Industry Committee on May 2nd, 2013

[John Knubley]

As Minister Bernier indicated, we have taken significant action to reduce administrative formalities.

Specifically—and I think I was asked about this earlier—the action plan introduces six fundamental system-wide reforms, and this has led already to 90 department-specific changes.

Again, to reinforce what Minister Bernier said, perhaps the most important change is this one-for-one rule, which—

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Yes, but one minus one equals zero. There is no reduction unless basic arithmetic no longer works.

[John Knubley]

I understand exactly what you are saying, but we are improving the situation if we cancel—

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Yes, but that is not a reduction.

With regard to the credit that was granted to the credit unions, and the caisses populaires in Quebec, once again, the chambers of commerce in the regions say that will harm SMEs because it cannot be said that that will equalize opportunities, contrary to what the government in power claims. The caisses populaires are established in very small municipalities and support very small SMEs that have never received assistance from chartered banks.

At least 70% of SMEs are supported by credit unions, particularly in the regions. If they are weakened, then the SMEs in the regions will be under attack. Do they understand the problem in your department?

[John Knubley]

I think this is really a question for the Department of Finance.

What I might do, though, because you mentioned the caisses de crédit, is really change the topic a little bit and just recognize that the industry department has taken on new responsibilities recently with respect to cooperatives.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I would like to emphasize that the SMEs in the regions are affected. Is there a chance of stopping the cancellation by 2017, which would leave us a little time? Can we hope that the SME sector, particularly in the regions, will get an opportunity to say that this is a bad reform? We cannot say that there is equality with the chartered banks.

I will stop troubling you with that question on the day the chartered banks arrive in Tourville and Saint-Pamphile to provide an SME with $100,000 in financing. For the moment, that is entirely false. The SMEs, particularly in the regions, will suffer without the credit unions and caisses populaires.

[John Knubley]

Like you, I am convinced that the SMEs are very important. This issue concerns direct and indirect taxes.

[The Chair, Conservative, David Sweet]

That's all the time you have, Mr. Lapointe.

[John Knubley]

That's a matter for the Department of Finance.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Knubley and Mr. Lapointe.

We'll now move on to Mr. Lake for five minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses for making yourselves available at an atypical hour for a committee so that we could hear a little more from you today.

I want to talk a bit about the Emerson report, if we could.

Maybe you could start by giving the background as to why the report came about, or how that report came about, and what the mission was of the group that was looking into the issues. Then maybe you can elaborate a little on the stakeholder reaction to the report, on what we have heard from stakeholders since the report was released, and maybe in conjunction with the measures contained in the budget in response to the report.

[John Knubley]

Mr. Chair, I'd be very happy to do that.

The Emerson report was tasked by the Government of Canada on February 27, 2012. I think the context for this work is very much the issue of competitiveness of the aerospace sector. Of course, the aerospace sector is exceedingly important across the country, particularly in Quebec and Ontario but also in B.C., and there's some important activity I know in Atlantic Canada, where I once worked.

The way the study worked was the Honourable David Emerson was the head of the review, and he was assisted by a three-member advisory council, including Senator Pupatello, from Ontario; Jim Quick, who's from the association; and Dr. Jacques Roy. On November 29 the final report was released. There were really two parts to it, one focused exclusively on the aero side and the second focused on space.

In terms of the response of the stakeholders, it was very positive. I think that throughout the process David Emerson and his advisory council spent a lot of time involving stakeholders. There were various subcommittees on specific issues, which eventually led to the specific recommendations. Key themes in the report are innovation, market access and development, supplier development, workforce skills and training, and procurement, of course. Procurement has been highlighted in the budget, as you've seen, not only with respect to the aerospace sector but more broadly.

As we move forward, we're working with the government to ensure that we respond quickly to the recommendations. The budget itself refers to $1 billion over five years for the strategic aerospace and defence initiative, and to $110 million over four years and $55 million annually for the aerospace technology demonstration program, which Minister Paradis referenced.

We're also launching further consultations in the coming months on the creation of a national aerospace research and technology network. This was something in the consultations around the report. Stakeholders are particularly keen to create a national network. I think there's a very solid network already in Quebec that we're wanting to build on, and it was cited as a best practice.

Finally, in terms of moving forward, and this is the area of Transport Canada, there's a review of cost-recovery rates for aircraft safety certification, to ensure the national aircraft certification program can respond and go to demand. This was a particular request from the stakeholders, recognizing they needed to have a rapid response in the area of transportation safety in the aero sector in order to be competitive globally.

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

Okay.

I have one minute left, so I'll ask a very basic question.

In regard to that, perhaps you can speak for that last minute about Canada's position in the global aerospace industry.

[John Knubley]

I think Canada, as many of you know, has a very strong aerospace sector, and has traditionally done well in that sector in terms of participating in the North American market and the European market.

As we look forward, the real challenge, as in many sectors, is the emergence of production in emerging markets, particularly China, for example, which is developing their capacity in this area rapidly, and also developing new production rapidly. One of the big issues, in order to remain competitive, is whether we put our industry in a position to participate effectively in our new emerging markets.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Knubley.

