Fisheries Committee on May 5th, 2009

[The Chair, Conservative, Rodney Weston]

I call this meeting to order.

I'd like to begin by thanking Mr. Comerford for coming here today on behalf of ACOA to meet with the Standing Committee on Fisheries and Oceans to discuss the issues surrounding CCFI.

Mr. Comerford, we generally allow 10 minutes for presentations to the committee. You'll hear some beeping noises up here as we try to stick to fairly specific time constraints for questions and answers. With presentations we try to keep it as close as possible to the time line. If you hear a beeping when you're speaking, maybe you can move it forward and try to begin the wrap-up.

Before I turn the floor over to Mr. Comerford, I'd like to assure him that he has the full attention of the committee this morning.

Mr. Comerford, the floor is yours.

[Richard Comerford, Director General, Regional Operations, Atlantic Canada Opportunities Agency]

Thank you, Mr. Chairman, for having provided me this opportunity to meet with the committee and discuss the Canadian Centre for Fisheries Innovation, or CCFI.

The Atlantic Canada Opportunities Agency was established in 1987 as the federal regional economic development agency for Atlantic Canada. Its headquarters are in Moncton, New Brunswick, and it has regional offices in the capital city of each of the four Atlantic provinces.

The agency's mandate is to advance the economy of the region across all sectors through advocacy, coordination of the economic development activities of federal departments, and the delivery of programs designed to effect specific outcomes. The agency's programs focus on business development, community development, and innovation.

The Canadian Centre for Fisheries Innovation is owned by Memorial University of Newfoundland and housed at the university's Marine Institute in St. John's, Newfoundland and Labrador. The CCFI works with the fishing industry to assist the sector to access the research capacity of the various institutions throughout Atlantic Canada. CCFI does not carry out any research and development. There are at least 20 organizations and institutions with fisheries-related research capacity in Atlantic Canada, and I've attached a list of those.

ACOA was involved in the establishment of the Canadian Centre for Fisheries Innovation 20 years ago. I was personally involved for the first 13 years of the CCFI's existence as the representative of the agency on the board of directors and the executive committee of the board. At that time, there was recognition that the fishing industry was not benefiting to the degree possible from access to the scientific and technical capabilities of institutions, particularly the Marine Institute and Memorial University. It was also felt that the institutional capacity was not being applied to the fishing industry.

In 1988 ACOA had just become operational, with a mandate to support economic development across Atlantic Canada. The fishing industry was facing particular challenges in the groundfish sector, and more innovation was needed. For the period from 1988 to 1999, the agency provided a total of $15 million to fund two five-year mandates for the CCFI.

The economy of Atlantic Canada has evolved over time and ACOA's approaches have adapted to these changes. In the late 1990s the agency moved to a more business direct delivery model.

After the second five-year mandate, we challenged the CCFI to become more sustainable and to seek other sources of funding for their operations. Funding from federal-provincial agreements maintained the CCFI for a further three-year period.

In 2002, the agency launched the Atlantic Innovation Fund, or AIF, as a major initiative to stimulate growth through innovation in Atlantic Canada. The focus was to encourage, facilitate, and fund the commercialization of research in the business community and institutions. Priority was given to initiatives that had specific research plans with expected outcomes that integrated the institutional research capacity and business enterprises with products that were capable of commercialization.

CCFI received funding from the first round of AIF, but was advised once again that they needed to pursue a sustainable governance and funding model. Three subsequent proposals by CCFI to the Atlantic Innovation Fund were not successful.

Finally, in 2008 CCFI secured $1.5 million in ACOA funding through the agency's Innovative Communities Fund, with the provision that CCFI provide a sustainability plan. The subsequent plan that was presented required that the agency provide $1 million per year indefinitely in order for CCFI to operate.

ACOA openly acknowledges the contribution that CCFI has made, along with research bodies throughout the region, to the integration of research and innovation in the development of the region's fisheries sector. However, over the course of 20 years, the fishing industry has evolved, research institutions have become more directly engaged in outreach to the private sector, and ACOA's approaches and programs have evolved to reflect the changes in the economy.

The seafood industry in Atlantic Canada developed its own direct path to research and innovation funding, as witnessed by the approximately $60 million provided to fishing and aquaculture organizations under ACOA's Atlantic Innovation Fund since 2002.

Companies and institutions from across Atlantic Canada have pursued AIF to access support for key R and D projects tied to downstream commercial opportunities for individual companies or for the sector generally. A few examples include the following: Quinlan Brothers Limited of St. Anthony, Newfoundland and Labrador, has accessed AIF to support research and development in the processing of chitin and chitosan, which are natural derivatives of shrimp and crab shell waste; Acadian Seaplants Limited of Dartmouth, Nova Scotia, accessed AIF to pursue research into the development and commercialization of two new seaweed food products; AIF is supporting Aqua Bounty Canada Inc. of Souris, Prince Edward Island, in its research designed to generate technology to produce reproductively sterile Atlantic salmon; and the University of Prince Edward Island, Atlantic Veterinary College, is using AIF support to research the effects of lobster moulting to increase the quality and value of the landed products in Southwest Nova, Nova Scotia.

