ADOPTING A COMPREHENSIVE RURAL POLICY
Rural Canada is about 20% of the employed Canadian workforce, one third of the Canadian population and over 90% of the nation's territory. It is a highly diverse economy and society, from its coastal regions, through its remote areas and its agrarian heartland. Rural Canada provides employment, forest products, minerals, oil and gas, manufactured goods, food security, and foreign exchange. It processes metropolitan pollution, educates a third of Canada's youth, and manages the environment on behalf of all Canadians. Rural Canada provides recreation and countryside amenities for all Canadians.
Rural Canada is also, regrettably, plagued by a number of unfortunate realities. Generally speaking, rural regions are economically disadvantaged compared to those of urban Canada. Per capita incomes have traditionally been lower - in 1990, for example, some $2,600 lower per person than the Canadian average - although this disparity generally varies on the basis of distance from major urban centres. Indeed, certain rural regions are growing as fast or faster than their urban counterparts. Others, however, have a long way to go to catch up.
The lack of adequate basic education and skills continues to be a problem. Rural residents, particularly women, youth and those with especially low skill levels, experience greater long-term unemployment. Unemployment rates, in fact, climb steadily as proximity to urban regions diminishes. Outward migration of youth is occurring largely because of a lack of employment opportunities and specialized education and training in rural areas.
Another key drawback to development is that basic infrastructure and investment capital needs are not being met in rural Canada. Social and medical services are often lacking or substandard. Roads are deteriorating and rail lines are being abandoned while new road and rail lines need to be constructed; air transportation is prohibitively expensive for many rural residents; communications infrastructure is sadly lacking in many regions; access to the information highway, a critical development tool, needs to be vastly improved; and there is considerable concern about the availability of credit. Rural Canadians also feel ignored by federal policy-makers.
Access to education and training, to infrastructure, to capital, to basic government services and to decision-making is much more limited than in urban Canada. It is not surprising that rural residents increasingly desire to be treated as equal citizens with equal access to the development tools that urban Canadians take for granted.
Many of the structural impediments to economic development in rural Canada have led to a lack of confidence among rural Canadians, especially young people who see urban areas as holding the key to their economic future. Rural development can only occur if there is an appreciation of the economic opportunities in rural areas and if the tools needed to act on those opportunities are readily accessible. The primary purpose of this report is to recommend actions that will enhance the economic well-being of rural Canada. We all want to create a rural economy that will enable our youth to remain within vibrant and proud communities.
Many urban residents also hold a negative perception of rural Canada. This perception may be attributed to a lack of understanding that there really is a separate rural economy and that it interacts in an important way with the economy of urban Canada. Promoting rural Canada should be an important domestic objective, for without rural Canada there really would be no urban Canada. It is important that all Canadians come to better understand the contribution of rural regions to the economic and social well-being of the country.
Rural communities provide much employment and economic benefit to all Canadians. Canada's international success and image is based primarily on natural resources. However, rural Canadians are now `a voice in the wilderness', as they often go unheard. Government must recognize the important contribution from this sector. This recognition should be heard and be celebrated by those of influence, the politicians.
One of the principal messages of this report is that rural economic development ought to be a collective responsibility involving all three levels of government as well as rural stakeholders. Within this broader picture, the federal government needs to play a more active leadership role in the economic development of rural Canada. It should demonstrate to rural Canadians that they and their economic contribution are essential to the well-being of the country.
Rural residents have to feel that their activities and communities matter, they have to become more involved in community development, and they have to invest in their own futures. With many rural organizations on the decline, individuals have to begin to take more initiative on their own, to create opportunity and reinvest in their community. To do this, however, they need to have the right tools.
Occasionally, in the past, rural development has meant providing government grants or other types of fiscal aid. We suggest that this is not the only way to ensure a strong rural economy in Canada. To take full advantage of the potential of the market, we need effective participation by government, government that provides a supporting environment through minimal direct intervention, clear regulations and legislative stability.
In addition to the federal government assuming a leadership role, it must specifically concentrate on "levelling the playing field" between rural and urban areas by extending to rural areas access to education, training, infrastructure, information, capital and other development tools equivalent to that enjoyed in urban Canada.
The government should facilitate the process of local economic development, leaving rural communities to decide how this development will actually occur. Rural people are not fond of having programs thrust upon them, and many are suspicious of the old mega-project and heavy-handed government approaches to regional development. These approaches have sometimes served to inhibit rather than promote proper local development. Building partnerships with rural communities, provincial governments, the private sector and local economic development officials is, we believe, the preferred course of action. The excellent efforts of federal, provincial and local government officials, environmentalists and the business community in the Mattawa, Ontario region, to join together to stimulate the local economy is testament to the usefulness of this integrated approach.
Government programs must provide the tools, but they must not interfere with their use, because if they do they will not be readily received and appreciated in rural communities. I believe, however, that if you develop self-reliance in those communities your approach will be much more successful.
Although small and rural communities frequently fall under the supposedly protective arm of governments and major resource companies, a community will be better off if it assumes responsibility for its own affairs and makes its own commitment to a viable future. Self-assertive communities develop the means to survive and prosper over the longer term using their own value judgements.
Most witnesses suggested and the Committee agrees that "bottom up" community development will work better than "top down" development strategies which can be counterproductive. Rural communities are more likely to achieve success if they are an integral partner in development decision-making, if they take responsibility for their own affairs and if they make their own commitment to a viable future.
. . . the federal government has an opportunity to significantly improve the economic development of rural Canada. To seize this opportunity the federal government must move beyond the sectoral interests of current national policies on rural issues and enter a new role.
The federal government's macroeconomic policies designed to lower government costs, reduce the deficit, lower interest and inflation rates and ensure employment are as relevant in rural as they are in urban Canada. What is critical for rural Canada, however, is that the government apply its policies differently in rural regions and in a manner which reflects the existence of a distinct rural economy based on different economic challenges and social structures.
The differentiated application of federal policies in rural Canada is the subject of the report's recommendations and should form the basis of a rural vision and strategy for the federal government. That strategy should be based on the following core principles:
- Urban Canadians need to be made aware of the significant economic contribution of rural Canada;
- Policies need to be implemented that would ensure access by rural Canadians to basic government services of equivalent quality to that of their urban counterparts;
- Quality access by rural Canadians to education, training, infrastructure, communications, capital, research and development and other important tools is crucial for them to meet their economic development needs;
- The specific model for rural development should be the choice of individuals in the local area and should ideally reflect a "bottom up" community-based partnering approach;
- It is not necessary to unduly increase federal government spending; instead, existing government funding programs should be proactively targeted at rural Canada; and
- The presence of the federal government in rural Canada should be enhanced through an ongoing communication of policy and program information to individuals residing there.
1. A comprehensive, regionally focused rural policy should be developed and made public by the federal government by the end of the fiscal year 1997-98. A clear vision for the economic development of rural Canada should be adopted and the vital economic, environmental and social contributions of rural Canada effectively communicated to all Canadians.
2. Existing federal funding programs should be proactively targeted at rural Canada, in a manner that guarantees that rural Canadians gain access to the government's programs, services and sources of capital equivalent to that enjoyed by urban residents.
HOW RURAL IS CANADA?
There are a number of ways to define what is rural Canada. During our testimony and research the various definitions fell into two broad categories: geographic and economic. Regardless of the type of definition, it can generally be said that Canada has roughly a third of its population living in rural Canada.
A. Geographic Distribution
Using OECD definitions to distinguish between rural and other communities and regions, a community is considered to be "rural" if it has fewer than 150 inhabitants per square kilometre. A region, on the other hand, is defined as "rural" if more than 50% of its inhabitants live in rural communities, while it is "intermediate" if 15-50% of its inhabitants live in rural towns. In "agglomerated" regions, which contain Canada's largest cities, less than 15% of the population lives in rural areas. In strictly geographical terms as much as 97-98% of Canada is rural.Others operate under a rule of thumb that any settlement under 10,000 people is considered to be a small town or rural community. From that perspective, as many as 25% of Canadians live in those types of settlements. The regional breakdown varies dramatically. In New Brunswick, for example, roughly 53% of that province's citizens live in rural and small town areas. A similar percentage exists for Nova Scotia and Newfoundland, while in Prince Edward Island the number is higher. Surprisingly, one of the most urban provinces under the above definition is Alberta.
For a better recognition of the diversity of rural and remote regions, three types of areas are distinguished: those adjacent to metropolitan centres (metro-adjacent subregions), those not adjacent to metropolitan centres (non-adjacent subregions), and northern hinterlands subregions. In 1991, 33% of Canadians lived in rural census divisions, compared to 35% in 1981 (see Table 1). During the 1980s, the total population of rural and remote regions registered a growth rate of slightly under 6%. The decline in rural Canada's share of the entire population can be explained by the fact that population growth in other parts of the country was considerably higher.
Table 1
Source: Agriculture Division, Statistics Canada; based on the 1991 Census of Population (20% sample)
Much of the rural population growth was recorded in metro-adjacent subregions. Indeed, in certain remote regions of Northern Ontario and Quebec, an absolute decline in the population occurred. Anecdotal evidence suggests that these adverse population trends have continued in the 1990s.
