:
Good afternoon, ladies and gentlemen.
Welcome to the 67th meeting of the Standing Committee on Industry, Science and Technology.
Welcome, Minister and Minister Bernier. You're talking about the main estimates.
I want to briefly introduce those who are with Minister Bernier and Minister Paradis: John Knubley, the deputy minister; Marie-Josée Thivièrge, assistant deputy minister, small business, tourism, and marketplace services; Iain Stewart, assistant deputy minister, strategic policy sector; Mitch Davies, associate assistant deputy minister, science and innovation sector; and Susan Bincoletto, chief financial officer, comptrollership and administration sector.
Minister Paradis, will you begin your comments? Then we'll go to Minister Bernier.
Hello to all the members of the committee.
[Translation]
It is a pleasure to be here today.
I see that time is flying by. A lot of work was done this past year. I would like to bring you up to speed on that work and on the Department of Industry's priorities. We can obviously talk about the measures that will follow from economic action plan 2013.
The issues concern, first, strengthening the manufacturing sector; second, stimulating business innovation; third, promoting entrepreneurship and venture capital; fourth, improving market frameworks; and, fifth, supporting the digital economy. That has been adopted and it is ongoing. Work is under way. I will be pleased to give you more details on that.
I am here with my Deputy Minister John Knubley, Ms. Bincoletto, who is Chief Financial Officer at the Department of Industry, Ms. Thivièrge and Mr. Stewart. Feel free to ask us questions. We have the necessary people to answer them. We will do it to the best of our ability.
Mr. Chair, after several consecutive years of uneven economic growth, the entire world is still at a crossroads. As the government, we will continue our efforts to navigate this turbulent global situation and to promote job creation, economic growth and long-term prosperity for Canada.
Our efforts have produced results. No fewer than 465,000 jobs have been created, exceeding the peak reached before the recession. That has been the strongest employment growth of the G7 countries during this crisis. In addition, Canada's real GDP is well above pre-recession levels. This is the best performance in the G7.
We will continue investing in growth drivers, job creation, innovation, investment and skills. We remain determined to keep taxes low—which will probably not displease my colleague here on my left—and return to a balanced budget.
[English]
In terms of today's meeting, Industry Canada will be allocated $1.16 billion through main estimates in 2013-14, which will directly support our jobs and growth agenda. In addition, subject to the will of Parliament, Industry Canada and the industry portfolio will implement measures put forward in economic action plan 2013 and associated priorities.
One of Industry Canada's priorities is to help manufacturers succeed in the global economy. Let's note that manufacturing accounts for 1.1 million jobs across Canada, generates 13% of the Canadian GDP, and conducts almost half of the R and D performed in Canada. Key areas I will highlight include the automotive, aerospace and space sectors, defence procurement, and advanced manufacturing.
As you remember, announced last January an additional $250 million over five years for the automotive innovation fund.
In March, our economic action plan announced ongoing funding to sustain and improve the strategic aerospace and defence initiative, with $110 million over four years to create an aerospace technology demonstration program, and forthcoming consultations on the creation of a national aerospace research and technology network. These measures would strengthen Canada's position as a global leader in the production of aerospace and space goods and services.
Our economic action plan 2013 also committed to reform the current procurement process, develop key industrial capabilities, and consider ways to target industrial and regional benefits. These actions will promote export opportunities and help ensure that all major procurements include a plan for Canadian industry participation.
Industry Canada will also work with the Federal Economic Development Agency for Southern Ontario in order to develop world-class manufacturing initiatives, supported through a five-year program beginning in 2014, for an amount of $200 million.
[Translation]
The government's venture capital action plan was announced in economic action plan 2013. It is a set of measures designed to enhance promotion of the Canadian venture capital system. Funding of $60 million over five years will be allocated to support business incubators and accelerators and to expand their services. In addition, $18 million over two years will be allocated to the Canadian Youth Business Foundation to support our young entrepreneurs. The Business Development Bank of Canada will also be making additional investments in firms graduating from business accelerators and will establish new entrepreneurship awards. Businesses, in many cases, suffer shortages when they start up. Some projects are squeezed. This form of funding will therefore be accessible to our businesses.
Innovation is an important factor that we continue to enhance in order to promote growth, improve productivity and raise our standard of living.
Last year, I told the committee that Minister of State Goodyear was directing work on our response to the recommendations made by Tom Jenkins's expert panel. We have acted on those recommendations. In budget 2012, we committed to paying $1.1 billion over five years to double support, for example, for the IRAP, the industrial research assistance program, to make the business-led networks of centres of excellence program permanent and to recentre the mandate of the National Research Council in order to focus it on demand and to make it more business-oriented.
