STANDING COMMITTEE ON
INDUSTRY, SCIENCE AND TECHNOLOGY
COMITÉ PERMANENT DE
L'INDUSTRIE, DES SCIENCES ET DE LA
[Recorded by Electronic Apparatus]
Thursday, May 10, 2001
The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm
going to call the meeting to order. Pursuant to
the order of reference
of the House dated February 27, 2001, we will consider
main estimates for
the fiscal year ending March 31, 2002—votes 1, 5, L10,
L15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75,
80, 85, 90, 95, 100, 105, 110, 115, 120, and 125, under
Industry Canada, and part III, report on plans and priorities.
We're very pleased this morning to have with us the
Honourable Gilbert Normand, the Secretary of State for
Science, Research and Development.
Minister, we would like to have your opening statement
and then we'll move to questions.
Hon. Gilbert Normand (Secretary of State (Science,
Research and Development), Lib.): Thank you, Madam Chair. With
your permission, I will speak in French. Maybe that will be
easier for everyone.
First of all, it is an honour for me to be here for the
second time in so few weeks. It shows the importance your
committee attaches to science and research development. This is
currently and indisputably a very major factor in Canada's
development. It also shows the importance the current government
attaches to this.
I do not want to repeat everything I said at our last
meeting. I would just like to remind you of all the efforts the
government has made in recent years to improve research in all
fields, across Canada, and with whatever partners could be found.
Universities, government sectoral research centres, industry,
everyone has pitched in to develop the research to prepare us for
globalization, the new knowledge-based economy and international
competition in all fields.
I am going to recap our activities.
The Canada Foundation for Innovation was established and
received very significant funding. In recent years, the
Foundation has been funded to the tune of some $3.1 billion.
Granting councils have also been supported. For example, the
Social Sciences and Humanities Research Council received
additional funding last year. The Natural Sciences and
Engineering Research Council has an annual budget of nearly $600
million. The National Research Council also has a budget of
You also know that the government has undertaken to double
research funding over the next 10 years.
We have also created Genome Canada, with $300 million in
funding. The people at Genome Canada have managed to increase that
funding by finding provincial and private-sector partners. They now
have nearly $720 million to spend on genetic research.
We have created 2,000 university research chairs, which will
be established over the next five years.
The government has thus lived up to its responsibilities,
invested a great deal of public money in research and found
partners. The government wants to attract even more private sector,
industry investment in research.
I will not go through the whole list of Canadian innovations,
but I might mention among other things the Canadarm, which made the
headlines in recent weeks. The computer system malfunctioned. It
was not our arm that malfunctioned, but NASA's computer system. In
a number of fields, including astronomy, the government of Canada
is currently working closely with other countries.
I am tempted to stop there and take questions. I gave you a
lot of examples last time, and I think that what you want to know
now is how all this money is spent, who spends it and how.
I am going to stop there for now. I may have more to say when
it comes to the questions.
The Chair: Thank you, Minister.
Mr. Rajotte, do you have any questions?
Mr. James Rajotte (Edmonton Southwest, CA): Yes, thank you, Madam Chair.
Mr. Secretary of State, the one big question I
have is with regard to deciding
where you're going to allocate funds. How do you decide
between, for instance, the
Canada Foundation for Innovation and the National
Research Council? Because one of the concerns
I hear from a lot of researchers
is that the CFI gets a lot of attention and a lot of
investment because it seems to be a very... They
describe it as a “sexy” initiative, one
that attracts a lot of attention. At the same time,
increasing funding for the NRC and the other
granting councils over time seems to be less of a
priority for the government.
I'm wondering if you
could just comment on that, on how the government
determines how much money to put into CFI versus
NRC, NSERC, and the Social
Sciences and Humanities Research Council.
Mr. Gilbert Normand: First of all, with respect to the
allocation of funds, we have no say in that. In the case of the
Canada Foundation for Innovation, all of those decisions are made
by a panel of experts; the research proposals come mainly from
universities and hospitals. It is primarily an infrastructure
program. Proposals are selected by a panel of experts, and we have
absolutely no say in that.
