Finance Committee on Oct. 13th, 2023

[Carey Bonnell]

There's a lot to cover there, but I'll try to do it very succinctly.

Our labour force is divided basically into land-based processing facilities and offshore vessels. We have four active offshore vessels right now, where we would employ maybe 500 people, give or take, 400 to 500 people in total. That's year-round employment. They go trip on, trip off throughout the year. They're full-time employees, basically, within our company.

Then, currently, we have four land-based processing facilities. That's seasonal work. That would be snow crab, sea cucumber, groundfish—a whole variety of different species. Those plants operate seasonally. Some are multispecies plants that may operate up to six, seven or eight months a year. Some are highly seasonal, like the plants that are largely snow crab only. In MP Rogers' district, they have one. They would be highly seasonal operations. It's an intensive 12-, 14- or 16-week period, depending.... In those operations, we would have people who would rely on EI and EI programming to support them.

I don't know if that answers your question fully or not.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Yes. Thank you very much for your answer.

Does the current EI program provide your seasonal workers with good coverage, or are changes needed to better address their situation? That's my first question.

Second, is your sector affected by the labour shortage?

[Carey Bonnell]

I missed your question on the labour shortage. Absolutely—we're all facing a labour shortage. Given the wind energy developments that are about to occur around the province, I fear that we're going to have further labour shortages that we're going to have to face. Our company introduced temporary foreign workers last year for the first time in our history. We were probably one of the last to adopt temporary foreign workers.

We still have operations in Bonavista, where we have 400 employees in our snow crab business, where we have zero temporary foreign workers. We have a waiting list for workers. There are regional examples where we still have a really good core workforce, but increasingly, with the aging workforce, we're moving toward temporary foreign workers. It's more so on our land-based processing than on our vessels. If you can offer year-round employment and good-paying jobs on a year-round basis, with no reliance on EI, it's more attractive. You can generally attract people into that lifestyle. It's not as much of an issue there.

In terms of the EI program, it's a bit of a loaded question. I'm not sure how to answer it. What I will say about the EI program is that the changes, obviously, that occurred here this past year will impact us, particularly given the shortened duration of coverage. It's not so much the hours of qualification, because I think virtually all our workers will qualify as seasonal workers. It's the fact that the changes that occurred because of the decline, I guess, in the unemployment rate will result in people running out of EI in mid-February, probably, or late February or early March. Our seasonal operations in snow crab don't start until April.

There's no way to bridge that gap, as it stands. That's going to be impactful. That's punitive, and it's going to be challenging. I think everyone is well aware of that. I know there's a lot of dialogue on that topic right now to try to find some solutions, hopefully.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

I have another question for you.

You mentioned the aging workforce in relation to the labour shortage. Do you think the government should introduce incentives for young retirees who want to keep working part time, say, so their retirement income isn't clawed back? Could that make a difference in your industry?

[Carey Bonnell]

It's hard to answer that question, really, because I don't know the specifics around what an incentive program might look like.

We have retirees who come and work for us seasonally. We have people, unfortunately for Mr. Foley, who came out of the hospitality sector in Bonavista with the massive challenges in hospitality in 2020 and 2021 during COVID. A lot of them came into the seafood processing sector in Bonavista. Some of them may not have gone back because they liked that seasonal lifestyle and seasonal work, where they qualified for EI and could maybe still do part-time work in hospitality. You can't really do that, though, because the seasons generally align. It's kind of hard to do.

I don't know the answer, but we are looking for all kinds of creative ways. We work with the Association for New Canadians to try to attract workers. We were very actively involved during the Ukrainian crisis with Ukrainians coming into the province. We're including temporary foreign workers. I don't think that's a long-term solution, but I think it's a necessary solution today.

We need longer operating seasons in our business to make it more attractive for people who want to work in our operations and to move from temporary foreign workers to an immigration strategy. That's what we need, but that takes time.

I'm not fully answering your question, but those are my views on that.

[The Chair, Liberal, Peter Fonseca]

That's time. Thank you.

You're a very humble and gracious MP, Gabriel Ste-Marie. You didn't introduce yourself or your riding.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I represent the riding of Joliette, near Montreal.

[The Chair, Liberal, Peter Fonseca]

Thank you.

We'll now hear from MP Cannings, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thank you to all the witnesses here today.

My name is Richard Cannings. I'm the MP for South Okanagan—West Kootenay in southern British Columbia.

As I've been saying here today, I have lived in Newfoundland. I was here in St. John's for three years in the middle of the seventies—back in the late Pleistocene—when I was doing my master's degree at Memorial. For one of those years, I lived in the lighthouse at Cape St. Mary's before it became a real tourist place.

We've heard a lot about wind energy. I served for six years on the House of Commons natural resources committee, and we talked about energy a lot. I was always thinking, “Why isn't Newfoundland developing this wind energy?” The comment we hear about wind energy is that it only works when the wind is blowing. Well, I can assure you that at Cape St. Mary's, the wind is always blowing. The year I was there, I think one day the wind stopped. I was like, “What's happening? The world is coming to an end.”

I'll start with Mr. Templeton on that theme, and I'll move to Mr. Leet later.

