INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 2, 2000

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I now call the meeting to order. Pursuant to the committee's mandate under Standing Order 108(2), a review of the Competition Act, we are very pleased to have here this afternoon from the Public Policy Forum, Mr. David Zussman, president, and Ms. Anita Mayer, vice-president.

What I would propose is perhaps some opening comments from either you or Ms. Mayer, and then we'll go from there.

Mr. David R. Zussman (President, Public Policy Forum): Thank you very much. I do have a brief statement that I'll read, if that's okay, and then we'll go on from there.

[Translation]

I'd like to thank you for your invitation to speak to you today. As you probably know, at the request of the Competition Bureau, the Public Policy Forum has undertaken consultation on amendments to the Competition Act and the Competition Tribunal Act.

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[English]

My statement will explain the mandate we have received and the process we are proposing to carry out these consultations.

Before I begin, I'd like to take the time to explain briefly the Public Policy Forum and its mandate and organization.

The Public Policy Forum is a non-partisan, not-for-profit organization aimed at improving the quality of government in Canada through better dialogue between government, the private and the third sectors, and the labour movement. We have over 150 members drawn from business, the federal and provincial governments, the voluntary sector, and the labour movement.

[Translation]

Our members share the conviction that sound public administration is essential for the quality of life of Canadians and our competitiveness in a global economic environment.

[English]

We accomplish our goals as a trusted neutral facilitator by bringing together a wide range of stakeholders in a productive dialogue. We also have a research program, which provides a neutral base to inform collective decision-making.

[Translation]

Because of these strengths the Competition Bureau asked the Public Policy Forum to undertake consultation on the proposed legislative amendments.

[English]

Our mandate in these consultations is to consult widely with all interested parties across Canada on the changes to the Competition Act and the Competition Tribunal Act as proposed in the four private members' bills currently before you—that is, Bill C-402, Bill C-438, Bill C-471, and Bill C-472.

[Translation]

It is our understanding that the Minister of Industry, the Honourable John Manley, supports the principles underlying these bills and is contemplating rolling them into a government bill to be presented in October 2000. He has asked that these consultations take place in the hope of reaching consensus on the proposed changes as a foundation for the government bill.

[English]

As I was saying, it's our understanding that the Minister of Industry, John Manley, agrees with the principles behind these bills and is contemplating rolling them into a government bill to be presented in the fall of 2000. He has asked that these consultations take place in the hope of reaching consensus on the proposed changes as a foundation for the government bill.

We have therefore undertaken a four-step process for these consultations. The process began on April 13 and is designed to include the following stages.

In step one, the launching of the project, our communications plan included three types of activities.

On Thursday, April 13, when the commissioner of competition appeared before you and announced that he had asked the Public Policy Forum to undertake this project, we sent out a press release through Canadian news wires announcing this fact to the public.

On April 17, a discussion paper prepared by the Competition Bureau, entitled Amending the Competition Act, on meeting the challenges of the global economy, was placed on the Public Policy Forum website, as well as on the Competition Bureau website. From that website, interested parties also have access to information on the four private members' bills, as well as information on the Competition Bureau, the Competition Act, and the Competition Tribunal Act.

Also starting April 17, letters were sent to stakeholders and interested parties across Canada to invite them to submit comments on the proposed legislative amendments. Submissions can be made electronically, by fax, or by mail.

The original deadline for the submissions was May 17. However, we have since been made aware by several interested parties that this short period did not allow organizations to consult their own members adequately before submitting their comments. In the interest of ensuring that the consultations are fair and equitable, we are therefore proposing that we announce to all interested parties that the final date for comments has been forwarded to June 30, 2000.

Our intended goal for the consultation process is to encourage dialogue and search for common ground on the principles underlying the proposed legislative amendments rather than a technical application of the law. We are not therefore seeking legal briefs on these issues but rather inviting all those interested to provide us with their ideas and concerns about the proposed amendments.

Our objective in this first step of the consultation process is to obtain the viewpoints of the concerned public as well as the experts in competition law in order to provide discussion points for the round tables to follow.

In step two, a summary or an excerpt from each submission will be posted on the Public Policy Forum website as the process unfolds. An analysis and summary of the written comments will be completed by July 7 and will be posted on our website.

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In step three, the analysis and summary document on the written comments will be used to inform the participants in a series of round tables to commence in mid-July, to the beginning of September.

We are proposing to hold seven round tables across Canada with participants from consumers and trade associations; small, medium-sized and large businesses; federal, provincial and territorial governments; labour; academics; journalists; and not-for-profit organizations. These round tables will probably be held in Halifax, Montreal, Ottawa, Toronto, Winnipeg, Calgary, and Vancouver.

We are also proposing to hold two technical round tables in Montreal and Toronto with experts in competition law from among the legal, law enforcement, and academic communities.

In order to facilitate an open and frank dialogue, we believe all discussions should take place on a not-for-attribution basis and that participation should be limited to approximately 15 representatives from the various stakeholder groups at each round table.

A summary of discussions for each individual round table would be prepared and posted on the Public Policy Forum website. There's also the possibility of holding more round tables if demand is sufficient.

