[Recorded by Electronic Apparatus]
Wednesday, April 9, 1997
.1619 
[English]
The Vice-Chair (Ms Judy Bethel (Edmonton East, Lib.)): Members of the committee, while we don't have a quorum, we can start to hear witnesses. The meeting is called to order.
We have the pleasure today of hearing from the Department of Industry. We have with us, from the information and communications technologies directorate, Keith Parsonage and David McAllister. Welcome, gentlemen.
Mr. Keith Parsonage (Acting Director General, Software, Advanced Networks and New Media Branch, Information and Communications Technologies, Department of Industry): Thank you very much for the opportunity to give you an overview of the information technology industry in Canada and its contribution to the Canadian economy.
I presume that all members have a copy of the material.
.1620
The Vice-Chair (Ms Judy Bethel): Thank you very much.
Mr. Parsonage: Information technology is a very important contributor to Canada's information -
Mr. Osvaldo Nunez (Bourassa, BQ): What's happening?
Mr. Janko Peric (Cambridge, Lib.): What's happening? You know very well, Mr. Nunez. All month you didn't have time to hear witnesses. Now suddenly you're going to hear them.
The Vice-Chair (Ms Judy Bethel): All right, can we proceed, please, with the business of the day.
Mr. Parsonage: Information technology contributes to Canada's economy in, I think, three distinct areas. First of all is its contribution to the development of innovative products and services - products, for example, such as WordPerfect, which Michael Cowpland of Corel has. It's also important for the development of the infrastructure for the information economy, and we hear everything on a day-to-day basis about the World Wide Web and Internet and the information highway. Third, and most important, is its impact in providing enabling tools to all other sectors of the Canadian economy, so all their industries and services can become more competitive both domestically and internationally.
Canadians have many achievements to be proud of in the information technology and telecommunications industry, from about 122 years ago when Alexander Graham Bell invented the telephone near Brantford, Ontario, down to the recent launch of the mobile satellite services in 1995. Before you, on the third page of the deck, is a whole listing of these achievements, and I'll let you peruse some of these at your leisure. But we have made very substantial inroads internationally in terms of what we've contributed to the development of information technology and telecommunications.
Canada is by no means a slouch worldwide in terms of its use of information technology. We rank only second in the G-7, behind the U.S., in our use of information technology. Currently 48% of Canadians use computers at work for a wide variety of tasks.
Another example is SchoolNet, an initiative designed to connect every library and school in this country to the Internet. Canada is a leader there. We will actually accomplish this innovative challenge well before the United States will do so.
Another innovative initiative in the field of information technology is our student connection program, administered by Industry Canada, which supports students to help up to a target of 50,000 small and medium-sized enterprises to use the Internet, the World Wide Web. And when they're on that World Wide Web, they'll have the opportunity to visit Strategis, Industry Canada's business site, the largest business site in Canada, which receives already today over a million accesses a week for information on business-related products, market intelligence, and technology developments.
A lot of Canada's science and technology initiatives are designed to assist the Canadian information technology industry. For example, we have the Technology Partnership Canada fund, which will be up to $250 million a year at the maturity of its development.
We also have the National Research Council, with its industry research assistance program.
We have fourteen national centres of excellence, five of which have a specific focus on assisting the information technology developments in Canada. These are university-led research organizations.
We have the most recently announced Canada Foundation for Innovation, with $800 million over five years to modernize the research infrastructure in our universities, and a lot of that will be in the field of information technology.
Most recently, the Information Highway Advisory Council met last week to finalize its recommendations to government here in Ottawa. The IHAC is one of the key initiatives designed by this government to support the instalment of the information highway in Canada and its roll-out.
Yesterday, announced at the regional innovation forum here in Ottawa were 43 projects involving $16 million worth of funds under the CANARIE program for information technology application development projects. CANARIE also has a national outreach program to support awareness about the Internet and high-speed networks, and it also supports a national high-speed test network.
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Across Canada, information technology companies can be found from coast to coast, from a company such as Instrumar sensor technologies in St. John's, Newfoundland, out to Victoria B.C. In many cases distance, with the use of the information highway, is becoming irrelevant to the conduct of activity. You can see on one of these charts I have before you here the six major clusters of activity that take place in Canada: Calgary, Vancouver, Kitchener, Waterloo, Toronto, our own local community here in Ottawa, and Montreal.
Canada has many world-class, world-renowned information technology companies in the telecommunications equipment field, such as Northern Telecom, Newbridge Networks, and Mitel, for example. On the software and computer services side, we have companies with which you are probably familiar, such as Corel and Cognos. Without the technologies developed by Alias, we probably would not be able to see films such as Jurassic Park or The Mask.
I would like to spend a few minutes on this next slide because I think it's very important and has a very telling message. The information technology industry was worth more than $70 billion a year in 1995. Its contribution to our gross domestic product was over $40 billion. In 1995, it represented 8% of gross domestic product, which is up from roughly 6% in 1990. Just as a comparison, that compares to roughly 3% that the aircraft and motor vehicle industries combined contributed.
Annual revenue growth in the period 1994-95, the latest year for which we have statistics available, was 11%. That compares to a compound average annual growth rate of 9% since 1990. The key sectors are telecommunications services, computer services, telecom equipment, computers, peripherals, etc.
