John Manley

[supply, February 11th, 1994]

Mr. Speaker, I think it is necessary, after all, to have review systems. It is not necessarily required to review every program under a formal system every year because it would be too difficult, but each program should be effective. My department must have a system of accountability to the minister. After all, it is the minister who bears the burden of accountability to Parliament.

[supply, February 11th, 1994]

Mr. Speaker, I would love to visit the riding of the Bloc Quebecois member. Perhaps shortly.

As to his proposal, I agree that we cannot cut indiscriminately. We need to have a strategy, and I believe strongly in a real strategy of economic development. After all, this is going to cost a bit of money.

I agree with a system whereby members would have more say in budget affairs, even those of government departments. Historically speaking that is the real reason for the existence of Parliament. The legislative process is only secondary to it. The first thing is to provide the government with money, and that is what Parliament was created for.

I would welcome the opinions of members on the expenditure of public funds. Whether we need a committee like the one proposed by the Bloc Quebecois, I am not so sure, because government spending is extremely complex. Let us take the example of my department. A member of the committee-not my committee, but the committee of the House- would have to look not only at the expenditures under my authority, not only at all the programs of Industry Canada which total about $6 billion, but also at the spending of the National Research Council, the Canadian Space Agency, Statistics Canada and others. There is a lot to cover, and I was just talking about the Committee on Industry.

I believe that any given committee has a lot of work if it wants to review the expenditures of all departments. If one committee should review all government expenditures, it is really the Public Accounts Committee which answers reports like the one presented by the Auditor General.

[supply, February 11th, 1994]

Mr. Speaker, I appreciate the question. The best way to explain my view of this is to say that I do not see the contribution to aboriginal businesses under this program as putting the non-aboriginal community at a $230 million disadvantage. I would suggest to the hon. member that the amount we are able to invest in aboriginal businesses falls far short of enabling the aboriginal community to reach an equilibrium with the non-aboriginal community.

Let me explain a little more what I mean. First, as we know, throughout Canada access to capital for small and medium sized business is difficult. It is doubly difficult for members of the aboriginal community, particularly those living in parts of the country where the existing economic infrastructure is not well developed.

Second, with respect to this program, we are endeavouring not to right the wrongs of past generations, but to assist a group of people to build on a base of self-reliance.

If we are going to do that, we have to not only provide capital, we must have programs that assist in helping the members of the aboriginal business community expand their businesses in a meaningful way, to have the kind of interest shown post-advancement of capital, as the business grows and develops, that ensures its success.

We are dealing with financial assistance which is rather small when compared to assistance given to other segments of government, some federal, some provincial, to many non-aboriginal businesses. We are endeavouring, with some success, as I think statistics will show, to create within the aboriginal community a successful spirit of entrepreneurship, culture of entrepreneurship if you like, leading to self-reliance and offering people the opportunity not just to get handouts and not even to get jobs of their own but to create jobs for themselves and for others in their community.

This is a very important contribution, which is why I agreed with the Auditor General, provided the strategy is clear and developed, and that is what we are endeavouring to do, and also providing that this ability to work with the entrepreneurs is there. This is why the program is set up with a very thorough review process largely directed by experienced members of the aboriginal community who provide their input as to what businesses should receive financial assistance. It is a multi-faceted approach.

[supply, February 11th, 1994]

Mr. Speaker, first of all I would like to say I welcome this opportunity to respond to several of the concerns that have been raised in today's opposition day motion, particularly with respect to the aboriginal economic development program.

Although the motion refers this question to the Minister of Indian Affairs and Northern Development the aboriginal economic development program is administered by Industry Canada, formerly Industry, Science and Technology Canada.

In his report to the House of Commons, the Auditor General's comments on the aboriginal economic development strategy served to focus attention on this issue at a time when there is renewed interest by aboriginal Canadians in their tradition of

commerce and there is increasing recognition by the non-aboriginal private sector in doing business with First Nations.

As Minister of Industry, I am responsible for a large number of programs and services designed to increase Canadian businesses' competitiveness. And the businesses managed by aboriginal people play a strategic role in this effort. In fact, these businesses will have an increasingly more important role in our economy, which is about to enter a new millennium.

The government's aboriginal business programs are quite deliberately located in the industry department which is able to offer programs to all aboriginal Canadians, including status and non-status Indians, Métis and Inuit peoples.

This role continues a tradition going back over 20 years as the department and its predecessors help to build a critical mass of aboriginal business owners and managers.

