Industry Committee on March 10th, 2011

[The Chair, Conservative, David Sweet]

You have 40 seconds, Minister.

[Gary Goodyear, Conservative, Cambridge, ON]

I'm sure everybody in the room has heard about the “valley of death”. We have all read the statistics of a drop in venture capital and investment capital to help small businesses, especially the higher-risk businesses. We need to address that, if we're serious about moving this economy and stabilizing the economy.

That said, we took a very strategic position that if a venture capitalist comes along and is registered and meets the requirements in Ontario and is willing to put dollars on the table, then the investing in business innovation program is open to them, and they will be considered.

We need to fill that gap. We have many very creative people in Ontario whose creations, whether by way of an improvement in a process, a new software, a better way to make an aluminum suitcase.... People sometimes need to get over that hump, and they can't always count on the traditional methods, which are banks.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Braid.

Now we go on to Mr. Masse for seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister and the rest of the guests here today.

Thank you for noting the MediaPlex. It is an important project. Ironically, I was on city council with the group that fought off its becoming a strip bar.

[The Chair, Conservative, David Sweet]

Well, that worked out pretty well.

[Brian Masse, NDP, Windsor West, ON]

Yes, it worked out pretty well, absolutely; it's a good project. Unfortunately, the delay of the opening was.... But that's another story.

There are 250 jobs. Would those be just immediate jobs, in terms of what you were referring to? How many of those 250 jobs are long-term? Are you talking about purely the construction and design element?

[Gary Goodyear, Conservative, Cambridge, ON]

I'm going to have to defer, if somebody has the exact answer or a promise to get you that exact answer.

My understanding at this point is that it is in fact constructions jobs as well as teaching jobs that will be created as a result of the new institute and assistance to the students.

[Brian Masse, NDP, Windsor West, ON]

That's fine.

You mentioned as well the runway. We had a runway extension in Windsor. One of the problems we're faced with...and I hope you'd agree that when we have these projects in the community, you're hoping people from the community are hired. Is that correct?

[Gary Goodyear, Conservative, Cambridge, ON]

We're not delegating that they hire somebody from down the street; we let the market play out on that. Obviously, if you're going to hire a construction company or a paver, you're not going to have them come from Cambridge all the way down to Windsor—although when I was in the paving business, we did go as far as Stratford. So we think that the initial jobs were there to help the community.

Some of our other programs, Brian, are actually designed to help, for example, in the Windsor area. We want to change the economy a little bit in some of these communities that have either one or two industries or are heavily reliant, for example, on the automotive industry.

A good success story in your area was a company that was heavily into automotive, which came to FedDev and said it had a great idea to move into medical devices. Of course, that struck a chord with the diversification of your area, and they ended up getting help from FedDev and have completely swung their business away from automotive and have developed a new economy for themselves and your area.

[Brian Masse, NDP, Windsor West, ON]

We have a couple of those, but I want to go back to the airport example. I'm glad you made your comments, because what happened was that actually trucks did come from Orangeville, where they had a 3% unemployment rate at the time. We had an over-10% unemployment rate. The truckers came down, they slept in their trucks overnight, and then they paved. A local contractor picked it up and then got the labour to come from so far away. None of the workers were actually local on that project.

Would it not be wise to consider, as they do in the United States, having a local workers mandate, or some clauses to ensure that there's going to be some of that? We're having problems with some of these large-scale projects.

I can tell you that we've also had this happen on the border work, for which, for example, surveyors came down from London who have more than ample work, while we have people in the surveying industry laid off in Windsor, collecting unemployment insurance or on welfare.

[Gary Goodyear, Conservative, Cambridge, ON]

I think that's exactly why FedDev took a strong look at the hardest hit areas in southern Ontario. We had a focus on those ten hardest hit areas, and of course your riding, Windsor, was one of them, and Welland, and and some other areas around. That allowed us to provide a yes to hundreds of projects all over the province. I suspect that workers came from various areas.

I can tell you that when I was travelling around doing round tables, the motels we were staying at were in fact filled with construction workers. But I also hear in my own riding that people in my riding—asphalt companies, cement workers, architects—are being hired for the university, which happens to be next door and not in my riding.

It all ends up putting money back into the economy. We don't know where those folks shop, but they get out, they spend that money, and that helps the economy. And obviously, I guess, overall, 240,000 jobs were created. I will tell you that over 200,000 of those jobs are full-time jobs.

[Brian Masse, NDP, Windsor West, ON]

I appreciate that. But the reality is that if a city like Windsor is going to get stimulus funding, we need to make sure Windsorites are going to be among the recipients. And I hope there is actually going to be a review or an audit on this, because you have half the funds left over.

And with the remaining time I have, I would like to hear a little bit.... What is the difference between this and the old TPC program? There was lots of criticism of the technology partnerships program that was in place before and the lack of return it had and the lost money. The Canadian Alliance probably has a phone book full of quotes from the House of Commons on this, for years. Can you explain whether there is a loan element to this still, and the payback systems? What's the difference between that and what you have now?

[Gary Goodyear, Conservative, Cambridge, ON]

Let me make two quick responses.

Our concern was that if we were in fact to put too much work into one area and run out the number of drywallers in an area, the price of drywall would go through the roof and it would counter the effect we were trying to have. So that's probably why we would not put forward legislation or suggestions that people had to be hired up the street. With this massive stimulus program, you would simply eat up the workers who were local. So it worked out very well. I think it worked out very well in Ontario.

