[Recorded by Electronic Apparatus]
Tuesday, May 2, 1995
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[English]
The Chairman: Order.
The order of the day is main estimates 1995-96, involving votes 1, 5, and 10 under Atlantic Canada Opportunities Agency.
Is there unanimous consent that I call votes 1, 5 and 10?
Some hon. members: Agreed.
Mr. McClelland (Edmonton Southwest): Mr. Chairman, are you calling the vote now?
The Chairman: No, I'm just going to introduce our witness, but that's what the purpose of the meeting is.
I'm also seeking consent that the committee, pursuant to Standing Order 81(7), proceed to not only looking at votes 1, 5, and 10, but as well, the minister has indicated his readiness to deal with departmental outlook on program priorities and expenditures.
Is there unanimous consent for that?
Some hon. members: Agreed.
The Chairman: It's my pleasure to welcome the Hon. David Dingwall, Minister of Public Works and Government Services and Minister for the Atlantic Canada Opportunities Agency.
Welcome, Mr. Minister. I believe today you're accompanied by Mary Gusella, the president of ACOA. I also believe you have an opening statement, sir.
Hon. David Dingwall (Minister of Public Works and Government Services and Minister for the Atlantic Canada Opportunities Agency): Yes, I do, Mr. Chairman. I want to thank you and the other hon. members. As well, as you've indicated and as required by a new provision under the Standing Orders of the House of Commons, we have filed with the clerk a copy of the outlook document on the priorities as it relates to the different agencies and departments of the Government of Canada. I hope it's been circulated to all members.
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I'm pleased, Mr. Chairman, to appear before you on this, the occasion of the main estimates for the Atlantic Canada Opportunities Agency. Before we begin, I would like to take this opportunity to congratulate your committee for its outstanding work in the area of small business financing. You have made a significant contribution. You have also advanced the current debate in Canada, as evidenced by the Canadian Bankers Association's concession to your recommendations to produce data on loans to entrepreneurs. Small and medium-size enterprises in all regions will benefit from the implementation of this very recommendation.
That being said, I've come before you today, Mr. Chairman, to describe the new directions being taken by the Atlantic Canada Opportunities Agency. I want to show that ACOA plans fit into the overall agenda of the Government of Canada, particularly as it relates to small business development, and yes, economic leadership.
[Translation]
Let me say, at the start, that the government in place feels that regional economic development is something good, positive and necessary. We must keep up our efforts to build strong regional economies in Canada that will strengthen the national economy.
As we were saying in the Red Book:
- We see strong regional economies as the building blocks of Canada. Concerted action and the
mobilization of scarce resources are necessary to achieve strong regional economies in this age
of international competition and change.
It is important to review the context within which the agency has developed its plans. The government has made a clear commitment to sustainable job creation and to economic growth. It also has committed, as evidenced by the February budget, to the principle that a healthy fiscal environment is an essential underpinning for a successful jobs-and-growth agenda.
We have recognized quite properly that it is the private sector, not government, that is the engine of economic growth. Accordingly, we are putting greater emphasis on the importance of effective partnerships between the public and the private sectors. The focus, quite clearly, has to be on creating a positive environment for business, and our small and medium-size enterprises in particular. Governments must be seen as effective partners to business, not working in isolation. This was one of the primary considerations behind the federal government's program review exercise and was the driving force for the kinds of reforms to government departments that we are now witnessing.
The overriding objective was to render government programs and services as cost-effective and cost-efficient as possible. It is of note that in July 1994 I announced that the ACOA office in Cape Breton would be closed and its programs would be delivered by the Enterprise Cape Breton Corporation. This step is consistent with the government's initiative to streamline government operations and provide more efficient service delivery in the area of regional development. Further, as a result of streamlining its own activities, the Enterprise Cape Breton Corporation will eliminate 15 permanent positions for a 28% overall reduction.
Members might also remember that last July, I announced my intention to reduce the size of the ACOA advisory board from 18 members to 8. I'm pleased to say that this was done, and the appointment of 8 new members to the advisory board was announced in mid-April.
Other reductions as a result of program review and the budget include ACOA being cut of $173.5 million over the next three years. This represents a 30% cut in ACOA's core program funding. Furthermore, the work force complement will be reduced by 50 full-time equivalents over that same timeframe.
As the above-noted examples highlight, ACOA has undergone a redesign that puts the agency at the leading edge of the modernization, if you will, of the public sector. The outcome is an agency positioned like never before to be an effective partner to Atlantic Canadian businesses, an aggressive champion of Atlantic Canada's interest in Ottawa, and deliver daily on the government's commitments to jobs and economic growth.
The major changes being introduced by ACOA respond to the program review process and the broader economic and fiscal policy imperatives of the government. They also build from the lessons and the successes accrued during the eight years of partnership with Atlantic Canadians. They have been designed to strike a balance between the agency's responsibilities and obligations as a federal government department and the legitimate expectations of Atlantic Canada's small business enterprises and of course taxpayers.
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I have personally consulted with business leaders and associations across the Atlantic region, and one of the key messages I received from our business community is that we can no longer afford or justify grants or non-repayable subsidies. On December 7, 1994, I announced we would be moving in this direction, and as of February 7 the agency has been operating on a repayable basis under the action program.
This move was endorsed and reaffirmed, as all members will know, in the 1995 budget. The money repaid will be reinvested by ACOA in other opportunities in Atlantic Canada, a change that signals the commercialization of our dealings with our clients.
The budget has also restated the government's belief in the concept of strong regional economies and acknowledged the economic development leadership role to be played by ACOA and the other regional development agencies. It confirmed that ACOA will provide a single point of contact for federal government programming for the small business sector.
The economic development leadership role is one of the core elements of the new ACOA. The other core element is small business development. Together these two core business elements will drive the evolution of ACOA's partnership with Atlantic Canada over the coming years. They will serve to bring focus to our activities, to shape the development of our program instruments and service delivery methods, and to provide the basis for a more comprehensive, coordinated, strategic working relationship with all the members of Team Atlantic.
Let me give you two examples. ACOA's leadership in the creation of the Atlantic Canada Tourism Partnership was pivotal in bringing together the four Atlantic provinces, the four provincial tourism industry associations, private-sector partners such as airlines and hotel chains, and the federal government. This initiative is capitalizing on region-wide opportunities in tourism-related marketing, professional development, research, and communications.
The second example is the area of trade. ACOA and the Atlantic provinces have put in place an agreement on international business development. The agreement's purpose is to enable the Atlantic provinces to combine limited resources and coordinate trade development activities on - and I want to underline this - a pan-Atlantic approach.
To a significant degree, I believe the words ``economic development leadership'' define a new thrust in bringing together all the economic actors to align their efforts as never before. The future prosperity of the Atlantic economy, the competitiveness of our firms in the new economy activities of the global marketplace, depend largely on the ability of all components of our economy to be mutually supportive.
The economy of Atlantic Canada may be relatively small - and small it is - but it is certainly not without exciting opportunities and competitive advantages. The challenge lies in mobilizing ourselves to seize upon those opportunities and to capitalize on those advantages.
ACOA is the only public-sector agency that has both a pan-Atlantic mandate and the ability to respond to very local needs and opportunities. The agency cannot do it alone and has always succeeded on the strength of its various partnerships throughout the entire region.
I see three main components to the economic development leadership function. The first is a proactive advocacy. ACOA has always acted on a mandate to support and promote opportunity for economic development through the advocacy of the interest of Atlantic Canada in national economic policy, program, and project development and implementation. This traditional role will be augmented by placing a greater emphasis on influencing the 97% of federal spending in the region not directly under ACOA's control. This should provide for greater coordination of the overall federal effort in the region and provide for maximum regional benefits from federal procurement activity.
I would like to point out by way of example that in 1986, no Atlantic firms were doing space-related business. Now, thanks to ACOA's efforts in relationship with the Canadian Space Agency, there are more than 40 Atlantic firms participating in the Canadian space program.