On the next slide, I want to demonstrate to members just how the industry contributes to employment and gross domestic product in Canada. That's jobs and growth. The information technology industry in 1994-95 created more than 60,000 new jobs in the Canadian economy. Of those, 24,000 occurred in the software and computer services area, which is where you find a lot of the new, emerging multimedia companies too.
During the period from 1990 to 1995, IT employment increased at an average annual rate of near 4%, but it was 17% for the industry as a whole in the period 1994-95.
I draw your attention to the chart on the slide where you look at the software industry. Its employment growth from 1990 to 1995 was 11.5%, compared to the Canadian economy's employment growth at 0.5%. I look at the computer industry's average annual growth rate in 1990 to 1995, which was almost 30%, compared to that of the Canadian economy at 1.5%. Clearly, it's a very significant contributor to both growth and job creation in Canada.
On the next slide, I would like to share with you some other sectoral statistics for comparisons. You can see the information technology industry with an average annual growth of 4% employment in 1990 to 1995, and its GDP contribution and also growth rate of roughly 8% in that period. Compare this with that of forestry and logging, as well as the mining industry, which actually had a significant negative overall growth rate, and to the manufacturing industry, which, although it had a negative growth rate, did have a positive growth of roughly 2% in gross domestic product. In these comparisons with the IT industry, the IT industry has done very well.
I think it's very important to point out that there are very significant differences among the subsectors of the industry. I wanted to focus on two in particular.
One is the computers and peripherals industry, which employs approximately 14,000 workers in 146 establishments. This is an industry that is highly automated and has had a tremendous growth rate.
In comparison, if you look at the software and services industry, you have more than120,000 employees in more then 14,000 firms. If you do the very quick mathematics, you'll see that the average size in that industry is fewer than 10 employees per firm. These are very small, dynamic, entrepreneurial, innovative companies, and they are working with very limited resources.
.1630
It should also be noted that these highly dynamic industry participants are very export-oriented. I'll turn to that in the next slide.
Information technology exports increased by 22% in 1995. They now contribute to 7% of all of Canada's exports. Exports in the areas of software development and computer services tripled in 1990-95. The top 100 software companies export over 83% of what they produce.
I have with me a listing of Canada's top 100 software companies that came from The Financial Post, which was done by a local information technology firm. When you get below the 100th software company, you're down to revenues of about $2 million and an average size of employment of roughly 20 employees. You still have another 13,950 firms out there in the industry.
Another important point to note is that IT imports have been increasing in the period of 1990 to 1995. This represents a challenge in other sectors of the economy, as well as the IT industry, to find the people with the necessary skills not only to develop information technology products but to apply information technologies to other parts of the economy. This is the enabling effect of information technology in helping other industries become more productive and competitive.
It's also important to note the economic contribution this industry makes in terms of its performance of research and development. The IT industry performs 40% of all of Canada's industrial research and development. Some of the top-ranking spenders in this industry are Northern Telecom, IBM Canada, and Ericsson Communications, to just give some examples.
I apologize for the dates on this next slide. The dates are for 1986 and 1991, which are the latest I have available, but I have no reason to believe that the trend or the results would be significantly different if I had access, at the moment, to 1996 data. This looks at the issue of the skill sets that are being employed in this industry.
In the computer services area, which includes the software multimedia industries, a lot of these small, innovative companies showed that more than 50% of their employees had a university degree. I only have data for 1991. Compare other sectors of the economy. For example, in motor vehicles it's down around 10%.
The next slide has 1993 data. It's even more dramatic when you look at those personnel who are engaged in research and development in our industry who have more than one degree. In the telecommunications equipment sector, almost 75% of the industry, the people who are doing research and development have multiple degrees. These are people who do 40% of Canada's industrial R and D.
Go down to computers and peripheral equipment. Again, in computer software and new-medium services, about 65% of the people who do R and D have more than one degree.
I think we're fortunate in Canada that we are able to find these people with these multiple degrees to do our research and development. That, for the most part, is due to the fact that Canada has the highest rate of post-secondary enrolment in the world. This is an index taken from the World Competitiveness Report in 1995, showing Canada at 100. Our neighbours in the U.S. are ranked at 76. The United Kingdom is at 28.
There are some drawbacks, though. We are obviously a target for companies like Microsoft that look to the quality of the graduates from our universities and community colleges.
The recognition of the strength in education also extends to other parts of North America. For example, in our electrical engineering programs in North America, the U.S. Gourman report ranked Canada's electrical engineering programs in universities. Nine of them were in the top 20 in North America, and 19 were in the top 40. This is quite a disproportionate balance to what one would expect to find. Again, our universities have done an admirable job in turning out quality labour. In 1994, for example, there were 22,000 students enrolled in engineering, math and the applied sciences, with 21% at the graduate level. This is serving an industry that generated 60,000 new jobs in 1994-95.
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To summarize for the members here, I'd like to say that the Canadian information technology industry is highly competitive. It is globally oriented, with many small, dynamic entrepreneurial firms struggling with limited resources to make their niche in the world. The industry is a significant contributor to jobs and growth today, and certainly for the foreseeable future. Skilled human resources are very much a key to its success.
Thank you.
The Vice-Chair (Ms Judy Bethel): Does that conclude Industry Canada's remarks?
