Finance Committee on Oct. 20th, 2016

[André Nepton, Coordinator, Agence interrégionale de développement des technologies de l'information et des communications]

Good morning, Mr. Chair and committee members.

AIDE-TIC is a non-profit organization. Its mission for the past five years has been to develop access to information and communication technologies in rural areas. We have carried out projects with the community. These are public and private partnership projects that are associated with large Canadian telecom providers.

To date, we have provided Internet and cellular service to 19 communities in Quebec, including the Innu community of Essipit.

Today, I'm not going to stress the importance of developing our fibre optic networks so that they are closer to users and therefore would strengthen Canada's digital backbone, no more than it is necessary to recall that cellular telecommunications are now part of everyday life, improving the public's quality of life and safety.

Today, I will speak to you about the future, a near future in which digital technology will play a major role and the government will have a leading ability to respond.

The technological environment and the Internet are constantly transforming to meet growing needs. So adaptation of businesses the furthest from the markets and supply is increasingly difficult, forcing them to work harder to remain competitive.

As the OECD indicated in 2015, countries that are successful in positioning themselves on the global digital stage are those that support the deployment and development of broadband networks to remote regions, but that also integrate the dual objective of expanding mobile broadband and optimizing spectrum resources.

Canada has been successful on this front. However, the efforts to date have always favoured the deployment of fixed and satellite networks, while mobile networks necessarily play a key role in the vitality of the digital economy.

Mobile technology is complementary to and inseparable from the fixed Internet. It supports new applications, including those adapted to emergency and health services, business, self-driving transportation initiatives, document transfers and financial services.

On a global scale, the volume of Internet use is increasing by 20% per year, with mobile data traffic increasing by 600% in Canada by 2020. In 2015, 51% of the data that flowed did so over smart phones and tablets, which explains why 60% of all new applications developed are for mobile devices.

The strong demand for mobility therefore justifies the need for additional infrastructure, speed and capacity. By 2020, the technology will attain similar speeds to those of fibre optics, with targets of 1,000 megabits, 10 times faster over the next decade. So today, the rural right to accessibility to the digital economy is the focus of our concern. The need for adequacy when there is a demand for service and government programs is essential, particularly to help new organizations that must face this next revolution of Internet access platforms.

Therefore, the current challenge is to extend mobile networks, which are a source of economic vitality and a factor in accelerating innovation because they remain the only mass support technology that can simultaneously offer mobile Internet and voice transmission, so cellular telephony. The most remote businesses can no longer be excluded from these benefits. Consolidation of the rural contribution to the country's economic input, both through employment and added value must remain at the heart of our actions to encourage more dynamic occupation of the Canadian territory.

To this end, for some time now, elected officials have been expressing the need to have government programs adapted in light of the deficiencies in national cellular services. They are calling for respect for a rational and reasoned technological choice for broadband Internet that is much more progressive and adapted. In reality, even today, too many rural municipalities, including many First Nations, are still completely without cellular telephony, and that must not be the case anymore.

We have two recommendations that are consistent with the expressed will of the current government to make Canada a leader in innovation by developing a digital capacity and having it adopted by all sectors of the economy.

First, the Minister of Innovation, Science and Economic Development Canada is currently establishing the criteria for the new connecting Canadians program, which will be in place for five years. This crucial program is itself the central element of the federal government's digital strategy for the next five years.

In light of the imminent announcement of the operational framework for the program and the $500-million envelope under budget 2016, AIDE-TIC would like to express its concern about the risk of looking for an obvious technological neutrality that too often in the past has had negative impacts on the deployment of cellular services in the regions. In that respect, we would suggest that you recommend to the officials involved that they create project-selection criteria that prioritize cellular technology as the essential strategic infrastructure for the transmission of mobile Internet and voice where there is no efficient Internet. Obviously, these projects will have to remain at a reasonable cost, prioritize locally, be based on local and provincial involvement and, of course, ensure that the telecommunications carriers are involved.

The second recommendation has already been submitted to the committee, but it has been adapted and regionalized. It is intended to stimulate the deployment of new cellular telecommunications infrastructure, but specifically in municipalities with fewer than 3,000 inhabitants, and along interregional roads. To that end, AIDE-TEC thinks that, considering the low user volumes and, therefore, the low profitability for carriers, as well as the premature aging of technology because of the rapid pace of development, a tax credit should be provided as an incentive for investments or a capital cost allowance of 55%. This would be done based on the total new expenditures incurred by carriers in these rural sites, as is the case for property in class 50.

