Industry Committee on April 26th, 2022

[The Chair, Liberal, Joël Lightbound]

Good afternoon, everyone.

I want to thank my fellow MPs for joining us today.

I also thank the witnesses who are joining us virtually.

Welcome to meeting No. 18 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Friday, April 8, 2022, the committee is meeting to study Small and Medium-Sized Enterprises.

Today's meeting is taking place in a hybrid format, pursuant to the House Order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. I think the vast majority of us are participating in person, with the exception of Mr. Fillmore and Mr. Masse—hello, gentlemen. Those who are here in Ottawa are familiar with the health rules in force, so I expect they will conduct themselves accordingly.

Without further delay, I will introduce the witnesses we have with us for the first hour.

First, we welcome two representatives of the Department of Employment and Social Development: Chris Bates, Director General, Apprenticeship and Sectoral Initiatives Directorate, and Helen Smiley, Director General, Strategic Integration and Corporate Affairs Directorate.

We also welcome representatives of the Department of Industry: Sheryl Groeneweg, Director General, Advanced Manufacturing and Industrial Strategy Branch; Etienne-René Massie, Director General, Small Business Branch; and Martin Simard, Senior Director, Corporate, Insolvency and Competition Policy, Marketplace Framework Policy Branch.

I want to thank all of you for what you do as members of the public service.

Thanks also for participating in this exercise today at this parliamentary committee.

Without further delay, I am going to turn the floor over to Mr. Bates or Ms. Smiley, from the Department of Employment and Social Development.

[Chris Bates, Director General, Apprenticeship and Sectoral Initiatives Directorate, Department of Employment and Social Development]

Thank you very much. I believe my colleagues said that they were actually going to start, if that's okay.

[The Chair, Liberal, Joël Lightbound]

That's fine by me.

We'll go with Mr. Massie.

[Etienne-René Massie, Director General, Small Business Branch, Department of Industry]

Good afternoon.

Thank you for the opportunity for us to participate in your committee's study of Canada's small and medium sized businesses.

Small businesses are key to our communities and main streets. They employ millions of Canadians and help drive economic growth. At the heart of all small businesses are entrepreneurs who work day in and day out to offer services and goods to Canadians and international markets.

Small businesses and entrepreneurs are problem solvers working daily to confront a range of challenges—from those that impact daily operations to those that have medium and longer term implications for their businesses. These include talent shortages, supply chain constraints, inflation pressures, infrastructure challenges and adjusting to climate change. The pandemic brought on a range of new challenges, and further amplified others.

Since the beginning of the pandemic, the government has made essential investments to support Canadian small enterprises to address these ongoing challenges and to provide a bridge to post-pandemic recovery. These emergency supports have enabled many companies to pivot, adapt and keep operating.

As COVID-19 support measures wind down, the situation across the country has improved in many cases, and the government's recovery plan is shifting from broad-based support to more targeted growth initiatives.

Budget 2022 provides a range of incentives to encourage investments in growing businesses. This includes steps to build more resilient supply chains, to cut taxes for Canada's small businesses, and to drive the creation and ensure the protection of Canadian intellectual property. The budget will also help Canadian businesses make the most of global trade opportunities while better protecting them against unfair competition.

To promote a competitive marketplace for Canadian consumers and businesses, the budget also announced the government's intention to introduce legislative amendments to the Competition Act as a preliminary phase in modernizing the competition regime. This will include fixing loopholes, tackling practices harmful to workers and consumers, modernizing access to justice and penalties, and adapting the law to today's digital reality. The government will continue to consult broadly on the role and functioning of the Competition Act and its enforcement regime.

With respect to supply chains, as one of the world's leading economies and trading nations, Canada relies on strong supply chains to support the competitiveness of Canadian companies and the quality of life of everyday Canadians. However, their global and interlinked nature makes them vulnerable to an array of risks.

As we all know, supply chains around the world have come under unprecedented strain. Firms from across the world are experiencing demand uncertainty, unprecedented supply and logistical delays, and significant operational stoppages due to the unavailability of inputs.

Some of the challenges we now face were present before the onset of the pandemic. More recently, disruptions like the invasion of Ukraine, labour issues in the rail sector, protests at border crossings and natural disasters such as floods and forest fires further illustrate that we must all fully appreciate our heightened vulnerability to a myriad of risks.

The government is committed to strengthening the country's supply chains to enhance the timely movement of goods and materials, while building a more resilient economy.

We understand that the current supply chain issues will have an impact in all sectors of the economy and affect Canadians in their everyday lives.

The government is working closely with the United States and global partners to enhance supply chain security for key commodities. These include industries such as critical minerals, batteries and semiconductors, as well as life sciences, manufacturing, transportation and the defence sectors.

Inflation is another global issue that businesses are confronting in the postpandemic recovery. Initially it was due to global oil shortages, pandemic supply chain problems and the way the virus changed spending habits. However, we also know that the inflation is getting further exacerbated by Russia's war in Ukraine.