B. Diversity Of Economic Activity
Rural areas can also be described according to some of their main economic activities and level of economic prosperity. From this, certain experts have broken rural Canada into three separate categories. The "first rural Canada" is, in cultural, political, and economic terms, part of the global economy. It is based on production, focused on international trade, and well integrated into the business community and global economic activity. It comprises the core of the lumber, pulp and paper, mining and energy industries; the trawler fleets; commercial grain and oilseed production; and cattle feedlots. With less than 10% of the rural population and employment, this "world-class rural Canada" represents well over 80% of the market value of the rural output of basic commodities.The "second rural Canada" is primarily in the business of producing niche products as well as services. It also supports "rural Canada 1" in its global trade, mostly through the provision of professional and environmental services such as oil field servicing and silviculture work. It is involved in producing basic commodities through family-based fishing and farming as well as the rural services provided by federal and provincial governments. It produces most of the non-market outputs, particularly with respect to heritage and countryside-based tourism. Within this category, some people define Canada's "rural nirvanas" to be those rural areas attracting urban dwellers on a regular or permanent basis - British Columbia's Kootenays, Alberta's Canmore, Ontario's Muskoka, Quebec's Eastern Townships, Nova Scotia's Lunenberg Counties, and Newfoundland's outports. "Rural Canada 2" accounts for about 75% of the total rural population and labour force, and 25% of the market value of agricultural output.
The "third rural Canada" essentially corresponds to the impoverished communities and geographic regions of Canada. It is characterized by very low employment and a large dependence on government transfer payments. It includes 15-20% of Canada's rural population and accounts for less than 5% of its economic output. Some would even say that "rural Canada 3" is socially, economically and politically excluded from the rest of rural and urban Canada.
One must be very careful, when analyzing the various rural regions of this vast country, not to assign them similar characteristics, for the diversity of these regions is quite remarkable. It is likely, for instance, that a community from Northwestern Canada will differ substantially from another community situated in a rural setting close to a major city centre. Indeed, rural Canada is becoming increasingly complex, from both an economic and social perspective. There exists a wide spectrum of development situations, from "rural enclaves" at one end to "rural nirvanas" at the other. Notwithstanding this diversity, rural areas share certain common development challenges which this report attempts to address.
NATURAL RESOURCES AND RURAL DEVELOPMENT
Canada's natural resource industries have been the mainstay of our prosperity for most of our history and continue to be so today. They represent the backbone of the domestic economy and are by far our major source of trade surplus. Currently, they are one of our strongest strategic advantages in global competition. In fact, Canada is the third largest mining nation in the world, the world's largest exporter of forest and mineral products, a net energy exporter and a large-scale producer and exporter of agricultural products.
Our future prosperity depends as much upon our continuing ability to discover and harvest our natural resources in rural Canada as it is coming to rely on our knowledge-based manufacturing and service sectors. There are those who argue that Canada's resource industries are sunsetting and are no longer important to the Canadian economy. The Standing Committee on Natural Resources categorically rejects this point of view. Economic activity in rural areas benefits not only those living there, but is also of critical importance for the sustainability of thousands of jobs in urban Canada.
Indeed, Canada's natural resources provide an important source of economic strength, both when looking at the domestic economy as a whole and when considering the impact of the resources on rural development. Natural resources are particularly important as generators of overall wealth, which has led to substantial job creation in urban Canada. On the other hand, the efficiency of harvesting and extraction as well as the advent of new technologies has reduced the direct job impact in rural areas as the demand for labour per unit of investment has declined.
As mentioned, the primary industries in Canada do spin off large numbers of indirect jobs. For instance, direct and indirect employment in forestry and forestry-related industries accounted for one of every fifteen jobs in Canada in 1995. Other examples of spin-off employment would include the almost 100,000 Canadians working in gasoline service stations and the wholesale trade in petroleum products, and the more than 1.8 million individuals employed in a food-related job. Many of these individuals, however, would not be based in rural Canada.
As Table 2 illustrates, forestry, energy and mining together account for roughly 13.5% of our Gross Domestic Product (GDP). In 1995, they contributed 5.6% of our direct employment, 24.1% of the nation's new capital investment and 38.3% of our exports. Also in that year, $64.6 billion were added to the country's merchandise balance of trade, with resource-based exports almost the only part of Canada's extensive foreign trade contributing to a positive trade balance. The balance of trade for Canada as a whole was, at $38.5 billion, much lower.
For its part, the primary agriculture sector accounts for $14.3 billion, or 2.1% of total GDP, and produced 413,000 direct jobs in rural Canada in November 1995. The overall Canadian agri-food industry also plays a vital role in Canada's economic health, contributing about 15% of the nation's employment opportunities and over $82 billion in goods and services, or roughly 8% of GDP. New capital investment in agriculture and related services reached $3.4 billion, or 2.7% of the Canadian total, in 1995. Primary agriculture also contributed almost $12 billion in export earnings in that year.
Similarly, the fisheries remain an important sector of activity for rural Canada, although they have experienced a significant decline in the 1990s. In 1995, the fishing and trapping industry contributed $681.5 million to GDP, or 0.1% of the domestic total. Capital investment and export revenues in that year stood at $117.5 million and $2.7 billion, respectively.
If primary economic sectors, including agriculture, energy, mining, forestry and fisheries, are invaluable to the Canadian economy, they are even more crucial for economic development within rural Canada itself. This is no surprise to Canadians living there, given that natural resource activity is highly concentrated in rural regions and that resource-based industries are often the only meaningful source of employment there. This reality, as we have already alluded to, is less well known to urban Canadians.
Table 2
- 1 Percentages in parentheses are in reference to the Canadian totals.
2 Includes fishing and trapping.
3 As of 1991.
Source: Agriculture Canada, Fisheries and Oceans Canada; Natural Resources Canada; and Statistics Canada.
In 1991, the largest employer in rural Canada was the services sector, followed by sales, manufacturing, agriculture, transportation and communications, construction, government, forestry, mining and oil. A total of 13% of rural jobs were in the primary industries, with employment highest in rural areas not adjacent to cities (16%). Agriculture accounted for 9% of total employment in rural and remote regions; mining and oil 2%; forestry 1%; and fishing and trapping also 1% (see Table 3).
Table 3
Source: Agriculture Division, Statistics Canada; based on the 1991 Census of Population
While the contribution of the primary industries to rural employment may appear to be small on the surface, it bears noting that without the primary sector, the basis of the rural economy, there would be no need for the related services to be there. Rural and remote regions of the country are, in fact, the only ones in Canada where changes in primary employment have a direct and tangible impact on total employment.
Small and rural communities tend to be economically vulnerable because of their location and their heavy reliance on a single source of employment. [ . . . ] Notwithstanding their evident vulnerability, small and rural communities are extremely important for a number of reasons. One, it is in these areas that Canada's natural resources are found. Two, exploitation of natural resources is a primary source of national wealth. Three, small and rural municipalities have essential governmental functions to perform. Four, they have a significant role to play in providing Canadians with an alternative way of life to that of larger urban centres. And five, they have earned a special place in Canada's social and cultural heritage.
In fact, more than 500 predominantly rural communities are today largely or solely dependent on resource extraction in the mining (150), forestry (340) and energy industries. Many more depend at least partly on natural resources - over 1,200 in the case of forestry alone - or are inexorably tied to the economic fortunes of the agricultural and fishing sectors.
This dependence is even more pronounced in remote regions of the country, where natural resource-based activity often provides the only meaningful opportunity to live and work. Mines, petroleum and forestry continue to be major employers and contributors of economic activity in the northern hinterlands, for example. In 1991, mining and oil alone accounted for 21% of the jobs in the northern Prairies, and between 7 and 14% of those in the northern hinterlands of Atlantic Canada, Quebec and Ontario.
The natural resource sectors are also an important factor in the economic activity of First Nations reserves. Concerted efforts to integrate these communities into all aspects of natural resource management could bring about an even greater contribution to rural development. In 1991, natural resource sectors provided employment for roughly 10% of aboriginal Canadians in the labour force. By industry, labour force participation was distributed as follows: forestry 2,200; hunting, fishing and trapping 1,500; agriculture 1,250 and mining 500. It bears mentioning that the data on hunting, fishing and trapping involvement in the formal economy undervalue the economic contribution of those activities. The harvesting of these land-based resources for strictly domestic use represents an extremely significant economic and cultural activity in many remote communities.
KEY DEVELOPMENT CHALLENGES
From the testimony provided to the Committee we have identified seven specific development challenges which any rural policy must address, on top of the need to promote rural Canada within governments, the country and rural Canada. These include:
- a need for better access to education and more effective training;
- a need for improved infrastructure;
- a need to enhance natural resource harvesting;
- a need to develop more value adding of natural resources;
- a need to proactively support rural tourism;
- a need to develop the small business sector in rural Canada; and
- a need to create appropriate structures to deal with rural development.
A. Rural Development Begins And Ends With People
With the new technologies that business and industry operate under today, the workforce must be literate, educated and functional in the new working technologies if they are going to be able to take advantage of the job opportunities. The private sector is willing to participate to ensure that the training is relevant and up to date. [ . . . ] It is essential that the government bodies cooperate and facilitate our education system to produce an effective workforce.
The many opportunities which exist in the region require skilled labour or experienced management to navigate the logistical difficulties and other impediments to development. All other impediments to development are secondary provided the education and training level are increased.
Rural development really does begin and end with people. There is widespread recognition within the resource industries that the future competitiveness of these industries will ultimately depend on the quality and training of their employees. The low level of schooling, along with high unemployment and low labour force participation, are major factors responsible for income levels in rural Canada being lower than the national average.
We pay very good money for a workforce. We now do not hire anybody without a technology background, at least at the community college level.
There are three issues here: the need for the education system to produce a technically competent workforce; the need for adequate on-the-job training to ensure that employees constantly stay abreast of the technological advances that are so characteristic of these industries; and the need to provide new skills to individuals whose jobs have disappeared.
Rural development cannot be achieved when a significant number of rural Canadians continue to demonstrate poor literacy and numeracy skills. Human resource strategies have to ensure that governments' investment in education provides the basic math and science skills on which to build eventual technical training for careers in the natural resource industries. There is no doubting the fact that a high-quality education opens up employment opportunities.
