Industry Committee on May 8th, 2024

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I was recently talking with a number of folks in Toronto. There are two megatrends in the economy: decarbonization and digitization. I would say that when you go into the digital sector—AI, quantum and cyber—Canada punches above its weight, and we're going to continue to invest in these sectors of the future.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

Minister, I have a colleague in the House of Commons who's fond of describing the Conservatives as the party that will eventually slash everything, across the board. However, the documents we received show that seven agencies in Canada are going to see their budgets cut by half a billion dollars, unfortunately. In Quebec, the budget of the Economic Development Agency of Canada for the Regions of Quebec is being cut by $168 million.

In Quebec, a large number of businesses are declaring bankruptcy, the largest number in Canada, in fact. Owners of small and medium-sized businesses—which I, myself, am—are struggling right now because of how high interest rates are. In light of all that, what do you have to say to all those business owners who will unfortunately suffer as a result of your government's cuts?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I would say that we have always been there for small and medium-sized businesses, and I think they know that. What's more concerning is the Conservative leader's response when I asked him whether he would support investments like the one we made in Northvolt, the biggest private investment in Quebec's history.

That's an important question as well. I have the utmost respect for you. You're an entrepreneur, a creator of jobs, but you need to ask why your leader didn't take a position on those investments, which brought Quebec into the auto industry. We're about the same age, you and I, and we'd have to turn the clock way back to pinpoint the last time a new industry was created in Quebec. We've just brought Quebec into the auto industry, and I'm still wondering, as are the people who follow our proceedings, whether your leader will support those kinds of investments. That is the question.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Actually, people should be wondering why your department's operating budget is going up while investments in small and medium-sized businesses are going down. That is the question. Canada's productivity is among the worst in the world right now. The country has a real productivity problem, and the economic development agencies across Canada, including in Quebec, help businesses boost their productivity.

In spite of that, you're cutting the funding of those agencies by half a billion dollars, and Quebec's economic development agency is losing $168 million of that, so I'm trying to understand the logic. You are at the helm of the department that is supposed to support small and medium-sized businesses when it comes to innovation and technology, especially smaller ones that are growing and looking to expand. As a result of these cuts, the economic development agencies won't be able to afford to help those businesses in order to boost Canada's productivity.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

As you know, the productivity issue is not new. We've been talking about it for at least 30 years, with many reports being written on the subject.

One thing that will help is AI. Helping small and medium-sized businesses adopt tools like AI will lead to better productivity. I saw that with Montreal's Mila centre. Guay Inc., which specializes in crane rentals, also comes to mind. AI technologies could benefit the food industry as well.

The more technology tools we have, the more we can help small and medium-sized businesses. I, myself, am from a family of business owners. Small and medium-sized businesses create jobs and collective wealth, and we want to support them every step of the way.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Let's be clear, here. Cutting the budget of the Economic Development Agency of Canada for the Regions of Quebec won't help productivity in Quebec.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

If you look at the overall amounts, you'll see that Quebec received record investments. Take, for example, LM Wind Power, in the Gaspé, which is going to manufacture the largest wind turbines in the world. Consider our recent investments in AI, not to mention in Northvolt and Volta. It's rare to see investments like that being made in the regions. Like me, you're from a region. We are talking about a billion-dollar investment for Volta in Granby. That's not something we've seen often in our lifetimes, you or I.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I agree with you, but you're turning your back on small and medium-sized businesses, and that's what troubles me the most.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I don't think we are. We will always support small and medium-sized businesses. They make up 98% of Canada's economy. They saw that we were there for them during the pandemic. You know in your heart that we helped a lot of people. When you or I meet them on the street, they tell us so. They know that we were there to help them. A lot of people tell me that they would have gone out of business had we not been there. With history as our guide, we will continue to support small and medium-sized businesses, and I know that you believe the same thing in your heart of hearts.

[The Chair, Liberal, Joël Lightbound]

On that positive note, thank you, Minister.

That concludes our two hours with you to discuss the 2024‑25 main estimates, and Rio Tinto and Alcoa. Thank you for being so amenable. Two hours is a long time to appear before a committee. We are always happy to have you.

We're going to suspend briefly, and then we'll spend the last hour discussing the 2024‑25 main estimates with the department officials.

The meeting is suspended.

[The Chair, Liberal, Joël Lightbound]

We are resuming the meeting.

Good afternoon. We are now back.