A key objective of the Atlantic Innovation Fund is to link the industrial capabilities around commercialization with the institutional capacity for research and development. But this objective is also a shared objective of players throughout the region. For example, currently there are industry outreach offices at 14 universities and colleges within Atlantic Canada, and I have attached a listing for your viewing. Most of these have been established since the inception of the Atlantic Innovation Fund. Each of these offices has a mandate to be engaged with, and to be relevant to, all sectors of the Atlantic economy, including the fishery.

There is a constant state of dialogue within the sector. For example, new technologies are enabling institutions to identify their research capability and promote it to relevant audiences. Memorial University recently announced a new web-based search engine for exactly this purpose. This interchange is constant and ongoing and it did not exist 20 years ago when the CCFI was established.

Over the last two decades, ACOA's programs have adjusted and responded to the transforming nature of the economy of Atlantic Canada. Our business programs now provide repayable loans rather than non-repayable contributions. Our community programs are designed to stimulate sustainable economic activities directly in affected communities. Our innovation programs require specific research outcomes that result in commercialization and projects that are self-sustaining.

The agency's position is that the original objective behind the establishment of the CCFI has been accomplished. The fishing industry and the institutions with related research capacity are working well with each other. The need for a stand-alone, non-sustainable organization, which requires $2 million per year to facilitate research and development, is no longer a compelling or appropriate use of ACOA funds.

Thank you very much.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Comerford.

Mr. Byrne.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair.

Thanks, Rick, for appearing before us.

You relay a story about ACOA being extremely successful in terms of stimulating innovation in Atlantic Canada—and yes, indeed you have. I think the organization has brought a tremendous amount of leadership, expertise, as well as dollars, badly needed money, to creating an innovative culture and capacity in the Atlantic region, which I think is a model for the rest of the country.

This is where we get into more of a philosophical debate about innovation and the innovation chain. I was reading an interesting editorial or column in The Globe and Mail on Saturday by the president and vice-chancellor of the University of Calgary. He made the point that in Canada we're extremely good at innovation, but not very good at the innovation chain or making these technical advances translate into commercial activity. The president of the University of Calgary said that establishing networks to be able to facilitate a completion of that chain was absolutely essential to the commercialization of Canadian innovation and prosperity in Canadian business. He referring specifically to those knowledge networks like CCFI that allow basic or pure science to be translated into applied science and into commercial innovation. He said that was lacking.

We heard from the executive director of the CCFI that there may be a concern on ACOA's part that the linkages in that innovation chain, when it comes to the fishing industry, are mature enough that CCFI is no longer needed.

Rick, would you be able to describe to us how the fishing industry has this critical issue so right, and how it can be used as a model for the rest of the country, because it's clearly lacking for the rest of the country?

I know we have a limited amount of time, but I have a second question. The CCFI has met or exceeded all provisions under third party delivery mechanisms, as outlined in both the Treasury Board and the Auditor General's remarks. Is there anything we should know that CCFI is not doing in this regard that causes concern for ACOA? If so, we're not aware of them. In fact, I understand that CCFI has been audited on numerous occasions, and it's been said that they've met all of those third party delivery requirements—and if not met, they've exceeded them.

On those two points, Rick, if you could enlighten our committee, that would be great.

By the way, thanks for coming on such short notice. I appreciate it.

[Richard Comerford]

Thank you, Mr. Byrne.

I'll deal with the second question first, because I'm not sure of the exact point of the first question.

Our relationship with CCFI in terms of accountability and that sort of thing would be a client-partner relationship. We get regular reports, probably quarterly, updating us on the activities of CCFI, and then at the end of each year we get all of the financial statements prepared by Ernst & Young. I think that's their personal auditor right now.

We've found the financial aspects of CCFI's activities to be quite good; they're quite straight, and there's no reason for worrying or questioning there

Does that answer the question?

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

It does, and we're good and clean on that file.

[Richard Comerford]

One of the issues around third party delivery would also have to do with whether the organization conducting the third party delivery is actually undertaking things within their mandate. Is CCFI doing things that ACOA would do, if ACOA were actually doing them?

Some of the things CCFI does, or some of the projects they would be involved with or fund, are not things ACOA would normally do. Some examples of that might be development work in the fishery, or experimental fisheries, and that kind of thing. That would be more the mandate and in the purview of the Department of Fisheries and Oceans, I guess.

