Finance Committee on Nov. 2nd, 2023

[Beth Potter]

We did a study with Nanos Research that showed that 55% of tourism businesses had taken on a large amount of debt during the pandemic, and 45% of them told us that if there aren't some changes made to the repayment structure, they could close their doors in the next three years.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Weiler.

Now we go to MP Ste-Marie.

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

Thank you, Mr. Chair.

Like Mr. Weiler, I would like to welcome the witnesses and thank them all for being here.

Ms. Nugent, rest assured we will read your brief carefully, as well as any submissions the committee receives. You will get just as much consideration as the other witnesses.

I found that last discussion between the member and Ms. Potter especially interesting. It was about the risks stemming from the current challenge facing tourism businesses.

Ms. Potter, I want to assure you that we will keep urging the government to be more flexible, so that these important businesses can keep their doors open.

My questions are for Ms. Poncelin de Raucourt and Mr. Colleret.

Thank you both for being here. It was very nice speaking with you on the Hill a while ago.

Ms. Poncelin de Raucourt, you talked about how a handful of universities received the bulk of the grants provided by the councils. Can you talk more about that?

[Céline Poncelin de Raucourt]

I should start by saying that the three granting councils and the Canadian Foundation for Innovation do a wonderful job when it comes to the vast majority of the grants they provide and the programming they offer to support investigator-initiated research. However, a look at the data from 2000 to 2021 shows that an increasing share of the research funding we receive comes from the Quebec government. It's about 26%, which I would say is proportional in terms of the number of researchers at our institutions versus the total number of researchers in the province. Conversely, the proportion of research funding Université du Québec receives from the federal government has shrunk to 11% of UQ's total research funding.

One reason is the significant amount of funding allocated to medical disciplines—and no doubt the pandemic amplified that trend—and the increasing share of federal funding going towards large-scale competitions like the Canada first research excellence fund. That tends to favour very large universities, which have sizable teams and the capacity to carry out these types of major projects.

Earlier, I gave the example of CIHR, which funds health research but focuses heavily on biomedical and clinical research. What that means is the bulk of grants go to universities with medical schools. The institutions in our network are very active in the health sector. I mentioned our cross-sectoral health research group, which has more than 200 scientists and nearly 900 students who focus on studying living standards, detection and vulnerability. They are very active in Quebec's regions. They have trouble securing funding, because the model is still very much geared towards medical research.

As you can see, the concentration of research grants is due to a few factors. I also talked about quotas earlier. What we're observing is that the more grants a university receives, the better its chances of being successful in all kinds of competitions or receiving grants. The way the system works, more and more funding gets allocated to a few universities.

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

Thank you. That gives us a better sense of the inequities, a situation that can hopefully be rectified.

Moving on to a different issue, I'd like to talk about the grants available to students. If I understood you correctly, simply giving out more graduate student scholarships isn't enough.

Do I have that right?

[Céline Poncelin de Raucourt]

Yes, that's right.

I would say two things about that. The first has to do with the quota system, which I just talked about. Simply increasing the number of scholarships without changing how they are awarded would likely widen the equity gap. Also, as I said earlier, the regions need a solid ecosystem that takes into account local and regional realities. Other witnesses talked about how important that is in relation to tourism and the green economy.

The concentration of funding, which we regularly criticize, jeopardizes the richness of the research ecosystem across the country. Since 15% of universities already get 73% of the grants, doubling the number of grants will just give a handful of institutions a few more grants, at the end of the day.

For example, the Alliance of Canadian Comprehensive Research Universities represents all small- and medium-sized universities, so 56% of university students. However, it gets nowhere near its share of grants. The current system doesn't take into account the diversity of the country's universities, some of which serve distinct populations with distinct financial needs. In UQ's case, nearly half of our students are what we call first generation students, meaning they are the first in their families to attend university. Research grants enhance the training opportunities that lead to a highly skilled workforce.

Having a system that gives these students access to scholarships is paramount because excellence isn't confined to one place. It exists in every region. Quotas are needed so that, at the very least, all universities receive a certain number of grants that they can allocate across the main areas of research to build local scientific expertise in response to the challenges identified by local organizations.