To conclude, we would like to thank you for giving us a voice and for giving a voice to the half a million Canadians who, even now in 2016, have no mobile cellular service.

We are available to answer any questions the committee members may have.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Nepton.

We are hearing a fair bit about that issue across the country.

We will turn now to the Association des marchands dépanneurs et épiciers du Québec, represented by Mr. Servais and Mr. Desrochers.

Welcome, Mr. Desrochers. It's good to see old—well, I'd better not call you old—former colleagues here.

Mr. Servais.

[Yves Servais, Director General, Association des marchands dépanneurs et épiciers du Québec]

Good morning, Mr. Chair.

I would like to thank the MPs for the invitation. It is greatly appreciated.

My name is Yves Servais. I am the director general of the Association des marchands dépanneurs et épiciers du Québec, the AMDEQ, a group of close to 1,000 owners of independent convenience stores. It is important to note that AMDEQ does not include multinationals like Couche-Tard, in Quebec, but only independent convenience stores. AMDEQ is also a buying group. It also defends and represents the economic issues that have an impact on the operation of our members' businesses.

I am accompanied by Mr. Desrochers, who takes care of AMDEQ's government relations. He is also a former member of the House of Commons.

That said, when you invited us to appear, you asked us what federal measures could help the growth of SMEs in Quebec and the development of Canada's economy. We currently have two priorities, which correspond to two matters currently being studied in the House of Commons.

The most important priority has to do with credit card acceptance fees. For close to six or seven years, we have been lobbying the various governments to resolve this matter. Retailers currently have to pay high fees when they let customers pay for purchases by credit card.

A few years ago, the Competition Bureau acknowledged that Canada's acceptance fees were among the highest in the world. We are here today to make you aware of the situation and to ensure that these fees will eventually be regulated lower. Several countries have already regulated credit card acceptance fees.

The former Conservative government took certain positions and was involved in the matter, which we think was a step in the right direction, but it wasn't enough. There were no concrete outcomes regarding the costs that accepting credit cards incur for our members.

For example, when consumers pay with their credit card, for some gas retailers, they may pay $40,000, $60,000 or $80,000 in management fees. For large grocery stores, these fees may fluctuate between $120,000 and $150,000. Those are huge amounts.

So we are meeting with you today as representatives of the Association des marchands dépanneurs et épiciers du Québec to ensure that credit card acceptance fees will actually be regulated, as other countries are doing.

I would like to point out that Australia was one of the first countries to regulate these fees by fixing the rate at 0.5%. Here in Canada, the average is 1.5%, but it can even go as high as 2% or 3%. The difference between Canada and Australia is huge. As for Europe, a year or two ago, England regulated credit card acceptance fees and set the rate at 0.3%. Once again, it is much lower than here, in Canada.

I would like to add something about the 1.5% to 2% fees that we are charged by credit card companies. It is important to dissect these fees. I find it worth mentioning that 40% of the fees invoiced to merchants are used for bonus points, free gifts or rewards offered to consumers when they use their credit card. We don't think it is our responsibility to pay for bonus points or rewards that credit card companies give to consumers. We are willing to pay for the technology and the security, but we think it is up to the credit card companies, mainly Visa and MasterCard, to pay the fees related to the rewards.

What happens is that the credit card companies and financial institutions do a lot of promotion to convince consumers to pay with a credit card, which provides astronomical income to the credit card companies and financial institutions, but also creates astronomical expenses for small businesses. That is why we are asking you to establish regulations on this. We believe it's important.

I would also like to point out that, previously, about a year or a year and a half ago, the NDP tabled a motion in the House of Commons to establish a rate on credit card fees. The Liberals were in opposition at the time and had indicated that they were in favour of regulating the rates and fixing them at 0.5%. In February 2016, a Liberal MP, Linda Lapointe, member for Rivière-des-Mille-Îles, introduced a private member's bill to truly regulate credit card rates. So we are asking the government and all the MPs to be sensitive to Ms. Lapointe's bill and to move forward with regulations on credit cards. We could elaborate on this later.

The last point I would like to mention relates to the bill tabled by the NDP on business transfers. It's something that is also very important to us. I could elaborate on this, but I think my time might be limited.

Mr. Chair, may I make a brief comment on this issue?

[The Chair, Liberal, Wayne Easter]

You're pretty well out of time. Please sum up in 30 seconds.

[Yves Servais]

Thank you, and I will be brief.