Now, how do we decide how much we are going to give one
granting council or another? Those decisions are made by Cabinet,
after consulting the various councils. We find out what their needs
and requests are, and we decide on that basis whether or not to
increase their funding.
In the case of the Canada Foundation for Innovation, the $750
million it was given last fall was for the next 10 years, because
the Foundation operates with its capital and capital revenue. The
money is not spent immediately; it will be spent over the next 10
years, in addition to the funding the Foundation already had.
Barring the unexpected, there will probably be no significant new
funding for the Foundation, at least for the time being. Instead,
that funding will go to the other councils.
Mr. James Rajotte: I realize that once the CFI gets the
money the funding is not then controlled by the
government, but one thing I want to understand, and
I think what other committee members want to know, is
how a government decides, for instance, this amount of money for
CFI—$750 million—versus this amount of money to
increase the base funding for NRC over time. That is
what I'm trying to understand. I'm wondering if
you can provide some
insight into how the funding priorities are
set, even at the cabinet
Mr. Gilbert Normand: In the case of the Canada Foundation for
Innovation, it was a Cabinet decision in January, after the
Minister of Finance announced that there was a surplus. Since the
Foundation is not funded on an annual basis, that lump sum will
enable the Foundation to operate for the next 10 years, as I just
Unlike other councils that receive annual funding, the
Foundation does not need annual funding or to be budgeted for every
Mr. James Rajotte: One of the things I think this
points to is that the former Auditor General, in two of his
last reports, pointed out
that we really need an overall funding fiscal framework
for science and technology to really assist
parliamentarians to determine that taxpayer
funds are being well spent.
Have those concerns of the Auditor General been
addressed, and if so in what way?
Mr. Gilbert Normand: A distinction must be drawn between
granting councils and the research that is done in each department.
Each sectoral research centre, whether it is Agriculture,
Fisheries, Natural Resources or Environment, is responsible for
research in its sector and department.
However, when it comes to granting councils, the government
decided there would be councils run by boards of directors and
executives, in order to prevent politics from influencing the
selection of proposals and so that scientists would continue making
those decisions. This way of doing things provides sure-fire
protection against political interference in the selection of
proposals, but on the other hand, it reduces our control to some
extent. To date, we can say that the proposals that have been
selected by the various councils... Those proposals are always
subsequently analyzed to see whether they deserve funding, whether
they are designed based on the selection criteria and whether they
are making progress both in terms of timing and results. There are
monitoring mechanisms put in place by the various councils and
Genome Canada to ensure that the money goes to the right places and
is well spent.
Mr. James Rajotte: The government obviously has
fiscal limitations. There are always opportunity costs
and choices to make
with regard to funding certain projects over
others—for instance, putting a
certain amount of base funding for the CFI versus the
NRC, or funding a neutron facility or
a long-range plan for
astronomy. There are tough choices to make at the very
top level, and I'm trying to understand
how those choices
are made at the very base level there.
Mr. Gilbert Normand: As I just said, the decisions are made by
ministers, upon consultation. If, tomorrow morning, we had to
respond to all of the requests we currently have on the table, we
would be talking $16 billion. We definitely cannot satisfy all of
those requests. As you were saying earlier, astronomy wants its
share, as do other types of research. We did the synchrotron and
neutron radiation. I could give you several examples. There are
many requests on the table, and we try to give priority to that
which meets our needs as a society and as a government.
The Chair: Thank you, Mr. Rajotte.
Madam Jennings, please.
Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.):
Thank you, Madam Chair. Thank you, Minister.
I found the presentation very interesting. I would like to
begin by saying that I am very pleased that our government strongly
supports the whole research industry in Canada and is increasing
funding to granting councils.
One thing I am very concerned about is productivity and
economic development. We know that these may be very closely
linked. We also know that productivity is often linked to new
discoveries, products or processes resulting from research that is
often subsidized by government and done by companies or university
researchers. I am thinking, for example, of the 2,000 chairs that
have just been created.
When you look at the process, you see that there is in fact a
continuum. A person who has been trained and who wishes to become
a researcher in a particular field that is perhaps industry-
related, designs a research proposal, applies for grants, receives
those grants and goes ahead with research on a new technique or
product. Eventually, that person may indeed come up with a new
process or discover a new product. Occasionally, depending on the
field, there may be a certification, permit or licence requirement
before the process or product can be commercially marketed.