Our intention for the round tables is to try to find the common ground among the various stakeholders as a basis for the federal government to consider in preparing its bill for changes to the two acts.

In step four, we would like to complete the analysis of the submissions and the round table results and to submit them in a final report to the commissioner of competition by the end of September 2000. This report will be posted on the Public Policy Forum website, as well as on the Competition Bureau website.

[Translation]

We believe that this consultation process will provide the Competition Bureau and Mr. Manley with the information they are seeking.

[English]

To do so, we will endeavour to ensure that all interested parties are allowed adequate opportunity to express their views, ideas, and concerns, and that our final report to the commissioner of competition reflects all points of view as well as the common ground that has been established.

Thank you very much for the opportunity to give you my brief presentation.

The Chair: Thank you very much.

We're now going to turn to questions or discussion. I will remind members that Mr. Zussman and his group are only here until 4.30, at which time we will have another witness.

Mr. Penson.

Mr. Charlie Penson (Peace River, Canadian Alliance): Thank you, and welcome, David.

Mr. David Zussman: Thank you. It's nice to be here. It's nice to see you again.

Mr. Charlie Penson: I really don't have much. It's an interesting process. I kind of wonder what the committee's involvement is going to be. It seems like this is the work we normally undertake as a committee, so I guess that will all kind of jell at some point.

But I'm looking forward to the hearings that you're holding. I think you should hold them at as many centres across Canada as you can to get a representative point of view, but other than that, we'll wait and see what kind of input you have. I hope a lot of people attend and you have a good process.

Mr. David Zussman: There has certainly been a lot of interest expressed to date from people to our initial mail-out. At this point, it certainly looks like we're going to have a full house, at least in terms of participation.

I think one of the challenges for us will be in fact trying to ensure that each of the round tables includes a representative sample of interests, and I suspect we'll have to make some choices at some point.

The Chair: Thank you, Mr. Penson.

Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Madam Chair.

The round tables you have outlined are all in major cities. Of course, my question is going to be about rural Canada. Often we need to make some extra effort to make sure the voice of rural Canada is heard. How are you going to go about that?

Mr. David Zussman: Of course, holding them in the cities I suggested we might doesn't preclude people from rural Canada participating. Again, the challenge for us will be to ensure that the people around the table do represent Canada grosso modo and as we move around the country. So I guess we're going to have to be very mindful of having a proper representation.

As you know, the difficulty with holding any such hearings in rural communities is the difficulty of access. So we'd like to think we'll anchor our round tables in these centres and ensure the proper representation.

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Mr. Walt Lastewka: I understand the reasoning behind the major cities for efficiency and so forth. When you go to Halifax, for example, are the Annapolis Valley groups going to be represented as part of the discussions? As you go to some of the other areas, are the outlying groups that represent not only the farmers but the small businesses from those areas going to be represented? The small business in rural areas is different from the small business in large communities. I just wanted to make sure there was an extra effort made to bring them in.

When will the listing be available of where these meetings are going to be held and so forth?

Ms. Anita Mayer (Vice-President, Public Policy Forum): We hope they'll be available in about a month's time. It will depend a little bit on how many submissions we get and what types of submissions we get. We won't make the decisions on the round tables until we have some fair idea of where the interests lie. I believe in about a month's time we'll have at least a first draft of what we're looking at as round tables.

Mr. Walt Lastewka: And these meetings will be open to the public?

Ms. Anita Mayer: It depends on what you mean by “open to the public”. They'll be held in camera to a certain point. There will only be 15 participants sitting around the round tables. We'll make sure the participants represent all kinds of points of view. We don't intend to have all of the public sitting around the table.

Mr. Walt Lastewka: Will the members of Parliament for the area sit in on the discussion?

Ms. Anita Mayer: They can be invited as observers, yes.

Mr. Walt Lastewka: I would suggest that we have the opportunity to invite members of Parliament from various areas to participate.

Ms. Anita Mayer: Thank you.

Mr. Walt Lastewka: I think what you've outlined is a darn good procedure. I'm glad the dates have been extended in order to do a more thorough job and get proper input. I want to thank you for that.

[Translation]

The Chair: Mr. Brien, do you have any questions?

Mr. Pierre Brien (Témiscamingue, BQ): I have a short question. Among the people or groups who have shown interest so far, is there any common element?

Ms. Anita Mayer: Excuse me, I didn't quite hear the question.

Mr. Pierre Brien: You said that information is available on the Internet site. You also said that people had shown some interest. Are you talking about chambers of commerce? What groups have shown interest so far?

Ms. Anita Mayer: Mainly associations. As far as I know, we've only had two replies on our Internet site so far. People are preparing their written comments. We've received calls from the Retail Council, the Consumers' Association and another association whose exact name I cannot remember, an association of independent gas retailers. Of course we've also received comments from the Bureau and from banks. At least 20 organizations called.

Mr. Pierre Brien: Have there been any consumer associations?

Ms. Anita Mayer: The Canadian Consumer Association did call but we have not yet received any brief.

Mr. Pierre Brien: Thank you.

[English]

The Chair: Thank you very much, Mr. Brien.

Mr. Mills.

Mr. Dennis J. Mills (Broadview—Greenwood, Lib.): I will defer to Danny. He can go first and then I'll follow him.