The second component is the whole notion of partnerships itself. One can only hope to achieve effective coordination and cooperation through real partnerships. From our perspective, this means building on a tradition of forging effective working relationships with the provincial governments, other federal government departments, municipal governments, business associations and small and medium-size enterprises, regional economic and business institutions, as well as other stakeholders.
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It will be through these relationships that the agency will continue to foster a Team Atlantic approach to economic development solutions for the region to help attain the goal of 50,000 new, sustainable private sector jobs in the next five years.
This will happen in many ways, starting with partnership mechanisms that have already proven effective, such as the harmonization committee of deputy ministers, a senior level federal-provincial forum for cooperation and coordination.
Other examples include the further development and implementation of the Atlantic Canada Business Service Centre network as a single access point for business and the regional joint councils of federal officials. I believe my colleague, Mr. Manley, spoke to that issue when he appeared here at an earlier time.
More importantly, it will include concerted efforts to respond to the calls from our business community for truly effective public/private sector partnerships. This was one of the key messages coming from participants at last year's regional development conference in Moncton, and I am personally committed to progress in this regard.
Overall, ACOA's partnerships focus will continue to sustain job creation, greater federal-provincial cooperation and public sector program streamlining and service delivery simplification.
The third aspect of economic development leadership involves bringing additional strength to the agency's economic research and policy capacity. The agency has already implemented an internal reorganization in support of enhancing the coordination of the policy research effort. In the months and years ahead, ACOA's policy analysts will, in concert with other stakeholders in the region, undertake development and provision of strategic policy advice tailored to complement small and medium-size enterprises' growth in a number of key sectors.
Among other things, the agency will be producing policy papers addressing issues related to the state of the region's competitiveness, access to capital and implementation of new economic technologies and practices in the traditional resource industries. As well, ACOA will seek to establish an academic round table of Atlantic Canada researchers involved in regional economic development.
ACOA's focus has been, and in my view must continue to be, on our small and medium-size businesses as the primary creators of employment. Accordingly, the other major element of the agency's core business will be small business development. I would like to address a number of the key aspects of this element and outline some of the new approaches being adopted by the agency.
With the introduction of repayability, the agency will be moving away from a tradition of subsidizing business toward a practice of investing in them. But that investment will not be restricted to financial assistance. Rather, our current account managers will place greater emphasis on proactive service to clients, developing effective relationships with small and medium-size businesses, and looking to identify business opportunities that show promise for development.
This new, opportunity-driven approach will target such things as procurement or trade-related opportunities, formation of strategic alliances or associations, and promoting the adoption of new economic technologies and business practices, particularly in our resource-based sectors. It will also stress the importance of capitalizing on our past successes.
There are several other new activities that will be undertaken under the small business development element. One of the most important challenges relates to the availability of venture capital in Atlantic Canada. We are the only region of the country that does not have it. In the February budget, my colleague, Mr. Martin, announced that ACOA will support the Atlantic Investment Fund initiative currently being developed by the provinces and the Atlantic Provinces Economic Council with the involvement of the chartered banks.
I am pleased to report that the four Atlantic premiers and I have recently held very constructive discussions with representatives of all the chartered banks relative to their interest in the Atlantic Investment Fund. A working committee has been formed to work out details and to achieve agreement, I hope, upon a summary of terms for the fund. This initiative would provide support to the development of small and medium-size enterprises in Atlantic Canada and is a fine example of ACOA's economic development leadership role in the region.
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ACOA will place greater emphasis on the provision of non-capital assistance to business, focusing, for example, on collaborative efforts to establish technology centres to help small and medium-size enterprises adapt, adopt or commercialize innovative new technologies; support for the development of a trade-training capability in the region, obviously with the cooperation of provinces, other stakeholders and other federal departments of the Government of Canada; and work with our partners in the development and provision of small business as counselling and management training.
ACOA will ensure that our business services and programs are easily accessible through single points of service. ACOA will work with the provinces and the private sector partners to expand and develop further the Atlantic Canada Business Service Centre network throughout the region. We are committed to working with all of our public sector partners to continue to simplify, to streamline all business services and programs, and to move toward a single program instrument for small business in Atlantic Canada.
The new directions I have described are, I believe, an important beginning to a new era of economic development in Atlantic Canada. ACOA is implementing policies, programs and practices that place it strongly on the leading edge of economic development approaches in the 1990s, not just in Canada but also in the global context.
But ACOA cannot achieve on its own this vision I described earlier. ACOA stands ready to forge innovative, effective new strategies and partnerships with all Atlantic Canadians in order to achieve our goals.
Success, I suggest, will depend largely on the degree to which the region's - and I want to underline this - economic development stakeholders can collaborate effectively together.
I think I have spoken far too long, but I thought I would take the opportunity to place these thoughts on the record as they relate to the Atlantic Canada Opportunities Agency. I would be happy to try to respond to any questions my colleagues might have in relation to this particular agency.
The Chairman: Thank you very much, Mr. Dingwall. As the only Atlantic Canadian member on this committee, I can tell you that I certainly welcome your support today at the industry committee. I want to congratulate you on your speech and your remarks. We both know how important your portfolio is in Atlantic Canada and how important it is for economic development. It's as important in Atlantic Canada as FORD-Q is in Quebec and Western Diversification is in the western part of our country.
Mr. Leroux, I understand you're going to lead off for the Bloc Québécois today.
[Translation]
Mr. Leroux (Richmond - Wolfe): First of all, thank you for your presentation. I note that this new direction is inspired by a very clear will to assume a leadership role, as you say. In a document entitled ``ACOA: 1995 Departmental Outlook on Program Priorities and Expenditures'' one can read, and I quote:
Economic development leadership will be carried out through proactive advocacy on the national agenda. Currently, regional development expenditures account for only 3% of federal spending in Atlantic Canada. In the future, ACOA will devote its advocacy efforts to influencing the other 97% of federal expenditures in the region, so as to influence other federal departments in maximizing regional benefits to Atlantic Canada.
First, do you have a clear objective to increase the 3% expenditures that are mentioned? What type of influence will be exerted to assume this leadership role on the 97% of expenditures? Will it stay on the level of friendly persuasion or could agreements be entered into with various departments about expenditures you make on behalf of other departments? How will you translate this will to take a leadership role, to take charge, to influence the other departments?
[English]
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Mr. Dingwall: I think the honourable member has asked a fairly relevant question about the future activities of ACOA and what it can do, as well as about other government expenditures that are taking place in the region.
Under my leadership and the leadership of the president, we all know we're not operating in the seventies and the eighties. We're into the nineties and we have less money. We're attempting to lever as much as we possibly can as a result of those expenditures within our jurisdiction. That doesn't preclude us from, for instance, trying to put groups together to work cooperatively on levering not only government spending but also private sector spending.
I'll probably get into this in greater detail as the meeting goes on, but the Atlantic Venture Capital Fund is one example of ACOA trying to use its status, if you will, in a leadership role by enticing the chartered banks, the provincial governments and other stakeholders to commence operations in the Atlantic region. By commencing their operations of a venture capital fund in the Atlantic region, they would run it.
I've said to the chartered banks - and I think they were quite pleased - that I don't want to run the Atlantic Venture Capital Fund. The Government of Canada should not be in that business. The provinces should not be in that business. We'll provide some seed money, but we want them to assume that leadership role in order to develop the kind of expertise you need in the financial institutions in your region.
That is a leadership role. That is levering economic activity. That is creating economic opportunity for the citizens who reside there.
Another example of economic leadership - and I made mention of it in my speech - is the whole tourism package. It was not hatched in a back room. It was a difficult, long, gruelling process to put all of the parties together. You're talking about four provincial governments, four tourism associations that have never worked before and the federal government and all of its agencies working together under one mandate. You're talking about less money for all of the various participants, but a more focused, streamlined approach to bringing better economic opportunities to that region of the country.