We also know that the power to certify products may belong to
a completely different department than the one that funded the
All of this is apparently interdependent and requires co-operation.
We know there are occasional problems with our
certification process, which for certain fields comes under the
Pest Management Regulatory Agency. In the United States, the
certification process for the same products takes six months on
average, whereas it takes 18 months here.
When you want to market a product, you know that the same
product is already on the market or will be in six months in the
United States, whereas in Canada, it takes three times longer. Or
sometimes, the products are already on the market elsewhere, and
the certification process is very cumbersome.
How much co-ordination is there between your department and
Health Canada to try to solve this problem? Because that is truly
an impediment to economic development and the marketing of certain
products and processes. What good does it do for government to
invest heavily in quality research, in keeping our researchers in
Canada and in attracting researchers here from other countries, if,
when it comes to marketing, there is a blockage? We even have
trouble attracting investors for companies.
Mr. Gilbert Normand: I think you are raising an issue that has
more to do with the Department of Health. I am not currently in a
position to answer on behalf of the Department of Health. You have
the power to make recommendations along those lines.
As for the co-ordination you referred to, with all of our
current and future funding commitments, that is certainly a problem
area that we are aware of. We are looking at that closely. I can
tell you, for example, that at the Department of Revenue, Minister
Cauchon has called for some reform, as a matter of fact, to
implement some tax benefits for research.
We are also talking amongst ourselves, but I cannot speak to
the problem of delay at the Department of Health. However, I must
say that the minister responsible for science recently created the
position of chief scientist, which should improve relations among
the various departments and offices even, so that this co-ordination
is even better.
Ms. Marlene Jennings: I understand that the Department of
Health is not your area, your portfolio. I fully understand that,
but we still live in the real world.
You see the Minister of Health at every Cabinet meeting. If,
in your area, you discover an obstacle that does not come under
your authority, is there any co-ordination along the lines of what
you described with the Minister of Revenue? The Minister of Revenue
has nothing to do with Industry. Economic development does have
something to do with Industry, but not the Department of Revenue.
So that part of Minister Cauchon's portfolio has nothing to do with
Industry. And yet you said that the two of you had been talking and
that the minister, on the basis of the facts that were presented,
following your discussions and so on, had set up a system with a
view to improving the implementation of tax credit incentives. So
I am wondering whether there is the same kind of co-ordination.
Mr. Gilbert Normand: Absolutely. I have often discussed that
with Mr. Rock, the Minister of Health, because, as you say,
companies occasionally complain about certification. So yes, the
two of us have held discussions. As a matter of fact, I think he is
setting up a mechanism to improve the situation. But as I said, it
is not for me to describe it. Yes, we do talk to each other.
There is another point you raised at the beginning of your
question to which I should respond. As far as I recall, in the last
budget, we also allocated $100 million, I believe, for marketing.
We have already begun to implement research marketing with the
universities. It was not in the last budget, but the one before.
This has been in place for a year, in order to promote the
marketing of research discoveries, especially on university
Ms. Marlene Jennings: Thank you very much.
The Chair: Thank you, Madam
Mr. Thompson, do you have any questions?
Mr. Greg Thompson (New Brunswick Southwest, PC):
Yes, thank you, Madam Chair.
I have a question with regard to the $700 million
Atlantic Investment Partnership fund the Prime
Minister announced last June. I believe
over $100 million of that was earmarked for the
National Research Council, so $600 million or
thereabouts would be left. I'm just
wondering how that money has been accessed, where
it's going, and how much of it has been spent.
Mr. Gilbert Normand: I think you are talking about two things.
There was an announcement of $750 million for the Canada Foundation
for Innovation. That money, as I explained earlier—I think you
were not yet here—comes from surpluses. It was a Cabinet decision
to invest that money in the Foundation. But you have to understand
the procedure. The Canada Foundation for Innovation manages a fund.
So the $750 million will fund the Foundation's activities for the
next 10 years.
APECA is not my bailiwick.