Mr. Parsonage: Yes.
The Vice-Chair (Ms Judy Bethel): Mr. Nunez.
[Translation]
Mr. Osvaldo Nunez: Just like any government officials who come here to sell us what is being achieved by their own departments, you have delivered us too optimistic a presentation. I would have liked to get a more balanced view which would have made us aware of the actual problem. All you told us is that everything goes all right in Canada. Yet, we do have a problem. While business people are saying us that there is a shortage of skilled labour in the area of high technology, for you, all is for the best in the best of all possible worlds. I don't understand.
There must actually be a problem, since the unemployment rate is at almost 10% in Canada and in Quebec. We have thousands of young people who would like to work and we have thousands of graduates who are unemployed. I have noted, in the course of our recent hearings, that companies do not put much money into training and that the departments of Citizenship and Immigration, of Human Resources Development, and of Industry had not anticipated the problem that we are experiencing today. There are no indications that timely action has been taken to address those problems.
If everything is going so well, tell me why we have all those problems today. For example, in 1994, we had 20,000 students enrolled in engineering, mathematics, and applied sciences. Though you don't have more recent numbers, could you tell me why only 21% of them did graduate. While so many of our young people, including university graduates, are trying to find jobs here in Canada, how come do we have to resort to foreign workers?
[English]
Mr. David Mulcaster (Director General, Manufacturing, Investment and Market Development Branch, Information and Communications Technologies, Department of Industry): If I may, I'll try to answer that question. I think it's evident that there is a very high demand for certain kinds of skills in industry. There is a very high rate of enrolment in engineering and other applied sciences in Canada. Many of these students find jobs outside the country. There is, in fact -
Mr. Osvaldo Nunez: Why?
Mr. Mulcaster: There are many reasons. Some of these students are in fact foreign students in the first place. Secondly, there are a lot of job opportunities in other countries such as the United States. Canada is not the only country that has a very high growth rate industry. There are very good job opportunities in the United States.
Mr. Parsonage: I think the point here is that this is an international industry. Canada competes in an international industry for both the sale of its products and services and also for its labour.
Mr. Mulcaster: It is uncertain as to what is the actual level of unemployment among university graduates coming out of engineering and technical courses. There are many anecdotes of students who say they couldn't find jobs, but we hear just as many anecdotes of students who find jobs very quickly. We're not quite certain as to what some of the inconsistencies are in the labour market.
We're trying to show that this is a very rapidly growing industry. It has a very high demand for skilled and educated labour, but there is no doubt that there are some inefficiencies in the labour market. We don't know what all the reasons are.
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[Translation]
Mr. Osvaldo Nunez: Would you have more recent numbers? You are talking about 1994. Did things change since then? Do we still have over 20,000 students enrolled in those fields in our universities?
[English]
Mr. Parsonage: No, I'm sorry, those are the latest statistics we have at our disposal.
Mr. Osvaldo Nunez: Why don't you have more recent statistics?
Mr. Parsonage: We are not responsible for the collection of those statistics per se. We gather them from various sources.
Mr. Mulcaster: One of our primary sources of statistics is Statistics Canada. There is always a time lag in the statistics they publish. So we tried to use the most recently available statistics in our presentation.
[Translation]
Mr. Osvaldo Nunez: Would you have statistics concerning the number of foreigners who are working in that sector in Canada?
[English]
Mr. Mulcaster: Yes, we have quite recent statistics. As a matter of fact, we make a reference to those statistics elsewhere in the presentation. These are your labour force statistics.
[Translation]
Mr. Osvaldo Nunez: I am talking about foreign workers.
[English]
Mr. Mulcaster: No, we do not have them.
Mr. Osvaldo Nunez: Could you find some figures?
Mr. Parsonage: I don't know whether that data is collected. Immigration would perhaps be in a better position to respond to that.
[Translation]
Mr. Osvaldo Nunez: Do you have an opinion on what the departments of Human Resources, and Citizenship and Immigration should do to improve that situation? Do you support the suggestion that the procedures relating to the entry of foreign workers in Canada should be accelerated?
[English]
Mr. Parsonage: I don't think we have an opinion on that, sir.
The Vice-Chair (Ms Judy Bethel): Pardon me, but I would have thought you would be defining the need from the department's perspective.
Mr. Parsonage: The lead from our department's perspective is to identify the issues that are of concern to the industry and, for example, to bring those to the attention of Human Resources Development Canada. We've been working with them for many years. This has led to the formation of the Software Human Resource Council, which is the focal point for trying to address this particular issue. I believe Mr. Swinwood had the opportunity to present to this committee before.
Mr. Mulcaster: Perhaps I can take it from a different perspective. We do receive submissions and representations from both companies and industry associations on a rather consistent basis. In fact, these companies and these industrial sectors face highly qualified personnel shortages in certain fields. We have received many representations over the last several years on a consistent basis.
The problems identified by firms and by industry associations vary from everything from allegations that there is a tremendous brain drain to the weaknesses in the university system and the community college system for producing the kinds of skilled people they would like to have.
We as a department have worked on several initiatives with the industry, with the associations and with HRDC to examine those issues. We have tried to define what is in fact the issue at stake and to begin to see what kinds of options there are between Industry Canada, HRDC and industry to address certain issues.