Many convenience store owners have had their business for 25 or 30 years. They now want to hand over responsibility for their businesses to their children, who are showing a desire to take over. However, fiscally speaking and with existing regulations, it is more profitable and more worthwhile to sell the business to someone other than a family member.

A bill was tabled on this matter. We support it, and we hope that the members of the House of Commons will support it as well.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Servais.

We'll now turn to Monsieur Leblanc from the Chamber of Commerce of Metropolitan Montreal.

[Michel Leblanc, President and Chief Executive Officer, Chamber of Commerce of Metropolitan Montreal]

Good morning and thank you, Mr. Chair. I would like to thank the committee for having us here today.

First of all, allow me to say how surprised I was that Montreal wasn't on the list of cities where you would be holding public hearings. It's the second largest metropolis in the country. You are going to Toronto tomorrow. When I speak to people from the business community I represent, and they speak of Ottawa, that's the kind of thing that is noticed. Please remember these remarks; otherwise, I will eventually repeat them publicly every year.

[The Chair, Liberal, Wayne Easter]

Just so you understand, we've tried to go to the capitals in each province.

We didn't go to Vancouver, and we missed St. John's.

[Michel Leblanc]

You made a choice. That's your call.

As I said, Montreal is the second largest metropolis in Canada. The Board of Trade of Metropolitan Montreal has existed for 194 years. It has more than 7,000 members. It works to improve business conditions and the business environment for businesses. Last week, at our forum, we welcomed the Prime Minister of Canada, Justin Trudeau, the French Prime Minister, Manuel Valls, and the Premier of Quebec, Philippe Couillard, to discuss the Canada-European Union free trade agreement. I will come back to that in a few moments.

The general context for the next budget is one of economic uncertainty that will have an impact on Canada. We are struggling with raw materials that still have very low prices. This affects the entire country, obviously western Canada more with the low price of oil, but the Quebec economy, too. There was a situation called Brexit. At this point, we don't know what will happen in Europe over the next year. Much of our foreign trade is with Europe. We also have these famous US elections where, suddenly, there is a Republican candidate who is even more protectionist than the Democratic candidate, who is herself protectionist. In addition, the Republican candidate said that he would review and perhaps even cancel the North American Free Trade Agreement, NAFTA. In short, in this context, the Government of Canada's next budget must be cautious and very attentive to the evolution of the international situation. In the next budget and over the next year, there will need to be some flexibility to react.

I will tell you quickly about the five areas of action that are important for the Chamber of Commerce I represent in the next budget.

I didn't think we would speak about them today, and I think that we shouldn't speak about them for the next budget, but the first area is Bombardier.

In the last budget, we formally asked the Government of Canada to be present and to provide leadership to support Bombardier. Bombardier is currently the mainstay of the main, if not the only, aerospace cluster in the country. Earlier, you asked how to help SMEs in the next budget. We are helping SMEs when we maintain a strong ecosystem in a key area for Canada like aerospace. Therefore, we are ensuring that this gem will be able to continue its innovation agenda, to follow through with it and to ensure that all sub-contractors, all suppliers and all small businesses that supply the ecosystem that leads to the C Series will be able to develop. If we end up there in the next budget, it's because the federal government probably missed the opportunity to show that it was there when Canada was facing a major innovation challenge. If it isn't in the next budget and hasn't happened beforehand, it will be a failure for the Government of Canada.

The second area of action involves strategic infrastructure investments. After giving you some criticism, I will now give you some praise.

The Government of Canada made a good decision to start a major infrastructure program in the first year of its mandate. It was a good idea to proceed with analyzing large infrastructure projects. It's doing a good job. The next year must be a year of commitment and payment. If the next year is not a year in which projects get under way and authorizations are given, we will fall behind in the economic cycle. We are currently in a weak economic period, but we aren't in decline. However, as I said at the outset, if there is any economic uncertainty, we need to make sure that Canada's economy continues to grow.

I will now draw your attention to two major projects that seem strategic for the Chamber of Commerce.

The first project is the Caisse de dépôt et placement du Québec's Réseau électrique métropolitain. It must be included in the projects that will be authorized from the infrastructure budget. It's a project that has unanimous support in the Montreal region. It's a project that fully supports the business community. The timelines are tight, and the Government of Canada, which is a major player in terms of funding, must maintain pressure for the timelines to be met.