To your second question, I won't comment on TPC because I don't know the program, except that it was a massive failure. But what I do know about FedDev is that we've taken great strides to look at who is receiving the money, with significant due diligence. Generally speaking, if it's a not-for-profit, it's a grant. If it is in fact a business, it is a repayable contribution. Generally that's the rule.

[Brian Masse, NDP, Windsor West, ON]

You've listed off several programs and they're all through here: scientists and engineers in business initiative; the knowledge advantage; applied research and commercialization initiative; and technology development program. They seem to cross over a lot with regard to some of the language that's used. Do you have brochures and packages and stuff like that, and are these all out the door right now?

[Gary Goodyear, Conservative, Cambridge, ON]

They're all launched. Some of them are four years; some of them are two years. The ARC program, for example, is a two-year program. Some of them are over many years. Again, the reasoning behind that is that we are in fact now looking for the big game-changing players who will change the economic situation in Windsor.

Those sizes of program usually require more than one year, so we went to a multi-year program, again modifying based on feedback from stakeholders.

We do have a fantastic website. Of course we have brochures. I would invite you to look at that, because the criteria do look as if they overlap, and in some cases they do, but mostly they fit niche areas, as I mentioned. We're looking at helping folks who haven't graduated yet, folks who haven't even hit high school yet. We're looking at helping businesses; we're looking at helping existing businesses expand. We want to help businesses train their current employees. We want them to have access to skilled trained employees. And we want the economy to continue to grow more and more through the private sector.

[The Chair, Conservative, David Sweet]

Thank you, Minister Goodyear.

Thank you, Mr. Masse.

We now go on to Mr. McTeague for five minutes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Chair.

Minister, thank you for being here.

And thank you to all your colleagues as well. It's good to see some of you. Some are very good, I must admit, at a good game of golf—Mr. Dicerni—and I could still learn a few points.

Let's talk about science and technology. Minister, one of the concerns that has been raised in our region, in Toronto and southwestern Ontario, has been the application process recently with SRED. You'll appreciate that this is a little bit outside and probably has a lot to do with the minister responsible for Canada Revenue Agency. But it seems to me that all initiatives that are used that could have a positive effect on encouraging and fostering greater research and development seem to be stopped by several of the revenue offices, which are suggesting now that perhaps as little as 10% might be remitted on the dollar.

Clearly, I don't want to mention names. Several of these companies are very notable. You've visited them in places like my colleague Terence Young's riding in Oakville. I'm wondering, Minister, if you've had a chance in your deliberations or if you will have a chance in your deliberations to ensure that the SRED program is as intended and will continue to provide expectations to companies that make investments that they in fact will receive a return that allows them to continue.

In the case of one company, which I won't discuss publicly, it may very well have to shut its doors--or, worse, be bought out by an American company that will take that technology with it.

[Gary Goodyear, Conservative, Cambridge, ON]

Thank you for the question.

These would be the round tables on science and technology. We've heard a number of issues, and I'll just bring you to the decision-making point.

Canada now spends more on science and technology research than our G-7 partners as a percentage of GDP. We're number one. And we do that very well. I'm very proud of that. Where we are not number one is in the private sector expenditures on research and development. We are trying to address that, as I indicated earlier, with the applied research and commercialization initiative. But that said, our government spends a lot of money on incentives to business to encourage business to do R and D, and the SRED credits is one of the more common and is frankly very expensive. It is around a $4-billion cost to the taxpayer.

So we have a plethora of incentive programs for businesses to take advantage of. In total, above and beyond SRED, it is around $7 billion. So you have to ask the question, if in fact we're putting that much money on the table to help the private sector, how come we're lagging so far behind on the utilization? So last year I launched a panel led by Tom Jenkins to look at all of the federal government's suite of private sector incentives to do R and D. The mandate of the panel is to have a look at them and have a look at what is happening around the country, consult widely, and come back to me this October with recommendations—not to increase or decrease, let me be very clear about that, but to look at the programs and tell us why they aren't working. If they're not, what are the complaints—for example, about the process of applications—and how can we make them better? Because ultimately what we have here, as I said, is somewhere in the neighbourhood of $7 billion to encourage businesses to do R and D, and they're just not stepping up to the plate like we need them to.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

That's good to hear. Thank you, Minister.

Minister, I'm looking here in your main estimates that the IRAP program will witness a 41% or $98-million reduction this year, if I'm reading the lines correctly. Can you explain to me why that is happening?

[Gary Goodyear, Conservative, Cambridge, ON]

I'd be happy to do that. In 2009, when we brought down Canada's economic action plan, we did a temporary two-year bump-up of $200 million to the IRAP program. The two years is up, and Canada's economic action plan is now moving to its next phase. That's what you're seeing there.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

On the transfer of $18,458 out of the funding provided for broadband implementation, this is something this committee has over several years been very concerned about. I think it's vote 1 on Industry. I'm wondering, if there are any changes in the implementation timelines of the initiative, what do you think the impact is going to be on the stakeholders?

[Gary Goodyear, Conservative, Cambridge, ON]

Broadband of course is under the Ministry of Industry, so I may defer to the officials. But if I could just brag, Broadband Wizard Inc., Brian, in your riding, got funding under FedDev—

[The Chair, Conservative, David Sweet]

I'm sorry, but—

[Gary Goodyear, Conservative, Cambridge, ON]

—so we have a number of initiatives to improve broadband.

[The Chair, Conservative, David Sweet]

—we're actually over time.