Industry Committee on May 13th, 2010

[Brian Masse, NDP, Windsor West, ON]

You've done that on the other side.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

--part of an auto rescue where Government of Canada funds were involved, sir.

[Brian Masse, NDP, Windsor West, ON]

Well, okay.

I thank you for your announcements with regard to the broadband rollout, but I would like to know whether that money includes any of the accounts that were basically brought back to deferral accounts that were paid back out to the government. This is with regard to the overcharge. Is that money still available from the deferral accounts? When will that be available to roll out? Because consumers were supposed to get back some of that money and then it's also to include some disabled and remote community development.

[Richard Dicerni]

The deferral accounts are under the guidance of the CRTC. They are not related to the announcement the minister made on Sunday.

[Brian Masse, NDP, Windsor West, ON]

Is there any reason why the CRTC has not moved on this decision? The Supreme Court has ruled on it. When will the CRTC release these funds?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

We're not aware of the particulars of that one.

[Richard Dicerni]

We'll get back to you, but it's not part of--

[Brian Masse, NDP, Windsor West, ON]

Okay. Well, it's hundreds of millions of dollars that is sitting out there that either is owed to consumers through the decision or also could increase broadband delivery. I just hoped that there would be a plan on that, and perhaps we can challenge the CRTC on it.

With regard to the foreign takeovers that could take place with regard to the expansion of the telco industry right now, you have a series of new entrants, the three new entrants that have come in. The CRTC presented that they expect that if we do more liberalization or open it up, there would actually be a consolidation of the industry. We've heard that in testimony here also.

What is your government doing to actually guarantee, though, that consumers are going to get better pricing and better servicing? If that's the intent, is there going to be a consumer bill of rights? What is going to protect the consumer out there to ensure that we don't just have either consolidation or several continuing players that have similar pricing, similar services, and still no real competition? How will that be managed?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Sure. I think what I can do right now is note your question and your concerns. Obviously no decisions have been made, and we are watching and reading very closely the testimony before this table. As I said earlier, it all goes into the hopper and will be part of our decision-making.

[Brian Masse, NDP, Windsor West, ON]

If Canadians do not get better pricing and better service at the end of whatever takes place, or with the new entrants, or if things stay with the status quo and after two years...will you consider the opening of the market and adding the new entrants a failure?

Is the goal at the end of the day going to be to have lower consumer pricing for Canadians and better service? Or is it just to have others in there? If it does fail to provide that extra competition and provide more service for Canadians, what will your government do about that?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

There's a lot of speculation in that question, Mr. Masse; I think I counted three “ifs”, and there may have been more.

Look, all I can do is say that empirical research has indicated that if you do things the right way--and there's an “if” there too--you can increase competition, you can lower prices, and you can increase service. I talk to a lot of Canadians, as you do, and everyone has a story about their mobile provider or their ex-provider. So look, I think that even in their quiet moments the incumbents realize that competition can be good to sharpen pencils and to give consumers more choice and quality.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Masse.

Thank you, Minister.

We'll suspend for five minutes to allow additional witnesses to come to the table. When we come out of suspension, we'll begin our review of the main estimates. This meeting is suspended for five minutes.

[The Chair, Conservative, Michael Chong]

We're coming out of suspension.

Welcome to our additional witnesses. We have Madam Yelich in front of us today. She is joining us as Minister of State for Western Economic Diversification). With her are officials from her department: Mr. Watson, Mr. Saunderson, and Madam Bernard.

We welcome all of you to our committee. We're here to review the main estimates for ACOA , for WED, and for the Economic Development Agency of Canada for the Regions of Quebec, as well as Industry Canada.

We have a number of votes to take at the end of our meeting today.

Without further delay, then, we will hear opening statements from each of the two ministers, beginning with Madam Yelich.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Thank you very much, Mr. Chair.

Mesdames et messieurs, I welcome the opportunity to appear before this committee and to highlight how our government, through my department of Western Economic Diversification Canada, is contributing to a stronger economic future for the west and for all of Canada.

Since 1987, WED has worked to promote the development and diversification of the economy of western Canada and to advance the interests of the west in national economic policy, program, and project development and implementation. There have been a lot of changes over the 23 years that have passed since that mandate was created. This mandate is just as relevant today.

The west remains a distinct region within Canada, one with its own unique challenges and opportunities that need to be reflected in federal initiatives aimed at strengthening our country's performance in the knowledge-based economy. The challenges facing western Canada currently have evolved from those we faced 23 years ago.