The Chair: Our second witness will be Minister
Mr. Greg Thompson: For clarification, Madam
Chairman, I thought with the technology sector this
would be the appropriate minister, but I'm prepared to
put that question to Mr. Thibault.
The Chair: Mr. Lastewka.
Mr. Walt Lastewka (St. Catharines, Lib.): Madam
Chair, thank you.
Minister, the transfer of technology from government
labs and from universities has always been a topical
item at this committee, knowing full well, as witness
after witness has said, that we don't have enough
expertise in this area and we're continually developing
it in Canada. Could you explain to the committee
your priority in
improving the transfer of technology from university
and government labs?
Mr. Gilbert Normand: First of all, I think we need to
distinguish between universities and government labs because each
government lab follows the policies of its department. I will give
you an example I am familiar with: Agriculture Canada labs.
Agriculture Canada and the Department of Industry have a special
transfer of technology program; in addition, Agriculture Canada has
a 38-million-dollar annual cost-sharing research program, with the
department matching private sector funding dollar for dollar. This
program includes an intellectual property agreement. So each
department operates differently with respect to research and
Insofar as universities are concerned, we definitely do want
to make an effort to work with universities on marketing products
and then transferring technology. This has given rise to
substantial ideological debate on campuses, but we believe it is
absolutely necessary for universities to make some profit by
marketing some of their research and through agreements they may
have with their partners.
The various programs we have, as you know... take, for
example, the case of the Foundation. The federal government
contributes 40%, the provincial government, 40%, and the
universities come up with the remaining 20%. That remaining 20% may
come from their own funds or from a private partner. In the latter
case, the universities have agreements with those partners.
Mr. Walt Lastewka: I'll give you an example of
what I was getting at. In terms of transfer
offices of technology from the university into the
marketplace, the University of Alberta
in Edmonton has probably one of the best. Some
of the people who are there now came
from the University of British Columbia. The last
time I was there, I think 35
people were working with the university to make sure that
technology was being transferred into the marketplace as
best as possible, with feedback from the marketplace back
to the university.
If you visit other universities, you'll see
they are not as effective.
Previous ministers have
talked about the importance of improving our leadership
in the transfer offices across the country.
Is your department doing
anything to assist in that?
Mr. Gilbert Normand: I would say so. I would say we are
somewhat in the early stages of improving marketing. You are quite
right about the University of Alberta in Edmonton. Just last week,
I met with the very people from Laval University who do marketing
at that university. In the last year, they have created six spinoff
industries in the wake of a discovery at Laval University. It is a
process that is getting underway at a number of universities, that
we support and fund too.
Mr. Walt Lastewka: When you talked about the
government labs doing their own research and so forth,
it was my understanding that a group of
assistant deputy ministers meets to cover off all
the government labs and make sure that we're using best
practices and best models and best transfers.
Is that process
Mr. Gilbert Normand: Yes. The Council of Science and
Technology Advisors brings together representatives from every
department. It makes recommendations. The process is continually
underway, and we receive recommendations every year.
Mr. Walt Lastewka: As Secretary of
State for science and technology, do you receive
reports from that group, and do you take action on
them? What is your interaction?
Mr. Gilbert Normand: Yes. A report is produced and released
every year. The latest report is available, by the way. We can send
you copies if you like.
Mr. Walt Lastewka: Thank you.
The Chair: Thank you, Mr. Lastewka.
Mr. Sauvageau, do you have any questions?
Mr. Benoît Sauvageau (Repentigny, BQ): Yes.
First of all, Mr. Normand, I am sorry I was late. My party had
a little communication and management problem this morning. I am
not going to discuss hovercrafts with you this morning; we will
talk about that some other time.
I would like to ask you a simple question, one that was
suggested to me by my colleague. Your report refers to knowledge
infrastructure. Apparently, there are problems with the
establishment of knowledge infrastructure in small universities in
every province. I know that in your speech, you referred to Brock
University, in Ontario. Just because I had never heard of it does
not automatically mean that it is a small university, but it may
serve as an example. Do you intend to pay particular attention to
these small universities?
Mr. Gilbert Normand: First, take the chairs, for example.
