Industry Committee on Nov. 30th, 2011

[The Chair, Conservative, David Sweet]

Good afternoon, ladies and gentlemen. Bonjour à tous. Welcome to the 17th meeting of the Standing Committee on Industry, Science and Technology.

Today, we have witnesses before us. Mr. Richard Dicerni is the deputy minister. Welcome, Mr. Dicerni. We have Kelly Gillis, who is a chief financial officer, comptrollership and administration sector. Good afternoon.

Is Simon Kennedy going to be with us? That's in progress. That's very good.

At the industry committee there are always interesting things that happen. This is a new one for me. In the spirit of non-partisanship and esprit de corps, it looks as if the opposition is going to have all the questions in the first round.

We're going to turn to Mr. Thibault now for seven minutes.

I apologize. That was so shocking, I missed the opening remarks. Let me get control of myself.

Sorry, Mr. Dicerni. Go ahead, for ten minutes, please.

[Richard Dicerni, Deputy Minister, Department of Industry]

I'm told there will be an exercise in democracy, when you will all be invited to vote, which will interrupt our proceedings. The opening remarks Kelly was going to make have been circulated. Why don't we deem those read and you can go to the questions now?

[The Chair, Conservative, David Sweet]

See, that's just what that was. It was a little bit of telepathy. I wasn't able to actually grasp the concept in my mind at the moment.

[Kelly Gillis, Chief Financial Officer, Comptrollership and Administration Sector, Department of Industry]

Parliamentary Appearance on the 2011-12 Supplementary Estimates (B), Opening Remarks

Thank you Chair, and thank you for the opportunity to be here with the members of the Standing Committee on Industry, Science and Technology. I am Kelly Gillis, Industry Canada’s chief financial officer. Here with me is the department’s deputy minister, Richard Dicerni, and the senior associate deputy minister, Simon Kennedy. I have prepared some brief opening remarks, after which we will be pleased to answer any questions you may have regarding these supplementary estimates.

The 2011-12 supplementary estimates (B) include a total of $324.7 million for Industry Canada. The bulk of the total amount presented—$250.3 million—represents items under statutory appropriations previously authorized by Parliament through other legislation. These items are presented for information purposes only and reflect updated forecasts. The main statutory update in this category is $243.9 million for the knowledge infrastructure Program, KIP. Program funding for KIP was already authorized by Parliament through the Budget Implementation Act 2009, but was deferred from 2010-11. This deferral was due to the decision to extend KIP until October 2011, thereby providing an additional construction season to complete related projects.

Turning to the next group of spending items, Industry Canada is also requesting the authorization of Parliament through these supplementary estimates to access a total of $74.7 million. These requirements are explained on pages 94 and 95 of the supplementary estimates (B) “blue book”. The majority of this amount is available to Industry Canada under two authorities granted to the department as part of our normal funding process. These authorities allow the department to access contribution repayments received in the previous fiscal year to fund programs and operations. Under these two authorities:

The first item, on page 94 under vote 1, our operating vote, requests $23.1 million in repaid contributions from the defence industry productivity program, DIPP, in order to support the operational requirements of the department.

The second item, on page 94 under vote 10, grants and contributions, requests $21.3 million in repaid contributions from the Technology Partnerships Canada, TPC, program in order to reinvest these funds in the strategic aerospace defence initiative, SADI.

From the remaining portion of the $74.7 million I referred to earlier, we are also seeking to access funds for items stemming from Budget 2011. These items could not be included in the main estimates or the previous supplementary estimates due to the nature of the timing of these parliamentary processes.

Specifically, we are also seeking to access $14.8 million for the community access program, CAP, which supports sites located in communities across Canada where populations face barriers to Internet use. We are also seeking $10.1 million to assist youth with obtaining information and communication technology skills to better prepare them in seeking employment. These two amounts are the third and fourth items respectively on page 94 under vote 1 and vote 10.

Finally, these supplementary estimates include requests for transfers either to other federal departments or to different appropriations within Industry Canada. For example, on page 95, under “Transfers”, the second item requests a transfer of $8.6 million from our operating vote to our capital vote. This transfer is required to replace legacy technologies for spectrum management and to maintain the Shirley’s Bay campus infrastructure in order to prevent health and safety issues before they occur.

We are pleased to answer questions the committee may have in regard to supplementary estimates for the Department of Industry Canada.

Thank you.

[The Chair, Conservative, David Sweet]

Now we will do as I said in the beginning. We'll go to Mr. Thibeault for seven minutes.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Chair.

I'd like to thank my colleagues across the way for allowing us to have this first opening round of questions. It's much appreciated, and it just shows the great work we do here on the industry committee.

With that, some of the things I'd like to focus on right now relate to northern Ontario and the Community Adjustment Fund. If we can be specific, there appears to be a reduction of $16.3 million due to the sunsetting of the Community Adjustment Fund in northern Ontario.

First, you can describe, in the Coles Notes version, what the Community Adjustment Fund is and any specifics on what the funding was being used for. If the program was successful, why is it winding down? That would be something we'd be interested in hearing.

I'll leave you with those three questions to start off with.

[Richard Dicerni]

As part of the economic action plan that was put forth in the 2009 budget, there were a number of specific initiatives the government identified. In the Department of Industry, for example, we had the knowledge infrastructure program. We had the marquee tourism events program.

In the FedNor part, there was the community adjustment program, which was administered in other parts of the country by the regional development agencies. FedDev did southern Ontario.

The funds allocated were specifically allocated for a two-year period of time to deal with the significant economic difficulties of the times. If you look at other areas of our estimates, you'll see under the knowledge and infrastructure program that there has been a significant decrease. That reflects the fact that it was a two-year program.