But for the most part, the financing and the records, and all of that, of the CCFI, to the degree possible, seem to be fine.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Okay. Let me elaborate, then, on my first question. In fairness, it may not be in your purview, or it is more of a cross-governmental policy issue or debate.

You said that basically there's an established, well-oiled network within Atlantic Canada, specifically in the university system, to be able to transfer technology from the environment of academia into the private sector, which I don't disagree with. There are some very good institutions that have developed out there. The question is whether or not they're completely good enough.

I remarked that the president of the University of Calgary said that this is a Canadian issue: we're not very good at transferring technology from the academic environment to the private sector. That's where we fail, not on the intellectual side but on the intellectual transfer side, in getting that process out into commercial application.

ACOA does fund other organizations, like Springboard Atlantic. Are we to read from this that maybe this is going to stop, that because individual institutions have mechanisms in place to be able to outreach their expertise, their R and D capacity within the university...? I know that Dalhousie has an outreach office, Memorial has one, and Saint Mary's has one. Pretty well every university has an outreach office. Because that is the case, should Springboard Atlantic expect to shut down soon?

If not, what exactly is it about CCFI and the fishing industry such that the fishing industry has this so right that they don't need a go-between to get innovation, research, and development out of the university and college environment and into the private sector? How have they achieved this? Could we use this as a model for the world?

My proposition is that we're still lacking in that regard and that an organization like CCFI is still valuable. I think Springboard Atlantic is still valuable, and other initiatives that ACOA might want to fund outside of existing networks and mechanisms are still valuable.

Maybe you could comment specifically on CCFI.

[Richard Comerford]

Since ACOA began, or over the course of our activities, one of the approaches we have taken in working with industries, industry associations, or groups within industries has been to identify particular initiatives--and usually they would identify them--where, if the industry were able to cause that to happen, it would be a good thing for the industry and everybody would benefit.

ACOA's approach has always been to provide seed capital or upfront capital, to provide money to get organizations through the early stages of their start-up, so that the good work they intend to do or hope to do can be recognized by those who are benefiting from it. Over time, then, those who are directly benefiting from it--and also if government departments with a specific mandate were able to benefit from it--would take on more of the cost of undertaking the activity.

There has always been a requirement toward a sustainability model, or else it becomes something the government has to do forever, and if that's the case, then it probably should be a government-owned structure as opposed to a third party structure. But again, I think the point is that when ACOA gets involved in something, whether it's the tourism association or something in the fishery, generally you do it for a while, but you hand it over to the industry once the industry has seen the value in undertaking it.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Rick, the fishing industry is probably one of the industries with the least amount of excess capital for research and development activities, yet the CCFI has been able to lever $1 of assistance with $5 of outside funding, and now operates with basically a 50% ratio in terms of its own operating costs. That's the testimony we've heard, if I've paraphrased it correctly, but that seems like a pretty good movement towards sustainability over the long run.

I agree with you. I don't know if CCFI would ever be fully sustainable, especially in these markets at this time. Could you comment on that?

Finally, is the door closed on CCFI? Has ACOA made a decision at the ministerial level and it's now no longer an option to fund CCFI?

[Richard Comerford]

I think there were three questions there.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Could be.

[Richard Comerford]

Is the door closed? I guess my answer to that would be yes. Minister MacKay and Minister Ashfield have written CCFI and advised them that ACOA would not be funding the CCFI further.

The other questions, I guess, concerned leverage and sustainability. With respect to the sustainability, there are two categories of money the CCFI uses. One is operating costs, which are the salaries, rent, travel, etc. for staff. The other is program activity.

Until recently, ACOA's money provided for both categories of funding and was generally $1.5 million in total, with $.5 million for operating and $1 million for research and development.

The question was...?

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Did they show a movement toward sustainability, the fact that they've been able to lever so much operational funding from outside government circles and, as well, reduce their operating expenditures from a 100% ask to a 50% ask?

[Richard Comerford]

The leverage would refer to the $1 million they have in research and development money. The leverage figures they quote would be that that $1 million results in their participation in x millions of dollars in research and development projects.

Some of the debate around leverage is that most of the other money that goes into those projects is money that comes from government or from the private sector. The government program money would continue to be spent, so it's levering it but it's really working with it, so you could argue the government money is levering the CCFI money just as well. Leverage becomes a bit of a mug's game, I think, when you look at it that way.

There have been indications from provincial governments that they're prepared to pay something toward the cost of the ongoing operations of CCFI, and that's seen as a move in the right direction. I guess that's something we had been telling CCFI they should be doing for about eight years.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Comerford.

Monsieur Blais.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Thank you very much, Mr. Chair. I see that you are being generous with regard to time allocation today. So, that means you will do so fairly, no doubt, and consequently, I will be able to speak for a little bit longer.