The Chair: Mr. McTeague.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): Thank you, Madam Chair.

Dr. Zussman and Ms. Mayer, thank you very much for being here. It sounds like a very worthwhile undertaking.

I like the idea of consultation, and consultation widely. I think it's important that we establish that as a basis for parliamentary review. Ultimately, when the minister has drafted legislation, this committee will no doubt look more widely at all of the considerations and some of the ideas. I think it will add legitimacy to the legislation beforehand. That's a rare feat in terms of legislation before the House of Commons. I think that can only serve to strengthen what we're trying to achieve here, which is a Competition Act that works for everybody.

I wanted to signal a concern as opposed to merely a question and perhaps leave it with you. In the buildup to Bill C-402, I also presented to this committee an aggregated survey of concerns in the grocery industry, at which a good part of Bill C-402 is aimed, but it deals with the whole question of abuse of dominance. Many respondents—those who are affected by this—clearly do not want to risk their current business relationship with their retail supplier or with the people who are responsible for ultimately selling their product to the consumer.

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As a result, your undertaking may not have the full benefit of all views. I would caution you at the beginning just to know that there are some people who would dearly love to do that but cannot. To make the point more succinct, in the United States, the Senate committee on small business undertook the same concerns with respect to slotting fees and found that only six of the hundreds who were interviewed came forward and gave public testimony. Those were done behind a screen with muted.... I guess they play with the voices so you don't know who it really is.

I don't suspect you'll be that sophisticated. I don't think you should be; it's an open process. I wanted you to be aware that you may not get all of what you're looking for. If there's anything we can do as members of Parliament, we'll certainly be helpful in that area.

I again congratulate you. It's a bold undertaking. I think the minister and the commissioner have wisely chosen to bring this up a scale and to render it to people who obviously have an opinion beyond us, as politicians, for the time being. We think this can only strengthen the process. This committee will have a lot of work when the bill is proposed in the House of Commons ultimately, if indeed that is the intent of the minister.

Thank you, Madam Chair.

The Chair: Are there any comments on that? You're not intending to have any screens or anything, Mr. Zussman?

Mr. David Zussman: I'm intrigued by the possibilities. We'll be using the method we've been testing over the last decade or so of bringing stakeholders around the table for a fairly good, frank discussion. We're very hopeful that this will help us find a consensus on some important issues.

The Chair: Thank you.

Mr. Mills, please.

Mr. Dennis Mills: Thank you, Madam Chair.

David, the concern I have about this is with the work you're doing, the work the forum is doing, and its linkage to this committee. How is that going to happen so that we can build on what you are doing concurrently?

In other words, there are a number of us in the House of Commons right now, from most parties but not all, who have a strong view that a total review of the Competition Act is long overdue, and we want to get at it immediately. How can your work send a signal to those stakeholders that you will be speaking to and ultimately preparing a summary of thoughts and analyses? How can you project this in such a way that they know that ultimately we're going to square off with this bill as a committee and in the House and make sure that what you've put on the table is consistent with what we're hearing as members of Parliament?

I don't want to take lightly what Danny said in terms of the fear that men and women—strong men and women who own serious, substantial businesses in our community, as I know from my own community—will not appear even here, let alone with your group, and talk about what's going on in certain sectors of the economy. You know of my respect for you, which goes back 20 years. It's nothing to do with you personally, but Dan and I have had experiences where some of these men and women are so frightened to talk about what's going on that they just won't even put everything on the table.

I just wonder how we can create the synergism here with your work so that this is not just the minister and your organization doing a summary of review on this. Members of Parliament are passionate about getting to the bottom of what's really going on out there. Have you had any thoughts on how we can have some kind of synergism?

You know that most senior business people in this country will dismiss the work of members of Parliament. They will only listen to senior lobbyists, ministers, and PMO. My concern is that if we don't show that we're working together, this will be perceived as, oh well, we have this review in hand, we have it under control, and we don't need to worry about the members. I will defer to any of my colleagues who want to interject, if they have a different view of this.

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This is my concern: how can we make sure that what you're doing is inextricably intertwined with the ultimate work of this committee? On September 30 you're going to produce a document, then we'll get the document and say, well, that's not consistent with what we've heard over the last three years from people who have come to talk to us about flaws in the Competition Act. How can we reinforce your work and how can you reinforce ours?

Mr. David Zussman: That's a good question. I think, in part, I was asked to come here this afternoon so we could talk about that very issue.

There are a couple of things. First, we'll only be able to work with what we have, that is to say, people who agree to come to sit around a table and talk about the Competition Act and its implications overall for Canada. Our skill in fact is in just trying to get the right mix. We can't force people to appear and we can't tell them what they have to say. So the product we produce will simply be a resumé or a compilation of the points of view that are expressed around the table.

I've already been quite struck by a couple of the comments about the possibility that some individuals might in fact be somewhat fearful of appearing. But the dynamics of our meetings are not like this, where you sit before parliamentarians as individuals and present your case. In fact, they are an opportunity to sit around a table to discuss and debate issues, hoping again to try to find some degree of consensus at least, or areas of disagreement, and see what the common attributes are as consensus or disagreement, as we move across the country.