The second project is Via Rail Canada's high-frequency train. For decades, people have been wondering why Canada doesn't have an HFT. We won't have an HFT for a long time yet, but we must take action on rail transport and on the connections in this respect. We must ensure that we appropriate these technologies, especially since this hybrid model will have a huge impact on our greenhouse gas emissions. It will also fit with the goals of COP 21.

The third area of action involves research and innovation, but especially productivity. We have an innovative society. We create innovations. However, we have a productivity challenge, particularly with our SMEs. Based on our analysis, our SMEs are slower than elsewhere to adopt innovations. They are somewhat slower than their US competitors to integrate innovations, particularly in the digital sector and in applications. One of the first challenges we should take on in the next and subsequent budgets is having an explicit growth strategy for the productivity of Canadian businesses, particularly SMEs, by focusing on the integration of new innovations.

Above all, our SMEs must be more alert to detecting innovations that will improve their productivity, to integrating them, and to financing the purchase of the equipment and training required. There may be federal programs, perhaps in harmony with the provinces, that could encourage SMEs to do this and recognize when they do it.

The fourth point aims to encourage the internationalization of businesses. As I said at the outset, the European free-trade agreement is strategic. We support it. Obviously, we supported NAFTA in Quebec, and we support the Trans-Pacific Partnership.

Now, there needs to be consistency and the means to ensure that when we sign these agreements, there is an immediate impact on our SMEs and our businesses. This involves bringing our companies into these economic areas so that they develop their markets. Yet that is where the weaknesses lie. We have economic trade missions with big players, but little attention is given to SMEs and to the capacity of our SMEs to detect business opportunities abroad.

The Board of Trade of Metropolitan Montreal has had a program for over 30 years called the World Trade Centre Montréal. It brings SMEs abroad.

However, the previous government cut our budget by 50% in 2006-09, and reduced it again in 2009-11. Later, when our budget was maintained, there was no indexing for that period, except for one year.

In short, the pan-Canadian challenge is to take advantage of free-trade agreements, to export and to bring our SMEs into these territories. The government should not be the only one to do it. There are organizations who are mandated to do this. It can be done in partnership, but appropriate budgets need to be set aside for this, and it must be part of an integrated strategy.

Finally, on the fifth point, our current dynamic is such that we have agreed that we would have deficits. We still need a clear plan for eventually returning to a balanced budget. The next budget is a credibility budget in this respect. The budget must include an explicit and detailed plan to return to a balanced budget. We will see if the situation changes and if, subsequently, there are reasons not to attain it. But right now we should have a very clear path of how to balance the country's budget, which will reduce concerns about future tax pressure on businesses and individuals.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Leblanc.

We'll now turn to Mr. Gaudreau from the network of support to the single and the homeless of Montreal.

[Pierre Gaudreau, Coordinator, Réseau d'aide aux personnes seules et itinérantes de Montréal (RAPSIM)]

Good morning, Mr. Chair.

Good morning to all the committee members.

We thank you for this opportunity to be heard and to describe the homeless situation in Montreal and the needs of Montreal, which are among the most significant in Canada, as my colleague mentioned.

The Réseau d'aide aux personnes seules et itinérantes de Montréal, or RAPSIM, is made up of about 100 organizations that assist those who are, or who may become, homeless in Montreal. It is the oldest coalition of community organizations in Montreal. Homelessness is not a recent phenomenon, but, as we describe in our brief, the situation is unfortunately growing. I will come back to that in a few moments.

RAPSIM partners with the City of Montreal in efforts to fight homelessness. We are part of the mayor's committee on the issue. We are also partners in and supporters of the Politique nationale de lutte contre l'itinérance, adopted here in Quebec, which takes action in various areas. In addition, we have been involved with the federal government since 1999 in distributing funds for what is now called the homelessness partnering strategy, previously the SCPI.

As I said, we are pleased to be here and to be able to contribute to the discussion on the questions you are asking about ways to contribute to Canada's growth. I will come back to the homelessness situation in Montreal in a few moments, but I would first like to say that, in the new government's first budget, two actions were a step in the right direction. We even made that the title of our brief. Funds were allocated over two years to repair the social housing units that were built with federal assistance up until 1994 and to ensure that they are accessible. The federal government also increased the budget for its homelessness partnering strategy by 50% over two years only. Those actions were well received all over Canada.

However, unfortunately, even more is needed to address homelessness issues, and that is why we are submitting our requests to you today. I want to give you some figures. Of course we have to talk about figures, even though we must also talk about the human beings who live in such situations.