Mr. Parsonage: For example, through Statistics Canada we are in the process of looking at a specific study on some of these HR issues. A survey is in the process of being sent out to industry on the issues of recruitment, retention, compensation, education and training, and the availability of skills to look at what some of these challenges really mean and at just how real they are.
The Vice-Chair (Ms Judy Bethel): Mr. Nunez, take your time. Are you finished?
Mr. Osvaldo Nunez: Do I have another minute? Okay.
[Translation]
While accepting that companies import foreign workers, could we not impose on them certain conditions, for example, require that those foreign workers transfer their knowledge and help train our local workers? Those foreign workers could work with young people and transmit their knowledge to them. Would you agree on all that?
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[English]
Mr. Parsonage: I don't know whether that is feasible or not. I would refer back to the fact that we are dealing with an industry that primarily consists of very small companies with an average of less than ten employees and very limited resources. They are struggling to compete internationally.
[Translation]
Mr. Osvaldo Nunez: If those companies have so few resources, why should they resort to foreign workers? It is very expensive for companies to import foreign workers. It would certainly be less costly to train our own workers instead of recruiting them abroad.
[English]
Mr. Mulcaster: There are two aspects to your question, Mr. Nunez. First, you're quite correct that it is very expensive for companies to import highly skilled personnel. A number of the companies I've dealt with have done some costing for recruitment and retention of employees from other countries. It costs an average of $150,000 to $200,000 per person to recruit, move and settle a new employee from outside the country.
It costs a lot less, you're quite right, to hire somebody locally who comes out of École Polytechnique in Montreal, for instance, or from Ryerson and the University of Toronto in Toronto. So there's a certain incentive by companies to look for Canadians first, simply from a cost perspective, if for no other reason.
As for whether or not there's an opportunity for foreign professionals to transfer technology, to transfer knowledge to help train current employees of companies, I really don't have an opinion about that. That would be a natural process, though, but I don't know whether or not it's an explicit policy of a company or companies.
The Vice-Chair (Ms Judy Bethel): Thank you, Mr. Nunez. Ms Meredith is next.
Ms Val Meredith (Surrey - White Rock - South Langley, Ref.): Thank you, Madam Chair.
Would it be fair to say that Canada has actually been a leader in some of the technological developments over the last hundred years?
Mr. Parsonage: Yes, I would say so, given the list of achievements we've had and the firsts that we've accomplished.
Ms Val Meredith: Would you also say that Canada is a leader in the telecommunications field worldwide?
Mr. Mulcaster: It certainly is. A number of independent studies indicate that the technologies, products and services that Canadians sell abroad are competitive with any produced in any country.
Ms Val Meredith: There is one thing that concerns me and I feel from yesterday it also concerns most of the committee members. If Canada is a leader in telecommunications and if Canada is a leader in intellectual development, if you want to call it that, why are we going to developing nations for people who have the skills that apparently you can't find in Canada? How can we as a country become a developing country from intellectual property? We're drawing from China, Taiwan, Hong Kong, India, Pakistan, Romania, Morocco, Poland, Algeria, the Philippines and Yugoslavia. That's what we are having a hard time dealing with here.
If Canada is leading in technology worldwide, why don't we have the people trained here in Canada? Why are 1.5 million people unemployed? I know for a fact in British Columbia there are biochemists, university graduates, who are unemployed, who are not in a meaningful employment that respects their university training.
Mr. Parsonage: It is certainly fair to say that Canada is a leader in telecommunications, a leader in many areas of information technology. Canada is not a leader by any means in all of them. In order to compete in some of the markets it does need some skills that may not be represented here in Canada.
Ms Val Meredith: What is your department doing to ensure that Canadians are getting support and training? Is your department working with Nortel, Mitel and all these other companies to see that in the next two, three, four, or five years there are Canadians who can fulfil these requirements?
.1650
Mr. Parsonage: We've been working very closely through a variety of initiatives and particularly through our centres of excellence and through the new Canada Foundation for Innovation. We want to put in place, particularly between the universities and industries, mechanisms and collaborative arrangements that facilitate the development of the skills and the transfer of the skill sets to these industries.
Ms Val Meredith: In layman's terminology, so the person who's outside of government can understand, are you putting research money into studying the problem or are you putting money into training programs?
Mr. Parsonage: We are not putting money into training programs; that is not the mandate of our department.
Ms Val Meredith: So basically the Department of Industry is not putting money into training or seeing that Canadians are trained to fulfil the requirements of the industry that's having problems?
Mr. Mulcaster: That's correct, but as Mr. Parsonage indicated, we are working on a number of initiatives with the Canadian industry. First of all, we are trying to find out what the problems are in terms of labour supply in the country. Secondly, once having defined that, we will try to determine what industry itself, along with the educational institutions, can do to fill those gaps.
We are active on the Software Human Resource Council, and industry is so as well. I sit on the board of directors of what's called the Canadian Microelectronics Corporation, which is a non-profit corporation of 18 universities and about 9 Canadian companies. It also has a partnership with NSERC. The purpose of that non-profit corporation is to upgrade the facilities, the equipment, and the educational programs and microelectronics engineering programs in those 18 universities in Canada.