Whether this committee will work simultaneously over the summer months with its own process or will prefer to wait until we produce a document.... By the way, I think the suggestion has already been made that members of Parliament would like to sit in on these meetings. I think that would be perfectly reasonable. They could track our progress throughout the summer months by sitting in on not just the ones in their own areas or ridings, but ones across the country, to get a better sense of what's emerging as a common theme. I'd be distressed in the end if we came up with a report that was significantly different in tone or emphasis from what you've been hearing here. That would appear to be somewhat inconsistent. I would be very surprised if that were the case.

We hope to be able to give better definition to what these issues are that you've been hearing individually from groups, and perhaps be able to summarize them and capture them in a more thematic way, in a way you probably haven't been able to do in committee, where your witnesses have appeared sequentially as opposed to together.

I can't go much further than that because I don't know—

Mr. Dennis Mills: Just reflect on it. We want to give you a heads up.

Mr. David Zussman: That's a good warning. I don't really know much about the dynamics of what our meetings will be like. When we do these, we're sometimes very surprised by the nature of the discussion. After we've done a couple of them, I will certainly be able to report back to you, if the House is still sitting, on what we're beginning to sense and feel. Of course, you'll be able to access all this through our own website. But I'd be glad to come back and give you some feeling for that.

Clearly, we'll make adjustments to the process, if we feel it has to be done, as we move across the country.

Mr. Dennis Mills: Thank you.

The Chair: Mr. Mills, just to clarify, I spoke about this briefly this morning at committee. The committee will be meeting for the next three weeks on the Competition Act with regard to principles more than the specifics of the bills Mr. Zussman's group will be looking at, as well as a couple of other areas of the Competition Act that I believe will not be discussed at the public policy forum sessions. We will table an interim report before we break in June, wait to allow the public policy process to take place, and come back in the fall to determine whether the legislation will be introduced in the fall, whether the minister's directive will be for us to look at the act again, or wait to see what happens. That's kind of where the committee's at right now, just to clarify.

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Do you have another question?

Mr. Dennis Mills: No, that's fine.

The Chair: Madam Jennings.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Mr. Zussman and Ms. Mayer. I'd like to echo some of the comments made by my colleague Brien. First of all something about the representativeness of the organizations.

You obviously have a good deal of experience in guiding this kind of process, particularly round tables, but I think it is very important to have a means whereby members of Parliament could have an impact before everything is finalized. In the Quebec area for example, not all the organizations interested in this matter have necessarily shown their interest. So it should be possible to get in touch with you to tell you that such and such an organization does not appear on your Internet site and that you should perhaps contact them to encourage their participation. That is one thing.

Second, it is clear that your organization cannot act as a commission of inquiry. I can understand my colleagues' concerns when they say that there may be interested parties with interesting things to tell you who would never take part in such a process, that is this series of round tables. As you say, it is not public. Organizations indicate their interest or you invite them yourself to take part. Once it is organized with 15 or 20 participants, no one else can take part, except if there has been an agreement to allow for observers.

If, in the coming weeks, this committee hears testimony it considers important, I imagine that we will refer to it in our interim report and that your organization will be able to take note of it before the beginning of the round tables. In other words, if certain matters or points of view are raised, that are not necessarily discussed in your round tables, then you will still be able to take them into consideration.

Another matter. Are your sessions bilingual? Will you have simultaneous translation?

Mr. David Zussman: Yes.

Ms. Marlene Jennings: Yes? Very good. That's all. Thank you.

[English]

The Chair: Is there any response to Madam Jennings' comments? Mr. Zussman?

Mr. David Zussman: No, I think we've answered her question directly. Also, the issue you've just mentioned about the interim report is something we will clearly have to factor into our own work now.

The question of representativeness has been raised a couple of times. We're not doing a study that encompasses every interested party in the country that has an interest in competition because it's just physically impossible for us to do that. In fact, you're saying—and I think it's very important—we'll have to go out of our way, perhaps even more than usual, to ensure the proper representation. The lists we are working from, which are ours from the Public Policy Forum, may not include all the potential interested parties, so we'll have to go beyond them. I'll be back to members here, if you like, to try to ensure we get that.

At no point at the end of this process will we claim we've spoken to everyone, for sure. Nor are we going to say we have spoken to a representative sample of the total population of Canadians who have an interest in competition law, because we can't do that within our limited time. We have a much more limited series of objectives, and in September we'll be placing in your lap a report that will be for many the beginning of the real process of deliberation and consultation.

We will be telling many of the interested parties we talk to that this will be the place for them to come to specifically put their cases forward on their individual concerns about parts of the Competition Act. We will be looking at the broader issues. I hope that in so doing it will spark a fair amount of discussion amongst stakeholders about the broad implications of the act, and not the narrow interests many of them will carry forward to both our meetings and potentially here.

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The Chair: Does anyone have any other questions? Mr. Zussman, you've obviously answered all of our questions.

Mr. David Zussman: For today.

The Chair: We hope you will be willing to come back in the fall to discuss your final report with us. Whether it's when the legislation's introduced or prior to that, we will welcome you back, if that's okay. I anticipate a number of members will anxiously follow your meetings, and hope to participate in them as well. We want to thank you for taking the time to come to explain the process to us this afternoon. We look forward to your results.