Last winter in Montreal, we broke a sad record. The shelters had to accommodate the homeless for more than 80,000 nights, an increase of more than 10% for men and 8% for women. If we were in the hotel industry, we would be happy to be talking about a high occupancy rate, because it is an indicator of economic growth. But the growth we are talking about is in distress and misery, a growth that must bring us no joy.

This reality has a number of faces. The people in the streets or shelters, in an increasing number of areas of Montreal and the cities of Quebec, are ever more diversified. It is sad to see more and more older people in the street. Some have been there for a long time but others who were not homeless have become so, and come to knock on the shelter doors, after losing their jobs and their housing, or because of addiction problems.

So the needs are great. We are not seeking to bring you these requests so that you can bring us solutions to deal with the situation. This is about coming back to the questions you are asking. It is about finding how to make a bigger contribution to growth and to get more people into the action. I know that you know that, but we must remind ourselves of it.

Tomorrow is the 27th homelessness awareness night in Quebec, when we will be highlighting the extent of the problem in 30 or so cities. Why have we been doing that for 27 years in Montreal and now in 30 or so cities? Because there is a problem.

Some people are actually unable to find jobs. They are the ones now lining up at the Maison du Père on René Lévesque Boulevard in Montreal to get one of the places in the shelter. Before that, they lined up to get food. They have no mailing address, no email address. They have difficulty accessing communications: they have no phone, none of the other devices. Those are the basic problems that have to be solved.

To do so, the federal government played a major role and can do so again. I pointed out that, in the recent budget, funding for social housing units built up until 1994 was maintained. In Quebec, this means a little over 120,000 units that were built with that assistance in the past. The government has announced its intention, during the consultations undertaken by Minister Duclos and the Canada Mortgage and Housing Corporation, to develop a national housing strategy. That is very welcome. One of the aspects that is as clear as day to us is that the strategy must in large part be focused on the development of social housing.

The federal government must continue to live up to its responsibilities for the social housing units it contributed to. They are assets, in which people can live, pay a decent share of their rent, go back to school, and find jobs. It must also contribute once more to the development of social housing. For 20 years, since the federal government withdrew, the Government of Quebec has been playing a modest, but at least a continuous, role. The City of Montreal does its share, as do other cities in Quebec, such as Gatineau. But we need the federal government to contribute in a major, long-term way by developing a vision for dealing with the problem. We are not happy with the position that Mr. Duclos is taking on the matter.

Housing is without doubt an important part of the fight against homelessness. Since 1999, when the federal government decided that it wanted a homelessness strategy, it has recognized that it is not just a question of housing. There must also be support for shelters, for the work being done in the street, and for the work being done by mental health and addiction organizations to help the homeless.

Last year's 50% increase in assistance over two years brings some relief. For us, we echo the request made to the federal government by the Federation of Canadian Municipalities, that is, to establish a vision for the matter and to double the assistance over 10 years.

There will be no miracle solutions. Homelessness will not be eliminated overnight. But we must find it within ourselves to support the people in the situation and the organizations working to help get them out of it. The assistance provided must be significantly increased over the long term. The federal budget could make a contribution, a difference, in that respect.

So there must be investments in the social housing that exists and that must be developed. The budgets in the homelessness partnering strategy must be increased so that a variety of actions can be supported. People in the streets must be helped out of them. But there must also be help for people who are about to fall into that situation, or who are in danger of doing so, so that they can avoid it.

That is what we are asking you for today.

Thank you for your attention.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Gaudreau.

Turning now to the UPA, Mr. Lemieux, second general vice-president, and Ms. Bourdeau, economic adviser.

Pierre, welcome.

[Pierre Lemieux, Second General Vice-President, Union des producteurs agricoles]

Thank you, Mr. Chair.

Good morning, everyone.

We are pleased to talk to you today about Canada's largest sector of economic activity, agriculture and agri-food. The two areas go together well.

In fact, agricultural producers look after production and others add value by looking after processing. Revenue from agriculture in Canada totals $50 billion. The trade balance for agricultural products in 2014 reached $19 billion. The agri-food sector in Canada generates about 2.2 million jobs, or one job in eight, an indication of how important this sector is. In Quebec alone, we are talking about $8.3 billion in revenue in 2014 and a positive balance of $1.8 billion. In jobs, the situation is similar to Canada's, meaning that about one job in eight depends on Quebec's agriculture or agri-food industries.

