Industry Committee on May 3rd, 2018

[The Chair, Liberal, Dan Ruimy]

We are in meeting 105, in which, pursuant to Standing Order 81(4), we are continuing with the main estimates.

Today, we have the Honourable Bardish Chagger, Minister of Small Business and Tourism; along with John Knubley, deputy minister; and Paul Thompson, associate deputy minister.

Minister, you have up to 10 minutes.

[Bardish Chagger, Liberal, Minister of Small Business and Tourism]

Mr. Chair and members of the committee, I thank you for the invitation to join you this afternoon in my role as Minister of Small Business and Tourism.

As you know, small business is the backbone of our economy. Small and medium-sized firms account for 99% of all businesses in Canada and just over 90% of all private sector jobs—that's more than 10 million Canadian workers.

In my role as minister, I am the voice at the cabinet table of this strong and growing community, and I take this job very seriously.

Since 2015 our government has taken strong action to support these businesses. We know that when we invest in the economy, we are investing in the middle class and those working hard to join it. The results are already being felt right across the country.

Canadians have created more than 600,000 jobs, most of which are full-time positions. The unemployment rate is at a 40-year low. Our economy is the fastest growing in the G7.

Canadians can feel rightly optimistic about what the future has in store, and yet there is still more work to do. Canada is in a global competition. Our new progressive free trade agreements with the European Union and the 10 countries in the CPTPP bloc will open up new markets for Canadian goods and services. Innovation is also reshaping our economy, creating new sectors such as app development, while revolutionizing others such as manufacturing.

We must take steps to build a modern economy, one in which Canadian businesses are developing innovative goods and services that are the envy of the world.

Small businesses are central to this transformation. That is why our government is cutting the small business tax rate to 9% by 2019, as we committed to doing in 2015. This will put up to $7,500 per year back in the pockets of small business owners so that they can reinvest in their businesses.

We are also taking clear actions to create a world-leading business environment, one that fosters innovation and business growth.

Our accelerated growth service is supporting growth-oriented businesses by helping them access such key government services as financing, exporting, innovation, and business advice in one place.

We also launched Innovation Canada. This new web portal—at innovation.canada.ca—provides business owners with all the information they need on programs and services available to them.

More than 120,000 Canadians have already visited the site since its launch in January. They reflect Canada's diversity. They are urban and rural. They are men and women. They are new Canadians and indigenous entrepreneurs.

For entrepreneurs just starting up, landing a procurement contract with the Government of Canada can make a world of difference. Through our new program called innovative solutions Canada we are specifically engaging these start-ups to help develop innovative approaches to new and complex government challenges.

It's a win-win: the businesses get a reliable customer while the government gets innovative solutions to tough challenges.

Of course, as you heard from Minister Bains, the six regional development agencies are doing great work to promote economic development and to support small businesses in every corner of this great country.

We have accomplished a lot. However, as the Prime Minister often reminds us, better is always possible.

One area in which better is possible and necessary is that of supporting women's entrepreneurship. Less than 16% of businesses are owned by women. We think it's about time women had a fair shot at starting and growing a business. That is why, as part of this year's budget, we announced Canada's first women's entrepreneurship strategy.

This is a coordinated national plan that will support hardworking, passionate women entrepreneurs at every stage of business.

It is based on four areas of work. It starts with helping women start businesses by supporting skills development and closing gaps throughout the entrepreneurial ecosystem, so that a woman entrepreneur in Kelowna has the same opportunities as a woman entrepreneur in St. John's. It also requires increasing access to financing and recognizing that women face unique barriers when applying for financing. It requires improving access to innovation programs, such as the kinds of government programs I mentioned earlier, which can make all the difference in a start-up's development. Finally, it means that we must invest in better data and knowledge so that we can properly measure our progress.

We're investing close to $2 billion over the next five years in this women's entrepreneurship strategy. Of this, we will invest $105 million to provide nationally coordinated, regionally tailored support for women entrepreneurs from coast to coast to coast.

Under our leadership, we have also given the Business Development Bank of Canada an ambitious goal to make available $1.4 billion in financing to support women-owned firms by 2021. We are confident that this target, while ambitious, is very much achievable. But it is a target, a goal; it is not a quota.

The BDC will also expand its women in technology fund to $200 million. This fund started at just $50 million in 2016, the largest of its kind in Canada. I announced an increase to the fund of $20 million just last year, making it the largest of its kind in North America.