In action plan 2013, we have also announced additional support in this field in the form of funding for our granting councils, such as the NRC and Genome Canada. I know that you have looked at that in greater detail with Minister Goodyear.
[English]
Another major priority, in addition to keeping taxes low, cutting red tape, and promoting fair tariff trade, is strengthening our marketplace framework policies, which set the conditions for companies to compete, innovate, and invest. We also introduced changes to our investment review process, including guidelines for state-owned enterprises, timelines for national security reviews, and the threshold reviews under the Investment Canada Act.
Following the passage of the last year, we are continuing to improve our intellectual property protections. We recently introduced, as you know, the .
[Translation]
It is still important to promote a world-class digital economy. In the next stages, we want our future innovation to be driven by digital technologies in order to support this digital economy and make Canada a digital leader. We have taken several essential measures such as adding a digital component to the NRC and refocusing the mandate of the Business Development Bank of Canada. A digital technology adoption program is now offered through BDC. The 700 MHz spectrum auction, which will be held by the end of the year, will stimulate a lot of activity in the digital economy.
I am determined to move forward with these measures and issues, to examine ways to strengthen the digital economy, support digital skills, encourage technology adoption by business and promote access for Canadians. I know the committee is currently examining this question, and I will be delighted to review the work it does.
Mr. Chair, I believe that, by focusing on the priorities I have outlined here today, Industry Canada and the government will help enhance competitiveness and support our government's goal, which is to create jobs and stimulate growth for all Canadians.
Thank you.
I am pleased to be here with you this afternoon.
This is an opportunity to speak about my portfolio, small business and tourism.
I am here today with my associate Marie-Josée Thivièrge, Assistant Deputy Minister, and Mr. Stewart. I want to thank them for being here.
[English]
I would also like to take this opportunity to share with you the important work that this government has been doing to support two areas of great value to this country: small business and tourism.
[Translation]
As many of you know, I am from Beauce, a region that has been nicknamed the kingdom of business in Quebec. I am a proud Beauceron. These resourceful and ingenious business people have engineered the success of the Beauce region.
It is an honour for me to advocate the interests of Canadian entrepreneurs. I do so by sitting at the cabinet table and by meeting entrepreneurs. In a way, my role is to represent them at the table where the government's decisions are made.
As you know, small and medium enterprises are important. They represent 99% of businesses in Canada and contribute to more than 40% of our country's gross domestic product. SMEs create half of all private sector jobs.
I meet with business men and women in my riding and elsewhere in Canada. When I go door to door in my riding, or elsewhere in Canada, and when I hold round tables with entrepreneurs, I always tell them the same thing. I tell them, quite simply, thank you. I thank them because they are the ones who create the jobs and the wealth and who have enabled Canada to emerge from the last global recession, the financial crisis that we experienced in 2008.
[English]
What do small business entrepreneurs say to me in return? They're saying always the same thing. There is too much government on the back of businesses and too much government in their pockets.
[Translation]
The goal of our government is first to establish a business climate that enables businesses to grow. For that reason, we have made it possible for entrepreneurs to keep their money in their coffers so that they can carry out their development projects and create wealth. We have lowered the small business income tax from 12% to 11%. We have established a tax credit for entrepreneurs to encourage them to hire new employees, and we have cut red tape. Entrepreneurs told us that the government was on their backs too much and that there was too much regulation and red tape.
I was fortunate to chair a commission, with some of my parliamentary colleagues and people from the private sector, for the purpose of submitting a report to the government. Through my colleague Tony Clement, President of the Treasury Board, the government decided to act on all of our recommendations.
Entrepreneurs told us about more than 2,300 irritants that they had to overcome every day. Those irritants come from more than 18 federal government departments and organizations. We listened to entrepreneurs, and we can tell you today that more than 40% of the recommendations are now in effect. And the others will be within the year.
[English]
The main recommendation of the Red Tape Reduction Commission has already been implemented. It is the one-for-one rule. If the government wants to introduce a new regulation, the government needs to scrap an existing one. Our government believes that this new rule will turn off the tap on government red tape so that entrepreneurs can spend their time growing their businesses, not growing the government.
[Translation]
We have also established partnerships with 9 provinces, 3 territories and more than 650 municipalities in order to offer the BizPal program. That program, which is called PerLE in French, provides Canadians who want to start up a business with a website that posts all the administrative requirements of the federal, provincial and municipal governments.