We encourage companies like Ericsson. Ericsson has responded by funding research chairs and educational programs in universities such as Waterloo. We have worked with and actually financially supported companies like Spar Aerospace to develop courses in satellite technologies with École Polytechnique. So we have been trying to deal with industry, first of all, to define the issues, to define what the problems are, and to come up with some solutions that at least begin to address those very particular skill shortages they seem to have.
Ms Val Meredith: This committee has been presented with the problem. It would seem that the industry has no problem defining what the problem is. They are coming to us and saying that immigration should be relaxing the regulations to allow these people whom we have already identified that we need into the country without any hassle. That is basically my interpretation of what we're being asked for. So it is my understanding that they don't need help in trying to identify the problem. They're telling us they've identified the problem, they're not able to meet the needs they've identified, and therefore they want this committee to see what can be done to help them bring these foreign workers in.
Are we as a government wasting money in researching something when we already know what the problem is? Are we putting our money into the actual retraining programs? I'm pleased to hear that somebody is trying to get into the universities, colleges and other areas to try to address the issue from a Canadian perspective. I am just a little concerned that perhaps we're spending more money in researching and studying something that has been studied to death when what we should be doing is something positive to rectify the problem.
Mr. Mulcaster: We're not spending a large amount of money or a large amount of time in defining what the issues are. You need to do that to some extent. From our perspective as Industry Canada, most of the effort is going into finding those fora where we can sit down with industry and discuss options on how to address the issues that they're facing, the pay shortages they're facing. This particular initiative of finding an easier way to bring in certain kinds of people from outside of the country is only one of the issues they're facing in the HR field.
Ms Val Meredith: Are you aware that some companies contract foreign companies to supply labour and that their only commitment is paying for the benefits? The wages are paid for by the foreign company.
Mr. Parsonage: No, I'm not.
Ms Val Meredith: Okay, thank you.
The Vice-Chair (Ms Judy Bethel): Thank you, Ms Meredith. We now have Monsieur Bélanger.
Mr. Mauril Bélanger (Ottawa - Vanier, Lib): I would like get a better picture of the problem here. According to your presentation, there are about 350,000 people currently working in the IT sector.
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Mr. Parsonage: In the information technology industry there are about 400,000 today. That's just in the information technology industry. You have to think as well that throughout all other sectors of the economy there are people with similar skill sets applying information technology.
Mr. Mauril Bélanger: I understand that. So 400,000, and since 1990 it has grown, according to a piece of paper that was presented by your ADM to CIPS, a group that was here yesterday, at a rate of 11.2%. Is that a fair number? Let's assume 10% growth. Is that growth that is likely to sustain itself for, let's say, the next three or four years? Can you make an educated guess at that?
Mr. Parsonage: It would be speculative on my part, but when I look at the most recent numbers, where, for example, the software industry grew 25% in one year... That was the 1994-95 year. The forecasts we have seen and some preliminary indications out of 1996 suggest that rate is continuing and sustaining.
Mr. Mauril Bélanger: All right. So I'll assume, for the sake of argument, a 10% rate of growth, which would indicate that for the foreseeable future, three or four years, and who knows how long after, we would need 40,000 people, roughly speaking. I understand it doesn't represent productivity gains, but then I'm taking 10%, not 11.2%, and so on. How many graduates are we going to generate per year? In your document you say there are 20,000 students in engineering, mathematics, and applied sciences, 21% of them being at the graduate level. Is that how many we produce yearly?
Mr. Parsonage: That was from the latest data I have, I believe 1994. That was the number enrolled.
Mr. Mauril Bélanger: How many do we graduate on a yearly basis in Canada, roughly?
Mr. Parsonage: My data, unfortunately, are too dated to be meaningful today.
Mr. Mauril Bélanger: What do you have?
Mr. Parsonage: I have a profile here that shows it varying around 18,000.
Mr. Mauril Bélanger: We graduate.
Mr. Parsonage: Graduate - university and college graduates in IT and IT-related fields. Unfortunately that's for back in the late 1980s, so it's not correct.
Mr. Mauril Bélanger: If we have 20,000 enrolled, I would imagine we can't graduate more than that, so I will assume the 20,000 also. If we need 40,000 a year and we graduate 20,000 a year...and I understand there will be some unfortunate incidents, perhaps too numerous, where some people will have a difficult time getting a job, for a variety of reasons. For some of them it may be that in the particular region where they live there's less of a demand for that or whatever. At any rate, generally speaking, on a macro-level we are not now producing enough to meet the demand. Is that correct?
Mr. Parsonage: That's what the figures would suggest.
Mr. Mauril Bélanger: And that's the situation for the foreseeable future?
Mr. Parsonage: Yes.
Mr. Mauril Bélanger: Would Industry Canada agree that as a part - and I say a part, and a minute part - of the overall solution to the shortage we would have to look abroad?
Mr. Parsonage: That is one of the solution elements, yes.
Mr. Mauril Bélanger: Temporary and partial? Are other countries doing that, do we know?
Mr. Mulcaster: Oh, yes, they are. As a matter of fact, a good part of the computer sciences graduating class - I'll give you an anecdote - of the University of Waterloo is hired by American companies, and particularly Microsoft.
Mr. Parsonage: It's called ``Microsoft U.''
Mr. Mulcaster: In fact, two years ago I think just about every graduate out of that course was hired by Microsoft, and almost all of those people went to the United States.