Chairs have been set aside both for small and large universities.
Another example is the announcement I made last week in Montreal.
It was about three major environmental research projects, each
involving seven or eight different universities, may of them small;
the research deals mainly with pesticide-free agriculture, climate
change and temperature change in space. Several researchers from
small universities will be involved with large universities. You
have to realize that small universities may not have the human
resources required to undertake, supervise or manage several large
research projects, but I must tell you that they are very often—I
cannot give you a specific percentage—involved with larger
universities. There are many partnerships between large and small
In Quebec, which is of particular interest to you, the
University of Montreal, for example, has partnership agreements
with Rouyn-Noranda on pain research, with Chicoutimi on de-icing
research and with other universities, such as Rimouski. There are
partnerships. Universities can no longer work in isolation, and
even large universities often have to involve small universities in
certain specific areas.
Mr. Benoît Sauvageau: Thank you very much.
The Chair: Thank you.
Mr. Reg Alcock (Winnipeg South, Lib.): Thank
you, Minister. I have just a couple of quick questions
functioning of some of the granting councils.
understanding that for NSERC and SSHRC and the new
health networks, people who are appointed by the
government to the boards of those organizations do not
receive any remuneration. They receive expenses for
attending meetings, but they're not paid to be on those
boards. Is that true?
Mr. Gilbert Normand: They are not paid to be on the board. The
only paid members are the members of the Canada Foundation for
Innovation. Excuse me, the chair of each board is paid, but not the
Mr. Reg Alcock: Right. Their members
would be sitting there as a public service,
basically. It's an honour
to be appointed, they do very good work, and they
give their time for the benefit of the country.
The presidents, who are paid—these are
full-time jobs—are paid on a scale, if I recall
from reading the chart, that is equivalent to other senior
positions in government. They would be tied to the
executive classifications, right?
A voice: Yes.
Mr. Reg Alcock: Why then are the members of the
board of the Canadian Foundation for Innovation paid?
Mr. Gilbert Normand: I do not know. The foundation is
completely independent and beyond our control. It was set up that
way to ensure its independence. I cannot explain why they are paid
while the others are not.
Mr. Reg Alcock: So we gave public money to them to
do good works for the public, and they chose to spend
some of that on salaries for themselves.
Would that be a fair characterization of what occurred
Mr. Gilbert Normand: We do have some information. I do not
know if we have the exact amount, but I am told the members'
salaries are approximately $15,000 per year. These people often
have to work at home. It is not really a salary... The chair gets
a salary in accordance with government standards, but the members,
according to my information, get about $15,000 per year. We will
check that and send you the exact amount.
Mr. Reg Alcock: I would be interested to know the
specific amounts, and any amounts that they are paid for
attendance at meetings. It seems odd to me that
some people who serve on these boards do it as a
community service and others get paid. There's an
inconsistency in policy there.
As to the president of the Canadian Foundation for
Innovation, the full-time person, can you assure me
that this salary is tied to the same salary grade as the
others in the other councils?
It's not. Okay. Can you provide me
with the information on the salary scale for
Ms. Marie Tobin (Director General,
Innovation Policy Branch, Industry and
Science Policy Sector, Industry Canada): This
information under access to information, and we're not
allowed to have it. This is the private sector. It
Mr. Reg Alcock: If I understand this correctly,
we give them a bunch of public money at arm's
length, sending them off to do good works the way that
the other councils are charged with doing, but we
exercise no control and have no accounting
relationships with them. So they can spend that money, as
they see fit, on themselves.
Is there not a discontinuity here?
Mr. Gilbert Normand: Certain sums are provided, and I think
that all the grants given out by the organization are public. We
will check into the salaries that people pay themselves. I do not
have that information at the moment. You ask whether the
president's salary scale is the same as that of people in similar
positions in the councils? I cannot answer that. The same goes for
Mr. Reg Alcock: Ah! Would they then be subject
to freedom of information? Could I, for example,
initiate a freedom of information request to get that
Mr. Gilbert Normand: No. They are considered as part of the
private sector. The organizations that manage these funds are
completely independent. I do not know whether you could get that
under the Access to Information Act, but we can ask them that.