There is a lot of traffic on the site, and it is very useful for current and future entrepreneurs. We hope that Quebec will soon be the tenth province to take part in this very popular program.
[English]
We also have a very good partnership with the Canadian Youth Business Foundation, which has helped over 5,000 young Canadians start their own businesses.
[Translation]
Our government will always support job creation in Canada. As you know, I am very proud to work closely with Canadian tourism industry stakeholders. The news about the tourism industry is good. That industry is growing this year and has had 13 consecutive quarters of growth since the last global recession.
Tourism spending in Canada, which represents money spent on airline tickets, hotel rooms, restaurants and so on, reached a record $8.1 billion last year, a 4.2% increase over 2011. The number of jobs in the tourism industry also rose 2% to 614,600 last year.
Last October, I launched the Federal Tourism Strategy, which is outlined on the government's website, to support this important sector. This very simple strategy addresses the concerns of tourism industry people by eliminating sector irritants so that the industry can grow even more quickly in the next few years.
One important point is that we have established a steering committee, chaired by Assistant Deputy Minister Thivièrge, as part of this strategy. The committee meets regularly with industry stakeholders to assess progress on the strategy, but also to ensure that government as a whole and the various departments and ministers involved view the tourism industry as a priority.
Let me give you an example. My colleague the , who is Minister of Immigration and whose cooperation is important, has considerably increased the number of visa processing centres around the world in response to a request by the tourism industry. If we want to attract more foreign tourists to Canada, we have to make it easier for them to obtain a visa. The number of visa processing centres has therefore risen to 130 in 95 countries. Last year, Canada also issued nearly one million visas, a record number.
We will continue to promote Canada to foreign tourism markets. In February, I had the honour to travel to India with the Canadian Tourism Commission and its President and CEO Ms. McKenzie to attend Focus Canada-India 2013, an event organized by the Canadian Tourism Commission to promote the Canadian tourism industry to Indian buyers. I can tell you that the number of tourists from India and China has risen again this year. The Canadian Tourism Commission's mandate is to focus on these high-potential emerging markets over the next few years.
In closing, I want to tell you that I am available to answer your questions. Thank you for inviting us to take part in your proceedings.
Thank you.
Thank you, Ministers, for taking time out of your very busy schedules to be here and to give us the outline and update that you have.
I'd like to focus in on small business because that was may background for 25 years. I was a business owner in the construction industry prior to coming to Ottawa. I frequently hold business round tables and economic round tables leading into our budgets, and I hear exactly what Minister Bernier has articulated in terms of red tape.
Another area of concern that I hear frequently is the duplication that adds cost to running a small business. In the case of my part of the country, which is southwest Ontario, there are provincial—I would call them—policies that require certain things in the development industry as well as in the construction industry, and they are duplicated at the federal level in many departments.
Is your department working with provinces and territories, maybe not working with but at least making sure that where there is duplication there is a hard look to see whether it is absolutely necessary?
I'll give you an example. A raw piece of land that is zoned properly for building often requires some environmental studies, heritage studies, at the provincial level. These are duplicated at the federal level. When you apply at the federal level, they tell you, “We will not accept the report that you gave to the provincial government. Start all over again. Do it all over again.” Hence, taking a piece of property that is properly zoned for an industrial development may take as many as five years to bring on stream.
I cite that as a real-life example and to ask you to please comment. There's not only the need for a great reduction and simplification of red tape and the processing, but also of these duplication items.
Minister Bernier.
Before answering your question, I want to correct myself. In my introductory remarks I said that the spending coming from the tourism industry was $8.1 billion. It's more than $81.9 billion. That's the money that is spent in the tourism industry in a year. So it is not $8.1 billion, but $81.9 billion a year of spending in the tourism industry. I'm sorry about that.
Concerning your question, you're absolutely right. It is why we have this website called BizPal. It's very simple, and I encourage the members to google “BizPal”. You'll see all the regulations that a business person has to comply with when they want to start a business. If you are in the food industry or restoration, or things like that, you have all the industries. If you're living in London, Ontario, you'll be able to know all the regulations that apply to you as a person who wants to start a new business—at the municipal level, at the provincial level, and at the federal level. Sometimes there are a lot of regulations.
When we did our consultation when I was chairing the Red Tape Reduction Commission, business people told us, “It is great if you reduce red tape at the federal level, but why not speak with your counterparts at the provincial level because there are a lot of regulations there also?” My answer was very simple. We don't have jurisdiction over the provinces, but I assured business people and Canadians that we would be in contact with our provincial counterparts to do the same thing.