While we have accomplished much, it is even more important today than it was in 1987 that western Canada expand its economy into new areas, whether that is in adding new elements to our world-leading natural resource capabilities or becoming dominant players in sectors of the economy that no one could have dreamed of 25 years ago.

The list of western Canada's competitors on a global basis has changed significantly in virtually all sectors. Competitors who were sometimes small in scale and who lacked market presence have in many cases made significant gains in markets that were easily won by western Canadian businesses. These competitors have set extraordinarily high standards in innovation and productivity that western Canadian businesses need not only match but beat if they are to continue to enjoy the successes of the past.

By working to create a more diversified western Canadian economy that has strong, competitive, and innovative businesses, WD is building a solid and more diverse foundation that will support the west's economic success over the long term. And while we are planning for the long term, this past year we also recognized and addressed the immediate challenges posed by global financial circumstances.

Through the delivery of Canada's economic action plan, our government and Western Economic Diversification Canada are responding to short-term economic challenges by creating jobs and growth in western Canada today, which allows people to keep their businesses, find work, and remain in their communities during difficult economic times.

WD is delivering two key components of the economic action plan in the western provinces: RInC, the recreational infrastructure Canada program, and CAF, the community adjustment fund.

The severity of the global economic downturn required a swift and decisive response and, like the government as a whole, WD rose to the challenge. By January 29, 2010, WD had committed 100% of its RInC funding, the almost $153 million provided to the west. In the short time from program announcement to full commitment of funding, the department defined the terms and conditions, made a call for proposals, analyzed, selected projects, and entered into contribution agreements.

More than 700 projects--recreation centres, arenas, swimming pools, sports fields, parks, rinks, and community centres--have been approved. Many of them are already being implemented and completed. Not only are these projects building a substantial legacy of recreational infrastructure in western Canadian communities, but they have created or maintained more than the equivalent of 8,000 person-months of employment across the four western provinces to date, and there will be many more in the months ahead.

The results have been similar for the CAF program, which is providing $306 million over two years to support western communities that have experienced significant job losses and lack alternative employment opportunities. All of the funding has now been committed to projects that have already created or maintained more than 17,000 person-months of employment in western Canada's most vulnerable communities to date.

The 290 approved projects are as diverse as the very communities themselves, from a wood pellet plant in Merritt to a technology commercialization centre in Lethbridge and to a trades training centre in Saskatoon and an industrial park business incubator in Morden, Manitoba.

Canada's economic action plan is working and it will benefit western Canada for years to come.

But as important as it is to respond to the needs of today, we must also continue to build the jobs and industries for the future. That is why we were pleased to see budget 2010 acknowledge the major role that Canada's regional development agencies, including Western Diversification, play in building that future by supporting jobs, growth, and innovation within a context that is unique in each of Canada's diverse regions.

The impact of budget 2010 was considerable for my department. Ever since its creation, a significant component of WD's funding had to be renewed every few years, making it difficult to plan for the medium and the long term and causing hardship for our external stakeholders and partners.

Budget 2010 removed this uncertainty by making this component of WD funding permanent, allowing us to continue to focus our support on initiatives that will drive the west's long-term success: by expanding the west's knowledge-based economy by investing in innovation and technology commercialization, the foundation of economic diversification; creating trade and investment opportunities that help western Canadian businesses expand into the international markets and attract foreign investment, driving the region's future prosperity; and enhancing the productivity and competitiveness of western small and medium-sized businesses, key components of long-term economic growth and an increased standard of living for all Canadians.

Budget 2010 also maintains ongoing funding for Community Futures organizations across the country. There are 90 CFs in western Canada. Members of WD's business service network have a history of working with Western Diversification and other partners to enhance business and community economic development outside the west's major urban centres.

WD is grateful for the strong support our government has shown for our role in enhancing the west's contribution to our nation's success. We are determined to take that contribution to the next level. WD's report on plans and priorities for 2010-11 brings the department's efforts together under a single strategic outcome: that the western Canadian economy is developed and diversified.

Underlying that strategic outcome are program activities that encourage business development, innovation, and community economic development, supported by the department's leadership and coordination role in furthering western interests and responding to western challenges.

WD recognizes that households across the country have adjusted their budgets in response to the new economic realities, and so must we. We are redoubling our efforts to improve the department's efficiency, ensuring that the investment of taxpayers' dollars results in maximum benefits for the people and the western Canadian economy.

