Government Operations Committee on June 4th, 2009

[Kevin Lindsey]

Of the $84 million allocated to this year, our forecast is that the vast majority of that money will be going to building out or to activities that are necessary to build out, like engineering, surveying, and things like that.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Okay. Thank you very much.

[The Chair, Liberal, Derek Lee]

On your question on whether it was this year, question mark, did you answer that, Mr. Lindsey?

[Martha Hall Findlay, Liberal, Willowdale, ON]

Yes.

[The Chair, Liberal, Derek Lee]

You did. It was this year.

[Martha Hall Findlay, Liberal, Willowdale, ON]

The $84 million is for this fiscal year, yes.

[Kevin Lindsey]

The operative assumption right now is that this $84 million will all be spent this year.

[The Chair, Liberal, Derek Lee]

The operative assumption. Good. Thank you.

[Kevin Lindsey]

It's a big country.

[The Chair, Liberal, Derek Lee]

Mr. Warkentin, for five minutes.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

And thank you to the representatives from Industry Canada who are undertaking this process to get broadband across rural communities across this country. Those of us who live in these areas know that you are on the ground and that you are utilizing that money even now to do those assessments. I shared an office building with somebody from Industry Canada, who was just down the hall, who has been working on this project over the last number of months and doing these assessments. For those of us in rural communities, we appreciate your endeavour and your efforts on this front.

In terms of the different allocations that were undertaken through vote 35, Industry Canada also received an amount for the Canadian Youth Business Foundation. You'll give me a better definition than I maybe have, but my understanding is that this organization allows for loans to be given to young entrepreneurs who are starting businesses and looking for ways to engage in the marketplace in their own communities. My understanding is that there has been a significant increase in the number of applications for this type of program this year.

There was $10 million allocated. I'm wondering if you could give me a little bit of a breakdown of that program, the jobs that are expected to be created as a result of that, and what the uptake or current status of that funding is.

[Kevin Lindsey]

Thank you.

Industry Canada did receive $10 million for 2009-10 for the Canada Business Youth Foundation. The money did come from vote 35. The expectation is that this $10 million will allow us to make something in the order of 450 new loans to young entrepreneurs, with a ceiling on the loan amount of $15,000. We are uncertain now of the spin-off, of what total number of jobs created will be associated with those 450-odd loans, but the record of this program is really quite good, having created about 15,500 jobs since its inception.

I would say, too, that this program has about a 95% repayment rate.

[Chris Warkentin, Conservative, Peace River, AB]

That's fantastic.

I know everyone has talked about getting the money out and the application process going for many of the different organizations, especially as it pertains to infrastructure funding. Mr. Watson, I think you have some experience in my own area as to the application process specifically for some of these infrastructure programs. RInC is the one that comes to mind. There has been some dialogue about whether jobs are created, if the money is not on the ground, in cases where applications are going forward. In my experience, there are already jobs being created, even during the application process, in these communities: engineers are being consulted, construction companies are being consulted, and there's already an exchange of money for the applicants, in this endeavouring.

Could you give me some information pertaining to how jobs are created even possibly before the cheque is cut from the federal government?

[Daniel Watson]

In the world of contribution programs generally, when you think of people looking for work who are maybe unemployed or underemployed, there are four key conversations that happen. The first one is “We'll see”. That conversation started on January 27, when people had heard about this program and were asking themselves whether this could work for them. The question was “We'll see”; nobody knew the specific answer.

But as people were able to get more details about it, began to look at the criteria, and got further into the stage of applications, they got into another conversation, which is “Be ready”. “Be ready” goes in part to the idea that if you're going to need to show people what you're going to do, you have to hire people to do blueprints, hire engineers, hire people to get ready with environmental assessments and to advise on those fronts.

The next conversation, though, is quite critical. It's one that we enter into, and it's the “I promise” conversation. That's where we say, “We've received your application, we've looked at it, and I promise that we will reimburse this share of costs.” That's where vote 35 was critical for us, because I'm barred under the Financial Administration Act from promising to pay for something that Parliament hasn't given me the money to pay for. I can't say “I promise” unless Parliament says, “Here's the money to back that up.”

The conversation that follows immediately after “I promise” is the fourth one, which we all look forward to and which is “You're hired”.