Mr. David Zussman: Thank you very much. I look forward to seeing you in September. I'm sure I'll be seeing many of you before then, as well.

The Chair: The committee will suspend now for about 15 minutes until Minister Mitchell arrives.

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The Chair: I'll call the meeting back to order pursuant to the order of reference of the House dated February 29, 2000, main estimates for the fiscal year ending March 31, 2001, votes under Industry; and the performance report for Industry Canada for the period ending March 31, 1999.

We're very pleased to welcome here the Honourable Andy Mitchell, Secretary of State, Federal Economic Development Initiative for Northern Ontario.

Minister, I'm assuming you have some opening comments for us.

Hon. Andy Mitchell (Secretary of State (Rural Development)(Federal Economic Development Initiative for Northern Ontario), Lib.): Yes I do, Madam Chair, and I'm pleased to be here and to have an opportunity to provide testimony to the committee. Having been a member of this committee in the previous Parliament, I know how much good work you do and the importance of the subject matters you address.

I'm going to give a brief overview of FedNor, and then I'd be pleased to answer questions from the committee members.

Essentially what FedNor attempts to do is create an economic environment in northern Ontario within which individual businesses, communities, and individual citizens can achieve their particular successes. So our main job in FedNor is to help create that economic environment. We approach that through a number of initiatives that generally fall into five areas.

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Firstly, on the issue of connectiveness, we work hard through FedNor in northern Ontario to help develop telecommunication infrastructure, telecommunication networks, and telecommunication applications, as well as to promote e-commerce. As you can appreciate, in northern Ontario all of those are critical to our economic development and have a number of particular challenges in that region.

Secondly, we work on the issue of trade, both in terms of developing markets for northern Ontario products and working with the entrepreneurs of northern Ontario to develop the skills in order to enter into a trading relationship on behalf of their businesses.

The third area we work in, Madam Chair, is the area of innovation. There we work as partners with entrepreneurs in terms of research and prototype development. We also work in terms of what we call developing innovation capacity to give our entrepreneurs the tools they need in order to conduct research or for the development and commercialization of new products.

The fourth area we work in, Madam Chair, is the area of community partnerships, where we work with communities to help create that economic environment. There are a number of important initiatives that we undertake under community partnerships, including community futures, a program of youth internship, and work that we do with aboriginal communities on business development.

We have a community recovery fund to deal with our single-industry communities and some of the impacts of changes in the natural resource industries that operate in the north. We have funds that assist with tourism development as well as general economic development.

The fifth area we deal with, Madam Chair, is in the area of investment. We do that both in terms of community futures, which provides investments for individual businesses, and through some MOUs that we've had in the past with lending institutions.

The question of course is, why would you have a regional development agency specifically for northern Ontario? The reality is that there are challenges that exist in northern Ontario that are not the same as those faced in other parts of the province.

First is the whole issue of geography. As many of the members of the committee know, in northern Ontario we have 8% of the population of Ontario, but 88% of the geography. So the whole issue of distance is a critical one in northern Ontario.

The second challenge we face in the north is the issue of population density. We do not have a great deal of population density. As I mentioned, only 8% of the population of Ontario lives in northern Ontario. But when you take a closer look at that, you see that 60% of it is in five communities. The rest of it is spread out through the rest of that land mass.

So population density is a critical issue in northern Ontario, particularly when you're trying to attract private sector investment and trying to do it in a way that would achieve a return for that private sector investor. As you can appreciate, if you're trying to make an investment in Toronto or you're trying to make an investment in northern Ontario, the type of return you're going to get from that population density can be very different.

Third, in terms of challenges that we face in northern Ontario, is the issue of distance for markets. Obviously, if you're operating in northern Ontario, you're much farther from the marketplace where you're likely to sell either your value-added or your primary resources, and that's an issue we need to deal with.

Fourth is the reality that in northern Ontario our economy is very cyclical in nature. Ours is a resource-based economy. We are dependent on commodity prices in terms of both the mining and the forestry sectors.

So for all of these reasons, these specific challenges we face in the north, a decision was made in the 1980s to develop a regional development type of agency called FedNor.

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When you take a look at the economic indicators, you see that these challenges have in fact resulted in northern Ontario lagging behind the rest of the province and therefore we are in need of additional partnership with the government. If you look at the EI rate in Ontario today, it stands at 6.3%. In northern Ontario it's 9.2%. The participation rate is 66.8% in Ontario as a whole and only 61.5% in northern Ontario. With regard to job growth between 1996 and 1999, we saw a 9% growth in jobs in Ontario as a whole, but only 1.7% in northern Ontario. If you take a look at the per capita income, in northern Ontario it is substantially less than it is in Ontario as a whole, 19.4% in northern Ontario and 22.8% in Ontario. So you can see that when you look at the economic indicators, those challenges I mentioned earlier certainly do have an impact.

FedNor has evolved fairly significantly over the last few years. As I mentioned, it was originally established in the late 1980s as a temporary development program. It remained such until the budget of 1995, when FedNor was renewed with a three-year, $60 million commitment from Finance. Also in 1995 FedNor took responsibility for the community futures program. As you know, Madam Chair, prior to that it had been delivered by Human Resources Development. FedNor took on responsibility for the community futures program not just for northern Ontario but for all of Ontario.