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

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP St-Marie.

Now we go to MP Blaikie, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you, Chair.

I will echo the thanks to all of our witnesses for being here today.

That's including Ms. Nugent. We're sorry that technical difficulties are preventing you from participating in the meeting, but I do look forward to reading the opening comments and brief that are on the way.

I wanted to ask Ms. Potter for some further clarity.

Would you like to see a recommendation from the finance committee to the effect that the repayment period, including for the forgivable portion of the CEBA, be extended?

[Beth Potter]

In a short answer, yes, we would.

The repayment changes that were made earlier this year just don't go far enough to give tourism businesses the time to pay back the loan and to realize the forgivable portion.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you for the numbers that you shared with us earlier.

Mr. Gray, I'm wondering if you're hearing from your membership about the impact of the upcoming deadline for CEBA loans.

Do you agree that those deadlines should be extended, including for the forgivable portion?

[Alex Gray]

The extension of 18 days is quite a short extension, frankly. It just seems like a half measure. If you're opening to extending it, why not actually extend it?

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Do you think it should be extended?

[Alex Gray]

Yes, I think that's broadly supported at this point.

It's been a couple of years, and businesses are still struggling. The economy looks a lot different than it did at the beginning of the pandemic. I see very little downside.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I know that kind of extension appears on the government ledger as a form of spending.

Are you concerned that would be inflationary?

[Alex Gray]

I think that given the scale of the program and the consequences of possibly not extending it, i.e., the closure of further small businesses, I think the effect is probably minimal.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much for that.

Mr. Mertins-Kirkwood, I wonder if we could come back to some of your recommendations.

You talked about workforce development. One thing we know is that there is churn in the labour market. Employment insurance, particularly as we start to talk about entering recession territory, is a really important stabilizer, both for the economy and for individual households in a time of economic churn.

I'm wondering if you could talk a little about the importance of the employment insurance reform that the government's been promising for eight years now, as well as the importance of reinvesting in EI training programs as one component of a workforce development strategy.

[Hadrian Mertins-Kirkwood]

I don't know too much about the EI reform process. Certainly EI is important. It's an important part of our social safety net. Every time a region goes through economic turmoil, we see how inadequate EI is. It can work in general, but often when we're in crisis, EI is insufficient.

We've had governments at the provincial level and the federal level step in with top-ups, like in the case of coal, for example, or other resource transitions. We haven't seen any of that recently in the government's sustainable jobs agenda. It's great that we are moving forward with this, which would otherwise be called the “just transition” agenda, but there doesn't appear to be any money in there that would actually support workers in a meaningful way.

What we're concerned about, though, is that EI is only one part of the equation. EI is sort of a parachute for workers who need it in a crisis. That's not the same as providing a new job at the end of the day.

We see that a lot in resource communities, historically. We're worried about it in the case of coal, oil and gas, where you can support a worker for six months or a year, but if there's no job at the end of the road, then you haven't really helped them transition. That's why we've argued for more proactive economic investment in those communities.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

How do you think government should tie skills training to creating those new job opportunities, so that Canadians who may be losing work in one sector are prepared to bridge into retirement, take a job in a new sector or transpose some of their existing skills to something similar but different?

[Hadrian Mertins-Kirkwood]

That's a great question. The most important thing is having some clarity about which direction we're headed in.

We saw that with the coal transition. We gave a deadline. We said, “We aren't going to be burning coal by x year.” That allows workers, the corporations that are affected and the communities that are host to the coal industry to plan for that transition. They have a runway.

Right now we don't have that in oil and gas. If you're a high school kid in Calgary right now, what is your economic future? You have people in one ear telling you that your best bet is oil and gas. People in the other ear are telling you that you need to be looking at different kinds of careers.

There's no clarity, and that means those communities and those industries can't plan for the future. We need greater clarity about our economic direction first. That basically underpins all of our workforce development.