Those are the kinds of things we believe we can do out there to lever and enhance economic activity in our region. That's what we mean by economic leadership development. It's not easy. When you come from the area I come from, where you don't have great economic opportunities, it takes a while, but we're endeavouring to do that as quickly as possible.
[Translation]
Mr. Leroux: I would like you to talk about the influence you will have on leadership in the area of cooperation. You have given an example of cooperation, but given the real influence you want to exert to get concrete results, have you allocated sufficient funds to human resources training?
What is your strategy to ensure that all those activities lead to the creation of jobs in a region where it is extremely important to make sure funds devoted to training will create real openings? I will come back on the question of training.
[English]
Mr. Dingwall: On the issue of training, it would be and has been our desire to try to work very closely with various stakeholders. For example, we have tried to work very closely with Human Resources Development on a number of initiatives.
The provincial governments are involved in trying to provide some training to individuals who seek training for job enhancement. More importantly, the private sector, through a variety of different associations, has come to government and said, ``Look, we need more training in this particular area.'' We've responded by saying, ``Yes, but we don't have the kinds of dollars you would expect.'' We've told them that we have less money, and perhaps we could do things cooperatively, agree to a focus in terms of where the training ought to be and work with the various stakeholders in order to try to achieve the results we would want to have.
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The kind of influence one has over those kinds of things is that you're part of a cooperative effort. If you agree on the vision, if you agree on the objective and everybody knows that the money that you have is substantially less than what it was, for instance, in the 1970s and the 1980s, I've found that people are more inclined to be receptive to the ideas and to the approach.
I don't want to give you the impression that it's easy. It's not easy. Regional economic development is one of the toughest businesses in the country. It is very tough, and we take our other stakeholders and our other partners very seriously in terms of their interventions. We try to work with them cooperatively and do the best we can under very difficult circumstances.
[Translation]
Mr. Leroux: I would like to come back to the other departments that you say you want to influence as far as their expenditures and their strategy in this area are concerned. What type of agreements ACOA will want to get into with the other departments that spend money on regional development? Is there any solid base for that or are we only talking about agreements through which you try to convince them of following a given course? Is it all connected to a strategic plan accepted by the other stakeholders? Is there any substance in that? This document contains quite a number of directions. It talks about a new twist, about the technological business, about exportation. What is this strategic plan?
[English]
Mr. Dingwall: It's a very good question, but I'm sure you are aware that the Government of Canada has interdepartmental committees - one example is the committee on procurement - to make sure there is a reasonable fairness in terms of how benefits can be distributed across the country where possible, keeping in mind that the underlying philosophy is the value for the taxpayer's money.
The second example is that under the auspices of cooperation agreements we have with the respective provinces - some of them are pan-Atlantic, some of them are not - we attempt to lever sums of money, but more importantly, to try to arrive at some economic activity to create the kinds of jobs that we believe are needed in Atlantic Canada. The process we go through is quite comprehensive. Consultations are continuously ongoing in terms of priorities and in terms of attempting to achieve the objectives we have set out.
[Translation]
Mr. Leroux: What really concerns me is whether or not there is a concrete strategy. I noted, for example, that when the Federal Development Bureau had a very precise plan, with phases and strategies; we had a very clear document on that. With ACOA, is there such a strategic intervention document? I note, for example, that you have put $1.9 billion in training, especially in the TAGS program which has about 40,000 beneficiaries.
There is training, but one of the major problems is that there are no openings. ACOA has been offered $50 million it never asked for. ACOA had not developped a project taking into account this budgetary offer.
Will there be a consensus on investing in training according to a strategic or leadership plan, as you very concretely announce? Why did you not use the $50 million which were offerred to you for training, when there are major problems there? Why did you not use this money to set up a job creating program?
[English]
Mr. Dingwall: Mr. Chairman, the honourable member is making reference to $50 million for training. We haven't received $50 million for training.
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Secondly, as it relates to the TAGS program, as the member will know, that's a program that is administered by the Minister of Human Resources Development and by the Minister of the Department of Fisheries and Oceans.
There was an element of the TAGS program that provided some moneys for the purposes of economic development, which is in the process, if you will, of being disbursed as it relates to the number of fisherpeople who have been affected by the downturn in the fisheries.
ACOA has set a very clear objective, which has been announced publicly, and I've said in the House that we hope to work in cooperation with all of the various stakeholders in the Atlantic region, and over a five-year period we would hope to be able to create 50,000 private-sector, sustainable jobs in the next five years. That's an objective we have set out.
We believe the track record of the past has been helpful, and with our redesigning of programs and our levering with other government agencies - provincial, federal and municipal - as well as the lead role of the private sector, we can achieve that particular objective of 50,000 jobs over the next five years.
The Chairman: Thank you, Mr. Minister.
Mr. Mitchell from the Liberal Party, please.
Mr. Mitchell (Parry Sound - Muskoka): Thank you, Mr. Chairman.
Welcome, Mr. Minister. I have a couple of questions.
In the Atlantic Venture Capital Fund you've talked about, approximately how many dollars are you looking at being able to bring together, and what do you see ACOA's contribution to that being?
Mr. Dingwall: For the Atlantic Venture Capital Fund, we hope to have initially between $20 million and $30 million for the various participants. I hope it will grow.
One of the key elements of the Atlantic Venture Capital Fund is that we're trying to broaden the base of the various stakeholders of the fund. As you probably know, for any financial institution that has to embark upon, if you will, the due diligence all financial institutions have to, it is an essential ingredient in terms of the success of the fund.
We want to broaden the number of private sector stakeholders on that Atlantic Venture Capital Fund. We want to go beyond just the chartered banks. We started there because we believe they can provide some real leadership, provide some opportunities. Government will play a small role in terms of seed money. But by broadening the base we hope it will be able to grow in terms of its amount, but more importantly, in terms of its economic activity and the leadership role it can provide to an economy of the country that is relatively weaker than others.
I don't want to go back and get involved in history, but you have to recall that in Atlantic Canada we had for many years major financial institutions that made their decisions in the region. Over the last number of years there has been an exodus, if you will, of the decision making as it relates to financial institutions themselves. In point of fact, as I said in the opening, we are the only region of the country that does not have a venture capital fund.
So in answering your question, it would be between $20 million and $30 million initially, but we want it to grow and we want it to grow with other stakeholders, because they help from not only a financial perspective but also certainly in terms of the due diligence. The private sector will run this Atlantic venture fund. Government will not run it.
Mr. Mitchell: Sticking on the financial side for a minute, ACOA is going to be entering into closer cooperations with the business development corporations, with the FBDB. Maybe you could expand a little bit on the initiatives in that area.
Mr. Dingwall: Yes. Members are aware that we went through a pretty exhaustive program review, where all departments and agencies of the Government of Canada examined their expenditures. I think they asked the fundamental question, as we did: Is this the role of the state in a modern economy?
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That was the fundamental question we raised. As a result, to look at the whole issue of overlap and duplication, we are working with the Federal Business Development Bank, in fact as we speak, to make sure our functions in no way conflict with their functions.
Most members know, and I'm certain if they don't know they'll know now, that the functions of the Federal Business Development Bank and ACOA are quite different. Where there might be some similarities, we believe it would be wise to move away from that as quickly as possible so that we can get on with the task of providing economic activity in that region of the country.
Mr. Mitchell: One of the important growth areas for small businesses, and I suspect in Atlantic Canada as well, is the opportunity to trade, to expand your markets overseas. Maybe you could tell us a little bit about what ACOA is doing to assist small businesses in Atlantic Canada to develop their trade, their business, on the export side.
Mr. Dingwall: I think Minister Manley has referred to this in speeches he has given across the country. He's said, and I concur with him, that when it comes to trade, Canada by and large lacks a trade culture.
We have in the Atlantic region some individuals who are quite sophisticated in terms of trade in the international world. But when your fisheries are down, when your resource-sector industries are moving quite strongly now because of the position, if you will, of the Canadian dollar - If we were just to rely on that sector and that sector alone, we wouldn't have too much in terms of economic growth for the future.