In the budget of 1998 FedNor became a permanent A-base program. As I mentioned, prior to that it had been a temporary program. Then in June 1999 an additional $60 million over three years was committed to FedNor. In August 1999 for the first time a secretary of state position was created with responsibility for FedNor. Prior to that the Minister of Industry had dealt directly with the FedNor file.

Since the re-engineering of FedNor occurred back in 1996, we've funded some 800 projects, involving approximately $62 million to $63 million. When we re-engineered FedNor in 1996, we moved away from what we had done in the past, which was business specific assistance, and went into programming to help create that economic environment.

As I've mentioned, there are a number of specific programs we've undertaken since 1996, and we've had some good results. The one I'd like to mention before turning it over is our youth internship program, which is a way of trying to have northern Ontario people who are recent post-secondary graduates get that entry into the workforce. We have seen that 96% of our young people who go through that program are finding permanent employment, and a good many of those are finding that employment in northern Ontario. So it has been an excellent program.

I don't often get a chance to be in front of a committee and talk about FedNor. I could go on for hours. But rather than do that, I'd be happy to answer questions from the committee members.

The Chair: Thank you very much, Minister.

We'll begin with Mr. Penson.

Mr. Charlie Penson: Minister, it seems like a bit of a contradiction. You talk a lot about the mandate you have for northern Ontario, and yet on the other side you're administering the community futures program for places like Leamington, which is one of the most southerly points in Canada. It seems rather strange that FedNor would be given that responsibility.

Nonetheless, having that responsibility and relying heavily on the community futures program, can you explain what kind of oversight the department has on the community futures program, what kind of reporting is available to members of Parliament, and what kind of track record the community futures loans program has so that we might know what kind of job they're doing in putting a lot of taxpayers' money into communities?

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Mr. Andy Mitchell: There are some 52 community futures that operate in Ontario. They all operate on the basis of an agreement they sign with the federal government.

The program is designed in a way that I personally support in the sense that it's a bottom-up type of approach to economic development. In other words, the community futures are operated by a local board of directors that is selected by the community itself. What it recognizes is almost exactly the point you made, which is that how you go about supporting business in Leamington is probably going to be very different from how you're going to support it in Timmins. So we have a structure that allows for that flexibility by having local control, where local priorities are established.

As I mentioned, they're subject to individual agreements with the federal government that outline the terms and conditions they have to operate under. In FedNor we have a series of field officers who monitor the ongoing performance of the individual community futures and ensure that they adhere to the individual criteria.

Since we've had the community futures program under our wing in FedNor, there has been $106 million lent out to some 4,100 businesses. They've helped create or support just under 16,000 jobs, and that $106 million has been able to lever $184 million. The programming is on a commercial basis. The money that is provided to businesses is in the form of loans, and in a few cases they are equity injections. They are repayable. They are generally collateralized. They are at commercial interest rates that are usually much higher than what you would see in a chartered bank. That is—

Mr. Charlie Penson: Minister, I'm aware of that, but that was not really my question. My question was, what kind of oversight does the department have in order to see whether or not these community futures programs are carrying out their mandate and using taxpayers' money wisely? Is there some kind of process?

Mr. Andy Mitchell: They're subject to an agreement with the federal government that contains specific terms and conditions they have to adhere to. As we renew those on an annual basis and provide them with their annual funding, we ensure that those terms and conditions are adhered to.

Mr. Charlie Penson: Is there auditing involved?

Mr. Andy Mitchell: Yes, there is.

Mr. Charlie Penson: Are there audits available that your department has done in the last year?

Mr. Andy Mitchell: FedNor as a whole was audited by the Auditor General in 1995, with a follow-up in 1997. There's an internal audit taking place in the department right now. As is normal practice with internal audits, if there's a request made, they become public documents.

Mr. Charlie Penson: Thank you.

The Chair: Thank you, Mr. Penson.

Mr. Pickard, please.

Mr. Jerry Pickard (Chatham—Kent Essex, Lib.): Thank you very much, Madam Chair.

You pointed out some of the real difficulties business has in northern Ontario. From the point of view of southwestern Ontario or generally central Ontario, many businesses would not choose to locate in northern Ontario because of the remoteness, the lack of people they would have available to them in the employment field, all kinds of disadvantages, and I think we all are aware of those.

In a program like FedNor there must be some really good targeted areas of employment, possibly in the high technology areas and some developmental areas. Mining is another one you mentioned. Mining and forestry have new dollars going into them. But where is FedNor really looking carefully at business opportunities that would be, in whatever way I put it, self-sustaining? I think it's fruitless if we go about putting programs in place that year after year after year have to be supported. I think we have to have targeted areas and targeted spending. At least that would be my view, and if I'm wrong there, please explain that as well.

Mr. Andy Mitchell: No, you're absolutely right, Mr. Pickard, that it is necessary to target the type of programming we do. That's why I mentioned in my opening comments that there's some very specific targeting that we do and approaches that we take.