However, we would like to tell you at the outset that agriculture's primary calling is to feed our world, and to feed as many people as possible when we are able to export our products. We at the Union des producteurs agricoles are not opposed to agreements being negotiated to facilitate trade. But some of our products are sensitive, including those covered by supply management. We also have agricultural industries of critical importance, specifically milk, poultry and eggs. For us, those are sensitive products and we want to protect them. To do so, we need control at the borders. Otherwise, those industries may well collapse. That is why we are so insistent about border controls.

Given what people in other countries are paying for those products, it is clear that supply management principles established in those industries cost consumers very little. We very often hear that those products are a little more expensive, but the fact is that any product bought in Canada is more expensive than in the United States, even toothpaste. Everything is a little more expensive here. It probably has to do with our geography and with transportation. We do not know exactly why, but we do know that it is not because the products are covered by supply management.

In agriculture, it is crucial to have support mechanisms and income security. Two of those mechanisms are particularly important: supply management and collective marketing. Small companies are located all across Canada. We have legislation that allows us to come together and pool our resources. Those mechanisms are still valid today and are extremely important, for Quebec also. We rely on those tools a lot and, as farmers, we make a great deal of use of them.

To answer your questions in part, I will say that specific employment insurance measures once more require improvement. You have improved them, and that was welcome, but there is room for still more improvement in the program. In agriculture, there are managers but there is also the labour and the labour problems. With unemployment and the workforce, training is important. Currently, some people do not have access to training programs. That must be considered with a more open mind.

There is also a problem with transportation. With people who are a little less fortunate, transportation problems are critical. In rural areas, there is no public transportation. People may talk about poverty in Montreal or in other large cities, but it is everywhere across Quebec and Canada. Accessibility is an ever present problem in the regions.

In addition, responsibility for infrastructure like roads has been transferred to the municipalities. But how are small communities going to manage to maintain that municipal infrastructure? The question has to be asked because, in agriculture, transportation is something that we really cannot do without.

In terms of the labour shortage, we always give priority to the people who live here, but foreign worker programs are vital in agriculture. I am referring to temporary workers.

In terms of measures to help our small agricultural businesses, we need assistance in research and innovation. A number of people brought that up earlier. In recent years, Canada has become disengaged from research and innovation. In that aspect, we are one of the lowest ranked OECD countries.

Can we get back to where we once were among OECD countries in research and development?

As Mr. Leblanc mentioned, in terms of promoting and selling our products outside the country, we need help. We need it to improve our presence outside the country.

No one is better than the people close to the sectors involved when it comes to setting up those programs, that way of doing things, including innovation and research. I am sure that Mr. Easter remembers the former agriculture development councils. Unfortunately, that structure was discarded.

Over time, money may well have been transferred to other structures, but, as a farmer, when I assess everything the councils did in the past, I can say that we have never achieved the same goals, the same results, as we did then. The councils were administered by producers’ associations that ran the organization and the programs that had been agreed on together.

Our businesses have a continuity in time and in the way they are transferred. In agriculture, most farms are family-run. The problem is that, when a farm is transferred from one family to another, the tax rules are not fair compared to when other businesses are transferred outside the family.

We are therefore asking for improvements in two aspects: the tax measures and the rules of the game governing the transfer of farms. When this involves siblings, there is a problem that absolutely must be solved. Quebec has already solved it in part. Could the federal government make corresponding adjustments and thereby correct the tax problem for siblings?

We have been waiting for a long time. Some will perhaps say that we have to wait and see, that is, until after the consultations on the Growing Forward program. I say that we can act immediately. In budget 2017, there is a way to send a signal to farmers, telling them that the government really does want to invest in agriculture.

When we sign trade agreements, we have the responsibility of making sure that people are ready and able to be competitive. The country has been opened to outside markets, and very often, other countries are preparing as a result. We do want to sign agreements, but we are not ready to implement them. Our businesses have to be prepared as quickly as possible. That is why a clear signal is needed in budget 2017 so that our companies are motivated and determined to move forward. Our farmers have that motivation and determination and they want to press on.

That is basically the message I wanted to give you; I will be pleased to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Lemieux.

We'll turn to questions. Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Thank you all for joining us today.

Mr. Leblanc, although we are not in Montreal, I feel that you have just kicked off next year’s hearings, by which I mean the tour we are planning for 2017-2018.

Mr. Servais, I took careful note of your recommendations about SMEs and the needs that exist in the regions. There is a certain consistency in the witnesses’ presentations. The topics that frequently come up are business transfers and access to high-speed Internet. I would like to explore those issues. I am sure that my colleagues will too. So I will start by asking Mr. Leblanc some questions.