[Some hon. members]

Oh, oh!

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Good day. First, I want to speak to the committee members. I will have to leave you shortly after noon. I am giving an interview on the seal hunt. You know that today is a sad day, almost a day of mourning, because the European Parliament has decided, by a landslide, to vote in favour of banning seal products. For my part, the fight will continue, a fight for truth and respect for our traditions, particularly in the Magdalen Islands.

Furthermore, I also intend to talk about the possibility of having an emergency debate on this matter this evening, and we will see. However, I would like to stress that there is no doubt that we will have to look again at the issue of the seal hunt. I don't know how we will be able to do so. I hope that it will happen next Thursday.

Good day. I heard people from the Canadian Centre for Fisheries Innovation. Today, I am listening to you. I have clearly understood the message from the centre for innovation, but I am having a little difficulty understand yours. You are going to help me over the next few minutes better understand you.

Please tell me if I am right or wrong. It seems that there is a certain philosophy that a research and development agency, in order to be able to exist for many years, must ultimately rely on private sector funding so that the government, at some point, can stop funding that agency. It shouldn't be like that. I think that the government or your agency can approve funding on an annual, two-year, three-year, or five-year basis, with progress reports, and so on. And if various facts mean that we are not satisfied with the work done, the funding can be stopped.

I have always understood that research and development remains the poor parent of the private sector, if I might say so. The private sector will invest if it benefits it to do so, if it wants to make more money. I am thinking, in particular, of pharmaceutical products. Hundreds of millions of dollars are invested in research and development, but for a target market.

In the fishing industry, we are trying to understand what is happening underneath the surface of the water, that which we cannot see. In my opinion, we are just starting to do a bit of research and development in that sector. We should remember that, even with regard to cod, an area we are extremely familiar with, we still don't know today the chain of events that can scientifically explain what has happened with regard to cod stocks. This kind of research and development is extremely difficult and takes an extremely long time, in my opinion.

I'd like to give you the opportunity to tell me your philosophy, how you see things regarding research and development organizations coming to see you and whom, at some point, you are turning away; they are turned away because they haven't made the necessary efforts to get private funding, and you are cutting their funding.

I get the impression that there are all kinds of ways in which you could maintain the same control over the funding that you grant to such agencies. However, it's essential to understand that the work they do, in the area of research and development, is long-term, whether we want it to be or not. With regard to fisheries, I get the impression that this could mean that a centre, such as the Canadian Centre for Fisheries Innovation, would not and will not be able to go and get private sector funding to make up for the shortfall.

[Richard Comerford]

There are a couple of issues here. One is that the Atlantic Canada Opportunities Agency puts a tremendous amount of money into research and development. About eight years ago we developed a new program, the Atlantic Innovation Fund, which made an unprecedented amount of R and D money available. To do that, we had to take a particular approach. We had to target commercializable projects. We wanted products that could be developed and sold, products that would allow people to be employed in manufacturing.

This was the approach we took with respect to research and development. In the course of doing this, our ability to continue to do everything we'd always done before was limited. We adopted the Atlantic Innovation Fund model and things like CCFI. We were carrying on the work of matching the fisheries research with the fisheries industry. It was getting done. They had found each other.

There were also programs available, either through provincial governments or from other federal departments, that had a mandate for fisheries development. The one thing missing with CCFI was that specific matchmaking exercise—bringing those who want to do projects to those having the capability to do them. But after 20 years of this sort of interchange, we feel that this should be able to happen much better now that everybody knows one another and we have been working together for quite a long while.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Do you feel that this is related to trust? From what I can hear, decode and interpret, there seems to be a lack of trust between your organization and the Canadian Centre for Fisheries Innovation. Tell me if I am right or wrong.

[Richard Comerford]

No, I would not see any breach of trust.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

If there isn't, why stop the funding?

[Richard Comerford]

The way our programs work is that they're for specific periods of time. There has to be a start, a time for conducting work, and an end. In the case of the CCFI, we've gone through that a number of times. We have now reached the point with the CCFI where we believe that the work they do can now be done without a specific organization that does what they do. There are a number of university institutions that provide the research. There are a number of university centres that make the research available to the public. It may be that the fishing industry will have to do as other sectors have done and try to find it for themselves, without the benefit of the CCFI. But we still believe that it will happen.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

In closing, I want to thank you for your honesty. However, that is the problem. You are saying that there is a beginning and an end. In my opinion, research and development has a beginning, a period of continuity, a follow-up, but it doesn't have an end. We will always continue to do research. We will always need to innovate if we want to overcome challenges.

I appreciate your honesty, but I cannot agree with your perception of the situation.

Thank you.