Mr. Mauril Bélanger: You say a study is being done now in Industry Canada, getting a sense of the difficulty or the nature of the problem. Are you also looking at the exodus of talent from Canada?
Mr. Mulcaster: We're beginning to.
Mr. Parsonage: We're beginning to look at that, yes.
Mr. Mauril Bélanger: How?
Mr. Parsonage: We've been looking at some of the U.S. immigration statistics, but unfortunately the coverage is not giving us the type of data we would like to have, so we're looking at other ways of doing it. For example, the Canadian Advanced Technology Association actually did a study last summer on the ``brain drain'', as they said, looking at graduates from the University of Waterloo going down to the States and trying to track them. They are actually looking at replicating a much broader coverage of that particular initiative, to see who is going where and why.
Mr. Mulcaster: We have indications from the internal immigration service of the United States that a relatively small number of Canadians go to the United States on the basis of green cards. However, we have no data on how many Canadians go to the United States on temporary work permits, which are issued for a one-year period.
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Mr. Mauril Bélanger: You don't have that?
Mr. Mulcaster: No, we don't have that yet. We will be making a request to the United States government for that data. But on a green card basis, which is more or less for a permanent employee, relatively small numbers of people emigrate to the United States.
Mr. Mauril Bélanger: Does Industry Canada have a sense of the number of contracts we're missing out on because of lack of resources?
Mr. Parsonage: Only anecdotal. I've had companies say to us they weren't able to undertake a particular bid for a world product mandate for a certain type of software development because they didn't believe they could ramp up the workers fast enough to meet that need. But again it's only anecdotal.
Mr. Mauril Bélanger: Is that something Industry Canada is also taking a look at? Is it possible to do this?
Mr. Parsonage: Yes, we're doing that.
Mr. Mauril Bélanger: It's part of the study. When can we expect results from that, do you know?
Mr. Parsonage: Our indications are it's probably in the fall that we would be in that position, by the time Statistics Canada carries out the initiative, collects the data, and we have the opportunity to analyse and assess what it's really telling us.
Mr. Mauril Bélanger: I guess we can't put a request out for that now.
The Vice-Chair (Ms Judy Bethel): Mr. Nunez.
[Translation]
Mr. Osvaldo Nunez: As for labour training, a legislation which was adopted in Quebec will make it compulsory for businesses to dedicate a certain percentage of their revenue to training. Do you feel that such action should be taken at the federal level too?
[English]
Mr. Mulcaster: I hesitate to make a comment on provincial training policies and legislation. What I can say, though, is I think it is the opinion of Industry Canada that a reasonable and healthy investment in human resources by all companies and all industrial sectors is required in order for companies to make sure they are flexible enough to meet changing market conditions.
[Translation]
Mr. Osvaldo Nunez: Would you have any numbers showing whether our companies spend more money into labour training than companies in other countries, in Germany for example?
[English]
Mr. Mulcaster: No, we don't have any readily available data, although about two or two and half years ago the Conference Board of Canada attempted to undertake a study of that nature to determine the levels of training expenditures of Canadian companies in different industry sectors. It also made an attempt to compare that expenditure rate with American industry sectors. I don't have that study available. I just learned about it this afternoon. But apparently they did a study about two or two and a half years ago to try to determine that.
[Translation]
Mr. Osvaldo Nunez: You really don't know if we, in Canada, are spending more, or maybe less, in that area compared with what is spent in other countries?
[English]
Mr. Parsonage: No.
[Translation]
Mr. Osvaldo Nunez: There are some provisions under NAFTA which allow certain categories of professional workers to go and work in other member countries. Are you aware of those provisions? Are those provisions already sufficient or could we improve them without going as far as allowing the free movement of all workers? Should we do something at that level?
[English]
Mr. Parsonage: Anecdotally, I believe Mr. Boynton, with the Canadian Information Processing Society, was here recently. He indicated that his members have been experiencing difficulty in entering the United States under those provisions. Representing his group, he would like to ensure that the free movement of personnel is facilitated, particularly so Canadian companies doing foreign contracts would not be impeded in moving their workers back and forth. But this is only anecdotal from what Mr. Boynton has conveyed to me.
Mr. Mulcaster: If I can give you an anecdote from the other side, I chair what is called a ``national sector team''. A national sector team is a group of government officials and industry representatives looking at trade and trade development activities the industry and government can do together.
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This issue was raised at a recent meeting of that particular committee, and some members from the private sector agreed with Mr. Boynton that there were some difficulties in the movement of labour back and forth among Canada, the United States and Mexico. Other companies said they experienced no such difficulties. The companies that faced no difficulties in moving people back and forth across the border felt it was a matter of knowing what the free trade agreement said, what were the processes for clearing people through customs, and that if you knew the rules there were no problems. It depends on who you talk to as to whether or not they have a problem.
[Translation]
Mr. Osvaldo Nunez: Would you have some...
[English]
This my last one question.
The Vice-Chair (Judy Bethel): Your time is up, Mr. Nunez. Perhaps we will get to a third round. Ms Meredith is next.
Ms Val Meredith: Thank you, Madam Chair.