A voice: They have annual reports.
Mr. Reg Alcock: Are you telling me the
board members for Genome Canada are also paid?
Mr. Gilbert Normand: The people at Genome Canada operate in
the same way as the Foundation, but I do not know whether the
members of the board of Genome Canada are paid. I can check into
that, but I do know that barely one month ago, there were only five
people on the permanent staff of Genome Canada. I do not know
whether they have increased their staff, but there were only five
Mr. Reg Alcock: These are senior people, and
they should be well paid. They're doing very important
work. I'd just be interested to know about those who
volunteer for the board, and I'd be interested to know
what accountability there is for the
expenditure of large amounts of public money.
I do understand that you may not have that
responsibility, and I'll pursue that in terms of
There's another thing I wanted to ask you. In the
allocation of research supports,
you have broad responsibility for that, I understand,
and I would say
that the government has done a lot of very good work in
making more resources available to universities.
When it comes to the allocation of the
I was told that the reason they were not allocated on
any kind of proportional basis was that you wanted to
have a competition, that they should be awarded for
reasons of merit and excellence.
That is a principle I would certainly
support, but when I enquired into that,
I found that it was feared that if you were to give
universities an entitlement, it would, in a sense,
dull their competitive edge. They would not
compete as hard because they would know they were going
to get this number of chairs.
Would that be a fair
characterization of the policy?
Mr. Gilbert Normand: No. So far, everything depends on the
expertise and scientific merit. I can give you the example of the
latest entitlement provided by Genome Canada. Quebec received more
than Ontario and Newfoundland received nothing, but Newfoundland
did not present any projects. There are no amounts set aside for
the various geographic regions. The same is true in the case of the
Canadian Foundation for Innovation and the other councils.
The Chair: Last question.
Mr. Reg Alcock: All right.
I would both agree with
and support that policy.
I think universities throughout the country should be
required to compete, and I think it does force a certain
That said, what I don't understand is why, when
we gave universities in the chairs
program, particularly the five largest universities, an
entitlement, we did we not just force them to compete
in the same way that we want the scientific community
across the country to compete. Why would we have
allocated the research chairs? Why didn't we just put
them in a pot and let everybody compete for them?
Mr. Gilbert Normand: You were speaking mainly about the
chairs. This is what happens. In some areas of activity, we
absolutely require a critical mass in order to attract foreign
researchers. The large universities are in a much better position
to do that. There is also the whole issue of salaries and technical
support. There are the famous indirect costs or overhead, about
which we have not spoken, but which we may discuss shortly. There
is no doubt that the large universities are in a much better
position to attract well-known scientists from abroad.
The Chair: Thank you, Mr. Alcock.
Mr. Reg Alcock: Can I come in on another round,
The Chair: If we have time.
Mr. Reg Alcock: Good.
The Chair: Mr. Rajotte.
Mr. James Rajotte: Thank you, Madam Chair.
I want to follow up on the Canada Research Chairs
Program specifically, but one of the things that
strikes me as I go through the estimates is the
plethora of ways that Industry Canada does fund
research and development.
I wonder if you can comment on whether we can
simplify the manner in which we do fund research and
Just using an example from your speech,
you talk about the Canada Research Chairs Program
supporting university professors, but then you also
talk about NSERC supporting university
Can you comment generally on whether we are
layering the ways in which we support research and development
in Canada? Are there too many ways in which
we are funding research and
development, and can we simplify this at all?
Mr. Gilbert Normand: I think the organizations we have are
meeting research requirements at the moment. They each have their
own vocation. The Canadian Foundation for Innovation is involved
with infrastructures in particular. The NSERC is involved mainly
with instrumentation and research support as such. The Social
Sciences and Humanities Research Council works in a different area,
one that is often been forgotten. That is why its budget was
increased last year. There are also the Institutes of Health
Each council has its own area of expertise. Of course, there
is also Genome Canada, which often works in co-operation with the
others, because genetics covers all areas of activity, from
forestry, to agriculture, the fishery and human research. Each
council has its own niche, and this is quite well respected.