Moreover, with its specialists in business issues and intelligence, Industry Canada is best positioned to serve the business needs of aboriginal clients, the role it plays in the Canadian aboriginal economic development strategy.

In carrying out my duties, I can count on the precious advice and dedication of the native economic development boards in the private sectors, which have played a major role in the evolution of the government's business development programs over the years. The boards, which are mainly made up of aboriginal businesses and chiefs of communities from all over the country, develop policies and make recommendations to Industry Canada on initiatives which deserve support.

We are partnered in the Canadian aboriginal economic development strategy with the Department of Indian and Northern Affairs, which focuses on community economic development, and with the Department of Human Resources Development which promotes training and workforce participation.

Our other partners are the aboriginal women and men who have worked with the program over the last four and a half years to realize their business dreams.

The Auditor General took a look at a number of businesses and he made recommendations on monitoring the progress of our clients. He wants us to follow up and obtain information allowing us to see if public funds are invested shrewdly.

I have to say that I agree with the Auditor General on this point and while procedures were not fully developed at the time last year when he conducted the review, I am assured that our department is currently making improvements in our tracking systems and will be much better able to monitor the performance of our client companies in the future.

I will continue to watch this program and all programs for which I am responsible to make sure that the money being spent, every dime of it, is being used effectively and carefully. We are and want to be accountable to all of the taxpayers of Canada.

I am sure members would be interested to know, however, that there are many successes being achieved by aboriginal businesses in Canada. Most Canadians do not know that there is high tech equipment manufactured by a Canadian aboriginal firm, ACR Systems Inc. of Surrey, British Columbia, which has its products on the Canadarm in outer space and on formula one race cars very much on the ground.

ACR's temperature data loggers meet the highest quality standards and serve a variety of uses, including measuring building environments for energy savings and maintaining the careful temperature controls of blood products while in transit.

We all take pride in the achievements of Canadian aboriginal entrepreneurs and film producers as well as entertainers who are increasingly making their mark on national and international stages.

Canadian aboriginal tourism products and destinations are now being sought by visitors to Canada, particularly from Europe, for the unique experiences created and the genuine hospitality offered by aboriginal hosts. The aboriginal tourism sector is already an important contributor to the country's performance in this important area of our economy.

There are many examples of success from the small community based grocery store to the investment bankers on Bay Street. Winnie Giesbrecht has created a thriving business operation in downtown Winnipeg so that she could fill a need for a care home and employ aboriginal women.

D'Arcy Moses and Dorothy Grant have unveiled Canadian aboriginal high fashion to the world at the Canadian Embassy in Paris.

So, even if we learn some tough lessons from previous initiatives, the things which we do well must be pointed out.

Under our current aboriginal economic programs, we have supported some 3,000 client firms. The $230 million that went toward these business ventures of every size levered other investments and an injection of half a billion dollars in total resulted for the aboriginal private sector.

From a study commissioned last year looking at firms the program supported over their first two years we learned the following facts: 90 per cent of all businesses the department capitalized were still operating after two years; 60 per cent of these firms were operating with a profit or a small loss. These results compared favourably with the Canadian average for small business performance.

[Translation]

Important jobs are created by aboriginal businesses. The study encompassed some 300 companies which either created or preserved more than 2,000 jobs.

The cost to the government in helping to create these jobs turned out to be much lower when compared with past efforts. These firms proved to be effective providers of jobs for non-aboriginal Canadians as well, especially in some of the more remote areas of the country.

I am committed to building on the momentum that I have described. There is a critical mass of entrepreneurship, of skilled and talented aboriginal people who are working very hard right now to turn things around for themselves and for their communities.

As a government we will continue to do what we can to improve the climate for this business growth and support the leadership and the initiative and the desire for self-reliance being shown by aboriginal Canadians in all parts of the country.

As Minister of Industry I would like to respond to some of the issues raised by the Auditor General in his report on the failure of the former Department of Industry, Science and Technology to follow the government's accounting policies. I am sure, Mr. Speaker, you will find this especially fascinating and I hope that you can contain your excitement as I talk about accounting policies.

The policy, entitled "Payables At Year End", requires departments to charge expenditures to the period in which they were incurred rather than that in which they were paid. The net result was that in the Auditor General's opinion the department under-recorded its liabilities at year end by some $42 million.