I want to follow up on something Mr. Nunez brought up, and that's the transportation of individuals back and forth across the border. My understanding from the industry is that it's not entry-level skilled people they're looking at. It's individuals who have 12 to 15 years' experience and the managerial skills to develop new programs and to spur the industry on, if you will. As a government department, have you looked at the free trade agreement to see if it would meet the needs, that the skilled managerial individuals can move from the United States to Canada and back again without any problem?
Mr. Parsonage: Again, we have anecdotal evidence showing that some companies have no difficulties in moving them back and forth, and on the other hand, we have companies that say they have a lot of difficulty. It depends on the specific type of person they're looking for for a particular type of project they need to undertake.
Mr. Mulcaster: If I might say, we started working with CIPS during the last two to three months, and we have agreed to work with CIPS during this coming fiscal year to try to define what the issues are in terms of labour mobility within the North American Free Trade Agreement to see whether or not the anecdotal examples given to us by companies are isolated incidents or more widespread. So we have undertaken to do a survey in conjunction with CIPS.
Mr. Parsonage: We've asked them to specifically document the cases they are encountering and the specific contributing factors in each case.
Ms Val Meredith: Industry is asking for changes in the regulation to remove the requirement to look first in Canada for workers. My impression was that it was the administration of the Immigration Act that was causing problems, that the act itself doesn't prohibit workers from coming in, but it was the length of time and the difficulties they were having in processing it through the proper channels that was causing a lot of the problems. I'm asking you as a government department, do you play a part in that or does it only involve Human Resources and Immigration?
Mr. Parsonage: We have been supporting the work of the Department of Immigration, the Department of Human Resources Development and the Software Human Resource Council to look at this issue and find out what are the ways things can be improved to speed up the overall transaction process to bring these workers in. So we have been a player in the loop, one would say.
Ms Val Meredith: Are the three departments working together getting anywhere as far as easing the timeframes and making it easier for people to use the regulations that are already in place?
Mr. Parsonage: One of the elements of the proposed pilot Immigration was going to undertake was by using templates or job descriptions being developed in conjunction with industry through the Software Human Resource Council, to look at a way to allow people to do the assessments much more quickly than they currently can.
Ms Val Meredith: My understanding was that they were going to allow them to do it without having to look at all to see if any Canadians were available for employment in those categories.
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Mr. Parsonage: If they were the identified categories where they believe there were actual skill shortages, they have not been able to find them.
One of the things I think you have to bear in mind is this. Again, when I look at the nature of the industry, with very, very small companies that are trying to find workers in a very short timeframe, administrative burdens can be quite severe for these firms. These are companies that have less than ten employees.
Ms Val Meredith: So if you had a company of less than ten employees, what are they looking for? If you don't employ a whole bunch of people, and if it's a small company, with an owner-operator, why would they be looking for that kind of technical or management...?
Mr. Parsonage: They are probably looking for a very specialized skill set and a very highly specialized area of technology development, with someone who has the project management experience to bring it to fruition. It's very specialized.
Ms Val Meredith: Do you support their claim that those types of people cannot be found here in this country?
Mr. Parsonage: In some cases, yes.
Ms Val Meredith: When you say ``in some cases'', are we talking about 80% of the cases, 60% of the cases, 20% of the cases? When you say ``some cases'', what figure are we looking at, what percentage?
Mr. Parsonage: I don't have a figure. All I can relate is anecdotally what the companies have said their difficulties have been in trying to find these people.
Mr. Mulcaster: It's not so much percentage-wise, it's more very specific skill sets they are looking for. I speak from one particular perspective, telecommunications, where there is an identified shortage of radio engineers. There are a number of reasons why, but one of the reasons there is a radio engineer gap is that the wireless telecommunications industry is growing so rapidly. Every time you license a cellular carrier or carriers, or a PCS carrier, or a new paging company, or new kinds of broadcasting technologies... In the next three to four years we will probably see a shortage in digital television and digital radio broadcasting engineers, who have been specially trained in that.
Ms Val Meredith: I thought CBC laid off a whole bunch of people. Isn't that something where retraining should be considered instead of looking abroad?
Mr. Mulcaster: I can't speak for the CBC.
The Vice-Chair (Ms Judy Bethel): Mr. Bélair.
[Translation]
Mr. Réginald Bélair (Cochrane - Superior, Lib.): Some very interesting questions have been asked concerning our two witnesses' presentations. You seem to say that Canada is producing excellent and highly qualified people in the field of computer sciences.
We still have to link our today's work with immigration. First of all, I take for granted that our best brains are attracted to United States, likely because salaries are higher and entrepreneurship is more developed there, and probably also because of a certain appeal to exoticism, since those young people who are just coming out of schools want to see the world.
When we, as members of Parliament, go back to our constituencies, we meet young graduates who are unemployed. When we talk with employment officers, they tell us that there is a shortage of graduates, particularly in engineering and in science and technology.
Then, is it not the role of government to become a kind of catalyst who could bring our industry to first look at our own people before recruiting employees abroad? If that has already been done - you have identified almost all of the problems this afternoon - which action plan have you made in order to redress that situation? Have you thought of having the different stakeholders sit together at a consultation table, with provincial ministries of labour, colleges, universities and the department of Human Resources, in order to promote professional training? Were concrete attempts made to meet the needs of several businesses who are complaining that they cannot fill certain jobs with Canadian workers?
