Subcommittee on Canadian Industrial Sectors Committee on March 24th, 2009

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Let me ask—

[The Chair, Conservative, Dave Van Kesteren]

Your time is up.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Mr. Delorme, I think, wants to comment too.

[The Chair, Conservative, Dave Van Kesteren]

Be very brief.

[François Delorme]

That is an excellent question. Whether we're discussing the transition period, issues tied to innovation or venture capital, as discussed earlier, I'd like to know if you've given any thought to inviting people who work directly in this field, for example, officials from the Business Development Bank or from Export Development Canada. They evaluate financing capacity and lend money.

We've talked about various structural issues. During the transition period, it is truly difficult to improve business financing to help them weather these hard times. I think it would be a good idea for the subcommittee to consider inviting officials from BDC or EDC to appear, if it hasn't already thought about doing so.

[The Chair, Conservative, Dave Van Kesteren]

Mr. Garneau.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

I would like to ask formally, Mr. Hewett, if you could see if there are statistics on the number of firms that do perform R and D in Canada but whose ownership is foreign-based and therefore are restricted from taking advantage of SR and ED credits. I'd be interested in knowing whether they are significant or small in number.

Again, to cite the Conference Board of Canada, they came out with a report last year that put forward the idea of playing to our strengths. They specifically chose, or came up with, a number of areas where they felt there were going to be significant markets worldwide for the technologies Canada was well placed to take advantage of. Amongst them were water management and regenerative medicine; the other one was energy-related.

Within your branch at Industry Canada, how do you approach the idea of playing to our strengths or focusing on areas where we could do particularly well? For example, I know that in the aerospace sector there is the SADI funding, which specifically looks at aerospace and defence. But in a more general way, do you come forward with policy that is focused on playing to our strengths?

[Billy Hewett]

I'd say in a more general way, yes, we attempt to work both in terms of policy and in terms of on-the-ground direct contact at the firm level in a manner that takes advantage of our strengths.

In so doing, we don't attempt to pick winners per se or decide who those are going to be. Rather, in the sector I represent, we have five different industry-specific groupings focusing on autos, aerospace, defence, marine, and also resource-processing industries, where there are also other mandates in Ottawa. Natural Resources Canada, for example, has some crossover and a direct mandate in that area.

There is the life sciences industries branch, to try to look not just at biotechnology but also at pharmaceutical medical devices and other advances in that area, as well as in terms of service sectors, service industries, consumer products, and textiles in that area. Then there's also the ICT sector.

So those are Industry Canada's. We definitely do look to work with and help to enhance, if you will, Canada's value proposition on a sector-by-sector basis. On the programming, we have some small programming that may be sector specific, but by and large it's not about targeting particular sectors; rather, it's about working with the industries themselves.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Yes. It sounds like it's a more general approach as opposed to specifically saying, “Hey, where is there a big market in the future for a particular product or service and is Canada good at that and should we...?” It doesn't look like you get that specific.

[Billy Hewett]

We certainly do attempt to work with industries, with firms, and with other levels of government on specific sectors. We do work closely with Foreign Affairs and also with the firms themselves to help promote and take advantage of those strengths. We don't decide on our own which they are.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Do you deal with IRBs?

[Billy Hewett]

Our sector does deal with IRBs. I'm not the IRB expert per se, but yes.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Okay. When IRBs are involved because we make a foreign purchase, do we establish certain criteria with respect to the nature of the IRBs? There have been complaints that some of the IRBs we're getting here in Canada are of a pretty basic nature in terms of metal-bashing as opposed to allowing us to rise within a particular industrial sector and increase our capability to produce more sophisticated products.

[Billy Hewett]

Yes. I'm aware of that concern, if you will. We do attempt, through the administration of the IRB program, to get back the greatest value for the taxpayer, for the defence sector, and for the Canadian industries that are supplying in and have that capability. There has been a policy review under way with respect to IRBs, where one of the questions is the very one that you've raised.

[The Chair, Conservative, Dave Van Kesteren]

RIB is a return of business?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

No. It's IRB.

[A voice]

Industrial--

[The Chair, Conservative, Dave Van Kesteren]

Oh, okay.

Monsieur Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

You stated that the budget included programs aimed at assisting the wood and paper industry. I believe you extolled the virtues of these programs, or at least you spoke very positively about how they could help these industries. During our first meeting on the forestry and paper sectors, we heard from one witness that the programs were ill-suited to the industry. He even went so far as to say that the marketing program was not appropriate, that industry officials were currently in survival mode and in dire need of credit.

Can you tell me if Industry Canada is in a position to say that the wood and paper industry is well acquainted with its programs? Is the information getting out to this industry?

[Billy Hewett]

I just want to know if I understand the question. Are you asking whether we are doing everything we can or whether the sector is fully aware of the financing-related programming that's available currently?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Let me put my question to you once again. Are your programs known to the wood and paper industry? According to one of the witnesses who testified before our subcommittee, programs are ill-adapted to the wood and paper industry. He cited the marketing program as an example, claiming that now was not the time to engage in marketing when the focus was on trying to survive. What the industry needs more are loan guarantees.

So then, let me repeat the question. Is the wood and paper industry aware of the programs you spoke of that are included in the budget?

[François Delorme]

The only answer I can give you is that during the course of our discussions with finance department officials, further to Budget 2009, about decisions regarding access to credit for businesses, one of the concerns expressed was the need to simplify as much as possible the delivery of these assistance programs,specifically by adopting the single window approach to service delivery. It remains to be seen how this would work. Discussions are taking place.

Let me just say that this concern has been voiced and discussions are under way with officials from the Department of Finance. We are trying to simplify the process in order to make it as effective and as workable as possible.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

By single window, do you mean one-stop service where the industry could access all of the programs?

[François Delorme]

That's exactly what I mean.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I see.

Earlier, Mr. Lake asked what you might like to recommend to the subcommittee in terms of potential witnesses and solutions. Admittedly, you have described the situation clearly to us this morning, but I don't think any solutions have been put forward.

Who do you suggest the subcommittee call as witnesses to get some direction or possible solutions to the problems plaguing the wood or other industries? Would meeting with representatives of industry associations put us on the right track? You suggested that we meet with officials from the Business Development Bank of Canada or with consultants. Who do you think should be invited here to shed some light on possible solutions or to make some recommendations to us?