WD is proud of the way it's creating and maintaining jobs today while building a stronger western economy that will continue to create new jobs in the future. We are looking forward to completing the work begun last year on Canada's economic action plan and to working closely with western provinces, industry associations, businesses, and other stakeholders, to leverage the opportunities that will see western Canada reach new levels of success in the global economy.

By working together with our partners to create more innovative and successful business communities, we are building a stronger west for a stronger Canada.

Merci beaucoup.

[The Chair, Conservative, Michael Chong]

Thank you, Ms. Yelich.

Minister Clement, I invite you to make an opening statement with regard to estimates.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Very quickly, Chair, just let me address the committee on the current status of the 2010-11 main estimates.

I would like to begin, however, by providing this committee with an update on Industry Canada's recent initiatives. When I addressed this committee in March, I outlined Budget 2010's focus on three broad goals: first, implementing year two of the economic action plan; second, outlining a plan to return to fiscal balance; third, targeting investments to position Canada for the economy of tomorrow.

I also outlined how my department is moving forward with the implementation of some key initiatives to improve Canada's competitiveness.

As a government, one of the strongest tools we have to stimulate economic growth is, obviously a competitive business environment. Our government has implemented significant tax reductions and tax changes to provide businesses with an environment that really encourages new investment.

As a result of our actions, combined with provincial business tax changes as well, Canada's overall tax rate on new business investment is now the lowest in the G7.

Furthermore, we are reducing business costs by eliminating over 1,500 tariffs on manufacturing inputs and machinery and equipment to position Canada as the first country in the G20 to create a tariff free zone for manufacturing. This means that Canadian manufacturers will be able to import goods for further production in Canada without the burden of tariffs and the cost of complying with certain customs rules such as rules of origin.

To help spur private sector investment, we have also introduced legislation to narrow the definition of taxable Canadian property, which will eliminate the need for tax reporting under section 116 of the Income Tax Act for many investments. As I said before, this will enhance the ability of Canadian businesses to attract foreign venture capital and help our emerging firms access funding and expertise to grow their businesses.

We are continuing to act on a number of other fronts to support Canadian businesses, such as: accelerating trade negotiations; cutting red tape; modernizing our competition and investment laws; further reducing internal trade barriers; working to create a national securities regulator; and, streamlining our immigration system.

But while a good business environment is important, it is critical that our policies also succeed in advancing innovation and driving competitiveness. In this respect, one area that holds particular promise is the digital economy. Information and communications technologies — or ICTs — are as critical to success today as raw materials and transportation were at an earlier time. As I pointed out earlier, Canada can and should be a leader in the digital economy.

In developing our digital economy strategy, we're going to be focusing on enabling our ICT sector, our information and communications technologies sector, to create new products and services, accelerate the adoption of digital technologies, and contribute to increased cyber security.

Pursuing this strategy means fostering a culture of innovation in Canada, supported by all sectors of the economy, and this will happen with the concerted efforts of governments, academia, and business, all working together. Success won't come solely through a particular government program or even a combination of government programs. It must come from a concerted effort, with government setting the right conditions so that individual businesses can be global leaders in their fields.

Furthermore, our government is committed to ensuring that necessary digital infrastructure is available to remote and rural areas with the Broadband Canada: Connecting Rural Canadians program.

Budget 2009 committed $225 million over three years to this initiative, which was formally launched by the Prime Minister in July of last summer.

These fundamentals establish a foundation on which the private sector can promote innovation and economic growth.

I'm proud to announce that we've made significant progress in advancing this broadband program. To date, Industry Canada has received 570 applications requesting close to $1 billion, so there's obviously a lot of excitement about getting access to this program. Also, this week, as we know, my colleagues and I announced that funding for projects to bring broadband connectivity to 168,000 households in 58 communities has been approved. As I mentioned earlier, more will be coming in the weeks ahead.

Broadband brings important economic and social benefits. It opens the door to information, services, and opportunities that would otherwise be out of reach. For unserved and underserved Canadians, particularly those in rural and remote areas, the program represents an important enhancement of service. Given the huge importance of access to high-speed networks, we will continue to play an ongoing role in ensuring that Canadians in rural areas are not left behind.

Canadian talent in science and engineering is one of our most important resources as well. Our university researchers and students are second to none in the world, and our public sector research capacity is among the strongest in the world as well.