As a result, we've tried to capitalize, with the provinces, with the private sector, with associations, to bring together all of the various elements in terms of, first, trade promotion, and second, business development. I just don't mean putting the 15 or 25 people on a plane and sending them away to a particular country to try to sell their products. That's one aspect of it. But there's the whole training of individuals to take advantage. It is the knowledge-based industry in terms of where your product can be sold, whether your product can be sold as a finished product, or not a finished product and assembled somewhere else. That kind of information is needed for the private sector.
Through our partnerships with the private sector and the provinces we have found that we have been able to develop a number of programs, if you will, to facilitate the private sector so that they can penetrate different markets throughout the world, whether it be in Israel, Asia, the United States, or parts of Europe. Those things have been improving, and improving quite dramatically in some sectors. We have found that the leadership from the business community has been rather outstanding on that.
Mr. Mitchell: I have one last question, Mr. Chairman.
I notice as your agency's primary objective - and I was really pleased to see it stated this way - you have job creation. You have established a five-year goal of 50,000 new private sector jobs.
First of all, will we be seeing each year a report on how many you have been able to achieve in the preceding year? Secondly, is the culture of the agency such that every employee there knows their primary objective in operating the agency is to create employment? Is that culture ingrained in the way the agency operates?
Mr. Dingwall: First of all, on the target of 50,000, it is not just a target of the agency; it is a target that goes beyond the agency itself. We want to do that in cooperation with others.
Secondly, your second question, about what is the attitude of public servants and the expenditure of money in terms of the overall goal of job creation, is probably as equally important as the first part. I think their attitude is pretty good. Can it be improved? The answer is yes. Will it be improved? I have every confidence it will be improved.
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Public servants in this particular agency readily recognize that governments don't have the money they did in the 1970s and the 1980s to put big deals together for the purpose of job creation.
The amount of money we provide to small and medium-size business, which is roughly around $32,000, is average in terms of a small and medium-size enterprise, and it's helpful.
But that culture, and improving upon it, is essential. Never mind the agency, in terms of its longevity. What's more important is the culture it can introduce and create in the private sector for them to create more meaningful jobs in our region. That's the objective of the board, president, senior management, and employees of the agency as well. You can probably infer from my comments that this is my objective too.
The Chairman: Mr. White is a new face on the Standing Committee on Industry for today.
You have a new-found interest in industry.
Mr. White (Fraser Valley West): Mr. Dingwall encouraged me to come here.
The Chairman: I'm sure he welcomes you. Go ahead, please.
Mr. White: I'd like to follow up on a couple of questions asked by my colleague. One is with regard to the FBDB.
John O'Regan, the former president of the chamber of commerce in Mount Pearl, suggests that ACOA should look at interfacing its operations with the FBDB. In fact, one could eliminate ACOA and move in that direction if the intent is to eliminate grants and non-repayable loans. I wonder if the minister might comment on that.
Mr. Dingwall: That's certainly a different view from what Mr. O'Regan expressed to me when I spoke at the chamber of commerce in Mount Pearl. He found ACOA to be a very effective tool. In fact, I think he complimented me in terms of our decision to move away from grants to repayability.
On the issue of the Federal Business Development Bank and how we interface, we are working with the FBDB as we speak in terms of a memorandum of understanding so that no duplication of any of the services we offer or any of the services they offer will be in existence. I hope to be able to come back to the House fairly soon with more information in terms of those discussions.
I think it has to be understood that the role of the Federal Business Development Bank is quite different from that of the Atlantic Canada Opportunities Agency. I think it's quite obvious to most that the role of the Federal Business Development Bank, at least up to this point in time, is not as an active player of great significance in the Atlantic region.
Mr. White: I've had discussions as well with many FBDB managers, and they disagree with that comment.
I'd like to go back to the creation of jobs. I think it was last year, Mr. Dingwall, when one of the newspapers in New Brunswick took ACOA to task on the statement that was made about creating 40,000 jobs. When pursuing this to the limit, it seemed the number of 40,000 jobs was based on a survey that ACOA undertook. In fact, there was really no mechanism to determine how many jobs were created, where they were, etc.
I wonder if you could enlighten us as to the 50,000 jobs you're now talking about. Are they real jobs? How do you monitor how many new jobs are being created, and so on?
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Mr. Dingwall: Randy, I think you're asking a very substantive question. On the first part, Price Waterhouse came in as an independent third party and took our numbers. ACOA said in its first five years of operation 42,000 jobs were created. They were an independent third party who came in and did an assessment in terms of what had been created by the particular agency.
I think it's important, since our goal as an agency, in cooperation with others, is 50,000, that we provide that information on a timely basis as we move toward that goal and Canadians can see at first hand whether or not we are being successful. If we're not being successful as an agency over a five-year period, get rid of it.
I've said to the senior officials that we can do this; we can create the kinds of jobs that are necessary in the Atlantic region. I'd like to create 100,000 jobs, or 200,000 jobs, in the Atlantic region. But we're going to work cooperatively with all the various other stakeholders and work toward that objective. I think we can try to provide that information, as my colleague asked about earlier, on a timely basis.
Mr. White: I wish some day we could see the actual creation of those jobs, because the unemployment rate doesn't really seem to increase or decrease much at all in Atlantic Canada. I'm not sure how you can put some tangible number to it and say, ``Look what we've done over these years''.
Mr. Chairman, I'd like to put a motion here, at some point, reducing vote 5 for the Atlantic Canada Opportunities Agency. But I need to -
The Chairman: When I call them, Mr. White, I think that would be the appropriate time to introduce the motion. If you want to use your time up on that now, that's fine.
Mr. White: No, I don't.
Mr. Dingwall: On a point of order, Mr. Chairman, as a former opposite House leader.... Perhaps as a courtesy, if the member is indeed going to present a motion for members, he might share that in advance.
Mr. White: Mr. Chairman, in part III of the main estimates it states that ACOA announced in 1994-95 its intention to work towards investing in business through repayable contributions rather than grants and non-repayable contributions. On page 12 of the estimates it states that ACOA's intention is to make all of its contributions subject to repayability as part of the national effort to reduce government expenditures.
What I'm curious about is this. Of the grants and contributions that are shown on page 34 for 1995-96, we see $218 million of contributions. If you go down further you'll see $91 million for contributions to the Atlantic provinces, and so on. I'd like to ask you what portion of those are repayable for 1995-96. What portion is grants, what portion is non-payable, and so on?
Mr. Dingwall: The decision we had rendered as it relates to repayability was under the action program, which is the major core operations of the Atlantic Canada Opportunities Agency. Assistance to business would be based on repayability. Under the cooperation agreements we have with the provinces, universities, and what have you, there are still grants that will be made to those provinces and to those kinds of institutions and that we believe will be important for the purposes of economic activity.
Are you referring, on page 34, to contributions to the Atlantic provinces under the Canada infrastructure agreements?
Mr. White: I'm asking for all four in that column. I'm trying to determine what is basically repayable and not repayable, by either a non-repayable loan or a grant.
Mr. Dingwall: Basically, $110 million has been paid out on the action program. That's roughly what we're talking about in terms of repayability.
Mr. White: That's about half, then.
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ACOA in the last number of years has been criticized for, I can recall, travel costs at one point last year, living expenses, some bad projects. I just wonder, Mr. Dingwall, how much control you have on that organization and how much accountability they really have to government.
Mr. Dingwall: I think we have a lot of accountability, and I'm going to tell you something that I hope you're going to quote back to me in the House.
Mr. White: I will try not to.
Mr. Dingwall: Regional economic development is a tough business and you're going to have bad cases in the future. I hope they will be minimal. We had bad projects in the past. Public servants and others worked very hard and tried to work very effectively to make sure that at every opportunity the assets of the Crown and the taxpayers' money are spent in the most prudent and cost-effective way.
