Industry Committee on June 10th, 2010

[Kelly Gillis]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

Okay.

[Richard Dicerni]

It goes back a number of years. Some agreements were entered into in the late nineties. The agreement included that the department, should the company be successful in its initiative, would get a certain slice of subsequent sales. It's dependent on a number of factors over which we don't have much control.

[Mike Wallace, Conservative, Burlington, ON]

Is it policy that the money go back into the program to reinvest or does it go to general revenues?

[Kelly Gillis]

A portion of it will come back—there are certain limits—to fund the program itself and the rest of it will go back to general revenues.

[Mike Wallace, Conservative, Burlington, ON]

Thank you for that. It's very interesting.

[Paul Boothe, Senior Associate Deputy Minister, Department of Industry Canada]

Mr. Wallace, could I add to that? It creates an incentive to—

[Mike Wallace, Conservative, Burlington, ON]

To be successful...?

[Paul Boothe]

—recover the money from the program. I think that was the original thought in the recycling of these funds to the program.

[Mike Wallace, Conservative, Burlington, ON]

I think it's excellent.

[Richard Dicerni]

We have fairly dramatically increased our due diligence with some of our major companies by having quarterly visits. We put together a bit of a SWAT team to monitor the performance of the companies to ensure a higher degree of predictability in their profits on those particular elements.

[Mike Wallace, Conservative, Burlington, ON]

From a net point of view, the additional investment of sending bodies to visit these people has generated more money for us. Is that correct?

[Richard Dicerni]

It has generated more accurate results. It's always hard to say whether there's more money, but there's a much greater reliability because we inquire about forecasts as they relate to the next quarter's sales, the following quarter's sales, and so forth.

As Kelly was saying, part of it goes back into the base of the department, which we in turn use to manage the department. So we have an incentive to have predictability.

[Mike Wallace, Conservative, Burlington, ON]

Right. Those were very good answers. Thank you very much.

Bill C-9, the budget implementation bill, has now made its way through the House and is off to the Senate. We'll make the assumption it's going to pass; otherwise, we're in an election. That doesn't matter to you guys, but what will it do to supplementary estimates (B)? Is there a lot in the budget that would affect the industry department?

[Kelly Gillis]

Yes. It would not affect Industry itself, but overall within the portfolio there will be a number of items that are still in the works right now going through supplementary estimates (B), such as Precarn, the community access program, and the college and community innovation program. There will be a number of items in supplementary estimates (B), and potentially in supplementary estimates (C), depending on how fast the items are approved.

[Mike Wallace, Conservative, Burlington, ON]

I assume that the department, knowing what's in the budget, makes the assumption that it might pass and gets ready for that. Is that not correct? Why does it take all the way to supplementary estimates (C) for it to be implemented?

[Kelly Gillis]

It depends upon whether a memorandum to cabinet is also required and upon some policy decisions regarding the items. There are various steps in the process.

[Richard Dicerni]

There are x number of things that are in the budget but that subsequently require a more definitive specific memorandum to cabinet, which will then authorize a Treasury Board submission to be prepared.

[Mike Wallace, Conservative, Burlington, ON]

I completely understood our having had implementation bills on the previous budgets broken into two, one in the spring and one in the fall. It would make sense that you can't spend the money or budget the money until they're approved, but this time, it's all in one fell swoop, as far as I know. It was just a question.

My next question, if I still have time, is about the transfer of money from... It looks as though there's a transfer of money from FedDev to NRC. I think I read in these estimates documents that IRAP is taking up a whole bunch of it. First, is that true? Second, what is the demand for IRAP compared with our ability to service it?

[Richard Dicerni]

Without getting into the discussion that we had over the Quebec agency a little bit, and the department's role, here you're looking at two agencies that are, broadly speaking, part of the Industry Canada portfolio.

I will speak to this briefly, because when FedDev was established last year, we in the Department of Industry had a significant role in establishing the agency, defining its parameters, and kick-starting a few activities. In that sense, we recommended to the government and the minister that IRAP be expanded for southern Ontario. The program is always oversubscribed. It is very positive and very popular with small and medium-sized businesses.

In light of the economic difficulties in southern Ontario, it was felt that this would be a good investment to make and it would also be good for the new agency, because it would permit the agency to get to know a number of the key customers that the IRAP group was dealing with. Minister Goodyear decided to repeat this initiative this year, which is why the reference is in this year's supplementary estimates.

[Mike Wallace, Conservative, Burlington, ON]

To me, it looks like it's a transfer from FedDev to... Because FedDev doesn't actually implement it--it's NRC.

[Richard Dicerni]

The NRC, which is where IRAP is based.

[Mike Wallace, Conservative, Burlington, ON]

That its home and that is a temporary... What happens in the future?

[Richard Dicerni]

It's been temporary for two years.

[Mike Wallace, Conservative, Burlington, ON]

So it will depend on the policy decisions from us?