In addition to tackling broad-based economic challenges, the government is working to enable all entrepreneurs to advance their ventures.

To address barriers confronted by women, the government invested in the women entrepreneurship strategy. Budget 2021 invested a further $146 million to provide greater access for capital for women starting their business ventures and to further support business support organizations that help women entrepreneurs. The women entrepreneurship strategy has already helped thousands of women grow and start their business.

The government is also investing to remove systemic barriers faced by Black entrepreneurs and business owners through the Black entrepreneurship program, which was developed with Black entrepreneurs for Black entrepreneurs to address the systemic inequalities they have faced for far too long.

Indigenous-led businesses also confront a range of challenges, which can be amplified by the rural and remote settings. Through Budget 2021, the government expanded the aboriginal entrepreneurship program with an investment of $42 million. The National Aboriginal Capital Corporations Association also launched its $150-million indigenous growth fund alongside BDC and other government partners to help indigenous small businesses attract investment and take on more ambitious programs.

Finally, to help all business increase their competitiveness and access new markets, the government recently launched the Canada Digital Adoption Program. This program will contribute to the growth of many businesses, including those in rural Canada. It will help them access new customers in their communities across Canada and reach international markets.

Under this program, Canadian SMEs will be able to assess their digital readiness and apply for grants and loans online. Depending on their size, specific needs, and goals, businesses can apply for funding through the Grow Your Business Online or Boost your Business Technology streams.

Through these initiatives and many more focused on innovation, ISED—Innovation, Science and Economic Development Canada—is working to support small businesses.

Thank you for giving us the opportunity to make our presentation to you today in connection with this study.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Massie.

I will now turn the floor over to Mr. Bates.

[Chris Bates]

Thank you, Mr. Chair and committee members.

I am pleased to join you today to provide an overview of labour and skills shortages in the Canadian economy.

Labour market pressures are affecting practically all sectors of the economy and regions of the country. As of January 2022, there were more than 800,000 job vacancies across Canada, which is still significantly higher than prepandemic levels.

Sixty-two per cent of current vacancies are in jobs that require high school or less. Many of these vacancies are expected to be cyclical and filled in a post-COVID economy. For instance, the number of vacancies in accommodation and food services is now half of what it was last summer.

Other shortages are a result of structural factors, such as an aging population and rising skill requirements. This is increasing job vacancies in key sectors such as construction; professional, scientific and technical services; and health care. These vacancies will take longer to fill, given the scarcity of highly skilled workers among the unemployed and the need for specialized training.

Small and medium-sized enterprises, SMEs, were severely impacted by the pandemic and recorded the largest decline in the number of employees in spring 2020.

Automation, digital innovation and a transition to a low-carbon economy are also driving key shifts that present opportunities for all Canadians. The need for skills, including digital skills, to support the changing economy has never been so strong. For example, jobs to support the low-carbon economy are expected to increase at three times the rate of total employment.

There are three potential sources of labour supply in Canada: one, new entrants to the labour market, which are primarily youth and immigrants; two, groups under-represented in the labour market; and three, individuals already working who need upskilling and re-skilling to adapt and stay in the labour force.

To address labour shortages facing the Canadian economy, it will be necessary to maximize all three sources of labour.

Youth are the biggest source of new entrants to the labour market, with 4.9 million young jobseekers expected to enter the workforce by 2028.

The next source of labour market supply is from immigration. However, accessing this supply of labour will require addressing barriers many newcomers face to securing jobs, including English or French proficiency, difficulties in obtaining recognition of their credentials and a lack of Canadian work experience.

While temporary foreign workers will play a critical role in filling jobs in the agriculture, food and fish processing sectors—in fact, 80% are working in agriculture—it is important to underscore that they make up only 0.4% of the labour force.

Another source of supply is under-represented groups. Increasing the participation rate of women, indigenous people, persons with disabilities and visible minorities in the workforce could add over two million new workers to the labour market.

Finally, three-quarters of the labour force of 2028 is already working. This is critical context, as labour shortages are not a purely a numbers issue but also a skills mismatch or a skills shortage issue.

As the skills required for jobs continue to rise with the introduction of new technologies, most workers will need to upgrade their skills. As some jobs disappear, it will be important for workers to have access to training to upskill and re-skill so that they can fill new and emerging opportunities in other sectors. To this end, the Government of Canada has taken concrete measures to help reduce shortages and support SMEs.

To help ensure employers can quickly bring in workers to fill short-term labour market gaps, budget 2022 proposes to introduce a trusted employer model to reduce red tape for employers hiring temporary foreign workers, at $29.3 million; a new foreign labour program for fish and agriculture, at $48.2 million; improvements to employer inspections, at $14.6 million; and increased capacities for processing employer applications, with $64.6 million.

Budget 2022 also allocates $115 million over five years, with $30 million annually, to expand the foreign credential recognition program and help up to 11,000 skilled newcomers per year, including internationally trained health care professionals, get their credentials recognized and find work in their field.