Yes, there've been mistakes. I can acknowledge that. Will there be other mistakes? Human nature being what it is, yes, I would presuppose that there will be mistakes.
Are there measures in place for the accountability of those expenditures within the corporation? I am confident there are by the mere fact that we have these kinds of meetings to share the information, that this serves as another test, if you will, in terms of the accountability of the expenditures made by this agency for the people in Atlantic Canada.
Mr. Ianno (Trinity - Spadina): I must start off by commending the minister on the change he's brought forward regarding ACOA and its emphasis more on SMEs and the opportunities of creating jobs and so on for Atlantic Canadians.
Taking that into account, I would like to ask a couple of questions. On the Atlantic Investment Fund, I gather you want to work with the banks and their taking a leadership role in the process. Do you by any chance suspect that possibly with this fund there could be more equity positioning from the private sector in mutual funds, etc., that is possibly raised from Atlantic Canadians? With that, is there any potential slip-off from the banks doing some of their usual role by the creation of this fund?
Mr. Dingwall: Let me say several things. The Atlantic Venture Capital Fund will in no way be the panacea for some of the financial problems our small and medium-size businesses have in our region. I want to make that perfectly clear, as I did with the bankers.
We're attempting to do two things: one, to provide an opportunity for some of our small and medium-size businesses to have access to that kind of venture capital, and two, to try to enhance the human infrastructure as it relates to financial institutions. We are not a Toronto, we are not a Vancouver in terms of that human infrastructure as it relates to financial institutions.
In a few years, watch out, Toronto, watch out, Vancouver: we may take you over. But seriously, those two objectives are part and parcel. We want to have more equity by the private sector. We think it is essential that the private sector invest, but it's going to be a long process.
Mr. Chairman, I don't want to raise expectations in a false way that this venture capital fund will trigger in and then that will be the panacea for economic difficulties in the Atlantic region. It will not be. It will help, and I think over a long period of time those kinds of equity questions and equity opportunities can be realized.
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Mr. Ianno: Thank you on that point, Mr. Minister.
The other point I guess relates to what you indicated about a panacea or not being a panacea. As you know, we've been studying access to capital for quite a while in this committee. I guess one of the things that concern me with the banks lending to the corporate sector, and especially the small business sector, is that less than one-third of corporate loans are made to small business. I would assume the same problem or concern occurs in Atlantic Canada.
I was wondering, as minister responsible for creating this opportunity of new jobs and opportunities for the small business sector, if you might be accumulating some of this information so possibly you might be able to encourage the banks you're going to be working with to lend a higher percentage than they currently are doing to the small business sector so in effect at least a lot of the small businesses that do start up with your help will be able to sustain themselves and survive and grow.
Mr. Dingwall: The short answer is yes. We would want to encourage the financial institutions as well as other equity players and other financial players to participate by lending more money to worthwhile projects.
I must say, however, I am not convinced benchmarks are necessarily the best way to go in trying to get more access to capital, because ways can be found to circumvent.
Mr. Ianno: I won't ask you the question that follows on that one.
Mr. Dingwall: I'm open to argument, but I remain to be convinced that benchmarks are the appropriate vehicle to take in order to force the chartered banks to lend more money to small and medium-size businesses. I don't know that yet and I would have to be convinced.
I am convinced, on the other hand, that by trying to work with the banks and providing data such as the committee has sought from that, over a time, I hope a short time, the kinds of concerns we have for small and medium-size businesses will not be those financial concerns we have talked about.
Mr. Ianno: In other words, if I understand what you have said, what we want to do is what we've stated all along in this committee: work with the banks; do not force them; encourage them so that we see progression, and many of our small businesses in this country...whether it's anecdotal evidence or not, at least they're not feeling the pinch as they are right now. If we see where they are at in the lending and if they continue improving that, then in effect we'll all be happy. Correct?
Mr. Dingwall: That would probably be a good summary of where I'm at on that particular issue. I'm sure there are a lot of arguments people would like to advocate for moving away from that, in terms of maybe a strict legislative provision or something of that nature. Again, I remain to be convinced whether or not those things actually work.
The Chairman: You don't want to get Mr. Ianno started on that subject, I'll tell you.
Mr. Dingwall: It is an important issue, though.
Mr. Ianno: I have one question on tourism. I think it could be an effective tool, working with the four governments in the Atlantic region. Could you maybe inform us what type of things you are going to do with a pan-Atlantic perspective in terms of tourism? Also, can you add to that how it differs and how you could possibly tie into the proposed Canadian Tourism Commission?
Mr. Dingwall: First of all, on pan-Atlantic tourism, I'm not going to repeat what I said earlier, but it is quite unique in the Canadian context. Nowhere else in the country is this done. Atlantic Canada was the first to do it. In fact, the new Tourism Commission is going to adopt some of the principles we put into place.
What we've done is we have spent less money. We're focused on markets to try to obtain people to come from other regions of the world into the Atlantic region in order to spend their dollars.
As a country, with the position of the U.S. dollar and the Canadian dollar, we are a very attractive market for U.S. people. We in Atlantic Canada see that as an opportunity. We want to penetrate those markets. We want to be focused in order to get the people to leave the United States and come to the Atlantic region.
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If you get them once, the opportunity of getting them a second, a third and a fourth time is much greater, but it's hard to get that one-time hit. So we're focusing on those kinds of advertisements and that kind of marketing.
But I have to tell you that in the Atlantic region we are still far short on the necessary infrastructure. It's sort of like a chicken and an egg. What comes first? If we don't have the necessary infrastructure to accommodate these travellers, the likelihood of them coming is not great.
The reason is the entertainment dollar today is a very discriminatory dollar. Families plan their vacations as they have never planned them before. They want to go where it's clean, where they have first-class amenities and where they have an opportunity to be outdoors so the children and spouses can have social activities.
We in Atlantic Canada have to build that infrastructure along with the human infrastructure in the tourism sector.
Mr. Ianno: Thank you.
I think that's in the right direction. I wish we had a minister like you in southern Ontario to have the same kind of -
Some hon. members: Hear, hear.
The Chairman: Mr. Dingwall, I think you're being drafted.
Mr. Dingwall: Mr. Ianno, I'm happy to hear that.
Mr. Ianno: You like that, do you? That's my way of saying we need one, too.
Some hon. members: Oh, oh.
The Chairman: Thank you for that endorsement.
Mr. Dingwall, I think you'll appreciate that.
Ms Bethel, you're next.
Ms Bethel (Edmonton East): Mr. Chairman, I have four questions and five minutes. I sure hope we can get through.
Mr. Minister, in the outlook document, ACOA support for women entrepreneurs was highlighted. What initiatives is your agency pursuing, and how will these initiatives be evaluated and measured?
Mr. Dingwall: You said you had five questions. Do you want to give them to me?
Ms Bethel: All at once?
Mr. Dingwall: Sure.
Ms Bethel: Oh, good. This will ensure they get on the record.
Has the agency identified key growth areas and developed strategic plans in cooperation with ACOA's partners?
What measures has ACOA taken to deal with overlap and duplication, and are there resulting savings that can be quantified?
Has there been a consultation process to determine what the small business community believes it needs? I know you're addressing concerns that have been expressed about access to capital, brokering of information services, promoting innovation, improved markets and so on. But what I've heard from the small business community, in Alberta anyway, is the two things they really feel are missing are strategic alliances for business and market intelligence for international markets.
Mr. Dingwall: Some of those questions are intertwined, such as the survey and the needs of small business.
Small businesses have told me that access to capital is very important. They've said get rid of the overlap and duplication, which we have done and are continuing to do when it's pointed out to us. That's been a big part of program review.
Small and medium-size businesses want a one-window opportunity. They want to be able to walk in to a facility and say ``Are there programs available? Are there services that can assist me? If so, what are they, where are they and how can they help?'' They don't want to be driving around town to 19 different locations, whether they are federal, provincial, municipal or a combination thereof. That's what they've been telling us.