Providing First Nations' youth with a first-class education has posed a particularly vexing challenge for governments. It has, in too many cases, been difficult to retain the students in the school system until they have obtained their Grade 12 education, although recent trends in this area have been more favourable. With a young and growing population, however, much more needs to be done to prepare these young people for increased employment, particularly in the natural resource industries.
Education and training should be geared to needs. Intensive, modularized study units should be identified and planned by industry and business. The educational system should create curriculum based on industry and business designs and needs. Education must become industry driven.
Once basic educational skills are attained, it is important that rural workers obtain adequate access to specific job training. It is worthy to note that one of the shortcomings in the training area is that there is a historical lack of appreciation of the value of technical skills and the trades. Whereas such an appreciation is quite commonplace in European countries, we have no such "trades culture" in Canada. People at an early age need to understand the importance of such skills to the technologically intensive natural resource industries, for instance.
During the Committee's regional hearings, we heard of the need to develop training based on the natural resource strengths of these regions. Current government training programs need to be reviewed so that they incorporate industry's needs, we were told. Only by matching training to employment in this way would one avoid trapping individual rural residents in activities which soon could become inactive.
To a large extent, however, responsibility for continuous training lies with the private sector. While the education system can provide numeracy and literacy skills, the dynamic nature of technological change places the responsibility for continuous on-the-job training squarely on the shoulders of the companies themselves. Such specific training can best be achieved through partnerships between private sector firms and the local communities. The Committee was particularly impressed with Syncrude Canada's partnership efforts in the Fort McMurray, Alberta region, viewing this particular model as having merit for other resource development situations. The company's partnership initiatives are outlined below.
The Syncrude Educational Partnership Experience in Fort McMurray, Alberta
Of our payroll, we spend 5% to 7% every year on education and training because of the importance of training and on-the-job development. Our technology itself is changing, which is changing jobs and changing our plant configurations. That's also a very important part of our focus in the company.
Moving on to educational partnerships in this region, we have worked to develop a number of them over the years. The most recent and significant one is called Careers - The Next Generations. It's a program that has been worked through the Alberta Chamber of Resources. What we're trying to do there is create positions and more interest in trades and technologies in this province, especially given that there are a lot of new projects and resource development under way in Canada, particularly in Alberta. We're going to be facing a shortage of tradespeople here in the near future, so we think it's important to encourage education in that area, especially given the concerns of youth and the potential for high unemployment if something more isn't done in the educational field. We have what is sort of a three-phase program. It starts back at grade 7 with job shadowing and with partnerships that we have here with the local high schools. The aim is to get students interested in trades, technologies and sciences. It then moves into the high schools under the registered apprenticeship program that we've worked out in co-operation with Alberta Education. This gets students from grades 10 to 12 interested in the trades, and it actually gives them work experience on our sites so that they have the equivalent of their first year of trade apprenticeship by the time they've finished high school.
We then follow that up at the Keyano College level with the trade co-operative apprenticeship program, which is again very different and unique. It's recently developed, and what it does is give high school students employment with local companies after graduation without having to indenture them in a trade or guaranteeing them a job at the end of it. They're able to work for the next three years, and then at the end of the day they have their trade certificate coming right out of high school. So those are three important components of encouraging trades development. We also have a number of other partnerships with Keyano College. Keyano College Industry Education Centre was opened in recent years and houses our Syncrude corporate training centre.
Access to post-secondary education also poses a problem for many rural residents, given that distances to educational institutions are often insurmountable. Rural Canada cannot afford to have the brain drain from rural regions continue. Fortunately, however, the advent of technology has opened up promising new opportunities in this area. The federal government can certainly facilitate access to those new technologies that can now deliver knowledge and skills closer to rural residents themselves. We believe that the government should be working actively with its provincial counterparts in the field of post-secondary education to ensure that regional universities and colleges throughout Canada utilize new technological advances in the development of "stay at home" course programming especially geared for rural students.
The government must create a certain climate. There are a number of factors that contribute to the prosperity of a region. The government's role is to promote opportunities in the area of manpower training, for example. There are many structures that must be established or preserved in the regions to make sure people stay there.
The key to overall rural development is to give rural Canadians the tools and opportunities to make a sustainable livelihood for themselves and their children. In turn, the human resource skills required for the sustainability of the rural economy need to be identified and initiatives undertaken to assist appropriate skills development. As we were frequently told, the federal government should, in partnership with both the provinces and primary industries, play an important role in education and training.
We recommend that:
3. The federal government should realign its manpower training programs in rural regions to more effectively meet industrial needs and to capitalize on the natural resource strengths of rural Canada. Such realignment should become part of the negotiations with provinces wishing to assume responsibility for training.
4. Resource industries should be encouraged to form partnerships with regional training institutions, socioeconomically disadvantaged groups and community economic development organizations in the provision of appropriate skills development and training.
5. The federal government should enter into partnerships with provincial and municipal governments, business and regional universities and colleges in the development of high-technology, "stay at home" educational courses tailored specifically to the needs of students in rural and remote regions.
B. Infrastructure Does Matter
Declining infrastructure has to be a major concern in attracting rural economic development. Deteriorating highways, consolidation of our schools and health services, while a provincial responsibility, are feeling the slap of federal cutbacks. Without these services it is difficult to attract and keep employees in rural Saskatchewan. Quality of life is linked to economic development. Government policy must recognize the need to spend more per capita in rural areas, and government policy must assess its impacts right back to the farm gate and in human as well as economic terms.
It became obvious very early in our study that physical infrastructure in the form of telecommunications, energy and transportation is indeed an important linchpin for the development of rural Canada. The reality, regrettably, is that there is currently a lack of healthy infrastructure, and access to basic government services is inferior compared to that found in urban areas.
There are many problems with rural infrastructure. Funding cutbacks have restricted maintenance budgets. Educational and medical facilities are sadly lacking, making it difficult to attract individuals into rural Canada. Financial institutions have been closing rural branches in recent years, affecting the supply of private capital available locally.
Not having adequate levels of infrastructure makes it that much more difficult to develop regional economies, although it should be noted that infrastructure is only one of several preconditions to economic growth and development. Others include basic education, job training and the existence of appropriate government policies.
We firmly believe that economic development opportunities in the rural economy should not be constrained by a lack of infrastructure, whatever form it may take. While we recognize that infrastructure alone is not the answer to solving rural Canada's long-term problems, it is a necessary and important precondition to development. It is also one that governments, acting on behalf of society at large, have traditionally and appropriately helped fund. It is only fair that rural Canadians experience the access to infrastructure that urban residents have come to enjoy.
We recommend that:
6. To correct the historical deficiency of infrastructure in rural regions, a minimum of 50% of expenditures associated with any future federal infrastructure program should be injected into rural Canada.
1. Increased Access to the Information Highway
Access is a critical dimension of the public policy debate on the Information Highway. Basic access to the Highway should be as universal and relevant to Canadians as telephone and television services are today.
When you walk into some communities in Canada and talk about the advent of the computer age and the modem in your office on your farm or in your small business, you get laughed out of the home, because they're still sitting on a party line and it's impossible to hook up a fax machine, let alone talk about having an exchange that has the ability to put modems and what not in place and connect them into what's happening around the world.
While equal access to the information highway is desirable, inadequate telephone service in many regions has, in fact, constrained such access. Many rural residents do not today enjoy the same level of service as customers in larger cities because they are served by older telecommunications equipment. Too many rural customers remain on party lines, unable to use fax machines and modems. Before the telecommunications industry will be able to service outlying regions, telephone systems will first have to be upgraded to single-party digital status. Certain provinces have seen fit to mandate access to such telephone service to all regions within their jurisdictions. Others, however, have left their rural residents woefully unprepared for today's technological advances.
In order to fund this accelerated modernization program, Bell has also asked the CRTC to endorse a new local service pricing plan for residential customers in medium and small communities. The new system would allow Bell to recover more of the costs associated with providing basic service to those customers, whose prices today are less than one-third to one-half of Bell's cost to provide service. It would also provide more equity in the way customers are charged for telephone service, that is, customers would enjoy service levels similar to larger centres and would pay similar prices.
With all of today's technological advancements, geography should no longer be a barrier to the information highway and all it has to offer. A modern telephone network can make all of this possible for rural Canadians.
We are encouraged by the efforts finally being undertaken by Bell Canada and other telecommunications companies to replace older equipment with state-of-the-art technology, so that Internet access can be assured for most if not all of their rural customers. Moreover, in the not too distant future, new technologies such as satellite and wireless technology should facilitate the provision of services to individuals residing in isolated areas. We are concerned, however, that the cost of carrying out the current equipment upgrade not be borne exclusively by rural clients, but be more equitably spread out over the entire network.
In addition, existing Internet access has been expensive. Obtaining access to the Internet in rural areas typically involves considerable long distance charges, whereas for urban residents the cost is very low. Deregulation leading to reduced services but at higher prices for rural Canadians can be partly blamed for this disparity. We were also told that in rural areas, the new technology tends to break down more frequently than in urban locations. There is an urgent need for rural residents to obtain basic, reliable telecommunications services at an affordable price.
Turning to the business sector, advances in the field of electronics are providing firms, particularly those providing business services, with new opportunities to locate in rural Canada. By linking rural communities to the outside world through the Internet, for example, it is hoped that an increasing number of service sector companies will locate there. Here again, however, we are very concerned about Bell Canada's request to the CRTC to significantly increase its rates for business lines in every region of Quebec and Ontario, while reducing the price of multiple circuit lines in Montreal and Toronto. In many areas the monthly rate for a single business line would rise from $35 to $56, a 60% increase. Given that most small businesses have more than one business line - one for the fax and the other to access the Internet - Bell's proposal represents a significant increase in the cost of doing business locally.
