Finance Committee on March 10th, 2020

[Peter Fragiskatos, Liberal, London North Centre, ON]

I understand they are here.

[The Chair, Liberal, Wayne Easter]

Can someone answer that from finance?

Come to the table. You might as well sit here, Mr. Botham.

Did you hear the question Mr. Botham?

[Richard Botham, Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance]

I did, thank you. Unfortunately, I didn't prepare historical rates of unemployment for our appearance, but it's readily available data.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Could you tell us what the unemployment rate is today, in 2020?

[Richard Botham]

No, I can't.

[Peter Fragiskatos, Liberal, London North Centre, ON]

My understanding is that it's 5.6%, the lowest it has been in 40 years.

I'm going to ask a question on debt-to-GDP ratio.

[Richard Botham]

Quite honestly, I didn't prepare to bring that data to the discussion on business subsidies.

[Peter Fragiskatos, Liberal, London North Centre, ON]

That's fine.

It's important to have a context for understanding the discussion, which is economically focused, but there are some big picture issues that I think ought to inform the discussion.

If you could provide data that lets us know what unemployment was at 2015 and where it is now, along with the debt-to-GDP ratio and where that ranks, where Canada ranks in the wider G7 on that measure, and the number of people who have been lifted out of poverty since 2015, I think that would help the committee from a big picture perspective in terms of establishing context.

There is another important question to be asked here. It has been hinted at, but we haven't delved into it in a very direct way.

Mr. Poilievre opened up questioning, and Mr. Cooper followed. If some around the table question the philosophy behind investing when governments take the decision to invest in business, that is actually curious, because in 2008 the then Conservative government invested $350 million in Bombardier. However, I leave that aside and maybe my colleagues would care to offer an explanation at a later time.

The question in my mind is not why governments invest. They certainly do make the decision to invest. What would happen if governments did not invest? That's a crucial question.

Ms. Johnson, you just cited figures under SIF. You said that 60,000 jobs have been created or maintained, or at least that's the projection. Is that correct?

[Andrea Johnston]

That's the number we negotiated in the contribution agreement.

[Peter Fragiskatos, Liberal, London North Centre, ON]

That's a high-level figure.

The issue of BlackBerry was raised earlier by my friend, and it's good to get into specifics on the microeconomics.

Do you have information on the number of jobs created by the BlackBerry QNX investment and the number of jobs maintained by that investment?

[Andrea Johnston]

I do. With that agreement, it was a SIF contribution of $40 million towards a project of $310 million. Under the contribution agreement, BlackBerry QNX committed to maintaining 293 jobs and creating 807 jobs, as well as supporting 1,000 co-op terms.

It is also increasing QNX Canadian research and development spending by a total of $350 million and will be supporting an additional $5 million in R and D collaboration.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Okay. We're talking about 1,000 people who are going to benefit as a result of that investment in the region of southwestern Ontario, where I come from.

I think there might be a misunderstanding that suggests this is only about capital expenditures, that there are not other beneficial outcomes here, such as R and D, the expansion of firms, their scaling up. This is part of the principle that guides investment. Is that correct?

[Andrea Johnston]

Correct.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Okay.

[Andrea Johnston]

We look at not only funding the R and D commercialization or the scaling-up in a manufacturing facility, but we also look at the economic benefit to Canada and the public benefit to Canada.

[The Chair, Liberal, Wayne Easter]

Peter, I'm sorry, but you're out of time.

Mr. Morantz.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

Given that all taxpayers fund these programs, which I think we all acknowledge, when I look at the breakdown of the money being handed out from the strategic innovation fund, it's troubling when I see, for example, my home province of Manitoba having the second-lowest per capita funding from SIF. Not only that, but it is less than half the national average. In Manitoba, it's $21.91 per capita; whereas in Ontario, for example, it's $62.25.

It appears that the Liberals are not only picking through this program which industries are winners and losers, but also which provinces are winners and losers. Why is it that Manitoba is not getting its fair share of these grant and contribution monies?

[Andrea Johnston]

It is true that there are not.... I'll just step back. When we get the projects, we actually assess them and we look at them from a portfolio approach. We do look at it from a regional perspective, as well as a sectoral perspective.

We have some projects that—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

What is the reason, though? If all taxpayers are contributing, shouldn't all regions be treated equitably?

[Andrea Johnston]

As I mentioned earlier, the core criteria is—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I will let you finish your answer, but I want to point out that.... This comes from the recent Ernst and Young study that was published this year. You can all have one of these. I'll table it with the clerk.

When I show this to folks back home, they're going to be asking why Manitoba is dead last. If your department is administering these programs, why is it that my province is this little tiny line at the end here? What's the reason?

[The Chair, Liberal, Wayne Easter]

Ms. Johnston, the floor is yours. Take as much time as you need.

[Andrea Johnston]

Thank you.

Again, as I mentioned, we look at it from a public economic and innovation perspective.

The other challenge is that the strategic innovation fund is kind of the fund at the end of the road in the sense that many companies start at NRC IRAP. They get funding there, and then they move to the regional development agencies. Then projects that are quite large, at least $10 million in SIF contribution—that is at least a $50-million to $60-million project—come out of the strategic innovation fund. The numbers are low in Manitoba. That is the reality. We're certainly open to receiving projects that would benefit the province of Manitoba.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I guess that begs the question: Why haven't you, and what is the department doing to encourage regional equity in this program?

[Andrea Johnston]

The reality is that we assess the projects as they come in. It's not that we've rejected projects from Manitoba. We assess the projects as they come in. I would say there were hardly any projects that came in from Manitoba.