I know that in B.C. they are making a lot of effort to reduce the red tape that they impose on their small businesses. I hope some provinces will take our report and try to implement the same kind of report at the provincial level.
But you are absolutely right. As you know, time is money. The less time a business person spends working for free for government, he will have more time to work for himself and create wealth and jobs in this country. Our goal is to do our best at the federal level, but at the same time it's to be sure that the provinces are able to do the same. We need the willingness at the political level in each province. I'm pleased to see what's happening B.C., and I hope the other provinces will follow our lead.
:
I congratulate you on your clear French, colleague.
The priority that clearly emerges from economic action plan 2013 is the manufacturing sector. We have taken measures since we arrived in power in 2006. My colleague Minister Bernier talked about cutting needless red tape, but there have also been tax cuts. The corporate income tax is now 15%, which makes Canada one of the most competitive countries in the G7. We are going to continue in that direction.
Target sectors include the automotive industry, which will receive renewed funding of $250 million over five years. This is a major opportunity. We are talking about an innovation fund that drives a parallel economy in the automotive industry, which represents 440,000 direct and indirect jobs.
Funding of $1 billion is provided for the aerospace industry over the next five years. There are also the technology demonstration projects that have been introduced in response to the Emerson report's recommendations. That is very promising.
Once again, you can see that we are still targeting innovation and high technology. There is another aspect that the government wants to support, and that is creating innovation, but then it has to be sold or else it is worthless. That is where we generate added value in the country, where we create wealth. We have often heard about problems associated with access to capital. That is why we have established venture capital funds. In addition, as I explained earlier, $60 million will be allocated to incubators and funding will be allocated to the National Research Council so that it can create networks between universities, colleges and SMEs so that SMEs have access to that expertise.
Lastly, we want to optimize the industrial impact of military procurement. Tom Jenkins prepared a report on the subject. In economic action plan 2013, the Minister of Finance clearly stated that we wanted to head in that direction, to structure funding so as to optimize impact in Canada. Even for Canadian procurement projects, various factors will be considered when hiring labour, for the first time or in other situations.
This economic action plan is promising. I think that the measure we should not pass over in silence for the manufacturing sector is the two-year extension of the temporary accelerated capital cost allowance. This support of $1.8 billion enables people to acquire machinery faster, which increases productivity and, consequently, competitiveness.
As we know, there is a productivity gap between Canada and the United States. A good way to resolve it is to interest our people in investing in better technology, which would enable them to do more with less. That is precisely what is happening now. We have observed a rising trend in recent months. There is more investment in machinery in Canada on a per capita basis than in the United States. So we are on the right track, but we cannot rest on our laurels. We must forge ahead. That is why it is important to adopt the economic action plan 2013. It will enable us to advance in that direction.
:
You come from the area—it's 440,000 direct and indirect jobs.
In terms of volumes, in today’s world, economies like that of Mexico or the southern U.S. states are very competitive in terms of volume. However, if you look at high technology, innovation, and new products, that is where Canada can now be very competitive. We have a corridor of research centres of excellence in Ontario and in Michigan, something that is very attractive to investors.
A good example is when Toyota decided to locate their hybrid Lexus program in Cambridge, which is very good news, the automotive innovation fund was part of that solution.
This is where we can be champions. This is where we try to attract investments from the OEMs, the original equipment manufacturers, which is important because we have a large industry in Ontario in parts manufacturing. We have to keep these people, and the way to keep them is to make sure that we have some OEMs in the cluster.
We are very confident that we will have success in the future with the renewed fund of $250 million, because so far, the private sector has invested more than $1 billion since the first time we announced the first automotive innovation fund. We see that it generates economic activity, economic benefits, and it helps Canada’s plans to be on the leading edge of technology, which is, I think, the best Canadian brand we can demonstrate.
We don't hesitate to tell investors that we have skilled labour, very competent labour. We have probably the best in the world, and Canada is a great place to live. We can be competitive when we speak about high technology, innovation, and the value-added sector.
I'm going to use that question to also answer what our colleagues from the NDP asked about the expenses at the CTC. As you know, the Government of Canada invested a lot in tourism not only through the CTC but also with other agencies and departments. If you look at the global budget of the government, $939 million was spent on projects and program activities that benefited the tourism sector in 2010 and 2011. This is money that is being spent by other departments and that will have a positive impact on the tourism industry.