As well, small business operations say they need Human Resources Development, not only in the development of their own business plans, but also in enhancing their opportunities for the purposes of export.
With regard to key growth sectors, I've mentioned three. Trade is absolutely essential for us in the Atlantic region. The bulk of our trade is done with the United States, but we have to penetrate other markets throughout the world.
I went to Australia, for instance. Australia does a heck of a lot of trade in tourism with British Columbia, and rightly so. When they come to British Columbia, maybe they can do a Canadian tour as well, and go to the Atlantic. Or vice versa: people who come to the Atlantic can go to British Columbia.
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Trade is very important. Tourism is very important. For every dollar spent on tourism we get $6 back.
The whole high-tech information highway is very important to us, as a region. Let me give you a good example of why it is so important for all regions of the country, Quebec and the Atlantic in particular. The open bidding service of my Department of Public Works and Government Services is an example of the information highway.
It is not something that's written in some document far away; it's an actual example of the information highway. Having it there allows small and medium-size businesses - whether they're in Victoria, British Columbia; Mount Pearl, Newfoundland; or Shawinigan, Quebec - the same opportunity at the same time to find out what is taking place in their government.
With the information highway, the strategic alliances we can build with the private sector and the opportunities to capitalize on those relationships are numerous, as are the economic benefits they can bring to our region. So those sectors are being worked on.
With regard to our programs for women's enterprise, we have supported the Association of Atlantic Women Business Owners, and I have to tell you the success stories there are really wonderful. Grace White's activities in Dartmouth, Nova Scotia, are a good example. Other individuals have gotten into providing information services to levels of government as well as the private sector.
Ms Bethel: What kind of support have you given?
Mr. Dingwall: The same kind of support we would give to other businesses. We give the association money for the purposes of training, enhancing their activities and enhancing their network, which is just as important. Networking is important to small and medium-size businesses, particularly in the Atlantic region. That has seemed to foster a number of economic activities.
Perhaps the president wants to make a comment or two on those four questions.
Ms Mary Gusella (President, Atlantic Canada Opportunities Agency): Thank you,Mr. Minister.
Let me first say that the business start-up rate in Atlantic Canada has been the highest in the country over the past five years. We have worked under the auspices of a pan-Atlantic entrepreneurship agreement with all four provinces. From May 1991 to February 1995, the number of people who said they intended to start a new business within the next two years rose from 7% to 13%.
We have used a number of mechanisms across the region, such as television programs. We have The Leading Edge, which is shown on the networks throughout the region, and we have aired a number of entrepreneurship programs, many of them featuring women. As you know, one of the great incentives for women entrepreneurs is to see other women who can be models for them. Then they can say, ``Yes, I can do that'', and take the plunge.
We have also been working with the provinces in entrepreneurship curriculum development. We have a curriculum under development for every grade level in the school system. At the present time we have 40,000 senior high school students enrolled in entrepreneurship classes. In 1994 we had over 400 students being supported in ACOA-funded student venture programs, creating summer employment either for themselves or for other students.
We've also given start-up entrepreneurship training and counselling through the support of business centres and economic development agencies we have funded. This, we have found, is leading to an increase in the number of new businesses and also to increased employment and a higher survival and growth rate. As you know, one of the key features of women entrepreneurs is that in fact they do have greater staying power once they have started their businesses and are up and running.
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The other thing we are currently planning is a pan-Atlantic entrepreneurship initiative to lead to in-region training and professional development for small business counsellors and economic development practitioners. This is something that, in conjunction with the small business community, we have identified as a gap within our region. Through this program we are going to see a much-needed increase in the enhancement of small business counselling skills in the region.
Ms Bethel: Is there duplication with the provinces?
Mr. Dingwall: No, there's no duplication with the provinces.
Ms Bethel: How are you going to evaluate these initiatives?
Ms Gusella: ACOA in fact has been a pioneer in the use of evaluation tools. We have had evaluations of each of our major programs: the Action Program, the COOPERATION Program and the Fisheries Alternatives Program. We put evaluation frameworks into place each time we introduce a new program.
When I speak about evaluation, I speak about third-party, independent evaluation. That is what has led to the statements we have made with respect to job creation and job maintenance, with respect to the unemployment rate being a percentage point lower than it would have been without our programming, and so on.
Those evaluations were reported on in our five-year report to Parliament and are available.
[Translation]
Mr. Rocheleau (Trois-Rivières): Minister, over the past few months, you arrived at a decision which, based on what the media reported, profoundly upset your Liberal colleagues in the Maritimes. Apparently, some even threatened to leave the caucus and the government party and, I suppose, to join one or the other Opposition parties.
For the benefit of the committee, I would you to remind us the reasons and the rationale of your decision. How do you account for their dissatisfaction which was made public? Where do we stand now with this issue?
[English]
The Chairman: Is that an appropriate question?
Mr. Dingwall: I think it's an appropriate question, but perhaps he could be a little bit more specific about which decision he means.
[Translation]
Mr. Rocheleau: If I remember well, it involved ACOA and a transfer of funds whereby money intended for a certain purpose was used for something else.
[English]
Mr. Dingwall: To help the honourable member, I think he might be referring to the base closures and the funding that was made available.
[Translation]
Mr. Rocheleau: Correct.
[English]
Mr. Dingwall: The member will recall that the Government of Canada has gone through a very extensive and comprehensive review of different programs. Decisions were made and affirmed in the budget in February. That's a budgetary decision that has now passed at least one reading of the House. We might be voting on it again fairly soon.
Second, within our existing budgets, we were able to assist those communities for fiscal years 1995-96 and 1996-97, and we were able to find money as well for a third year. Although made in the budget, that decision stands. Moneys had to be found in other envelopes within the agency in order to provide the necessary funding for the communities that were affected.
[Translation]
Mr. Rocheleau: I wouldn't want to rub salt in the wound, but could you explain to us why your Liberal colleagues were so upset. This decision appears to be justified, except if...
[English]
Mr. Dingwall: Quite rightly, the members who were affected because of the closures of their respective bases wanted to make sure economic activities would continue. The decision that had been made in the budget really only affected them for their third year, not fiscal years one and two. We were able to satisfy our colleagues and the communities that were affected.
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Some of them, I think we have to acknowledge, have been affected quite substantially in terms of job loss and the loss of economic opportunities in their communities. I have been trying to work with them, and the agency in the Atlantic has been attempting to work with them, as well as the Minister of National Defence who, although he had to take a very difficult decision, nevertheless is trying to help in a variety of other ways to make certain we have some form of economic activity taking place in those areas.
[Translation]
Mr. Rocheleau: Does it mean, based on what you just told us, Minister, that these funds could have been the National Defence's but that because of your decision, the funds used were the ones originally intended to finance traditional regional economic development activities? Are we then faced with a situation where the decision maker is not the one digging in his pockets and where the funds provided by an agency were originally supposed to serve other purposes?
[English]
Mr. Dingwall: No. The money will be used for economic development. All of it comes from the Consolidated Revenue Fund.
The Chairman: Thank you, Mr. Rocheleau.
Mr. McClelland: In the forecast for 1997-98, the money available through grants and contributions is to decline from $313 million to $179 million, which really represents the reduction, so it's really net of infrastructure contributions. In the same period of time, just as an example, Western Diversification will go from $173 million to $9 million.
Given that they are two different geographic areas and given the different needs of the various areas, can you give this committee any sense of when all loans by ACOA to all businesses will be made on a repayable basis?
Mr. Dingwall: They are done now, under the action program, as related in my decision of December 7, under the cooperation agreement that was made by the provinces, or that we consummate with the provinces; that we do on a pan-Atlantic approach; that we do with universities; that we do with the Atlantic Women Business Owners. Those kinds of contributions are not repayable.