I was able to ask Mr. Dorval the questions; he was in the previous group. You talked about infrastructure in Montreal. Though I do not represent the Montreal region, I think we have to unclog our major cities like Vancouver, Toronto, Ottawa-Gatineau, as well as Montreal. I am one of those who believe our country’s competitiveness is at stake. You talked about the Caisse de dépôt et placement and the need to continue that investment. You also talked about VIA Rail. These are all major structuring projects.

Could you tell us how structuring projects like those can allow Montreal companies to realize your vision of international competitiveness?

[Michel Leblanc]

I will give you a specific example. For those who are not from Montreal, I will try and make the example clear.

There is an arterial road in Montreal called Autoroute 40. The highway goes east-west across the entire city. It was once one of the most dynamic focuses in Montreal's economic plan. Major companies like Pharma and Merck Frosst were located beside Autoroute 40. Those were major innovating companies. They were affiliated abroad, but they were still Canadian companies.

That economic zone has become weaker over about the last 10 years. When you dig a little deeper with those companies, you find that the lack of solid public transit infrastructure is a factor that leads them, when they are choosing to invest or reinvest in the region, to relocate near a public transit system. Ultimately, that translates into a destructuring of the local economy, but it also leads those companies to look elsewhere. Basically, it means that they do not immediately and automatically invest where they are presently, and we can lose them. When we are talking about multinationals, it is an investment that Canada cannot lose.

I agree with you entirely. I am talking about Montreal because that is the community that I represent, but I feel that this is about dynamically urbanizing economic activity all over Canada. I certainly do not want to leave you with the impression that what happens in the regions is not important. Roads are important in the regions. However, our cities must work well and they must be modern. I believe that, if we want a modern Canada and we want an infrastructure investment plan, the time to act is now.

My last topic will be VIA Rail. This has been talked about for decades. Bombardier makes high-speed trains for other places in the world. How come there are none in Canada?

We tell ourselves that, given the costs and complexity of the project, Canada is different. But there is no dedicated track for VIA Rail in the corridor where Canadians do a huge amount of travelling. We are very aware of the state of our environment. So, in this infrastructure investment plan, it makes sense to plan this major initiative that would be a legacy for future generations. By that, I mean a plan for VIA Rail.

[Steven MacKinnon, Liberal, Gatineau, QC]

I would also like to talk to you about a possible contradiction in your brief.

You advocate for the globalization of Montreal companies, but you are opposed to the Canada-wide plan—albeit not a federal one—to regulate financial markets. Could you explain that contradiction to us?

There is the SEC in the United States, and there are regulators for the European Community and for national markets in Europe and Asia. Can you tell us why you insist on regulating our capital markets here in Quebec?

[Michel Leblanc]

I am very glad you asked that question.

I do not think that there is any contradiction there. First, Canada has a solid financial structure that was the envy of a number of countries in the recent recession. The structure managed securities through a Canadian passport system that the regulatory bodies recognized. The system works well. Here is how I assess the issue:

“If it ain't broke, don't fix it”.

It was seen to have worked.

In fact, there was a Supreme Court judgment about the problem that arose in the last recession, systemic risk. This is probably, and justifiably, a type of problem that should be dealt with by a federal agency or at least should be within federal responsibility.

My personal position is specific to Montreal and Quebec. For a long time, we have chosen to operate within a federated system. One of the basic conditions for social order in this country, from Quebec's point of view, is that we accept that a federated system requires federated solutions. The temptation for centralized solutions will always be there. You will always find examples from around the world where centralized solutions work.

Canada's challenge is to show the world that we can have a federated system that is built on shared jurisdictions and that works because of it. That imposes an additional duty on us. In areas where jurisdiction is shared, where it seems to be working, let's make the effort to make it work well using our federated models and let's resist the centralized solution, tempting though it may be. In my opinion, a solution like that will have a negative effect on Canadian cohesion from Quebec's point of view.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Leblanc.

I would now like to talk to Mr. Gaudreau about the homelessness partnering strategy, the HPS.

I have had great conversations in Gatineau about cooperation between organizations. You did mention Gatineau in your remarks and I thank you for that. The mayor often talks to me about the need to fight homelessness with a holistic approach, not with the Housing First approach, as you mentioned.

Could you tell us about the need to evolve from Housing First to a more holistic approach in the fight against homelessness?