Recently I announced a $350 million investment in the Natural Sciences and Engineering Research Council's discovery grants program. These grants support the ongoing work of more than 10,000 researchers based at universities all across the country. In addition, $122 million was announced for scholarships that are being awarded this year through NSERC's postgraduate scholarships and post-doctoral fellowship programs, and through NSERC's share of the Canada graduate scholarships program as well.

But funding scientists and engineers is only half the equation; they also need leading-edge facilities to work in. Budget 2009 committed $2 billion over two years to repair and renew the R-D and training infrastructure of our Canadian universities and colleges.

I am pleased to announce that this program is now fully committed, providing support for 536 projects, with funding agreements in place with all provinces and territories. As of April 2010, 44 projects have already been completed.

Our government has also strongly reinforced the importance of small businesses and entrepreneurship in the Canadian economy. For example, budget 2010 provided $10 million in new funding for the Canadian Youth Business Foundation. This builds on our past record of supporting success. Since 1996, the CYBF has invested in more than 3,500 young entrepreneurs who have created over 16,900 new jobs. This new funding will launch more than 500 businesses over the next 12 months, generating an estimated 2,500 new jobs.

In conclusion, Mr. Chair, I believe these initiatives, taken together, are part of a strong economic package that is successfully supporting Canada's economic recovery. It is a forward-looking package that is creating jobs, stimulating economic growth, boosting productivity, and increasing our global competitiveness.

I appreciate your time this afternoon and look forward to your questions.

Merci. Thank you.

[The Chair, Conservative, Michael Chong]

Thank you, Minister.

We'll have about an hour and 10 minutes for questions and comments from members of the committee. At 10:15 we'll take the votes on these estimates. There is over $6 billion in votes for the estimates to be approved by this committee.

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

On a point of order, the schedule shows the ministers as being here until 10:30.

[The Chair, Conservative, Michael Chong]

The officials are here until 10:30 to answer any questions we may have--

[Mike Wallace, Conservative, Burlington, ON]

And the ministers are here until 9:30...?

[The Chair, Conservative, Michael Chong]

That's right, so we'll have about an hour and 10 minutes for questions and comments by members to both ministers and their officials on the estimates.

At 10:15 we need to take the votes, and since there are quite a few votes--close to 30--I'll set aside 15 minutes for that.

I also want to let members of the committee know that the ministers are leaving at 9:30 and the deputy minister has to appear in front of another committee at 10 o'clock, so he's graciously going to stay here until 10:10. Then he has to get to the public accounts committee to testify.

We'll begin with Mr. Rota and Mr. Dhaliwal.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you, Mr. Chair.

Because of time constrictions, we'll be sharing our time this morning.

I want to thank the minister and the Minister of State for being here this morning.

I was going through the estimates and I read about the Atlantic Canada Opportunity Agency, Western Economic Diversification Canada, the Economic Development Agency of Canada for the regions of Quebec, and the Federal Economic Development Agency for Southern Ontario. We can see that planned spending is on a constant decrease. Normally, we would call that cuts, but we'll call it a decrease for the benefit of discussion.

Each agency has a clear breakdown of its activities showing community development infrastructure, special intervention measures, enterprise competitiveness, positioning of sectors and regions, policies, programs and initiatives, and internal services. They're all listed. Everything is there very clearly. Each one of them is even graphed so that we can see the trend going down.

It gives us an idea of what's coming up. We may not like it, but when we look at it, the priorities are set for programs and management. Everything's clearly laid out. The future of these agencies is well depicted. We see what's happening. We know where they've been and we know where they're going.

It seems to be somewhat transparent, but the question I have—and the minister probably expects this question—is this: can the minister tell me where I can find the same information for FedNor, which represents the people of northern Ontario?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I appreciate the question.

Certainly we have terms and conditions for FedNor as well, which are always subject to a five-year review. Those terms and conditions are made public. We can certainly provide a copy for you if you've not been able to find them in the public record.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I got that answer the last time. I got a glossy brochure that was very pretty but had absolutely no information in it. It had beautiful pictures of northern Ontario. Of course, you know that I think northern Ontario is very beautiful, as I come from there, but I don't need that information.

What I need is the same information I'm getting here in the main estimates on the individual agencies so that the people of northern Ontario will know what is being offered, where we've been, and where we're going. It seems that we always get something 18 months after the fact.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I can assure you that the terms and conditions are available. We'll make sure you get that information. They're reviewed every five years. As the honourable member knows, we also have an unprecedented five-year budget floor for FedNor, which has never occurred before.