There are ways of exploiting the wind energy here in Newfoundland. One is through hydrogen and [Technical difficulty—Editor]. That sort of thing is a storage mechanism, but it's the direct wind energy, putting it into a grid, that can help Newfoundland and Labrador and the rest of Atlantic Canada benefit. You know, let's get our whole energy system into the green economy.

Can you comment on that? Maybe you can touch on the Atlantic loop or something like that. How can people here in Newfoundland and Labrador really contribute directly to the energy we use in Canada?

[Alex Templeton]

I can speak briefly to that.

What we see in the sector right now is, at times, there are a number of competing aspirations in what ultimately needs to be done.

The Atlantic loop is a proposal concept that makes a lot of sense from our perspective and our members' perspectives. It is something that has been intuitive to the organization for quite some time, but we know that our utilities, like Newfoundland Labrador Hydro, are facing circumstances, when they are looking at the projections, whereby there will be increased demand on generation. They are looking at significantly having to build out on the existing grid to account for all the electrification that we have proposed.

In light of that, while the idea of exporting energy directly out of the province is certainly a viable concept, frankly, there's a limit on our capacity to focus on all of these great prospects all at once. That capacity is very much under strain right now, and it's something that should be properly supported.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Mr. Leet, both you and Mr. Templeton mentioned the ITCs and things that are helping drive these changes forward, and both of you mentioned the comparison with the Inflation Reduction Act in the States, which is so much more generous to these prospects. I've heard from many Canadian companies that are under real pressure to move to the United States to take advantage of those.

Mr. Leet, could you talk about the difference between what is being offered in the IRA versus the ITCs that we have here in Canada, and why it's critical that we try to bridge that difference?

[Sean Leet]

Thank you for the question, MP Cannings.

In the U.S., the Inflation Reduction Act includes subsidies for the production of green hydrogen. There's a production tax credit. Our response to that has been an investment tax credit, which gets us about 50% of the way there, based on the understanding we have now of what the ITC will include. It gets us to about 50% of the value of the U.S. subsidies—again, the production tax credit—which is why we require additional mechanisms to help support it to level set us with the U.S.

Contracts for differences would be a key to unlocking some of these offtake contracts, but some of the other supports from the Canada Infrastructure Bank and the other organizations mentioned in my comments will be important to get us as close as possible to that lucrative U.S. subsidy.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Mr. Templeton, do you want to add anything to that on how we could better support Canadian companies to do this work so that they won't go to the United States?

[Alex Templeton]

I don't have much more to add on that. I know it's something about which our members share the impression that, obviously, the Canadian response has not been as competitive as it could have been with respect to what the U.S. is offering.

Again, to reiterate, that's one part of the puzzle. I know it serves the focus that we have here. It is a very critical component when you consider all of the complexities of the business model that people like Mr. Leet and his colleagues are trying to unlock for us.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Cannings.

Members and witnesses, we're moving into our second round of questions. In this round, timings will be a bit different, but we are starting with five minutes for MP Small.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you, Mr. Chair.

My question this time will be for Mr. Foley.

Mr. Foley, the CFIB and the Canadian restaurants association are saying that 50% of restaurants right now are at break-even or less.

What are the impacts to restaurants in your organization of the rising cost of food?

[Craig Foley]

Thank you very much for the question.

We joined CFIB, Restaurants Canada, TIAC and 250 other organizations, basically, to try to move the repayment time on these loans.

The food and beverage industry I think is perhaps the hardest hit of the hardest hit. What I'm actually hearing from many of our operators is that they're going to have to stop operating in order to stay whole. In other words, when the revenue shuts off, there are no margins now to stay open and hope they pick up a little business. It's better to close and then reopen. You're going to create more seasonal businesses. The real impact of it, and not only in rural Newfoundland and Labrador—it's happening in this city—is that it's going to be hard to get a place to eat. It's going to be hard for people to enjoy half the reason they come.

It's really having an impact. It's causing people to really consider their business opportunities and their business models.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Mr. Foley, we know that everything has to be shipped here except oxygen and—

[Craig Foley]

And wind—

[Voices]

Oh, oh!

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Yes, and the wind brings the oxygen.

We had a witness previously who talked about the high cost of shipping goods here and the ultimate impact to the consumer. What do you think the effect of the carbon tax is to the end-user, to your members?

[Craig Foley]

From the members I've heard from, it's primarily been around transportation: airlines, bus companies and boat tours. Certainly, everything that's served, if we're staying with the F and B example, every input, for the most part, because food security is an issue in Newfoundland and Labrador, has to be shipped in. Every time there's an extra cost put on the cost of goods shipped in, that has to get passed on to the consumer. At a certain point, consumers are going to say, “This is too much. I can't do that.”

There's a constant battle of trying to figure out the correct price point against the cost of doing business. That's causing a tremendous impact on the operators. It's ultimately going to change the face of the product available on the ground.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

As well, Mr. Foley, I guess a lot of your members burn a lot of propane. How do you think the carbon tax is impacting the cost of the energy used in their daily operations?

[Craig Foley]

I guess any increase in cost right now, at such a critical time, would be detrimental, I would say, to any business that's on the edge.