Mr. James Rajotte: But specifically in terms of
the Canada Research Chairs Program, what's the
justification for having that particular program in and
of itself and not just funding through such granting
councils as NSERC?
Mr. Gilbert Normand: The Chairs Program is run by the three
councils. Members of the three granting councils, the Canadian
Foundation for Innovation, the NSCRC and the SSHRC manage the
Chairs Program. Mr. Marc Renaud is the president.
Mr. James Rajotte: So when you mentioned in your
speech, on page 3, funding university professors
through NSERC, that's through the Canada Research Chairs
Program, is that correct?
Mr. Gilbert Normand: No. NSERC is funded separately, but the
chairs are supervised by the members of the three councils.
Mr. James Rajotte: The Canada Research Chairs
Program is creating 2,000 new research chairs across
the country, and then NSERC is funding over 8,700
Now, I guess what I'm getting at is, do we need the
research chairs or can we just use the existing
granting councils in order to fund the professors?
Mr. Gilbert Normand: When grants are provided—yesterday $346
million in grants was announced from NSERC—there is no doubt that
a portion of the money can be used to support the chairs that were
awarded. However, the money for the chairs is there mainly to pay
the salaries of the researchers and their support staff. We have
senior and junior chairs, but this money is used mainly to pay the
salaries of the researchers, while the grants provided by NSERC are
used mainly to pay for the instruments required in order to do the
Mr. James Rajotte: One of the things the
researchers tell me is that in fact we should be
combining funding for the research chairs and the
support staff and also the infrastructure. It should be
combined. You should not separate one from
One researcher at the U of A told me that, because
of the infrastructure they have to kick in to
complement it, if they get
another research chair they're going to go broke.
Mr. Reg Alcock: But that's U of A.
Mr. James Rajotte: That's U of A, which is a very
The Chair: Mr. Normand.
Mr. Gilbert Normand: The method we are using at the moment
seems to be working well, at least for now. There is no doubt that
as we provide funding, we are going to have to change some of the
political or bureaucratic coordination procedures, if we want to be
able to track developments and continue investing such massive
amounts of money. The infrastructures we have at the moment are
revealing their limitations.
The Chair: Thank you, Mr. Rajotte.
Mr. Bélanger, please
Mr. Mauril Bélanger (Ottawa—Vanier, Lib.): Good morning,
Am I correct to say that we now have five granting councils?
Mr. Gilbert Normand: Well, there are three of them.
Mr. Mauril Bélanger: So, Genome Canada and the Canadian
Foundation for Innovation are not granting councils.
Mr. Gilbert Normand: No, they are not considered granting
Mr. Mauril Bélanger: What are they, then?
Mr. Gilbert Normand: They are private or semi-public bodies.
Mr. Mauril Bélanger: But they operate strictly on public
Mr. Gilbert Normand: Yes.
Mr. Mauril Bélanger: They operate on individual projects, but
the councils themselves operate using public funds.
Mr. Gilbert Normand: To be clearer, I would say that the two
bodies were created using public funds, but their mandate is to
find partners that will bring in...
Mr. Mauril Bélanger: I understand. In the case of specific
projects, they have support from the private or semi-public sector,
but their operations are funded strictly with public money.
Mr. Gilbert Normand: Let me take the example of Genome Canada,
which was created one year ago. The people at Genome Canada have
managed to find partners, so that the $300 million we provided will
be used to fund $720 million in research.
Mr. Mauril Bélanger: That was not my question. I want to move
to a different area. How much money does the government of Canada
spend annually on research and development?
Mr. Gilbert Normand: It spends around $3.3 billion.
Mr. Mauril Bélanger: Do you have an approximate idea of what
percentage goes outside of government, and what percentage is spent
within government, that is by the departments?
Ms. Marie Tobin: The money is spent more outside of government
than inside government. But the percentage is almost fifty-fifty.
Mr. Mauril Bélanger: It has become fifty-fifty.
Ms. Marie Tobin: It is not quite there.
Mr. Mauril Bélanger: If I understand correctly, there is a
trend emerging. Would I be correct to say that there is a tendency
to increase the amount spent outside government, that is to the
granting councils, and so on, and to reduce the amount that is
spent inside government?