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For instance, there is the issue of connectedness. One of the ways we are going to help ensure we can have successful business development and business expansion in northern Ontario is to ensure that we have the telecommunications and technological infrastructure, which right now doesn't match up to the rest of the province. So a good part of what we do is to assist with the development of that telecommunications infrastructure, the working of networks, which will bring groups together so that they can actually access the information in a cost-effective way because we've been able to bring these networks together. We're to help companies with the types of applications on how they want to use this new technology.

So one of those targeted areas is to provide the connectedness so that a business that's operating in northern Ontario can find that it has, as its marketplace, not just the rest of northern Ontario, not just Ontario or Canada, but indeed the world now. But they can't do that if we don't provide, or help provide, that basic telecommunications infrastructure. So that's one of the targeted areas.

A second targeted area is a recognition that many of the companies that operate in northern Ontario would benefit if they could expand their market through international trade. So we're trying to provide empowerment to these businesses, both in terms of how they can market as well as providing them with the skills they need in order to be export ready. So that's another targeted area.

There is the area of innovation. One of the things we're trying to do—obviously, as you mentioned, we have a big mining and forestry sector—is encourage businesses to develop new products and new technologies that will help those very industries, the forestry and the mining industries. So we assist them in the development of new technologies, the development of new products, that they can sell to the mining industry and the forestry industry not only in the north, but right across the world.

Mr. Jerry Pickard: Could you elaborate a little more on the types of support industries there would be for mining, for forestry, or other support industries, I think, for northern Ontario?

When I look at it, I think of small business, in many respects, feeding in. And you have a much broader, better idea of what you're doing with FedNor and opportunity development in the north. I don't really have a good grasp of what exactly those programs might be or those targeted industries, or whether much of FedNor business goes, as it does in community futures in my area, to small developmental, innovative areas. That seems to be where our community futures dollars go in my area in Ontario. But I would guess that in northern Ontario, because you have difficulty competing because of the remoteness and the number of people, you'd have targeted industries or particular industries that you would focus on.

Mr. Andy Mitchell: I think what is important to remember is that we, since 1995-96, are not into business-specific types of assistance. We don't provide grants to individual businesses. For the most part, if we're going to be business specific, we go through the community futures program, where they are repayable.

We do have what's called a pre-commercialization fund, where we will assist a company that is developing a new product and help them move it from the design stage to the commercialization stage. That is a business-specific program, and it is repayable in that particular case, but it's a small part of our portfolio.

Most of what we're trying to do is to create the economic environment within which the business can be successful. So rather than giving the money to company X, we create a telecommunications infrastructure so that the most efficient and the most competitive companies will be successful. But if you don't have the basic infrastructure, it wouldn't matter how good a company might be, they're not going to be as successful as they are with that there.

So most of our programming with FedNor is creating that economic environment. It isn't the business-specific type of assistance, because what we've found is if you provide business-specific assistance on a non-commercial basis, what you end up doing is simply distorting the marketplace in the long run.

Mr. Jerry Pickard: Thank you.

The Chair: Thank you very much, Mr. Pickard.

[Translation]

Mr. Brien, do you have any questions?

Mr. Pierre Brien: Yes. You mentioned that one of the challenges that FedNor will be dealing with is connectivity or the entire communications infrastructure. I live on the other side of Lake Timiskaming opposite Ontario, the region that you cover.

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On my side, on the Quebec side, the reality is quite similar from the economic point of view. We have the same problem of technological delay in relation to the big centres like Montreal, Toronto and even Ottawa.

Do you think, and this is one of the recommendations of the productivity committee, that infrastructure programs should be more widely spread in rural environments like ours to allow for the implementation of technological projects rather than just road infrastructure projects?

[English]

Mr. Andy Mitchell: As we develop the infrastructure program—because the government, as you know, in the budget announced a $2.6 billion infrastructure program—I would want to see, certainly in rural areas, a telecommunications infrastructure be considered as part of that infrastructure program. And that's going to be dependent on the negotiations between the federal government and the provinces as to what's going to be included. I would certainly urge that it be part of the program.

We're building a highway, and whereas a hundred years ago we might have built traditional highways, today we have a telecommunications highway that needs to be built, and both are just as important. In fact, in today's world perhaps the telecommunications highway is even more important than some of the surface transportation.

But, yes, I believe it's a form of infrastructure. I would certainly want to see that included.

[Translation]

Mr. Pierre Brien: I see. My second question concerns the links between FedNor and Economic Development Canada. Are there any particular links or does each one work on its own? Are there any links between your department and Economic Development Canada? I listen to you describe the situation in Northern Ontario. It's very much the same in northern Quebec from the economic point of view. Are there any links between your two departments?

[English]

Mr. Andy Mitchell: The link really occurs under the Minister of Industry. All of the regional development programs operate under the auspices of Industry Canada and the Minister of Industry. We have an opportunity through the department to have an interaction occur. As well, I meet with the minister responsible on a regular basis and we share our successes and the types of things we can undertake.

But I think it's important to remember that the development agencies all operate under the overall initiative of the government and of the Department of Industry. For instance, the issue of connectedness is a priority of the Department of Industry and is a priority of all of the regional development agencies.