We're now moving to our final round. With the time the way it is, to be as fair as possible we'll have four people: Conservative, NDP, Conservative, Liberal. We'll do four minutes, and then that way everybody will get an opportunity, particularly Mr. Regan, who's waited here and should have the opportunity to question.

Mr. Braid, you have four minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much.

I actually want to stay on this theme, which I touched on earlier, of the importance of intellectual property.

I'm seeing in the main estimates for Industry Canada on pages 187 and 188—and the following page of 188 specifically—an increase of $6.7 million for the Canadian Intellectual Property Office, as part of a strategy to upgrade that organization's IT infrastructure. Given the importance of CIPO, and of intellectual property, I'm pleased to see this investment.

Will this investment help to modernize CIPO? Will it also help to streamline the patent process?

[John Knubley]

What I can say is that with respect to, I think, this particular expenditure, it is very much dealing with the fact that they have legacy systems in place, as many departments do, and they are moving to a modern IT system in the CIPO area. This is a priority for the organization, and in the long run it should help modernize the processes around that because of a stronger foundation from the IT system.

But I can also add that I know the organization is also spending a lot of time engaging and consulting with stakeholders around the mandate of the organization and is looking very much at the issues you're raising, in terms of how CIPO, as an organization, can better serve the activities of small and medium-business enterprises, and do it in a streamlined way. I think Sylvain, who heads the organization, is spending a lot of time encouraging CIPO to reach out to stakeholders around these issues.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you. That's a very helpful response.

A more general question.... In terms of overarching themes, many of the initiatives that both ministers spoke about seem to touch on the importance of two critical objectives for our country. The first one is accelerating entrepreneurship, and the second one is fostering innovation.

Could you just elaborate on why those two public policy objectives are so important and how we're helping to achieve them?

[John Knubley]

Maybe what I will say is that the department actually has three strategic objectives, and that's typically always shown in our documentation. Those three objectives are probably worthwhile reviewing and they touch on the two issues you've raised.

The first objective is to ensure that the Canadian marketplace is efficient and competitive. It's about getting the economic framework right, so, of course, the issues at play there are policies and programs, and modern legislation and policies to support competition, investment, corporate insolvency law, copyright patents, and trademarks. The recent work that you've been doing is very much in the area of this strategy objective, in terms of an IP regime, and we look forward to continuing to review the work that you've done here and to work with you on that.

Our second strategic objective is improving the knowledge-based economy through innovation and research and development. Minister Goodyear, who appeared here a few weeks ago, I think really covered the issues here in great detail. But the strategic objective of Industry Canada is to really put in place measures to help Canadian businesses and universities to be at the forefront of global innovation and scientific development. Of course, what we've done in the recent budget is taken a number of steps in terms of refunding the granting councils. The funding of the National Research Council and its transformation are examples of the kinds of initiatives that are related to this strategic objective.

Then lastly, the third strategic objective is just focusing on Canadian businesses and communities, so all of the things we've talked about in terms of small business and tourism are specific aspects of that.

These three areas are really the fundamental priorities of the department, and all with the aim, of course, of supporting business and industry in Canada to be more competitive and productive.

[The Chair, Conservative, David Sweet]

Thank you very much.

Thank you, Mr. Braid.

Now we'll go to Madam LeBlanc.

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

Thank you very much, Mr. Chair.

Once again, I want to thank our guests very much for staying with us.

You referred to the transfer of responsibilities associated with the cooperatives from Agriculture Canada to Industry Canada. How much money is allocated to manage those new responsibilities?

In addition, will the cooperative development initiative, the program that assisted emerging cooperatives, be restored? That program helped a lot of emerging cooperatives.

Lastly, what is the situation regarding the Co-operatives Secretariat?

[Iain Stewart, Assistant Deputy Minister, Strategic Policy Sector, Department of Industry]

The people who support the co-op file at Industry Canada are within my group. My group has a unit called the strategic policy group, in which these experts are situated. In addition, my group includes the regional executive directors for each region of Industry Canada. What I've done is establish a matrix across the five regions so that the regional executive directors and their staff reach out, engage, and work with the co-op movement. The result is actually to leverage resources across my sector. They're the people who are working on the file.

With respect to your second question with the program, we do not have plans or funds at the moment for that program.

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

Were there funds allocated, though, to embark on this new responsibility? Were there funds allocated to your department, which was already a department in itself, supplementary funds that were allocated to receive this new responsibility and to bring about the objectives set out to help the cooperative sector?

[John Knubley]

Yes, there was an amount, and we are still discussing those funds with the former department.

I would say, as Iain was stressing, that part of the idea here and part of the logic of the move, if you like, was to really try to take advantage of the existing resources that Industry Canada has, particularly from a regional perspective.

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

We hope the next budget includes adequate resources for you to be able to continue.

With your permission, Mr. Chair, I would like to hand the floor over to my colleague.