We're here for the second hour on the mains with officials. We have Simon Kennedy, deputy minister.

We also have Charles Vincent, senior assistant deputy minister, industry sector, as well as Stephanie Tanton, assistant deputy minister. Lastly, we have committee regular Mark Schaan, who I'm sure missed us.

Thank you all for being here. We heard opening remarks from the minister earlier, so we can get right into the discussion.

Mr. Perkins, you may go ahead for six minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair, and thank you, everyone. I guess Mr. Schaan missed us, so he's back, even though we're not on Bill C-27.

I'd like to start, Deputy, if I could, again with the net zero accelerator. For the $8 billion that has been committed to this, the environment commissioner, who is part of the Auditor General's office, said that the department doesn't track the per dollar value or the benefit of whether or not it's actually reducing carbon. What's your response to that?

[Simon Kennedy]

I'd like to assure the honourable member and the whole committee that we do, in fact, track GHG reductions. In fact, we have a very sophisticated process to actually work with companies to figure out what we think the reduction will be. There is a committee of federal experts in this field. We engage five external experts of various kinds. There's a pretty elaborate diligencing process to figure out for these large investments what would be the greenhouse gas reductions that we would be seeking.

In fact, in the case of large emitters, where we're investing actually to get rapid reductions in emissions, that's one of the business lines of the program. The funding we provide is tied to their reduction of emissions, and we have the ability to claw it back if they don't reduce. There's a whole follow-up and measurement and reporting infrastructure to make sure that happens. Just to answer directly, at this point of the projects where we have signed agreements, there are 11 megatonnes of reductions by 2030 that are contractually bound in the contracts we have signed.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

The environment commissioner said only five of the 17 contracts actually contained a commitment to reduce carbon emissions. Is that correct?

[Simon Kennedy]

Just very briefly to provide a bit of context, most of the environment commissioner's report was focused on one particular pillar of the net zero accelerator. It was one of the concerns we had, frankly, and I had a lengthy discussion with the commissioner about his audit. The program actually has three pillars, and there are projects across the three pillars that have reductions in greenhouse gases. However, for reasons that you'd have to discuss with the commissioner, his main focus was on pillar one. When I'm talking about 11 megatonnes, I'm talking about the collection of projects across the—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'm talking about the commissioner's report on pillar one, and most of the contracts don't have carbon emission targets. In fact, out of the 50 largest emitters in Canada, I think you have contracts with only three.

[Simon Kennedy]

We are in due diligence with multiple companies. I think there are nine that are currently in due diligence. I'm sorry—there are 10 large emitters in due diligence.

I think it's important for the committee to understand that these are very large projects, multi-billion dollar projects, and usually the strategic innovation fund, the net zero accelerator, is actually fairly early to the table. There are companies where we have already issued a letter of intent, where we're ready to engage further, and actually we're almost never the rate-limiting factor. Usually these corporations have other investors they have to line up. They have engineering studies to do, so in the case of—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I have limited time.

[Simon Kennedy]

It's just important to note that the commissioner's concern is that we have only two, but there are 10 more in active due diligence, where we have plans to make investments.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you.

Moving on, you gave a speech to a small group in a law firm in Toronto—I think it was a small group—about Bill C-27. We requested a copy of the speech, which you kindly provided. It was a speech at a business leaders' breakfast in Toronto, and it was behind closed doors. In that speech, you said, when we talk about high-impact AI systems, we are focused on a few key areas. You go on to list the systems, which include “systems...that can really be used to shape and often narrow perspectives if not appropriately monitored”. What narrow perspectives are you going to use Bill C-27 to moderate content on?

[Simon Kennedy]

Just for clarification, I regularly get invited to speak to business groups and others. I try really hard to go out and talk to a variety of groups, so certainly—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

With respect, I don't have much time, and I don't need a dissertation on how you approach speeches. I just need you to focus on answering the questions so I can get my questions in.

[Simon Kennedy]

It was mostly, I think, the suggestion that this was some sort of closed-door meeting. I just want to indicate that, as a practice, we try to get out and talk to the business community; that's the business we're in.

That was a document prepared by the department for virtually every kind of public setting where I'm asked to go and meet people.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

What systems, and what narrow speeches? That's my question. You're off the topic. What speech are you trying to narrow and censor on the Internet through an AI bill and algorithms?

[Simon Kennedy]

I think what I'll—