[Glenn Thibeault, NDP, Sudbury, ON]

I'd like to hear your opinion on how you think the sunsetting of this fund might affect industry in northern Ontario. It has been successful in some instances. Do you have thoughts on that?

[Richard Dicerni]

Given that those were budgetary initiatives by the Minister of Finance, my thoughts and imagination tend to be constrained.

[Glenn Thibeault, NDP, Sudbury, ON]

Fair enough.

I'm going to jump a little bit now to some things related to consumer affairs. Could you tell us the total operating expenditures for Industry Canada's Office of Consumer Affairs? Does that represent a decrease or an increase in operating expenses for the fiscal year 2011-12?

[Richard Dicerni]

I will ask my colleague, Michael Jenkin, who is the director general in the Office of Consumer Affairs, to provide some specifics. I would add two things, however, before Michael gives you the numbers.

The Department of Industry provides consumer support partially through Michael's office, but also through a number of other areas, for example, spectrum. When in 2008 we launched the spectrum auction and did a set-aside for new market entrants, the goal there was to assist consumers by broadening the number of new market entrants and assisting these new market entrants to have some spectrum, which has indeed led over the last two or three years—that plus investments by some of the incumbents—to lower prices and more products being available to consumers.

If I look across the river at the work of the Competition Bureau, which is very aggressive in pursuing false advertising in a number of sectors, that also contributes to helping the consumer. My point is that it's not just Michael.

Having said that, Michael....

[Michael Jenkin, Director General, Office of Consumer Affairs, Department of Industry]

Thank you, Mr. Dicerni.

The amounts outlined in the estimates paper are pretty clear, and they've been very stable over the last few years, and certainly in terms of our planned spending are stable at about $4.6 million a year and about 23 FTEs. That has been pretty consistent. I don't have the early year figures, but going back—I've been in the job for about 10 years—and allowing for inflation and other factors, it's pretty much been a stable resource allocation in terms of people and funding. Ditto with respect to the grants and contributions program that we run, which has been at a stable amount for a number of years now.

[Glenn Thibeault, NDP, Sudbury, ON]

Just specifically to that grants and contributions program that you were talking about, you said it's stable, so it hasn't declined or increased at all over the last, let's say, five years type of thing. Is that correct?

[Michael Jenkin]

That's correct.

[Glenn Thibeault, NDP, Sudbury, ON]

What organizations currently receive funding through this program?

[Michael Jenkin]

Basically, it's consumer organizations that are non-profits and are based across the country, mostly in Ontario and Quebec. They're typically relatively small organizations. We also get about half a dozen who receive funding from the program most years, and there's usually a handful of others where some years they get funding and some years they don't, depending on the project they submit. It's roughly about a dozen or so organizations a year that receive funding.

That number, again, has been relatively consistent, although the shares of funding that each individual group gets varies from year to year, obviously, because it's a competitive program, and organizations submit proposals and they're judged on their merits.

[The Chair, Conservative, David Sweet]

Do you want me to just let the clock run, or do you want to know when the seven minutes are up? You basically have 21 minutes right now.

[Glenn Thibeault, NDP, Sudbury, ON]

You know what? I think we could let the clock continue to run. We can ask questions...and we'll share that with Mr. Regan as well.

[The Chair, Conservative, David Sweet]

Mr. Regan has the last round anyway. You have 21 minutes, and he'll have seven after that. Right now you're at 6:45.

[Glenn Thibeault, NDP, Sudbury, ON]

Perfect.

I'll just ask one more question quickly, and then I'll hand off to my colleague. Thank you, Mr. Chair.

In relation to the Investment Canada Act, in the last Parliament there were discussions, a motion was put forward, and there was agreement that we would all look at this act and see if there was any way to update it. Has there been any discussion to start looking at that—the net benefit piece, the net benefit clause—through Industry Canada yet?

[Richard Dicerni]

I do recall the motion of the previous Parliament, and I would emphasize “the previous Parliament”. I would say that at a general high level some are looking at the Investment Canada Act. At this point, there's nothing terribly specific in regard to changing the criteria that relate to defining net benefit, but this is a matter that is constantly being reviewed.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you. I'll hand it off to Madame LeBlanc.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you very much for coming and sharing information with us again.

I would also like to thank my government colleagues for giving us the opportunity to ask questions.

I would like to go back to the experts' report on research and development that was tabled not too long ago. The report states that, despite a very generous grant program of $5 billion for research and development to encourage private businesses, the desired results did not materialize.

I wondered if you had a way to do a follow up or an assessment of these grants. Are you able to assess the efficiency of these programs that are benefiting from the $5 billion to find out how they could be improved in order to stimulate research and development in the private sector?

[Richard Dicerni]

The envelope amount that the committee focused on was $7 billion. We can divide that envelope into two major parts. The first is a tax credit administered by the Department of Finance. It's roughly $3.5 billion. It varies from year to year. The other part includes grants and is more diversified in the nature of the programs. The majority of this second component consists of grants awarded to academic researchers or the various granting agencies.

Secondly, there's the National Research Council of Canada, whose envelope is 600 to $700 million a year.

Thirdly, there is a certain number of specialized programs, like the aerospace industry support program.

This report was tabled in October. The various departments are now looking at these recommendations so they can provide follow up as effectively as possible.

As for the tax credit, I know that people from the Department of Finance are looking at the recommendations that were made and are trying to figure out how the government could follow up on them.

We are a little stuck. The report was tabled five or six weeks ago, and it is fairly lengthy, and another section, which deals with procurement, was added.

So we are continuing our reviews in this respect. The report deserves to be studied in depth.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I would like a little more information. Are there mechanisms that would let us see what results have been achieved through the various grants or the various tax credits? So, with respect to the private sector, for example, can we find out if there are any results as far as research and development are concerned? Will this bring us a little closer to innovation?