Technology is undergoing tremendous change. We now have an opening onto the world. Wherever you happen to be, if you're hooked up to the information highway, you're connected with the rest of the world. Let me give you an example to illustrate this. Near Rouyn, in a small municipality of 200 inhabitants, in a basement of a house is an information highway server containing advertisements for all the restaurants in Paris. In other words, there is a business in Paris that collects menus from all the restaurants in the city. Restaurants pay a certain amount of money to be included in this server and the server can be accessed in a small municipality of 200 people, 40 kilometres south of Rouyn. The server is in the basement of a house but people travelling on the information highway have no idea of this. [ . . . ] So if you're connected to the information highway, you're right in the heart of things. This of course is going to change the economy. For over a hundred years we have had an economy based on paper and because of this paper exchange, people have had to be in close proximity.
Companies already located in rural locations require the new technology to be competitive. They can use this access as a powerful business tool, by setting up a Web site for example. Firms in the software business can export electronically, and those in the tourism business can attract visitors much more readily. Businesses can use the Internet to describe their services and products, and access distant markets. The Internet has the potential to enable workers to work collectively from rural locations.
Anything that governments can do to reduce the need for firms to locate close to urban markets would be helpful. Improving telecommunications linkages with Canada's vital resource-based industries, including tourism, would be extremely beneficial. Rural people also need to have access to information about available business and employment opportunities. Gaining access will, moreover, allow rural young people to communicate with people outside the community without actually leaving the region, reducing the sense of isolation that today's youth often have.
For rural communities, programs such as the Community Access Program (CAP) - from Industry Canada - allows progressive partnerships to work for economic development using technology to open the global marketplace. Technology can provide support to larger geographic areas, with significant cost savings. These should be encouraged and expanded on.
Part of the federal government's information highway strategy, Industry Canada's Community Access Program (CAP) has proven to be a successful program in facilitating and accelerating the needed access of Canada's rural communities to the Internet. It is a cost-shared program that (a) finances up to 50% of the costs of establishing, in rural Canada, access sites to the "net" that are open to the public and (b) provides training in using it. The principal objective of the program is to stimulate growth and employment, especially so that young people can stay in the given region.
Through this program, rural communities are being hooked up more quickly than would otherwise be possible, and the cost of access is being lowered. Accelerated progress is attained by establishing a critical mass for the community in question, so that accessing the Internet becomes a viable venture for private service providers. The rural communities themselves are asked to provide rural access points, usually community centres and schools. In certain areas, agreements have been entered into with telephone companies to provide free access to CAP communities for the first few years of the program's operation.
As of January 1997, over 700 rural communities had become eligible for funding under the program. At that time, the overall target for hook-ups was 1,500 communities by 1998, up from the 1,000 when the program was first announced. The Committee is delighted that the 1997 federal budget contains $10 million in additional yearly CAP funding, to be disbursed over a three-year period. This new funding should ensure that virtually all interested communities with a population of between 400 and 50,000 will have access to the information highway by the year 2000.
We recommend that:
7. To meet the objective of providing adequate access by rural residents to the information highway, the federal government should attempt to ensure that the communications systems in rural Canada keep pace with available technology. The cost of upgrading rural telecommunications infrastructure should be borne by all subscribers, both urban and rural.
2. Satisfying Rural Canada's Energy Needs
Although most rural Canadians now have access to grid-supported electricity, and many can obtain natural gas, there are still a number of areas of the country where the reality is quite different. There, the energy needs of rural Canadians have not been adequately satisfied. The lack of availability of natural gas in certain regions is a good example.
Another obstacle to economic development is the high cost of power in remote, off-grid locations. Electricity rates in Inuvik, N.W.T. are more than four times that of those in Calgary, for example. The reason: the high transportation costs associated with shipping diesel to northern communities combined with the small population base paying for the necessary infrastructure to generate the power. Regional energy deficiencies thus continue to hamper the full potential of certain natural resources in rural and remote locations. There is no better example of this restriction than the huge Voisey's Bay ore deposit in Labrador, which cannot be processed locally due to the lack of access to a sufficient local source of energy.
It is essential that alternative energy options such as small hydro and other forms of renewable energy be explored and developed for those regions not benefiting from relatively inexpensive sources of energy. Electricity, for example, can now be generated in small increments close to the point of consumption at a cost approximating that associated with large-scale supply carried over long transmission lines. When storage technologies become competitive, small users will be in a position to choose alternatives to the present grid service. The private development of small hydro power generation facilities could play a very important role in rural development as long as the tax treatment of such facilities is improved.
Energy costs and availability are an important factor in determining whether economic development in a given region will be successful. The federal government can assist the process of energy diversification by providing tax incentives to firms interested in producing renewable energy in rural and remote locations. There is also considerable room for improvement in the research and development efforts given to these promising new energy applications.
We recommend that:
8. The federal government should provide (a) tax incentives to developers of renewable sources of energy in remote areas and (b) support for the development of rural micro-electric generating facilities through the use of tax incentives, an enhanced R&D focus and/or funding through a new rural infrastructure program.
3. Correcting Transportation Deficiencies
In the past, federal funding of the northern road network in Manitoba played a key role in new road construction to access isolated communities and in upgrading the highway network. Renewed federal participation in developing and enhancing the region's road system can support our economic future.
Existing deficiencies in transportation infrastructure, especially roads, were repeatedly brought to our attention. We were informed that the road infrastructure in place is often poor in quality, and that there is a complete lack of highways in remote regions. We were told that rail and air transportation is often inadequate and existing rural air transport is prohibitively expensive. The maintenance of inland waterways infrastructure is deteriorating due to a lack of funds for such services as dredging.
Federal policy initiatives in transportation have historically been detrimental to maintaining rural transportation infrastructure. Owing to the distance and geographic remoteness of rural Canada, both the need and the cost of providing and maintaining transportation infrastructure is greater there. Additionally, the type of bulk commodities produced by primary industries necessitate a diversity of transportation systems.
As a result, the Committee believes that the federal government's policy on reducing its physical ownership and control of the transportation sector must be applied differently in rural Canada. The government should:
- recognize that lower volumes of traffic in rural areas make it less attractive for private investment in transportation infrastructure. The provision of compensation through the use of tax incentives or subsidies should be considered;
- continue to provide critical rail and air infrastructure in remote areas where private concerns will not invest;
- recognize that cost recovery is not feasible in many smaller rural economies; and
- recognize that the limited number of existing transportation modes (e.g. single road) for many communities will require increased investment in maintenance.
Turning to air, the federal government has implemented its National Airports Policy. As a result, most rural communities have had to either assume the direct costs of maintaining their airports or abandon them. The government has also embarked on an ambitious six-year port divestiture program to transfer ownership, administration and control of these facilities to local interests, including those involving First Nations.
The current overcapacity and resulting process of rationalization of the existing rail, air and marine infrastructure lies in stark contrast to the rapid increase in use of the nation's highway and road infrastructure. Highways are unquestionably the dominant mode for passenger and freight transportation in Canada, accounting for 90% of interprovincial trade and 75% of trade between this country and our neighbour to the South.
Investment of public moneys on highway construction enhances Canada's international competitiveness, especially in the crucial North American marketplace, by making these markets more accessible. [ . . . ] Federal support for investments in the National Highway System are clearly justified on transportation policy grounds, in addition to the direct employment and economic growth benefits.
Rural Canadians, both individuals and natural resource-based businesses, want to ensure the viability of Canada's critically important road network, since it is becoming an increasingly essential element in rural development. We share Transport Canada's view, as expressed to the Committee, that the federal government shall become more active in its financial support in order to obtain quality in our road network. However, we note that it has failed to reach agreement with the provinces on a national highways policy.
I would agree that an alternative to providing the infrastructure or the plan to provide education would be to provide an incentive through a tax credit system or some kind of a tax reduction scheme that recognizes the higher costs and the difficulties in those areas that are less accessible.
The Committee was also told about the importance of governments contributing to the construction of roads and other infrastructure required to extract or harvest natural resources. Such infrastructure exerts a significant impact on regional economic development in terms of opening new areas to activities such as forestry, tourism, hunting and fishing. In remote regions, however, it is often the company itself that invests in the roads, power lines and even community medical facilities that are required for development to occur. In those instances where the private sector has assumed government's traditional role as the supplier of necessary infrastructure, the industry is of the view that it would be entirely appropriate to offer tax assistance as a quid pro quo for its direct expenditure of infrastructure funds. We share this view.
Finally, a number of groups appearing before the Committee expressed their concerns about the application of infrastructure-related cost recovery in certain areas of federal jurisdiction, ice-breaking and coast guard services being mentioned on several occasions. One of the main issues covered was the impact of cost recovery on single industry communities. The governments should, in our view, be careful not to let cost recovery jeopardize the financial viability of these single sources of vital economic activity in rural Canada.
We recommend that:
9. The federal government should enter into new cost-shared agreements with the provinces to implement a national highways upgrade for rural areas.
10. Federal tax assistance of limited duration should be provided to businesses willing to operate short haul rail lines; serve as regional air carriers or as rural airport landlords; manage and maintain rural docks and harbours; or construct road infrastructure.
11. The federal government should review its application of cost recovery to services provided in rural Canada, to ensure that undue financial burdens are not imposed on industries operating in rural and remote communities.
C. Enhancing Natural Resource Activity
Given that natural resources are the engine driving the rural economy, how can we ensure that the resource base is sustained for future generations and that current natural resource activity is enhanced?1. Sustaining the Resource Base
Canadians are firm believers in sustaining our resource base in the best way that we can, and in a manner that protects the environment. In fact, the resource industries' long-term competitiveness can only be assured if sustainable resource management is followed. Recent developments in the East Coast cod fishery are testament to the lack of adequate government/industry/international policy in this regard. The problems in the fishery must not be repeated in other industries.