The demand is so great that we will invest another $130 million, making this fund now the largest of its kind in the world with a total of $200 million.

Through our strategy, our goal is to double the number of majority women-owned businesses by 2025. This is our target, our goal; once again, it is not a quota.

Mr. Chair, I also want to touch on Canada's tourism sector, where we have a great story to tell as well.

Last year was the best year ever for international tourism in Canada.

We set a new record. Almost 21 million people came to Canada, and total tourism revenues for the year surpassed $97 billion, also a new record.

Through Canada's new tourism vision, our government has been working to deliver a whole-of-government plan to support this vital industry. When we talk about small businesses and exporting, Canada's tourism sector is the leader. Tourism is Canada's largest service export. It is larger than agriculture, mining, and forestry combined.

The industry comprises more than 200,000 small businesses, and the sector itself supports more than 1.8 million jobs from coast to coast to coast.

Though we are setting records, we think there's still tremendous room to grow. Through our vision, and with the help of all of our partners, such as Destination Canada, we will increase international visitation by 30% and double visitation from China, the world's largest outbound tourist market, by 2021.

This year is also the Canada-China Year of Tourism, which will help further increase the number of Chinese tourists coming to Canada.

Last year, Chinese travellers spent more than $1.5 billion while visiting Canada. They typically spend more here than the average tourist.

In 2017 we welcomed more than 680,000 Chinese tourists. That was a new record. To build on this momentum, we will make targeted investments to attract even greater numbers of Chinese visitors during the Canada-China year of tourism.

This includes hosting a number of high-level government and business events and helping tourism operators become more China ready, in other words, helping them prepare to welcome more visitors in general. When Chinese tourists visit, they are not just coming to take a picture; they are visiting our local businesses and supporting the local economy.

Tourism is a wonderful way to showcase our beautiful country to the world while also supporting communities large and small.

That's also why our government is committed to supporting this vitally growing economic sector.

The government has a clear plan to support Canadian small businesses. That plan will help our tourism industry flourish, ensure that all Canadians have the same opportunities to participate in our diverse economy, and build a strong middle class and support those working hard to join it.

I am happy to now take questions from my esteemed colleagues.

Thank you once again for inviting me to testify.

[The Chair, Liberal, Dan Ruimy]

Thank you very much, Minister.

We're going to move right to questions.

Mr. Longfield, you have seven minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair.

It is great to see you, Minister, and Mr. Knubley and Mr. Thompson.

I'm also very interested—it's a lifelong passion—in small business and tourism, most recently with the chambers of commerce in Canada.

We just completed a study on intellectual property and we know that many small and medium-sized enterprises are not taking part in IP management, development, or ownership.

How are we looking at rolling out IP promotion to SMEs? Is that included in the estimates in any way?

[Bardish Chagger, Liberal, Waterloo, ON]

To commence, what I would like to do is thank you for your work not only in your community, but with chambers. We work closely with the Canadian Chamber of Commerce as well as local chambers.

When it comes to IP, I know that Minister Bains talked about the fact that only about 9% of small businesses have an IP strategy. That's about 106,000 businesses across the country. We're talking about the backbone of our economy. We know that only 10% of small businesses hold formal IP, so we really do want to make sure that we create a plan, a strategy that works. He was really excited to launch it. We are really grateful for the work of this committee and the input that you were able to provide.

When it comes to the estimates, I'll turn to my deputy.

[John Knubley, Deputy Minister, Department of Industry]

In terms of the estimates, the $85.5 million over five years was in budget 2018, so that is not yet included in the estimates.

[Lloyd Longfield, Liberal, Guelph, ON]

Okay. I think that also speaks to a new process. I'm a little confused about the process in its first time around. Could you help us to align the estimates with the budget process?

[John Knubley]

I think what's different this year is that the overall contribution from budget 2018 has been rolled up into a vote, if you like, in the Treasury Board context.

[Lloyd Longfield, Liberal, Guelph, ON]

That's right.

[John Knubley]

The total number for budget 2018 is included, but we will need to reconcile the departmental investments—like this particular one, for example—as we move forward in the next year.

[Lloyd Longfield, Liberal, Guelph, ON]

Right, so it's a bridging year.

[Bardish Chagger, Liberal, Waterloo, ON]

If I could add to that, it means that it is a line item within the estimates, which can give Canadians and you the confidence that this is the money that will go to the strategy.

[Lloyd Longfield, Liberal, Guelph, ON]

It's committed for it.