Then we also need to be proactive. This is certainly the case in a lot of the building trades, where not only do we have skill shortages now, but we can see enormous skill shortages in 10 years. That's about as long as it takes to train someone up from start to finish for a lot of skilled trades.

That's why government in particular needs to be leading on that. We need to train these workers so that we have them when we need them. We can't wait until we have shortages and then hope we can retroactively train workers quickly to meet those needs.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

In the example of investment tax credits, one of the things that are unique about this—which New Democrats pushed for—was to have prevailing wage conditions as well as apprenticeship conditions attached to those ITCs. Do you think mechanisms like that are important to build in some of the workforce development and ensure that some of the wealth generated by these investments finds its way back to workers, who are actually producing that wealth, as opposed to just the capital that is behind the project?

[Hadrian Mertins-Kirkwood]

Absolutely. We were very happy to see the labour conditions in the most recent budget. We don't think they went far enough. You could go further—not just requiring a small share of apprenticeships, but also looking at other kinds of economic benefits.

We support the use of community benefit agreements more broadly to ensure that the benefits of investment are widely shared, and we're looking at other concerns in terms of workforce development, because it's not just about bringing apprentices in. We also want to diversify that workforce. How can we bring more women into the fold, more immigrants, more racialized Canadians? How can we diversify that workforce? Using conditions on federal funding is one way to do that.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

Members and witnesses, we're moving into our second round. Timings are a little different in this round.

MP Richards is up for five minutes.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you. I have a couple of questions for Beth from TIAC.

I want to start with a question on labour. A Liberal member, Mr. Weiler, asked you about this earlier, but I don't know if he really asked the right question, so I'd like to touch on it again.

Labour shortages for many tourism and hospitality businesses are a big issue right across the country, but I think it's particularly acute in communities like those that I represent in Banff and Canmore, in communities like Mr. Weiler is supposed to represent in Whistler—places like that, where they're remote, tourism-based economies. They are the places people are the most attracted to, but they're also where it's most difficult to get the labour.

You mentioned a need for long-term solutions. I think you could put it another way—that this is really a permanent problem for which the government has a temporary solution. We obviously need to see long-term, as you mentioned, more permanent solutions.

Could you speak to those solutions and what you see them needing to be? What can the government do to remove some of the barriers to the success of the industry in the way of being able to get labour to fill the positions we need to fill?

[Beth Potter]

I will say that there are two pieces that I think government has a role to play in with respect to assisting the industry to attract and maintain a healthy workforce.

The two destinations that you just mentioned, Banff and Whistler, are prime examples of affordable housing not being available for workers. If you add to that their location, transportation to the location is also challenging. I can take that to a different community. In Ontario, with regard to the towns of Collingwood and The Blue Mountains, workers have to live an hour away, because that's where the houses are that they can afford. It's become such a great destination that it's driven up the cost of housing within the local community.

In order to have people live where they work and work where they live, the government needs to turn its attention to more affordable housing builds, some specific incentives to building more rental housing, and also working with the provinces, territories and cities around building more transportation infrastructure. That's one piece there.

From an immigration standpoint, we've seen some movement on making getting into the country easier for folks who have the skill sets that we need, but a lot more work is needed in that space. We need changes to which NOC codes get priority for entry into Canada, and we also need to have a program dedicated to tourism, especially understanding that there are seasonal requirements that we have.

Again, I'll go back to your neighbourhood of Banff. A lot of folks who work within the ski industry actually follow the ski industry globally. It's a global workforce. Having temporary foreign workers who can come in for the season and then leave but come back the next year without having to go through the LMIA process and the expenses attached to that is incredibly important.

Recently, the trusted employer program was announced for the temporary foreign worker program, but you have to have two years with the program to be noted as a trusted employer. We had two years, at least, in which employers were not using the program. I've asked if the temporary foreign worker program could give the tourism industry a reprieve out of 2020, 2021 and maybe even 2022, so that, if they were a trusted employer prior to the pandemic, they could pick up that status now. Unfortunately, that's not something we've been able to move the needle on at this point.