How we go about doing that, though, is reflective of the areas in which we operate. You're quite right, there are a lot of similarities between northern Quebec and northern Ontario. There are some distinctions between the two as well. I'm a firm believer that by having a separate organization that operates in Quebec and a separate organization that operates in Ontario, although we operate under the same general principles, we're able to design our programming in a way that makes sense in the local markets in which we find ourselves.

The Chair: Thank you, Mr. Brien.

Madam Jennings, please.

Ms. Marlene Jennings: Thank you, Madam Chair.

I want to touch on the whole issue of e-commerce and the information highway. I'm not really quite sure what it is FedNor does in order to allow for or provide assistance to the remote regions to become more connected. Isn't it simply a question of getting the satellites in or the wireless in so that the companies or entrepreneurs in the remote communities who have a business idea or who already exist and wish to be able to expand have access to that? How does FedNor help them get access to that if Sprint Canada, AT&T, and Bell don't want to provide it there? How do you do that?

Mr. Andy Mitchell: You bring up one of the basic problems. In a large urban centre like Montreal or Toronto a private sector telecommunications carrier is likely to make the investment all on its own because it's going to get a return. The challenge probably in northern Quebec, and certainly in northern Ontario, is that this same investment is not going to get—

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Ms. Marlene Jennings: The same return.

Mr. Andy Mitchell: —the same return. So from a public policy perspective, do you simply say to the people who live in the remote areas, tough luck, it's important infrastructure; it's going to be in the urban centres, but you won't have it in the rural areas or the remote areas because you don't have the population density?

Our approach as a government—and I think it's an appropriate approach—is to say, no, in those cases what we will have is a public-private partnership.

Let me give you an example of how FedNor dealt with that. One of the problems in northern Ontario is that in order to have the data transmission, you need an upgrade of the switching equipment in many of the small municipalities. So we partnered with the telcos and assisted in the upgrading of that switching. I believe there were 58 communities in which we did that. In 58 separate communities, we were able to get the upgraded switching put into place by working in partnership with the telco, providing a portion of the dollars and the telco providing the other dollars, and all of a sudden a whole series of communities that didn't have access now had access.

That's the type of approach we take, and that's a very specific example of how a FedNor investment resulted in the connectedness of a number of communities.

Ms. Marlene Jennings: Great. That's the only question I had for you. Thank you.

The Chair: Thank you very much, Madam Jennings.

Mr. Penson, do you have any more questions?

Mr. Brien?

Mr. Lastewka?

Mr. Walt Lastewka: Yes, I have one question.

I've heard over and over the fact that the north is resource-based, the fact that there are fewer jobs in the north, and the fact that young people are leaving the north to go to the southern areas, urban sites, and so forth.

What is FedNor doing along the line of vertically integrating more of the resources in northern Ontario to keep jobs? Is there any work being done by FedNor on creating jobs in the north? Have you done any studies? How do you keep the jobs in the north or expand the jobs in the north?

Mr. Andy Mitchell: First of all, let me give you a little bit of history. The reality is that in terms of the population, if I remember correctly, since 1960 the population in northern Ontario has gone up only 1%, whereas the rest of Ontario has grown dramatically. I think that's the right figure. That gives you an idea of the challenge we have.

Really, what we're trying to do is create an economic environment, an economic infrastructure, that will allow for the development of that kind of vertical integration of jobs. What we have found is if you don't have that basic infrastructure, the jobs cannot be created. That has basically been our approach, and it's having some success.

For instance, we have a facility in Sudbury called NORCAT—I believe that's the name of it. It provides resources for a company to actually be able to do their research and product development. That's important, because whereas a large company that operates in southern Ontario may have access to that kind of facility, may even have access to it in a university setting and so on, that wasn't available in the north.

So when I say create the economic environment and the infrastructure, by creating NORCAT we're giving small companies in northern Ontario an opportunity for product development and product commercialization that they would never have had in the north before. It's giving them an opportunity to expand and to create jobs. That's the approach we've been trying to take.

On our young people, we've had a very specific problem. One of the reasons we have had only a 1% population increase since 1960s is that our young people are leaving the north and going to other areas. One of the things we've done is create a youth internship program, and that's important for a couple of reasons. What we do is combine it with giving the young person who is finishing post-secondary education some very practical experience in the work environment so that they can get permanent attachment to the workforce.

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But there's a second reason it's very important in northern Ontario. They're getting that job experience in northern Ontario, and we're finding that when they come back to the north to get that first practical job experience, when they do get that permanent job—and as I mentioned, 96% of them are getting that permanent job—it's happening in the north. So rather than these young people, these highly skilled, highly educated people, being lost to the south, from a northern Ontario perspective, we have a program that is working very well in keeping them. A good many of them will be the entrepreneurs who will create those businesses in northern Ontario. We weren't even getting an opportunity before, because they were leaving for school and weren't coming back.

The Chair: Thank you.

Minister, I don't know if you have anything further to add. I don't have any other questioners on my list right now.

Mr. Andy Mitchell: Thank you very much. I appreciate the opportunity to be here in front of the committee.

The Chair: You've answered all our questions. We wish you the very best of luck in continuing to do good work.

Mr. Andy Mitchell: Thank you.

The Chair: Thank you very much. The meeting is adjourned.