Western Diversification started earlier than we have, in terms of the repayability. You probably know that. We have embarked upon the repayability. We think we'll be able, over a reasonable period of time, to achieve that money back for the purposes of continuing the program or a program -
Mr. McClelland: Mr. Minister, I ask that because many people who are not recipients of these loans in business competition with people who are recipients of these loans figure that somehow it's not quite fair. I think there are many Canadians who feel that government...and I'm from Alberta, so I have some prejudice to this. The Alberta government just wrote off the last $153 million on its loan.
Somehow people, when they get elected, feel - and I don't know what magic transformation we undertake - they're venture capitalists. Usually it's taking tax money from individuals, taking it into government, and then regurgitating a small portion of that for people to go into competition with people who are already in business.
The rationale for the question is that if these regional development programs were to be, over a period of time, sunsetted with the specific intent to be folded into the FBDB, would we not then have a much fairer platform or foundation for getting into business and competing with the banks?
Mr. Dingwall: You ask a question about the Federal Business Development Bank. I don't want to be unkind to the questioner, nor do I want to be unkind to the subject matter, but surely to God, those of us in the Atlantic region have every right and every expectation that the Government of Canada will try to help one of the poorer regions of the country. The Federal Business Development Bank does less than 8% of its work in Atlantic Canada.
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Mr. McClelland: That was then.
Mr. Dingwall: May I finish?
We are now embarking upon a relationship with the Federal Business Development Bank to see whether there might be duplication. I've heard some of those concerns being expressed by others in the private sector. We'll examine that.
The fundamental question you have to come back to - and I think you're touching on it, indirectly if not directly - is whether there is a role in a modern economy for the state to play with regard to regional economic development. My answer to that question, when I stood on the platform for election in 1993, as I did in 1980, still remains today. Yes, there is a role for the state to play in a modern economy, as it relates to regional economic development. Has it changed? Yes, it has changed. How has it changed? It's working more cooperatively with the private sector, with substantially less money, on a focused approach, operating by and large with business principles to achieve the kind of public policy objectives we believe to be important.
Mr. McClelland: I accept that.
The economic activity or the investment opportunities of ACOA over the next three years are projected to decline by roughly one-third, yet the staffing is going to decline by roughly 10%. The 10% staff reduction is made up entirely of the people who are doing the jobs; there's not one executive or management job reduction.
Mr. Dingwall: That is something we will be reviewing as we finish up this fiscal year, both in terms of the corporate side as well as the overall number of employees in the agency itself.
I have to tell you that because of budget reductions one has to automatically assume there will be a reduction in person-years. Fifty years have been allotted for ACOA and a 28% reduction has been allotted for Enterprise Cape Breton Corporation. But there's no question, we have to look at the corporate side of the agency to make sure it reflects, if you will, the amount of money we have for the purposes of programming.
However, I remind you that ACOA is not only in the business of providing money for the purposes of an action program to small and medium-size businesses. It has a much broader role than that, some of which I referred to in my speech.
Mr. McClelland: The 50 full-time equivalent doesn't match the long-term.... It is not a big difference, but there is a difference.
Mr. Dingwall: I recognize this.
The Chairman: Mr. Discepola, please.
Mr. Discepola (Vaudreuil): My intervention is rather brief, Mr. Chairman, because bothMr. McClelland and Ms Bethel touched on the two points I wanted to bring up, but I did not get quite the answer I was expecting.
In measuring the success of either ACOA or the regional development program, you seemed to reply, in your response to Ms Bethel, that the main measurement is in the amount of job creation. I have a hard time with that, because everybody uses that as a measurement.
One of the problems I found from a municipal perspective was that municipalities were into industrial development, regional governments were into industrial development, provincial governments were into industrial development and prior to the election, in our area alone we had the provincial government introduce a $300-million industrial development program for the region of greater Montreal and its surroundings, yet in the prior year, the federal government had introduced a $100-million injection fund when they had a minister responsible for the Montreal area, only for the island of Montreal.
So when you say that ACOA is maybe coordinated with its municipal and other bodies, I have a hard time thinking that maybe there isn't an awful lot of duplication. If the sole measurement criteria is job creation, how do you know those jobs wouldn't have been created automatically by the private sector?
My second point is the point of Mr. McClelland. You announce in your estimate that we're going to be reducing roughly $173 million over three years. But the point of the matter is, $133 million of that is in your reduction of grants and contributions. So I have a hard time, when I see that we have less money to administer, accepting that we're only reducing the bureaucracy by 10% or 15%. That's the criticism I always get from my constituents, that we have less and less money, so why do we still keep the same number of staff?
Maybe you can answer both questions.
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Mr. Dingwall: On the second point, as I think I already said to Mr. McClelland, we are reviewing that. At the end of this fiscal year we'll be in a position to respond to it more definitely.
But don't get hooked, or rather, remember, that ACOA does much more than just providing financial contributions under the ACOA action program. It does much more, in terms of economic leadership and in terms of our partnering with the private sector, other financial institutions, academic institutions and municipalities.
On your first point, I think you're right, but the reality we've gone through in Atlantic Canada - Just to give you an example, there were 69 different individual agreements in the Atlantic provinces. What we're attempting to do is to cut them down to four, one with each of the provinces.
In Nova Scotia, they had umpteen different economic zones, overlap of provincial, overlap of municipality, overlap of what the federal was doing. We've tried to do away with that. We're down now to 13 different economic zones to try to streamline our approach with the province, as a stakeholder, with the municipalities.
In my own district, for instance, we had in excess of 69 different economic development groups trying to create jobs. We got rid of them all. We now have one.
Are some of these other groups still in existence? Yes, they're still in existence, but with no funding from the Government of Canada, none whatsoever. We've put our money into a small, specialized group that will cover eight municipal units over a geographical mass of about 125 people. They will provide the kinds of economic leadership. So there's cooperation, there's a cutting down of overlap, there's a cutting down of duplication.
We still believe in Atlantic Canada. The best test is not what's on the stock market. It's not how many cars you drive; it's whether you're working. That's the best test for us. And we've gone out to get third-party evaluations to find out whether or not our programs and what we do facilitate and achieve that goal. We have found so far, by these independent third party evaluations, that they do.
The Chairman: Mr. Discepola, I'm just watching our time. I know there'll be a vote called for 5:15 p.m. in the House. Do you have a last comment?
Mr. Discepola: Just a comment.
I share your vision that the federal government has a responsibility and a role to play in regional development. I'm just wondering whether we are the best level at delivering that service.
Mr. Dingwall: Would you like me to answer that?
The Chairman: Yes, I'd love you to answer that, from Atlantic Canada's point of view.
Mr. Dingwall: The answer to the question is in some sectors, yes, and in some sectors, no. Do you think for one moment that the Canada infrastructure program was delivered by the federal government? The infrastructure program, one of the most successful economic levers in this country, was delivered by who? It was delivered by local municipalities who went and got their engineers; they got their architects; they had their local committee meeting; they checked with another engineer here, went to their respective provincial governments and said this is what we want to do here; this is what we want to do there. They were the best vehicle to deliver that particular program.
But I don't think, my friend, when you're dealing with the Chinese, or when you're dealing with the Asians, that the best group to deal with them would be the local municipality. I would think that the weight of the Government of Canada, aided and abetted, if you will, by External Affairs, International Trade, the Canadian Commercial Corporation and the private sector, would be the best vehicle to deliver that kind of program on the international stage. So there's a give and take in terms of who can do best.
I can give you the same argument as it relates to housing policy some day. Not everything the federal government does, they do well. Some other levels of government might be able to do it.
But equally so, surely to God the Government of Canada can deliver and administer some programs better than some other levels of government.
The Chairman: Mr. Dingwall, I'm going to jump in here. Our time is ticking.
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Mr. Murray, please.
Mr. Murray (Lanark - Carleton): Mr. Minister, I believe it was last December that you announced ACOA was moving towards repayability, and of course that became a reality in February. I'm just interested in the reaction of business people in Atlantic Canada when that change was made. I'm sure the response you had from many was that they could understand why it had to be done, but in real terms, in dealings with individual businesses, have you noticed a change in the relationships you had with businesses as a result?