Another part of what we looked at was the work-integrated learning and how that might apply to small businesses. Also, we've done the study and have looked at manufacturing.

Since we've done that, I've been thinking about indigenous people and women in trades. I'm always thinking of larger businesses, but we have the opportunity to talk in terms of smaller businesses. Are they different pots or is it the same programs that would be applied to...? I know that we have a new website around Innovation Canada to access funding programs.

[Bardish Chagger, Liberal, Waterloo, ON]

Innovation Canada is part of the innovation skills plan. It's a one-stop shop for government programs and services to match Canadian innovators and entrepreneurs.

As the Minister of Small Business, I will tell you that small businesses don't always have the resources they need. They need government programs and services to work for them, and they need easy access to those programs and services so they can access those resources that are available to them. That's why we thought that a one-stop shop would help them better utilize those programs.

When it comes to work-integrated learning and the importance of skills development, entrepreneurship is going to be a huge part of the economy of tomorrow. We need to ensure that our young people understand entrepreneurship. We need to make sure that more women are considering entrepreneurship and that more under-represented groups take entrepreneurship more seriously.

That's why you see the work that the BDC, the Business Development Bank of Canada, is doing. They've done a better job of actually tracking where the money and investments are going. When it comes to the indigenous entrepreneurial loan program, for example, we know that $325 million has gone to 600 indigenous clients and is helping to create opportunities in their communities. It's also encouraging for the next generation to see strong leadership.

[Lloyd Longfield, Liberal, Guelph, ON]

We're keeping track of those numbers in terms of investment to return on jobs. I read the blues last time, since I wasn't here for the meeting, and I know that one of the members opposite was quite concerned about getting a return on investment in terms of numbers of jobs. That is being tracked.

[Bardish Chagger, Liberal, Waterloo, ON]

That's an important way of looking at it, because we know that when it comes to the jobs in the economy, it matters to Canadians. As a government, we take it very seriously. We need to look at how we are collecting that data. You'll notice that when it comes to our investments in tourism and our investments across the board, data and collection of knowledge are key, as I mentioned in my opening comments. We want to see the results of those investments.

[Lloyd Longfield, Liberal, Guelph, ON]

With the little time I have left, I'm thinking of the southwest Ontario economic development plan and the goal of developing to our highest potential in southwest Ontario. The FedDev organization has just been refunded. That's included in the estimates. Could you speak to that?

[Bardish Chagger, Liberal, Waterloo, ON]

When it comes to the regional development agencies, RDAs, they now come under the Innovation, Science and Economic Development portfolio of Minister Bains.

Where we have seen a lot of progress and a lot of opportunities is that when we talk about diversity, yes, regional diversity matters, but there is an opportunity to share best practices. I remember the first meeting in which the presidents of the RDAs came together. It was the first time that they were in a room together. They are now able to learn from each other and to teach each other, to ensure that we have greater economic potential in all communities.

Budget 2018 provided an increase of $511 million over five years. Of that, $105 million is for an ecosystem fund to really support the women's entrepreneurship strategy.

[Lloyd Longfield, Liberal, Guelph, ON]

In working with chambers of commerce, business improvement areas, and tourism agencies, we have to do a full-court press here.

[Bardish Chagger, Liberal, Waterloo, ON]

That's right. I do believe that the chamber does a fabulous job of ensuring that the voices of their stakeholders are heard. We need to ensure that we're doing a better job working with chambers to ensure that their stakeholders are also learning about government programs and services. We'll continue to encourage the chamber to be a two-way street so that they continue to push the government to do better and to do more. That's exactly what we expect. We want their stakeholders to also be able to benefit from the programs and services so that we know which ones are working and which ones we need to modernize.

[Lloyd Longfield, Liberal, Guelph, ON]

I met with the Canadian Chamber of Commerce this morning. They're very excited to be working together. I'm looking forward to being a bridge between the two, the Government of Canada and the chambers, so thank you for your input.

[Bardish Chagger, Liberal, Waterloo, ON]

They are good people indeed.

[Lloyd Longfield, Liberal, Guelph, ON]

Yes, they are good people.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We'll move to Monsieur Bernier.

You have the floor for seven minutes.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you very much, Mr. Chair.

I want to let you know that I will share my time with Mr. Lloyd.

Minister, thank you for joining us today.

I have a few questions, and I ask that you answer them fairly quickly, so that we could have a good discussion.

What is your definition of small business?