federal government do in that regard?

To both of you, I guess, we've heard from all the regional development agencies. What was surprising to us is that ACOA said they had enough money. They didn't make a request for more money or other programming. My question is for both of you. I think you work through ACOA. Does the regional development agency have the programming and the capital to do its job to meet your needs?

[Ron Keefe]

Let me talk just briefly about ACOA. I can't understand why they'd say they have enough money—

[The Chair, Liberal, Wayne Easter]

I can't either.

[Ron Keefe]

They certainly have been exceptional in the region. The Atlantic innovation funding helped us move along in the process of commercialization and research. There's no question about that.

ACOA is very limited in terms of its ability to invest in capital to the business development program, which is $500,000 per loan and I think a maximum of $1 million.

What we're talking about in strategic infrastructure is not.... It could be through ACOA, but certainly my understanding is that we are embarking on infrastructure programs in Canada. We've had our first round of them and they have been very specifically earmarked to certain activities. What we're looking at is economic infrastructure that will allow the economy of Prince Edward Island, and certainly economy of the region here, to advance beyond where they are today. That's specifically what we're trying to ensure: that in the next round of infrastructure funding the federal government provides, economic infrastructure is at the fore of that, and that projects like the BioAccelerator will be eligible for that funding.

[The Chair, Liberal, Wayne Easter]

Thank you.

Oliver.

[Oliver Technow]

Just to add to Ron's point here, I think ACOA has been tremendous in helping to support businesses to find funding ways over the last few years; however, the limitation is pretty much the scope. When we talk to ACOA about projects of our scale—for example, when we ask for a $10-million grant that would create hundreds of jobs and would return investment quickly in a few years—those kinds of programs don't exist within ACOA. There might be enough money for the smaller-scale projects, but they have no funding streams, no vehicle to support that kind of scale of investment that actually has a high impact on employment and rural infrastructure.

The way I look at it is in terms of creating sufficient infrastructure. It has to do with the exact mandate of these types of agencies. What are they looking at? What types of investments do they support? I believe there's a limitation simply by the funding streams they administer.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Grewal, you have five minutes, and then we're done.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses for coming today. It's my first time in P.E.I. and hopefully it's not my last.

I want to start with BioVectra. You've asked for $10 million in the budget this year specifically to help improve your Windsor plant. You say that 70 new jobs will be created. That works out to about $142,000 per job. What's the greater economic impact of the government's $10-million investment?

[Oliver Technow]

Thank you for the question.

This is the key question of our submission, obviously. From an economic and a business plan perspective, the way it works—and you pointed it out—is that the $10-million investment pretty much creates a strong investment case for the government. By default, it's not only the 70 jobs that we would create within the short term. As I alluded to in my presentation, when you create a facility of that scale and size, you create hundreds of spinoff jobs around that facility. It's vendors. It's the infrastructure. You create what is almost like a microcosmos of an economy in these types of businesses.

In terms of the way we look at it from a return on investment point, we did the same math that you just laid out, and the tax base will pretty much pay back this investment in two years. This is the way this investment would work for the Canadian government. We believe that this is a very smart investment to do, as we can actually create a very strong microcosmos there.