[ . . . ] Labrador will be entering the 21st century with the development of one of the world's richest nickel reserves, at Voisey's Bay, Labrador. It is imperative that Labradorians, which include all of us who live and work here, realize the maximum benefits from that development. No longer will it be acceptable that communities should go without proper infrastructure, nor will it be acceptable that our people go unemployed while immense profits accrue to outsiders. Simply put, that day is gone. We've been there, we've had the T-shirt, and we now want our fair share of whatever benefits derive from our resources.
Natural resource companies should not be subsidizing communities but they do have a responsibility to share the wealth with local residents in terms of jobs, contracts, and profits; this approach can be both beneficial to the company and the residents.
Governments undoubtedly have a critical role to play in putting in place appropriate policies for resource development. At the same time, it is our view that the resource-based companies have a social obligation to develop long-term partnerships with the communities, regions and people affected by their industrial activity. Reinvestment of a portion of the financial returns emanating from the resource activity back into long-term resource management, training, or even community infrastructure is indeed a worthy objective. Again, the Syncrude partnership example provides an excellent model for resource developments across rural Canada.
Apart from the need to sustain our resource base with appropriate harvesting techniques, a number of other, more specific resource management issues were brought to our attention. For instance, we were told that forest production levels could double or triple as a result of adequate investment in silviculture. It is now possible through genetics to improve substantially the quality of seedlings and trees, including their growth rate. No longer is it necessary to wait 10 to 15 years to get a new generation of genetically improved trees for our plantations. The provision of selective tax assistance as requested by the woodlot owners could also lead to more sustainable forestry activity.
It was also noted that the oil and gas industry was constrained in developing and marketing its products by a lack of pipeline capacity. In order for the industry to reinvest its earnings in exploration and technological development, it requires additional growth in its export markets. For this growth to occur, additional pipelines to the U.S. must be built.
The growing aquaculture sector is developing rapidly in Canada as world demand for fish and seafood is growing steadily and the wild fishery is on the decline. Shellfish and finfish aquaculture employ more than 5,200 people, mostly in rural Canada. It is also believed that shellfish farming presents a unique opportunity for First Nations to develop sustainable businesses in rural coastal communities, particularly in British Columbia. Unfortunately, aquaculture is far from being developed to its full potential in Canada owing to a number of constraints to development. The major factor limiting the industry's growth is the burden of government regulation and the uncertainty that it causes. The aquaculture sector also suffers from shortages of infrastructure and capital to support expansion and growth.
Third, the federal government should move towards developing research programs or pilot projects similar to those planned or in operation in other coal-producing nations, such as Australia, Germany, the United Kingdom, the United States and Japan. These people are overtaking us. We've developed technologies in this country that were firsts for the coal mining industry.
Fourth, it was brought to the Committee's attention that the three levels of government are not devoting sufficient attention to the global and domestic conditions under which the coal mining industry operates. Coal is an important commodity for both the Eastern and Western regional economies.
By the way, we have devised a product called the family farm loan, which provides security to parents in terms of an income stream and with respect to their assets. It enables the son, daughter or relative to acquire the farm with a very low down payment and very little collateral. This product, when we presented it to our alliance partner in the U.S., was so interesting that they immediately adapted it for their farm clients in the U.S.
A final concern that was expressed was the need for progress to resolve the issue of intergenerational transfer of family farms. The Farm Credit Corporation, the federal government's financial Crown corporation assisting the agricultural sector, has already introduced a special type of family farm loan to deal with this issue. It is our view that this product should be expanded and given considerably greater publicity.
We recommend that:
12. The federal government, in partnership with natural resource companies, provincial governments, local communities and other stakeholders, should ensure that resource harvesting is undertaken in a sustainable manner, to the long-term benefit of the communities involved.
13. The Farm Credit Corporation should expand and publicize its new family farm loan product, designed to facilitate the intergenerational transfer of family farms.
2. Improving the Investment Climate
We believe in environmentally responsible sustainable development. What we cannot condone is the maze of uncoordinated and overlapping regulations and authorities that do not contribute to a better environmental review. They simply waste investors' and taxpayers' money and add to the uncertainty of developing any project into a producing mine. [ . . . ] We need one process which can include all stakeholders: the proponent, all federal and territorial agencies and all intervenors who have business in the process.
Regulatory harmonization should remain a top priority for the government. An effective, efficient and stable regulatory system reduces unnecessary overlap that can cause long delays and drive up costs on pipeline projects requiring regulatory approval.
At present, the major limiting factor to the growth of the industry is the burden of government regulation and the uncertainty created by various levels of government. Aquaculture exists within a complex matrix of overlapping government mandates and jurisdictions.
The concerns raised in the above section do not exhaust all of the structural impediments that governments place on the development of the natural resource base. Governments also need to address a number of additional issues to ensure that the natural resources sector remain healthy. These include:
- an appropriate tax structure that encourages investment;
- a regulatory regime that maintains environmental standards but which is responsive to the needs of industry;
- a speedy approval process when permitting is required (e.g. gas pipelines);
- expeditious settlement of land use issues;
- increased investment in R&D;
- removal, through a joint effort with the provinces, of interprovincial trade barriers; and
- improved access to foreign markets through the negotiation of suitable trade agreements, a prime area of federal jurisdiction.
A number of specific criticisms of environmental policy-making have emerged:
- the environmental regulatory system currently in place is restrictive to potential investors. There is a tremendous need for regulatory relief and greater regulatory stability, to ease up on the suffocation of new business opportunities;
- the overlapping system of federal/provincial environmental assessment of new investment projects continues to lead to time delays and uncertainty for potential investors;
- environmental regulations have not yet been fully streamlined and harmonized, and in the main, applied in a consistent and certain manner. Regulatory overlap and duplication continues to be an irritant; and
- insufficient attention has been devoted to the resolution of important land access issues, such as land claims and the setting aside of space for parks. Land claims/land access issues are delaying the development of new resource extraction projects.
Improving the fiscal environment can lead to a flood of investment intentions, as the preliminary positive response of the oil sands industry to changes in the fiscal regime has demonstrated. Lowering the payroll and corporate tax burden on industry could also improve the current situation in natural resource industries in which there is less and less employment to be found per unit of investment.
We recommend that:
14. The federal government should immediately streamline its regulatory system to facilitate increased investment by natural resource industries in rural Canada, and remove the regulatory bias that currently exists against rural development.
15. Greater federal priority should be assigned to the attainment of a just settlement of existing land claims.
16. The federal fiscal regime affecting natural resource industries should be periodically adjusted to improve the domestic investment climate. An urgent priority is the implementation of the fiscal recommendations of the National Task Force Report on Oil Sands Strategies.
3. Enhancing R&D
While the domestic tax regime in place for R&D is quite competitive in international terms, it remains the case that Canada lags other industrialized countries in R&D activity. With a mere 1.6% of its GDP devoted to R&D, this country's performance ranks second lowest among G7 nations and is below the OECD mean of 2.2%. Perhaps more significantly, Canada spends less than one-half as much on R&D in the primary sector - only 0.3% of GDP in the forest products industry - than it does on scientific research, such as R&D on pharmaceutical products.
Enhancing existing levels of R&D activity should be an urgent priority for natural resource sectors, given that these represent sources of economic strength. The responses to resource development and environmental challenges have increasingly become dependent on technical breakthroughs; therefore the right climate for achieving these breakthroughs must be developed.
For it to be truly effective, R&D on natural resources can hardly be conducted from urban settings. In many of the Committee's public hearings, witnesses stressed the importance of supporting and establishing R&D centres of excellence and innovation in rural Canada. These should be based on the specific strengths of the rural regions. Closer partnerships with rural educational and research institutions, as well as industry, should be encouraged and further developed.
We recommend that:
17. The federal government should, while promoting more effectively existing R&D programs, enter into new partnerships with natural resource industries to develop improved resource harvesting practices. This research activity should be generally undertaken within rural locations, with the research results to be shared with firms active in these industries.
D. Value-Added Is Important
The key word, once again, is added value. As long as our natural resources are sold outside our region or outside our country without having value-added to them, rural communities will continue to lose their economic base.
From time to time, a school of thought has emerged which argues that Canada would be best served if its economy shifted away from one that depends heavily on its natural resource base towards one that is more high-technology, information oriented. Such an approach often becomes more popular during cyclical downturns when our normally vibrant natural resource industries tend to become less so.
On the other hand, one can find industry representatives who argue that Canada's comparative strength continues to lie in the extraction of raw materials such as minerals and other resource harvesting. Since we are among the most efficient producers of resource commodities in the world, we should thus concentrate on expanding this effort and not consider alternative economic activity. The view that we should specialize in what we do best is supported by the success that Canadian companies have traditionally enjoyed in global commodity markets.
As is often the case, the Committee believes that the truth lies somewhere in the middle. We heard from across the country that ensuring that value is added to our current primary output mix is indeed important. Value-added processing can be a key generator of jobs throughout rural regions. Rural Canadians told us that, whenever possible, natural resources should be processed locally prior to the finished product leaving a given community or region.
A shift to greater value-added can be accomplished without necessarily having natural resource firms adopt a strategy of forward integration into downstream production, although enhancing the rural manufacturing base would have its benefits. Currently, the lion's share of resource-based manufacturing activity, apart from wood manufacturing, is conducted outside of rural regions. Even if diversification away from primary production cannot be achieved, value can be added in a significant manner by altering the primary product mix in a way that confers greater satisfaction to customers and enhances the overall economic benefit. For instance, the forest industry has been forced through increased competition to generate more upscale products such as specialty papers .