We will continue working collaboratively with our federal partners and counterparts in provincial and territorial governments to help alleviate current and future labour market pressures.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Bates.

We are now ready to start the first round of questions.

Ms. Gray, you have the floor for six minutes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you very much, Chair, and thank you to all the witnesses for being here today.

I'd like to go to Mr. Massie at the ISED small business branch first.

In early 2015, the former government passed the Red Tape Reduction Act, the one-for-one law. For accountability, there was an annual scorecard report that was made public to demonstrate results to businesses, with ratings by department, yet the most recent scorecard I can find is from 2016. Where are these ratings now being published?

[Etienne-René Massie]

The Treasury Board Secretariat has the lead for the red tape reduction exercise across government, and all departments do participate in ongoing work with the Treasury Board to explore regulatory and administrative burden questions.

I don't have the immediate answer on where the next reports are. I would encourage you to, as part of the study, speak with the Treasury Board Secretariat officials on that front.

I do know that for ISED we do have the administrative burden count and we do conduct that on an annual basis. For 2021, the overall count for ISED was 3,582, representing a decrease from the 3,638 that we had in 2020.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

I know that this study we're doing today has five different sections, and two of them include competitiveness and regulatory requirements and bureaucracy, so can you table the scorecards from 2016 to 2022 for the committee? Can you report back to the committee on that?

[Etienne-René Massie]

Unfortunately, ISED does not control the scorecards. Those are controlled by the Treasury Board Secretariat. We can definitely indicate your interest to the Treasury Board Secretariat, but I can't commit to that from ISED's part.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

What about your department, then? Would you be able to table strictly for your department? We have five senior government officials here today, all of whom are directors general, representing two departments, so at the minimum we should be able to have those departments' results tabled today or on a future date as soon as possible.

[Etienne-René Massie]

I can commit for ISED to follow up on where our administrative burden counts are and our regulatory pieces, yes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Just so that I'm clear, I'm referring to the scorecard. There are different categories—for example, full compliance, significant compliance and adequate compliance. I want to make sure that I'm clear that we're looking for the scorecard that isn't public.

Thank you.

[Etienne-René Massie]

Sure.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Also, we know that the minister's annual report is tabled. It does have some information in it, but one of the other parts doesn't seem to be online, and that is the regulatory advisory committee. These members are appointed by the government with reps from small and large businesses to review the government's annual work in reducing red tape.

Again, the last membership that I can find is going back to 2015 online. Is this committee still in place?

[Etienne-René Massie]

I would have to check in with colleagues at Treasury Board Secretariat, which is responsible for the secretariat for that committee, to see if that committee is still in place. We can definitely come back to the committee and report whether that committee's still in place, and if so, its current membership.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

The question then is, why would the committee not still be in place? Were you informed that the committee wasn't being formed at some point? I ask because it looks like the former members of the committee would have worked really closely with your department or related departments because of the type of work that they were doing. Did you ever receive notification that the committee wasn't operating any longer?

[Etienne-René Massie]

I unfortunately can't recall offhand if that was communicated to me. I'd have to go back internally and talk to colleagues in the department who work more closely on this file.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Okay.

As part of that as well, again, because of what we're actually studying here today, do you have any information on the regulations that were exempted as part of this? Were changes made to the act or were there regulations that might have been exempted or changes made at some point to what was made public?

[Etienne-René Massie]

Unfortunately, I don't have that information. Again, the Treasury Board Secretariat is the lead for the administrative regulatory burden review for the Government of Canada, so we would have to check in with those colleagues, or you may wish to invite them for a future committee appearance as well.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Again, these are two points that are part of this study we are discussing today, and it's unfortunate that we have five officials here who can't answer about this.

I'll go down a different line of questioning. It's regarding removing interprovincial trade.

I know that we have the Canadian Free Trade Agreement, and there is the regulatory reconciliation and co-operation table, which has targets to reduce interprovincial trade barriers. Is that being kept up to date? Can you table with the committee, broken down by year and section in the table, whether trade barriers have been removed and what the progress is? We haven't had an update on that.

[Etienne-René Massie]

I'm just going to check with Martin to see if he has anything on this one from the competition side. If not, I think we'll have to go back to our colleagues, look at the question and see what we can provide to the committee.

[The Chair, Liberal, Joël Lightbound]

Thank you, Madam Gray. That's all of your time.

As you know, Mr. Massie, you're always free to table documents for further reference for the committee and to answer questions asked by members.

We will now move to Mr. Gaheer for six minutes.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Chair. My first question is for Mr. Bates.

You mentioned language and credential requirements for immigrants and the barriers that they face.

Could you expand a little bit on the foreign credential recognition program and tell us what that entails, what it looks like and possibly how it will protect against fraud? I'm aware of cases that involve online degrees or fake transcripts, so could you expand a little on that?