I am told the discussion between the office of the Auditor General, my department and the Treasury Board Secretariat, formerly the Office of the Comptroller General, has revolved around the difficulty of managing multi-year contribution agreements. This is complex and the rules for accounting are based on long standing and generally accepted principles of recognizing liabilities when they occur.

However, in the case under discussion, there has been a legitimate difference of opinion as to which accounting policy should apply and which fiscal year the liabilities should appear in the public accounts. The office of the Auditor General is not disputing the legality of the payments, only the accounting treatment.

The department's interpretation of the accounting policy has always been approved by the former Office of the Comptroller General, which is now part of the Treasury Board Secretariat. In fact, according to this office, the department maintains a high degree of control.

Also, it is generally agreed that departments do not always have control over the timing of costs incurred in multi-year contractual arrangements. This can result in variances from planned spending levels on a year to year basis even though parliamentary authorities are adhered to on a multi-year timeframe.

The department has had extensive discussions with the Treasury Board Secretariat which drafted the policy and that the Auditor General, in his report with respect to this item, is interpreting. This resulted in the deputy comptroller general agreeing with the department's accounting treatment of all items under discussion with the office of the Auditor General save for one item for $7.3 million.

This item was recorded in the 1992-93 fiscal year by the department and we accept the Treasury Board Secretariat as the final arbitrator in all accounting matters. The Auditor General's figure of $42 million was not adjusted to reflect the department's action in recording the $7.3 million item due to printing deadlines for the annual report. The amount actually under discussion is therefore roughly $35 million. This is comprised of one amount of $31 million which the Auditor General felt should have been recorded in fiscal year 1992-93. The disagreement, especially in the case of this amount, rose to the extremely complex nature of the contribution agreement in question. In situations of such complexity, often professional accountants will arrive at different conclusions based on their interpretations of the same set of facts.

Moreover, there are two adjusting entries representing a total of $4.5 million. However, as was already mentioned, the Treasury Board Secretariat supports our accounting procedure regarding those items.

In summary, the issue of unrecorded liabilities is part of a fairly long standing dialogue between the Department of Industry Canada and its predecessor, the Department of Industry, Science and Technology, and the office of the Auditor General due to the complex technical accounting issues surrounding the management of multi-year contribution agreements within the current accounting framework.

The Treasury Board Secretariat, author of the government's accounting policy, fully supports the manner in which the department has treated its liabilities and reported them in its annual report. The department has, for its part, been in full compliance with the accounting policies of Treasury Board.

We do, however, undertake to continue to work closely with the Auditor General in endeavouring to ensure that in future, agreement is reached between the department, the Treasury Board Secretariat and the Auditor General prior to publication of the Auditor General's report.

[Research And Development, February 11th, 1994]

Mr. Speaker, I want to thank the hon. member for his Friday question.

Encouraging small and medium-sized businesses to be more active in the research and development area is one very important element of our Canadian economy strategy.

As the hon. member knows, only 0.4 per cent of all Canadian businesses are involved in research and development, and very few of those are small and medium-sized businesses. The key element of our strategy is to find ways to help small businesses in that area.

[Electronic Highway, February 4th, 1994]

Mr. Speaker, as we said in the speech from the throne, the implementation of a Canadian strategy for an information highway is a priority of our gouvernement.

Considering this is a sector constantly going through changes, we believe we should have a committee to provide us with precise information on an ongoing basis.

What we are looking for in the formation of an advisory council on the electronic highway, is a group of individuals whose interest in the information highway will touch on a variety of fields; users, those who will be contributing to the highway as well as outside sources. To compose a broad committee which can keep track of the rapid change in this area is what is vital to us in ensuring that we have adequate advice as this important file evolves.

[Electronic Highway, February 4th, 1994]

Mr. Speaker, I thank the hon. member for his question. No, I cannot confirm that.

[Ways And Means, February 2nd, 1994]

moved that a ways and means motion to amend the Income Tax Act, laid upon the table on Monday, January 31, be concurred in.

(Motion agreed to).

[Aluminum Industry, January 28th, 1994]

Mr. Speaker, this is purely speculative. At the present time, we are still hoping for an international agreement, and this is the favoured solution.

[Aluminum Industry, January 28th, 1994]

Mr. Speaker, we are well aware of the problems in the aluminum industry. Many companies are affected in Quebec as well as Canada. We are hoping that the talks that are going on in Brussels right now will come to a favourable conclusion.

There will be a continuation of the discussions with respect to an international accord on aluminum. It is our hope that voluntary reduction in Russian exports will be the outcome of these discussions.