If rural citizens are to take advantage of the opportunities opened through adding value, a process must be put in place to provide the education and training necessary to fully understand the concept and scope of `value-added'.
For rural Canada, the challenge is to continue to expand its world class, resource-based primary industries and complement these with new economic activities that can function well in rural settings. Several obstacles to such a shift in rural Canada were, however, outlined to the Committee. First, the educational and training skills of rural residents are often not up to the norm required to take full advantage of value-added opportunities. These shortcomings must be corrected if the rural economy is to benefit.
At the moment, the industry is trying to move increasingly toward value-added products. It is specifically in these areas that our competitors throughout the world are continuing to erect tariffs and non-tariff barriers. Let me give you the example of a basic product such as pulp or newsprint. There is no tariff on pulp for those who want to manufacture their own paper using Canadian pulp. However, when the same people manufacture, often using our pulp, fine paper or coated paper, boxes or paper board, they impose some rather exorbitant tariffs on these products, because they don't want our products to compete with theirs. It is not unusual to see tariffs of 40, 50 or 60 per cent on some fine paper or specialty paper.
Second, the point was raised that it was of crucial importance to continue reducing all international trade barriers, particularly on value-added products. Countries that compete with Canada in natural resource-based production are continuing to impose trade tariffs as well as non-tariff barriers on our exports of value-added products. This protectionist action is definitely hurting Canada's ability to diversify its traditional export mix.
Third, interprovincial trade barriers are hampering progress in adding value to rural output. We find it extremely disappointing that while international agreements can be signed with our global trading partners (e.g. NAFTA), internal trade liberalization cannot become a reality. Efforts to remove the barriers to trade of value-added products must be accelerated.
We heard of several additional roadblocks in this area. One was the fact that individuals and companies wishing to invest in value-added opportunities often lack adequate financial resources in the form of debt and equity capital. For example, we were told that farmers often require assistance in identifying investment opportunities and financial support to ensure that these opportunities are realized.
Another frequently mentioned barrier was a shortage of R&D and innovation in promising value-added endeavours. It was also observed that there was often a lack of adequate transfer of technology to the marketplace. These roadblocks must be removed as soon as possible.
We were told that the federal government does not have programs aimed specifically at generating greater value-added in rural regions. Its contribution has been indirect in that its R&D activities have led to greater product transformation in rural Canada. We are of the view, however, that increased emphasis must be placed on encouraging the transformation of rural Canada's resources into more sophisticated products in response to market needs.
We recommend that:
18. The federal government should (a) enter into partnerships with natural resource industries to research potential value-added opportunities; and (b) establish effective policies to encourage natural resource firms to produce value-added specialty products where market conditions warrant.
19. In order to help raise the level of both external and domestic trade in value-added products, the federal government should (a) redouble its efforts to achieve an accelerated reduction in global tariff and non-tariff barriers to trade in such products; and (b) in conjunction with the provinces, accelerate the process of eliminating interprovincial trade barriers. Unilateral action should be considered if sufficient progress in liberalizing internal trade is not achieved by year-end 1997.
20. Supporting value-added activity in rural Canada should be accorded greater priority by federal organizations such as the Farm Credit Corporation, the Business Development Bank of Canada and its regional development agencies, as well as by officials responsible for Industry Canada's Technology Fund.
E. Supporting Tourism
The challenge facing the industry as we prepare to enter a new millennium is to not only maintain our current levels of visitation but to increase them by capturing a larger segment of the worldwide travel market. It is here that we look for assistance from our Federal Government to help us market Muskoka, thereby increasing business to the area and helping us to build a better economic base for the entire Muskoka community.
This means that for the regional tourism industry, all the things that we call the natural resource sector are of crucial importance. This Mr. Chairman, reveals the importance of natural resources for the regional tourism industry. It does not simply come from trees, but also from transformation and the history of that transformation. What we have to say does not go against the development and exploration of natural resources in the region. Instead, we believe that it completes the development and exploitation of these resources.
Canada's natural bounty of lakes, rivers, mountains and other geographical features has astounded domestic and foreign travellers for years, and continues to do so today. Adventure travel and ecotourism, as well as tourism based on Canada's extensive natural resource activities, are currently providing exciting new niche market opportunities over and above traditional summer and winter vacation activities. A good example is the interaction in the Mattawa, Ontario area, between the local forestry and tourism industries to develop ecotourist potential. Individuals are being asked to take silviculture and mill tours, to gain a better understanding of sustainable forest operations. Such partnerships, we believe, offer a vibrant model for the future.
A few statistics demonstrate the importance of the tourism sector to the overall Canadian economy. In 1995, tourism expenditures in Canada totalled $41.8 billion, representing a 7.1% rise over the previous year's level. Tourism growth, in fact, exceeded the rate of growth of the overall economy in 1995.
Tourism is also a people-intensive industry which continues to show that it can create jobs at a faster rate than the economy as a whole. For instance, direct employment in this industry in 1995 increased by 2% over 1994, to a total of almost one-half million person-years. The rate of growth of employment in the overall economy for this period was significantly lower. The overall total number of Canadians employed in tourism and tourism-related industries is roughly 1.3 million.
Tourism, one of this country's largest industries, provides rural regions with an opportunity to diversify their economic base with relatively low capital investment. Much more needs to be done to attract visitors there.
The tourism economy in rural Canada represents a separate and distinct economy from that most commonly seen in urban Canada. While it has the advantages of natural beauty and resources, a number of impediments inhibit the development of a strong tourism economy. These include:
- the lack of an adequate transportation infrastructure, which makes it difficult for people to travel to many rural areas;
- a potential market size for constructed tourism generators which often does not generate sufficient cash flow to service the debt required to build the required infrastructure;
- the relative small size and diversity of rural tourist operators, which combined makes it difficult for them to act in association with each other or in partnership with organizations like the Canadian Tourism Commission (described below); and
- the cyclical nature of rural tourism and the lack of actual market size, leading many private capital providers not to invest in the rural tourism market.
We receive the Canadian Tourism Commission newsletters and we are in contact with our colleagues from the other regions. It costs a lot of money to be at the table with the CTC and not everyone can afford to be a member.
While the creation of the CTC was generally well received by the witnesses active in tourism, a common complaint was heard. Whether it was in the Northwest Territories, the Muskoka region, the Abitibi-Témiscamingue region or in Atlantic Canada, we were told that small tourism operators - the norm in rural Canada - have largely not been able to access the services or partnering initiatives of the Commission. The prime reason: the limited financial ability of the smaller operators to buy in to the agency's co-operative marketing programs. The CTC's efforts, at least as perceived by rural operators, are directed more to larger operators, found typically in or close to urban locations.
The CTC told the Committee that, while it does have the mandate to develop a national marketing program, it does not reserve separate funding for non-urban locations. We believe this is wrong, and that the Commission has to recognize the urgent need to support tourism in the rural regions of Canada by targeting rural regions more explicitly. According to witnesses that we heard, it also needs to do a better job of distributing information on its operations locally.
Encouraging and/or assisting banks and/or institutions such as the Development Bank to recognize the trends, realities and potential of businesses in this industry would be of great assistance to the Muskoka region.
We heard that not all rural areas are blessed with developed or natural tourist attractions. It also became apparent that many tourism operators, like other small business owners, are having difficulties accessing debt and/or equity capital.
The access to capital issue for tourism operators needs to be addressed through the combined efforts of several partners. Chartered banks need to be willing to evaluate proposals less on tangible considerations such as collateral and more on such assets as the reliability of the project proponent, community support and management skills. Moreover, past problems in the tourism sector should not be allowed to prejudice decisions regarding future proposals.
Government lending facilities such as the Business Development Bank of Canada and Community Futures Development Corporations must continue to support the tourism sector. The tendency to use these programs to only support high-tech or export opportunities must be avoided. These organizations need to reevaluate their support of the tourism sector and recognize that, on an equivalent basis, tourism holds the same potential for rural Canada as does investing in high-tech firms in urban Canada. To this end, the announcement in the 1997 federal budget that the federal government would inject $50 million into the equity of the above-mentioned Bank for private tourism infrastructure development purposes comes as good news.
Regional development agencies also need to continue to support rural tourism. Agency initiatives should include: programs assisting in attracting infrastructure development; firm specific debt and equity assistance; and regional marketing and employment training initiatives.
Finally, the lack of equity capital for tourism operators needs to be addressed. The federal government should enter into partnerships with such entities as the labour-sponsored trust funds through a targeting of existing tax incentives to support rural tourist operators.
We recommend that:
21. The Canadian Tourism Commission should more actively assist the rural tourist industry by (a) allocating a specific share of its marketing partnership funding to rural tourism operators; (b) providing more information on tourism promotion possibilities to local government and community development agencies; and (c) ensuring that financial institutions have adequate knowledge of new business opportunities in the growing tourism sector.
22. The development of tourism infrastructure should be made an integral part of any new national infrastructure program.
23. Federal regional development agencies should allocate a specific portion of their financial resources to the creation of regional tourism attractions in rural Canada. Regional tourism marketing programs should be developed in partnership with the tourism industry.
F. Developing Small Business And Entrepreneurship
By now, it is generally accepted that the motor behind job creation is the small business sector. Small and medium-sized enterprises have typically accounted for over 80% of net job creation in recent years. This truth is as evident in rural Canada as it is in urban locations. In order for human resources to be deployed successfully, we need to ensure that a favourable business climate is in place, we need to eliminate capital shortages for small businesses in rural Canada, and we need to significantly boost entrepreneurship and managerial training there. If this can be done successfully, improved job creation should become a reality.1. Improving the Small Business Climate
The best thing the federal government can do for small established business development is to continue to provide a stable interest rate policy and access to financing and to work towards removing impediments to the flow of interprovincial trade and labour and the facilitation of intergenerational transfers of family businesses. Such policies would, coupled with lowering taxation on small businesses, such as with an annual revenue of less than $200,000, encourage the creation of jobs in smaller centres in our country.
