Industry Committee on May 28th, 2019

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Deputy Minister, to be fair—

[John Knubley]

Thank you for that.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

—if someone applies for it, the idea is that they would have a reasonable answer.

You could say, “No, not in this first round. We are expecting other funds, so if you would like us to keep you in status, please let us know.” That way you would not be having a program that is so ill-managed.

Deputy Minister, you were before the public accounts committee in regard to the Auditor General's report on this program. There were a lot of design issues. This happened under your minister, on your watch.

[John Knubley]

As I recall, we testified that in fact the program, which was reviewed by the Auditor General before it was even delivered, actually attained a reach of 900 communities as opposed to 300 communities.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay, well—

[John Knubley]

Indeed, our coverage was in fact much more successful than ever anticipated.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Sheehan.

You have five minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much for your presentations.

My question is to Lisa, the senior assistant deputy minister of strategy and innovation policy. If this isn't correctly directed to you, you can redirect it.

I asked the minister about some CanCode comments and whatnot. Specifically, do you know how many projects have been funded with the CanCode money? Do you have any specifics on the number of projects or perhaps dollars? I'd just like some more examples.

I used the northern Ontario example because I had access to the guy from Science North, and he gave me the number of teachers, the number of communities and the number of students in northern Ontario. Specifically, are there any numbers that you would have at your disposal in particular, and what kind of impact is it having on Canadian students?

[John Knubley]

I'll let Lisa speak to the impact more broadly.

The number of programs funded is 21 not-for-profit organizations since the program launched in 2017. From June 14, 2017 to March 31, 2019, the Government of Canada has invested $48.1 million for the delivery of those 21 CanCode projects.

Lisa, talk more generally about CanCode and what it brings to Canadians.

[Lisa Setlakwe]

In total with this investment we will have reached a million students and 61,000 teachers, so it's huge. I can share one very small personal anecdote, which is that my daughter participated in this kind of event with a number of others with her—it was a girls' day. The large majority of them reported that they didn't know that this was what coding was. They didn't know how much fun it was. The exposure to people who just don't know about this is significant and it just opens up a door for them that they would not have likely opened up without the offering of this sort of thing.

The federal government has made significant investments. We've announced an additional $60 million to continue these kinds of activities. I can say that the provinces and territories are also undertaking similar activities. It's really moving us in the direction and it's getting to that younger cohort because it's harder to make the transition midway through a career or whatever. The impact that it's having is significant.

The teachers, by the way, are extremely thankful for it as well, because they're in the classroom and there is demand for it. The students want to receive this kind of training and teachers, up until now, have not had the capacity to do it, so now they do.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

John, of the $90 million I referenced—the investment in Algoma Steel—$30 million was SIF funding, and $60 million came from a regional economic development agency. It wasn't FedNor, it was FedDev, just because of the sheer size of it.

[John Knubley]

Yes, that's correct.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

So $30 million was the previous announcement that just was never acted on because Algoma went into CCAA and then there was a new $30 million.

Can you explain to me and to the people of northern Ontario why FedDev is involved in funding things in northern Ontario?

[John Knubley]

I think the simple answer is that FedDev received the allocation for the steel dollars and that's why they covered it.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

When I look at the estimates, FedDev has a significant amount of money in there and that money is being used, not only in that area, but also in other areas. Is that a correct statement?

[John Knubley]

Yes, totally.

Mitch, do you want to elaborate on that?

[Mitch Davies, Senior Assistant Deputy Minister, Industry Sector, Department of Industry]

Just as a precision, it's an advanced manufacturing initiative that FedDev was responsible for and it covered all of Ontario. It was set up that way to provide a kind of analytical support. They also worked with the department to analyze these investments. They're large-scale investments, as was the investment, of course, in Algoma.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Yes.

[Mitch Davies]

It was essentially set up that way so we could deliver the kind of outcome we're trying to achieve with the kinds of companies and sophistication that they have, but obviously it made it available in all of Ontario. But that's a legacy initiative and a specific circumstance. In almost all our cases, projects in northern Ontario are funded by FedNor.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Lloyd.

You have five minutes.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you, Chair.

Thank you to everyone for being here.

An issue that I want to focus on today is related to the strategic innovation fund. I have some questions about how this program works. I noted in my constituency that there was a significant investment in Kuwait's Petrochemical Industries Company and Pembina Pipeline Corporation's joint polypropylene plant venture, which represented about 1% of the total capital cost of the project.

I'm going through other projects that are listed under the announced projects list on the strategic innovation fund, and I note that the average investment on the projects is in the 25% to 50% range of the project.

When making decisions on these matters, when some projects are getting 1% funding and other projects are getting 25% to 50% of the total project cost funded through SIF, is the department taking into account the feasibility that these projects will be able to pay back those loan funds over 15 years, or is it just accepted that many of these companies won't be able to ever repay the funds that they are loaned by the government?

[John Knubley]

I'll let Andrea speak to this. She's the leader of the strategic innovation fund program.

The general answer, though, is that each project is considered on its own and assessed with careful due diligence in terms of all the issues that you raised.

[Andrea Johnston, Assistant Deputy Minister, Innovation Canada, Department of Industry]

That's right. Each one is assessed on its merit, based on public, economic and innovation benefits, and that's how we calculate the SIF contribution.

In terms of repayability and non-repayability, our standard is repayability. In the event that there's a significant public benefit, such as significant employment in a certain area, greenfield investment, a large number of co-ops and a large number of R and D collaborations, we can start to look at some partially non-repayable projects, but in general the standard is repayable contributions.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Do you have any data to indicate how successful the repayment schedule is on these programs on average? Are companies repaying the government for these programs, or has the government had to take losses on any of the repayments or delay the repayment schedule? What's the general trend we're seeing here with SIF and other related programs under this portfolio?

[Andrea Johnston]

The strategic innovation fund was announced in June 2017, so we don't have a long history of repayability, because we're still in negotiations on the contribution agreement. Every commitment in the contribution agreement is an obligation on the company.

It's not only repayability, it is jobs created, it's their R and D collaborations, it's the co-ops they create; we take those commitments seriously. In the event that they're not meeting the contribution agreements, we will have to work with them on the best path forward for repayment.