We have to look at the budget of the CTC, but we also we have to look at the global budget of the government. I'm very proud of the work they are doing at the CTC. Yes, they had to manage a 9.8% cut of their budget, but that's a cut that they can manage pretty well. They are very competent. Now they will focus their energy and their money on markets where there is a lot of growth, like India and China. As well, we won't forget the U.S. and other markets that we know. The way to do that is by focusing marketing activities on what is nice to see in our country. I can tell you that there are a lot of participants around the CTC, and they are promoting all the great things that visitors can visit here in Canada—the Stampede, Old Quebec, the Rocky Mountains, and all that. They're doing this under the CTC umbrella, the Canadian Tourism Commission.
I was very proud to be in India and to speak with entrepreneurs from the tourism industry. They were very happy for the support that they received from the CTC, and they were also excited about the potential in India for new visitors. If you want details on the markets that the CTC will focus on, the key market is China. We've seen the biggest increase in arrivals from China. In 2010, 2011, and 2012, the number of arrivals from China increased by 20%. So what they're doing at the CTC is working. In 2012, China overtook Australia in Canada's five top inbound markets. Nearly 300,000 visitors from China came to Canada in 2012. The same thing also occurred for India and other markets like that. It's because of the work of the CTC and of the industry as well.
:
Mr. Chair, I'd be very happy to do that.
The Emerson report was tasked by the Government of Canada on February 27, 2012. I think the context for this work is very much the issue of competitiveness of the aerospace sector. Of course, the aerospace sector is exceedingly important across the country, particularly in Quebec and Ontario but also in B.C., and there's some important activity I know in Atlantic Canada, where I once worked.
The way the study worked was the Honourable David Emerson was the head of the review, and he was assisted by a three-member advisory council, including Senator Pupatello, from Ontario; Jim Quick, who's from the association; and Dr. Jacques Roy. On November 29 the final report was released. There were really two parts to it, one focused exclusively on the aero side and the second focused on space.
In terms of the response of the stakeholders, it was very positive. I think that throughout the process David Emerson and his advisory council spent a lot of time involving stakeholders. There were various subcommittees on specific issues, which eventually led to the specific recommendations. Key themes in the report are innovation, market access and development, supplier development, workforce skills and training, and procurement, of course. Procurement has been highlighted in the budget, as you've seen, not only with respect to the aerospace sector but more broadly.
As we move forward, we're working with the government to ensure that we respond quickly to the recommendations. The budget itself refers to $1 billion over five years for the strategic aerospace and defence initiative, and to $110 million over four years and $55 million annually for the aerospace technology demonstration program, which Minister Paradis referenced.
We're also launching further consultations in the coming months on the creation of a national aerospace research and technology network. This was something in the consultations around the report. Stakeholders are particularly keen to create a national network. I think there's a very solid network already in Quebec that we're wanting to build on, and it was cited as a best practice.
Finally, in terms of moving forward, and this is the area of Transport Canada, there's a review of cost-recovery rates for aircraft safety certification, to ensure the national aircraft certification program can respond and go to demand. This was a particular request from the stakeholders, recognizing they needed to have a rapid response in the area of transportation safety in the aero sector in order to be competitive globally.
:
Maybe what I will say is that the department actually has three strategic objectives, and that's typically always shown in our documentation. Those three objectives are probably worthwhile reviewing and they touch on the two issues you've raised.
The first objective is to ensure that the Canadian marketplace is efficient and competitive. It's about getting the economic framework right, so, of course, the issues at play there are policies and programs, and modern legislation and policies to support competition, investment, corporate insolvency law, copyright patents, and trademarks. The recent work that you've been doing is very much in the area of this strategy objective, in terms of an IP regime, and we look forward to continuing to review the work that you've done here and to work with you on that.
Our second strategic objective is improving the knowledge-based economy through innovation and research and development. Minister , who appeared here a few weeks ago, I think really covered the issues here in great detail. But the strategic objective of Industry Canada is to really put in place measures to help Canadian businesses and universities to be at the forefront of global innovation and scientific development. Of course, what we've done in the recent budget is taken a number of steps in terms of refunding the granting councils. The funding of the National Research Council and its transformation are examples of the kinds of initiatives that are related to this strategic objective.
Then lastly, the third strategic objective is just focusing on Canadian businesses and communities, so all of the things we've talked about in terms of small business and tourism are specific aspects of that.
These three areas are really the fundamental priorities of the department, and all with the aim, of course, of supporting business and industry in Canada to be more competitive and productive.