A number of witnesses pointed to the need for an improved small business investment climate in Canada. They argued strongly for an improved regulatory environment and a more efficient delivery of government services. Most witnesses supported the government's fiscal efforts to date and urged a continuation of policies to reduce government deficits and debt leading to opportunities for reduced business taxation. On the latter point, payroll taxes (e.g. Employment Insurance and Canada/Quebec Pension Plan premiums, provincial workers' compensation and health levies applied by certain provinces) were identified as the most onerous "job killers".
In a previous section of the report, we have already recommended that governments do their utmost to streamline and, in certain cases, rationalize their regulatory involvement. The interest in regulatory efficiency has also been a centrepiece of the Committee's past study activities. We are most concerned that immediate action on this front be forthcoming.
Similarly, the issue of inefficient government delivery of programs and services will be examined in the subsequent "structural reform" section. Rural Canadians have a right to a more streamlined and accessible government presence in their particular region.
On the taxation issue, the federal government has made significant progress in improving its fiscal position. The deficit is declining quickly, and public debt as a proportion of GDP is slated to fall soon. Once the government's financial picture improves even further, we believe that attention must then turn to reducing the tax load on small business, especially that caused by the imposition of payroll taxes. These, it should be pointed out, have been rising steadily over the past decade.
We recommend that:
24. Following further improvement in the federal government's fiscal position, consideration should be given to (a) reducing payroll taxes for businesses with annual revenue of less than $200,000; and (b) increasing to $300,000 the earnings limit for reduced corporate income tax rates for qualifying businesses.
2. Ensuring that Small Business has Appropriate Access to Capital
Many witnesses identified a shortage of private debt and equity capital as a significant obstacle to small business development. Access to capital remains a particular problem for rural enterprises.
In rural Canada, capital is sought from a myriad of sources, including banks, credit unions, caisses populaires and government agencies. As of June 30, 1996, the authorized lending of the seven largest chartered banks to customers in the agriculture, logging and forestry, mining and oil well industries stood at more than $52 billion, or some 12% of total lending by these banks. Lending for other business activities would have to be added to this total to obtain a more accurate picture of bank lending in rural Canada. According to the Canadian Bankers' Association, up to one-third of Canada's 8,000 bank branches are situated in rural Canada.
For a full 35% of the domestic population, credit unions and caisses populaires provide complete financial services. They are especially active in rural Canada, and are often the only financial institutions in the community, intent on remaining there to serve their members in that community. Indeed, we were told that for over 900 communities in Canada, they are the only source of financial services. In Saskatchewan and Manitoba, credit unions and caisses populaires are the largest non-government agricultural lenders. In Ontario, they have entered into financial partnerships with Community Futures Development Corporations.
Credit is also provided by means of federal organizations such as the Farm Credit Corporation (FCC) and the Business Development Bank of Canada (BDC). The FCC currently holds a loan portfolio of over $4.4 billion, or approximately 14% of total Canadian farm debt. In 1995-96, the Corporation authorized $1 billion in new traditional farm lending. The Committee is pleased that the federal government saw fit in its 1997 budget to provide the Corporation with an additional $50 million in capital. The FCC is the largest agricultural term lender in the country, and has a clear focus on the financial needs of smaller farming operations. It generally plays a complementary role to that of the banks, although it is of some concern to Committee members that it tends to compete with the private sector for low-risk loans so that it can cross-subsidize its higher-risk lending activity. A more appropriate strategy, we believe, would be for the Corporation to adjust to higher risk on the price side through increases in loan risk premiums.
For its part, the BDC provides financing to support Canada's growth and export-oriented, knowledge-based firms. Its lending activities are designed to complement those of the private sector. In 1995-96, the Bank authorized a total of over $400 million in lending to rural businesses, representing 43% of its overall lending. Virtually none of this rural lending was destined for the traditional farm client.
Through its four regional development agencies (Atlantic Canada Opportunities Agency; Federal Office of Regional Development - Quebec; Federal Economic Development Initiative in Northern Ontario; and Western Economic Diversification Office), small and medium-sized enterprises are provided access to venture capital and other investment funds. These funds have typically been cost-shared between the regional agency in question, the chartered banks and the federal government's own Crown financial institutions (and with provincial governments in Atlantic Canada). Direct loans to individual firms, on the other hand, have been abandoned in most cases.
What we have consistently heard, particularly of micro-entrepreneurs in small communities, is that they feel left out of the existing business assistance programs. While they're designed for what are called small and medium-sized businesses, they operate in a dramatically different context from these individuals in small communities. These people are crying out for minimal types of assistance, minimal capital, some advice on technology, some personal advice on balancing their family and work concerns, how to access simple market questions of where their markets may lie, and how to get advice on appropriate use of technology and sharing the cost of technology.
According to Industry Canada officials, access to capital is a particular problem for small rural enterprises (micro-enterprises) seeking small (e.g. $2,000 to $12,000) volumes of debt or equity financing. Calls have gone out to financial institutions and/or federal government financial agencies to provide micro-credit, or small amounts of capital. It bears mentioning that micro-businesses that provide self-employment or employ one or two individuals in a small community are vital to the rural economy.
A number of witnesses became concerned about the access to capital issue as a result of forecasts of bank branch closings in rural regions. Such an occurrence, if realized, would be in keeping with the banks' desire to concentrate on what they view as the higher-return lending market in urban Canada.
Still other witnesses, including a number of experts on rural issues, saw the issue as more of an investment problem rather than a financial one. As several pointed out, the Canadian chartered banks are essentially transferring rural savings out of the local economies (either directly or through intermediaries), as insufficient investment is occurring in rural Canada. We heard that banks were not particularly interested in serving what they view as a small and risky loan market in rural Canada. It was also brought to our attention, however, that more loan applications would be approved if project proponents had more equity invested in project proposals, and more adequate business plans were presented to the financial institutions.
We believe that both the federal government and Canada's chartered banks need to play much more of a long-term partnership role in rural Canada. Private financial institutions need to ensure that an appropriate portion of the capital they attract from rural investors and depositors is placed on loans within rural Canada. For their part, the federal government's own financial agencies, with the exception of the Farm Credit Corporation which already does so, need to focus much more aggressively on rural development. The Crown lending agencies should accelerate efforts to form alliances with private institutions.
We recommend that:
25. Canadian chartered banks should be encouraged to introduce a system to ensure that deposits and profits obtained from rural communities are invested back into those communities in the form of increased lending.
26. To stimulate small business in rural Canada, the federal government should (a) target a portion of the assets of the Business Development Bank of Canada specifically for lending to rural Canadians; and(b) mandate its regional development agencies to place greater priority on the economic development of the rural regions within their geographical jurisdiction.
3. Invigorating Community Investment
The federal government has also been active in its attempts to help communities, economic development professionals and the small and medium-sized firms within these communities to access venture capital and other sources of equity investment. This effort is now carried out primarily through two Industry Canada programs specifically targeted towards community development.
For years, the Community Futures Program has been a primary federal initiative for rural communities. It is a locally-based self-help program designed to help small communities work toward community development. It is largely directed to rural communities experiencing major long-term unemployment owing to their inability to generate economic activity and diversify the local economy. Generally, it has two specific components. First, the program is designed to support the activities of a local development structure known as a Community Futures Development Corporation (CFDC). In turn, the CFDC provides small, rural businesses with financial and technical assistance, as well as counselling on local development opportunities. Lending support is provided to local businesses meeting certain criteria.
Second, the Corporation undertakes specific activities to enhance community economic development by supporting or developing community business opportunities. The 1995 federal budget transferred responsibility for this program to Industry Canada and its regional development agencies.
There is no question that Industry Canada should continue to be the primary financial supporter of local Community Futures groups. This having been said, it is probably worthwhile for community organizations to attempt to recover some of their costs from the private sector. These, however, should be returned to the community in the form of new investment. Reducing the federal government's level of core support to each CFDC would be a mistake.
The Department of Industry's other initiative in this area, the Canada Community Investment Plan (CCIP), is a much more recent undertaking. It is designed to improve community-based efforts to attract and promote investment. Through this program, communities and/or entrepreneurs are provided with strategic information in order to help them access sources of capital that already exist in the given region. The government has agreed to cost share the implementation of some 20 innovative pilot projects.
The Committee is concerned that none of the original pilots are in communities with a population of under 25,000. There is an urgent need for the program to be expanded to cover smaller, more rural communities. We need to put in place a structure in rural Canada under which we can identify people or groups with money and flow these funds to those businesses and communities requiring equity injections. As such, the program needs to be reevaluated and amended to make it more applicable to small rural communities. For the government to meet this objective, a broader partnership needs to be developed with the nation's financial institutions.
We recommend that:
27. Industry Canada should make a long-term commitment to providing core funding to Community Futures Development Corporations. Revenues received by the Corporations should be reinvested into the communities and not used to reduce the federal government's contribution.
28. Upon completion of an evaluation of the community investment pool pilot projects, the federal government should enter into partnerships with the chartered banks to provide an expanded program specifically tailored to the needs of rural communities.
4. Enhancing Entrepreneurial Training in Rural Canada
In our opinion, the economic development of this country's rural regions goes through the development of entrepreneurship as well as research and development of new products. That's why we are ready to work very hard with the different government players with a view to finding the solutions best adapted to the development of our region.
Our study shows that too many entrepreneurs are refused funding to expand their business or develop a new project because of a deficient or even inexistent business plan. The study therefore recommends that we should find ways to make entrepreneurs aware of the importance of properly planned management.