So it's from “We'll see” to “Be ready” to “I promise” to “You're hired”.

The final conversation, which is a three word-conversation, is “Here's your cheque.” That happens months after the fact, because the way these programs are designed, for due diligence purposes we always pay after. We check their bills. We check whether they did what they said they were going to do. So they go out, they incur the costs, they get the credit that's required to do this—this is a standard practice across the federal government grant contribution world—and we pay if they did what they said.

The key one that was critical for us about vote 35 is that we would not have been able to say “I promise” had we not had the money out of vote 35 in relation to RInC, because we don't have that money available to us and so can't sign on the dotted line.

[Chris Warkentin, Conservative, Peace River, AB]

I appreciate this. It addresses two concerns that members around this committee have had pertaining to vote 35: first that the money is stimulating the economy, creating jobs now, but also that there's due diligence and so a holding back of the money until there's evidence that the project actually was undertaken. This addresses concerns that were brought up at this committee related to that.

[Daniel Watson]

I can put it differently: if there's no money, there will be no evidence, because I can't sign an agreement to create evidence if I don't have the money to back up the authority to sign it.

[Chris Warkentin, Conservative, Peace River, AB]

We appreciate that.

Is my time up?

[The Chair, Liberal, Derek Lee]

Yes, it is. Thank you for allowing for that.

It's Madame Bourgeois next, for five minutes.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Mr. Chairman.

Mr. Vermaeten, at the current time there is a major controversy regarding the waiting period and the additional five weeks of employment insurance benefits. Before the decision was made to provide an additional five weeks, I would imagine that your department did a study of the impact of such a change to determine exactly how much money it would cost to do away with the waiting period and add the additional five weeks. And I would imagine that you looked at the number of people who could benefit from the additional five weeks. Were any such impact studies done?

[Frank Vermaeten]

Thank you for your question.

In development of the economic action plan, a range of issues was considered, and certainly whether one eliminates the two-week waiting period or provides additional weeks at the end was assessed. We provided an estimate of how many people would be benefiting from the five weeks. We have that, and I can give you those numbers.

On the question of whether you get rid of the two-week waiting period, there are a number of issues. One is that, from an administrative point of view, it is just physically impossible for somebody to walk into the office and be given a cheque right away without our doing the necessary due diligence. There's always going to be a certain waiting period for processing it. I think, secondly, that from a principled point of view, this is an employment insurance program; therefore, the two-week wait is equivalent to a co-payment, such as you would have with any other kind of insurance program—for dental or medical programs.

The government could have come along and, instead of providing five weeks at the end, which it does now, provided two weeks at the front and three weeks at the end for the same amount of money. But it would have been an administrative nightmare. You would have gotten rid of the deductible principle. You would have had many people coming in to make very short claims, and when they found a job three or four days later, they would have had a very small insurance cheque, with significant administrative costs.

To sum up, it's a question of how you want to supply these benefits. Is it up front, where it's extremely difficult to do, where it's extremely administratively burdensome, and where you're moving away from the insurance principle, or at the back end, where people are more likely to need this funding?

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

So could you provide this committee with figures on the number of people who get their job back right after losing it, which could cause you some administrative problems. I'm talking about the abolition of the waiting period. Could you also provide us with figures on the number of people who need the additional five weeks of employment insurance. I gather from your response that you decided to provide an additional five weeks so as to eliminate the administrative difficulties. I would like to get all the studies that you based your decision on, namely, the decision to offer an additional five weeks of employment insurance benefits rather than doing away with the waiting period.

I am going to jump from one subject to another. In your brief, you mention the YMCA. You offer internships to youth allowing them to do environmental projects. Are these internships just in the field of the environment?

[Frank Vermaeten]

Let me please turn to my colleague to answer that question.

[Joanne Lamothe]

The internships are not just in the area of the environment. The YMCA and the YWCA will be issuing a call for tenders, so to speak, to not-for-profit organizations. Of course, environmental projects will come first, but other projects will be considered as well.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I see. Do you have to reach an agreement with Quebec, or are you dealing directly with these organizations?

[Joanne Lamothe]

We are dealing directly with the YMCA and the YWCA, which have locations throughout the country and in Quebec.