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[English]
Mr. Parsonage: We have been endeavouring to facilitate a lot of groups in many different forums to come together to look at these issues. For example, here in Ottawa, through the Software Human Resource Council and Industry Canada, we brought together the community colleges, the two universities, and members of information technology, from the perspective of the users of technology and also from that of developers, around the table, through the Ottawa-Carleton Research Institute, to ask what are the problems locally here that you could come to grips with and deal with, and what do you as industry and the academic community need to do to solve the local need. This was a role we as Industry Canada played, as I say, as the catalyst, the facilitator, to address that.
Mr. Réginald Bélair: That's local. How about national?
Mr. Parsonage: Nationally you have the Software Human Resource Council, which is an entity created by Human Resources Development Canada.
Mr. Réginald Bélair: I have never heard of it.
Mr. Parsonage: I thought the Software Human Resource Council, through Mr. Paul Swinwood, would have an opportunity to make a presentation to this committee on the role of his organization and what it was trying to do and the entities it represents.
In that case, perhaps, I would like to leave with you one of the pamphlets put out by the Software Human Resource Council. In it you can see the membership of the council, which includes representatives from the university committee, the community colleges - AUCC, ACCC - various universities, the professional engineering society, representatives of the Information Technology Association of Canada -
Mr. Réginald Bélair: Industry?
Mr. Parsonage: Industry, the Canadian Advanced Technology Association, and the Canadian Information Processing Society; along with Industry Canada, who also sit at the table. I will leave this for your perusal later.
Mr. Réginald Bélair: I'm just a stand-in here today. That's why I was not aware of that.
The Vice-Chair (Ms Judy Bethel): Yes, I appreciate that. They did appear before us and they did provide us with information.
I think the reason many of us felt we needed to see the department was so you could identify the needs clearly. He came to us with a solution. What we had really needed from the department was a clearly identified - not necessarily, but hopefully, more than anecdotal... I guess some of us are feeling a little lacking here.
Mr. Réginald Bélair: Is it possible that immigrants are welcomed into Canada because they are less demanding on the employer in terms of salaries, fringe benefits, and everything else?
Mr. Mulcaster: Anecdotally again, companies tell me at least for certain education and certain skills they are paying world prices. In fact, one of the reasons why, at least so they tell us, a lot of their most experienced engineers and scientists are leaving their companies and going to places such as the United States is that they are getting better salaries and better fringe benefits, and better relocation and signing bonuses, in the U.S. than they do here. I don't think there's any evidence that people are less demanding when they come here than Canadians who are born here.
The Vice-Chair (Ms Judy Bethel): Mr. Bélair, I'm sorry to butt in here, but it looks as if we have a vote, and there is one order of business we really do need to approve.
My thanks to the witnesses for their presentation.
Could we all focus now for a minute on the schedule of committee meetings. It was something that was discussed at our last meeting, to make sure we saw everybody we needed to see around Bill C-237 and to provide us with time to prepare and review a report. I think everything is already there. I would ask for a motion that the schedule of meetings be adopted.
Ms Val Meredith: I would like to object, Madam Chair, because in the minutes of the meeting we held it says we were going to hear only two witnesses on Bill C-237. I would like to know why all of a sudden we are seeing more witnesses when it was a decision of the committee back on March 11 that we would see two witnesses only and get on with the rest of our agenda.
The Vice-Chair (Ms Judy Bethel): I don't have that motion at hand, but I'm sure you do.
Ms Val Meredith: I have the blues.
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The Vice-Chair (Ms Judy Bethel): It was felt by the committee that we needed to see both ministers because this encompasses two departments. Do you not think that...?
Ms Val Meredith: My understanding was that we were going to deal with it with the two witnesses appearing before us and then get on with our other business, which is the foreign workers. I see absolutely no reason why we are bringing in more witnesses on Bill C-237. We're wasting our time. We can do a clause-by-clause on it, we can deal with it, and we can get on with the other work we have to do.
The Vice-Chair (Ms Judy Bethel): There is no motion before us. I'd appreciate somebody putting the motion on the table so that we can at least discuss it.
A voice: Mr. Bélanger has moved it.
The Vice-Chair (Ms Judy Bethel): I'm sorry, it has been moved.
Ms Maria Minna (Beaches - Woodbine, Lib.): By way of clarification, Madam Chair, I don't remember now at which meeting, but Mr. Nunez had wanted to add the Canadian Council for Refugees as witnesses in addition to the departments.
Ms Val Meredith: He was refused at that time. At that meeting we decided there would be no more witnesses.
Ms Maria Minna: It may have been a subsequent meeting, then. I don't remember. There was another discussion in any case. That was my recollection. I'm only going by -
The Vice-Chair (Ms Judy Bethel): Perhaps a vote should be taken, because it's very important that we get to the vote and that we -
Ms Val Meredith: Madam Chair, I don't want to belabour this, but Mr. Nunez at this meeting did ask to have the Canada Council for Refugees added. The chair demanded that we had a motion already on the floor. We would deal with that motion, and that was to hear those two witnesses.
It's inappropriate to be dealing with this motion when there's already a motion that has been passed by this committee.
The Vice-Chair (Ms Judy Bethel): I'll call the vote.
Motion agreed to
The Vice-Chair (Ms Judy Bethel): Thanks, everybody.
This meeting is adjourned.