[Pierre Gaudreau]

From 1999 to 2014, federal funds were invested in a number of initiatives, as we describe in the brief we have submitted. They might take the form of a contribution to the facilities of organizations such as the Maison du Père, Cactus Montréal or L'Itinéraire, or a contribution to social housing projects. They can also involve supporting people in the street. They may also involve helping people who need food or people who need mental health care. It is about preventing people from going back into the street, or providing them with ongoing support or reintegrating them.

The shift to the Housing First approach, which focused 65% of the assistance in large cities to people who had been in the street for a long time, greatly reduced the assistance available for the other initiatives, including assistance for the facilities. Of course it is a good idea to help people in the street, but if others in the area take their place, you are not getting very far.

The government has taken a step in the right direction when Minister Morneau provided a 50% increase to the HPS over two years. That will make possible a variety of initiatives. As my colleague said, it will allow Montreal to determine its most pressing needs, either to work within the shelters or to help to develop projects for women, for whom we do not have enough room. It will allow the various communities, by virtue of an agreement with Quebec, to act with a Canadian vision. That has worked before and it can work again. That is what we are asking for in the future.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Godin, you have seven minutes.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chair.

I have to apologize, I was not here when the witnesses were welcomed. I am the MP for Portneuf—Jacques-Cartier in the large, beautiful region around Quebec City. So, madam, gentlemen, please let me welcome you to our meeting today.

I would first like to comment on Mr. Leblanc's remarks. He seems offended by the fact that Montreal is not hosting this consultation. I think we must rise above that kind of thinking.

As parliamentarians, we are here to move matters forward and we must not entertain any rivalry between Quebec City and Montreal. I remind you that Quebec City is the capital of the province. Montreal provides the lungs of Quebec, a province that is part of Canada. I feel that playing one against the other is beneath us. We are stronger together, Mr. Leblanc. That is what I had to say. You expressed your opinion earlier and I am giving you mine.

Mr. Nepton, I am from a large constituency in the far-flung suburbs of Montreal, very close to Quebec City. It is called Portneuf—Jacques-Cartier. In my region, there is a problem with Internet communication. It is a serious situation, a matter of public security, and it is our obligation to intervene. I am sure you are aware that only 5% of Canadian territory has no Internet service.

However, a number of regions that are further from Montreal and Quebec City are not served. I feel that this is a major shortcoming that the government must be able—it has set money aside for it—to accelerate the provision of the service. How do we have to view the problem and find quick and specific solutions?

[André Nepton]

Rolling out Internet service clearly always depends on the installation of optical fibre. You have to calculate about $10,000 per kilometre for optical fibre. Serving rural areas becomes complicated for telecommunications companies, which understandably concentrate more on urban communications.

So you have to look at a technology that is able to provide the Internet en masse, and not through individual solutions. Because of our experience in the 19 communities that we have been able to serve, we in the Agence Interrégionale de développement des technologies de l'information et des communications, or AIDE-TIC, believe that cellular telephone technology is perhaps the mass solution to consider. This is especially so because it can provide the Internet in parallel. So, in the communities that we serve, we now have access to telephones, to mobile Internet and to fixed Internet through the cellphone system.

Earlier, I brought up the matter of the speeds that we will be attaining by 2020. We now know that, in the next five years, Canadian telecommunications companies that are not able to make fibre optics available in rural areas will be using cellphone technology in order to serve them. It works not only for the Internet, but for television, for fixed telephones and for all the packages that telecoms now provide through cable or fibre optics.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I share your vision. However, in my constituency, there is an area in Sainte-Catherine-de-la-Jacques-Cartier, not far from Quebec City, that has a cellphone coverage hole. I understand that the companies will not be investing in a tower to cover the area. There are a number of coverage holes, both in my constituency and elsewhere in Canada. Cell technology is one solution, but it does not solve all the problems. What does the priority have to be?

[André Nepton]

Satellite technology is already available and can cover localized problems that are really out of contact. Actually, that is its strength, especially in the Canadian north and the most remote regions.

Currently, we are not ready to support telecommunications by deploying optical fibre. As we see it, cell technology provides alternate solutions on a smaller scale. Previously, you had to systematically build very large infrastructures in order to provide service. One cell tower requires an investment of about $500,000, plus the ongoing costs of upkeep and repair.

With the advent of what we call “small-cell transmission”, we can now do things with almost surgical precision. So we can provide services to areas of 250 square metres. So I believe that, if we become directly involved with rural areas, we will indeed be able to open the doors to those small-cell technologies that should, right off the bat, serve at least the centre, the heart, of all the villages where there is a problem.