The Committee was told on many occasions that the federal government must increase its support to small businesses through programs favouring the improvement of management practices. We believe that for rural Canadians to invest adequately in their own regions, shortages of entrepreneurial training experienced there need to be severely reduced if not eliminated. As was previously noted, skills associated with business plan development are often sadly lacking. Other deficiencies include a frequent lack of knowledge and skills required for small business to access export markets. The large majority of businesses that remain small do so because they do not know the right way to expand into both domestic and foreign markets. Urgent action on these fronts is required.
The history of small business shows a high failure rate within a relatively short period of time after business start-up. It would be most useful if new rural entrepreneurs could seek the advice of "mentors" in the business community, who have already proven their success in developing new business opportunities. These experienced business owners could guide the new entrant into the business community, and help avoid many of the initial teething difficulties that many small businesses tend to encounter. The Committee is appreciative of the efforts of the Business Development bank in the area of management counselling and mentoring, and urges that these services be expanded to an even greater extent for entrepreneurs in rural Canada.
A few years ago some visionaries saw the need to create some sort of tool to entice people or stir up brains as to how to start a business. Those people got a hand on a project that was first done in Quebec called Posséder mon entreprise, which has since been translated into "Owning my own business". That was a television series in 13 steps, with the ultimate step to produce a business plan. That show, which was also a course given on TV with class activities, had tremendous success. [ . . . ] We have had the technical and financial support of federal agencies and departments for those projects, [ . . . ]
It is also worth mentioning that Industry Canada is in the midst of developing its Investment Skills Development Program as a self-learning course to facilitate the investment process. Available in the spring of 1997 on their Strategies website, this course should provide local communities and entrepreneurs with useful information and tips on how to best access the risk capital required for the growth of their particular operation.
We recommend that:
29. The federal government should respond to the training needs of rural entrepreneurs by (a) expanding the scope of the Business Development Bank of Canada's small business mentoring services in rural Canada; and (b) encouraging the Canadian chartered banks to introduce such services in their rural operations.
5. Capturing a Greater Share of Business Services for Rural Canada
On the other hand these natural resource-based firms often make little if any effort to conduct or purchase services within the communities from which they extract the natural resources. In the absence of affirmative action by senior levels of government which would mandate some level of re-investment in these communities it is unlikely that these firms will of their own volition make any significant contribution. Yet the irony is that many of these firms are paying premium prices for land, buildings, taxes and labour at their urban locations.
In their daily operations, natural resource-based and other companies require a number of important business services. Typically, these services include advertising, legal functions, accounting, bookkeeping, employment agencies, computer support and programming, software development, and scientific and technical work, to name a few. Regardless of which part of the country one is in, business services is the sector of the Canadian economy experiencing the most robust growth.
The problem is that while rural Canada is indeed participating in the growth of the business service market, it is attempting to grow from a small base. Historically, firms providing business services have located in urban centres since their principal clients have been the company head offices also located there. While such services could yet emerge as a growth industry in rural Canada, assisted by the advent of new technologies, it must be kept in mind that advances in information technology often represent a two-edged sword. By this we mean that while certain services could flow from rural and remote regions to urban regions, they could just as easily flow the other way. This is what seems to be happening with services to producers established in rural areas who are turning to big urban firms for legal, accounting, advertising and other services. We are of the view that this pattern needs to be altered.
We recommend that:
30. The federal government should encourage natural resource industries to maximize local procurement of required goods and services, including business services.
G. Designing Appropriate Development Structures
It has become increasingly difficult to design appropriate development structures for rural Canada. Largely, this trend has been exacerbated by three recent developments: the rural realities of stagnant populations, depleted volunteer organizations, insufficient youth participation in rural development and deficiencies in community planning; adverse federal action affecting rural Canadians; and inappropriate delivery of government services in general. Each of these will be examined in greater detail.1. Dealing with Rural Organizational Realities
I find that in today's world it is extremely difficult to maintain the level of volunteers and the work that is required. [ . . . ] One fact I've noticed lately is that more and more governments are giving responsibility and sometimes, but not always, money to not-for-profit organizations to run some programs. From this experience, I think we should be cautious, because the mindset is kind of fast. I'm not sure that all those organizations were well financed and had structures to manage all that.
For rural renewal to occur, there has to be a vibrancy to community life and organization. Sadly, this vibrancy often seems to be lacking. Population stagnation is hampering the development of support mechanisms and services. Rural youth are not participating in rural development to the extent that they should. The number of volunteer organizations active in rural Canada is dwindling, with those that are left experiencing difficulties receiving funding owing to cutbacks in transfer payments. Volunteerism and volunteer organizations are often the backbone of rural communities. These groups have served a useful role in the past, and their contribution needs to be reenergized.
The lack of appropriate community structures, strategic visions and business plans is further hampering development. Injecting equity through the CCIP is a good start but, as was already suggested, the program should be tailored to meet the development needs of smaller towns. People have to become knowledgeable about developing strategic business plans for their communities. Progress in all of these areas is required.
We recommend that:
31. The federal government should support volunteer organizations by improving tax incentives for contributions and by providing a small tax credit for individuals volunteering their time.
32. Adequate human and financial assistance should be provided, through the federal Community Futures Program, to optimize development planning at the community and regional levels.
2. Reversal of Adverse Federal Action
That reflects one of our basic critiques of existing rural policy, which is that we often seek and devise solutions in an urban setting or a more urban setting and then transfer those solutions to rural Canada, and I think that causes difficulties. Second, not enough attention has been paid to the uniqueness of rural and small town Canada, and that has led to a variety of assumptions that have driven decision-making over the last few years. To us, rural is people, and people live in rural communities.
Recent federal policy action taken at the national level has had adverse repercussions for rural Canada. For example, devolution of responsibilities from the federal level has resulted in a loss of federal presence and influence in rural regions. Moreover, deregulation, government downsizing and restructuring have caused reduced access by rural residents to services which used to be available to all Canadians. We believe that these policies should be revisited and adjusted to meet the needs of rural residents.
To gain a better appreciation of rural issues so as to help moderate the above types of policy decisions, it would be extremely useful if an additional research mechanism were to be established. This should take the form of a national rural policy institute, a relatively inexpensive co-ordinating unit that would be linked to other key research and policy groups, as well as to regional research units within universities and regional colleges. It is our view that this proposed institute should receive financing from both the private and public sectors.
We recommend that:
33. The federal government should initiate a gradual transfer, to rural areas, of offices dealing with natural resource harvesting activity.
34. The federal government, in conjunction with other levels of government, business and rural stakeholders, should actively support the creation of a national policy institute on rural issues. The institute's mandate would involve the dissemination of rural data and information on best development practices, and the provision of policy advice to the Rural Minister proposed in Recommendation 37.
3. Improving Government Programming in Rural Canada
We need more advertising of rural business development centers and programs - a sort of one stop shopping! Regional economic development has become a big business in itself. Hundreds of agencies, planning committees and their coordinators are building layer upon layer. It is grotesque!
Rural communities need a one-window contact to secure information of all types, from economic development through job postings. This would reduce local bureaucracy and allow a much faster interaction between government and the people.
A common complaint during our hearings was that the delivery of government programming and services needs to be radically improved. Rural residents told us repeatedly that they want "one-stop shopping" in rural regions for municipal, provincial and federal programs. They would like to see federal and provincial departments active in rural development cooperate more effectively and eliminate the duplication in government services that currently exists. We agree wholeheartedly. Programming needs to be streamlined, and access to government by rural Canadians made easier. One-window shopping would be desirable. At the very least, there should be a minimum number of services that anyone in rural Canada could count on when they enter regional offices of the federal government, as well as those of the Community Futures Corporations and the Canada Business Service Centres.
Many of the witnesses told us that they were in favour of a more focused, cross-departmental approach to rural development at the federal level, with the creation of a Minister in charge of rural affairs. At the present time, some 17 federal departments and agencies are involved in various aspects of rural communities and their development, whether in the natural resources field or in the direct provision of services to the population. Currently, rural issues are dealt with by a small Rural Secretariat within the Department of Agriculture and Agri-Food, which has a limited budget and a mandate focused largely on agriculture and agrifood-related issues. Yet agriculture is only one component of a diverse rural society. While an Interdepartmental Committee on Rural and Remote Canada has been established to provide a forum for rural development, it is only an advisory body, lacking any formal policy clout.
One Federal Minister should be assigned all responsibility for federal involvement in Rural Economic Development. Currently, there is duplication, overlap and confusion in the public eyes, as well as an excess of bureaucracy. This bureaucracy is difficult for the uninformed citizen, so much so that the small entrepreneur's creative spark may be stifled because of confusion.
Rural issues must be given a higher priority. We believe that the creation of a senior Cabinet Minister designated as responsible for Rural Affairs would inject political leadership into an area currently being neglected. It would give the regions a useful voice with respect to national policy-making, and thus further their economic development prospects. Having one focal point within the federal government on rural issues would enable the government to collaborate more efficiently and effectively with other levels of government on the necessary strategies for rural development. An added benefit would be that a rural Minister would act as a useful policy screen to detect negative impacts of policy initiatives and fiscal decisions on rural regions.
We recommend that:
35. A single-window approach should be adopted for the provision of federal services to rural residents, with government services made available either electronically or, where numbers warrant, through regional offices.
36. A new Minister of Rural Affairs should be assigned responsibility for coordinating the activities of federal departments active in rural economic development. The new Minister should be supported by a staff of adequate size, incorporating the Rural Secretariat currently situated within Agriculture and Agri-Food Canada.
37. An annual meeting of federal and provincial Ministers responsible for rural development should be held to coordinate policies across levels of government.