Mr. Dingwall: That's an interesting history, because on the whole issue of repayability, I had raised this with the executive committee of the Atlantic Canada Opportunities Agency and the president. Many months before that, we had talked about it and we wanted to move on it. I talked to a number of people who told me it couldn't be done; you can't do it; it will choke us; it will cut off our region; it's not the right way to go.
So I embarked upon very aggressive consultations with the different provinces, with the private sector groups, with the Federal Business Development Bank, the Atlantic Provinces Chamber of Commerce, individual chambers of commerce, the different sectors. We had consultations broadly based. What we found was quite different from what others had said: look, move off the grant and go to repayability for the purposes of financing small and medium-size businesses; but if you do that - this is the other thing the media don't report, and I hope they do report it - be in for the long term; don't choke us off here in Atlantic Canada by moving off the grants; be into the repayability, but be into it for the long term...because if you're into it for the long term, it gives them an opportunity to foster their economic plans and their objectives, and hopefully they can be realized.
That's the history of it.
Mr. Murray: You mentioned in your opening remarks the work this committee has done in trying to increase the amount of capital available to small businesses. We put a lot of time and effort into that and at the end produced a report. We're still waiting to see that increase in the availability of capital to small businesses. It's a very difficult thing to do.
But I was struck when I was listening to your remarks.... I just jotted down some of the words: ``harmonization committee'', ``coordination'', ``cooperation'', partnerships''; and then ``strengthening ACOA's economic research and policy capacity''. I thought in research into regional development Dr. Donald Savoie had written everything needed to be known about it, perhaps. I'm not sure why we need a continuing effort on research into regional development. It may be as a very minor part of ACOA's business.
All I'm trying to say is that...and you've answered this in answer to other members' questions: the fact that ACOA doesn't just provide capital to businesses. But really, I'm sure the problem for most small businesses in Atlantic Canada is access to capital, if they have the same problems as people in my riding have in eastern Ontario. I'm just questioning whether we need to have all these committees and all this coordination and more research when it seems it's a much more fundamental problem.
Mr. Dingwall: Two things. I don't think you would dismiss out of hand what Mr. Osborne and Galbraith have written about reinventing government. We have made some monumental moves, if you will, in the Atlantic region. Having the pan-Atlantic tourism initiative was not easy.
It's a whole new approach to how we governed in the 1970s and the 1980s. In the 1970s and the 1980s you'd take the cash and you'd run down and you'd say, here, solve the problem. That's no longer the case. People don't have the money. Provincial governments don't have the money. Federal governments don't have the money. Municipalities don't have the money. So we're on new ground in the public-private partnership that has to take place in a poorer region of the country.
It's helpful in the evaluations that we have of our various programs and the various directions we want to go in. We still have to have the statistical data necessary for how we perform in relation to other regions of the country.
Secondly, about access to capital, yes, access to capital is a major problem for small and medium-size business in Atlantic Canada. Human resource development is equally important. I don't want to downplay that. Access to capital, the Atlantic Venture Capital Fund, will be very helpful. It will not be a panacea.
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Over a long period of time, hopefully we can develop other stakeholders, more equity, etc., and develop that private sector in the Atlantic region. With its action program, ACOA also provides real and immediate assistance to small and medium-size business in terms of access to capital.
As I said earlier, the average amount is $32,000 for small and medium-size businesses. You'll find examples where it's been higher, but that has been the average in the past. We're confident that with cooperation, strategic partnerships, and alliances, we can benefit.
I am reassured by that for a variety of reasons. First, I think we're seeing results now in some sectors of the Atlantic economy. The second reason is the OECD.
Look at Japan and see some of the interventions they have made. I came back from a conference where the former vice-president of the Bank of Tokyo, who is also the chairman of the Economic and Development Review Committee of the OECD, said clearly that strategic alliances, private-public partnerships, and cooperation were why Japan in many of its sectors is booming. He can't understand why those of us in the North American continent, the western economies, are not doing more of that.
We're attempting to follow in that kind of a direction.
The Chairman: Thanks.
I'm going to allow one short question to Mr. Leroux.
[Translation]
Mr. Leroux: Mr. Dingwall, I would like to come back to the training program and the $50 million. From the beginning, I have heard nothing but speeches. I do not get the feeling that there is really an aggressive leader in all this. I hear someone who likes to talk a lot, who is into consultations. It is as if we had identified a new economy, and we started to talk about it and we have discovered a new vocabulary.
You are talking about a region that needs help. That's what you said. There is TAGS, for $1.9 billion, 1.6 of which come from HDRC, and $300 million from Fisheries and Oceans Canada.
In May of last year, ACOA received $50 million for regional development. I asked your earlier if that money had been used, if any programs had been set up, etc. You said: ``Well, I hope to come to an agreement with...''
Fifty million dollars were granted to a region that badly needs the money. Since those $50 million haven't been used in the past year while the needs are so obvious, I am wondering if we are not witnessing an example of the new semantics where, in fact, your leadership would be a partnership with the Department of Finance in order to ensure that those $50 million do not get spent and can be allocated to compensate for the $750 million shortfall in ACOA. Might that be the reason why those $50 million are not being used?
[English]
The Chairman: Mr. Leroux, I'm going to interrupt here. I'm going to ask you to keep relevant; put a question.
[Translation]
Mr. Leroux: My question is perfectly relevant. There are $50 million that ACOA hasn't used.
[English]
The Chairman: All right.
[Translation]
Mr. Leroux: What could be more relevant than that?
[English]
Mr. Dingwall: Mr. Chairman, the honourable member is quite right. The TAGS program, which is administered by my colleague, the Minister for Human Resources Development, in the Department of Fisheries, announced a $1.9 billion program in terms of fisheries readjustment.
The moneys that have been earmarked for regional economic development have not passed Treasury Board, and have not come to the agency. We are presently examining the TAGS program in its entirety in terms of its effectiveness.
I don't want to comment in terms of what another committee might be doing. I understand the fisheries committee is seized with that, but in due course I would suspect that the government will be making a definitive decision as it relates to that amount of money.
I'm telling you, however, that we don't have the $50 million transferred to us under the TAGS program. There are ways in which we believe we could effectively spend that money in the Atlantic region and contribute significantly in terms of the economic activities in our region, but thus far the decision has not been rendered.
The Chairman: Thank you, Mr. Leroux.
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Mr. Dingwall, I want to thank you and Ms Gusella on behalf of my colleagues. I'd like to thank you for your personal appearance.
As you can see by the group that's been assembled, your presentation has attracted some great interest. I want to congratulate you again on behalf of our committee.
I didn't hear many questions on the outlook document, but we had one. You have a very powerful appreciation for our region, and we thank you on behalf of all our colleagues.
We shall now vote on the main estimates.
Mr. White, you have a motion to amend vote 5.
Mr. White: Yes. I move that vote 5 for Atlantic Canada Opportunities Agency, in the amount of $313,261,000, be reduced by $109,358,000.
The Chairman: Are there any questions?
Mr. White, do you want to explain that further?
Mr. White: Do you mean the reason for the amendment?
The Chairman: Yes, please.
Mr. White: Mr. Chairman, that is the amount that, as near as we could figure, represents non-repayable loans and grants in ACOA.
The Chairman: You have the amendment before you. Does the motion carry?
Motion negatived [See Minutes of Proceedings]
ATLANTIC CANADA OPPORTUNITIES AGENCY
- Atlantic Canada Opportunities Agency Department
Vote 1 agreed to on division
Vote 5 - Grants and contributions $313,261,000
Vote 5 agreed to on division
- Enterprise Cape Breton Corporation
Vote 10 agreed to on division
The Chairman: Shall I report these votes to the House?
Some hon. members: Agreed.
The Chairman: The committee is now adjourned.