Mr. Gilbert Normand: We do not want to reduce, in percentage
terms, the initial amounts provided by the government, but we do
want to attract more from the outside.
Mr. Mauril Bélanger: Yes, I see. But following program review,
was there a reduction in total expenditure within the government?
Mr. Gilbert Normand: Well, perhaps before 1997.
Mr. Mauril Bélanger: All right. At the same time, was there a
corresponding reduction in our statutory and regulatory
responsibilities performed by laboratories and government research
centres in the area of health and public safety at Health Canada,
the Canadian Food Inspection Agency, Fisheries and Oceans or
Environment Canada? Do you see what I mean?
Mr. Gilbert Normand: Yes.
Mr. Mauril Bélanger: If there has been a reduction in the
resources earmarked for the performance of these responsibilities,
has there been a corresponding reduction in the responsibilities
themselves? Have we asked our officials to do more with less?
Mr. Gilbert Normand: Let us take the example of the Canadian
Food Inspection Agency. As you know, it is now an agency; formally,
it was part of the department. This agency must report to the
Minister of Agriculture, but must also manage and finance its own
activities with the amounts it is given. It is therefore required
to make a profit.
Mr. Mauril Bélanger: Right. Do you know whether a study has
been done by Treasury Board on the physical state of the government
of Canada's laboratories and research equipment?
Mr. Gilbert Normand: Go ahead, Ms. Tobin.
Ms. Marie Tobin: A specific study may have been done, but for
two years now, all the departments and agencies with a scientific
focus have had a special integrity program.
Mr. Mauril Bélanger: In English it was called Rust-Out, wasn't
Ms. Marie Tobin: I thought it was Program Integrity.
Mr. Mauril Bélanger: Program Integrity. Fine.
Ms. Marie Tobin: Each year they submit their requests on the
basis of certain infrastructure criteria, that is, what should be
done in order to comply with other standards. Each year, Treasury
Board earmarks money for this purpose.
Mr. Mauril Bélanger: Could you share with the committee the
conclusions of this overview of the state of our laboratories and
Mr. Gilbert Normand: Yes, if we can manage to get the
Ms. Marie Tobin: Ask Treasury Board.
Mr. Gilbert Normand: That is right. We can ask Treasury Board.
Mr. Mauril Bélanger: I would like to ask this of the
government representative who is before me.
Mr. Gilbert Normand: Yes. We will ask for the information
available at the moment on this.
Mr. Mauril Bélanger: Thank you. I have one final comment,
Madam Chair, and Minister. I must confess that I have a great fear.
I have no objection to this being done, but I fear that in trying
to make up for the abandonment of university, hospital and health
research centres by the provinces—we have invested a great deal of
money in this area and I have no problem with that—but in doing
only that, I fear we are undermining the government of Canada's
ability to carry out its statutory and regulatory responsibilities.
What I mean is that our laboratories need as comprehensive an
updating as laboratories in universities and hospitals, but this is
not being done. If we do not change course, we are going to cause
ourselves huge problems in this area.
Even though it is more attractive politically to go outside,
as a government, we cannot neglect our statutory and regulatory
responsibilities. We must maintain a scientific capacity within
Mr. Gilbert Normand: If I understand your comment correctly,
you are saying that the shoemaker's children are always the worst
Mr. Mauril Bélanger: And that is the model we should not be
Mr. Gilbert Normand: Look, Industry Canada is still using
The Chair: Ms. Torsney.
Ms. Paddy Torsney (Burlington, Lib.): Minister, we
have all these various pockets of money that see
to their very important functions in funding research
across the country. But are you confident, for some of
the really big expenditures that can be part of huge
international initiatives, that we really have the right
system in place for getting those groups to work
together to fund these big initiatives?
particularly of the astronomy initiative.
Everywhere they go, it's “Well, if that group will
give, then this group will give, and if this group will
give, then that group will give”. A lot of these people
spend so much time running after precious dollars
that it seems almost inefficient.
Mr. Gilbert Normand: Astronomy is a special subject. Canada
has proven itself in the field of astronomy, and it is an important
partner in a number of projects at the moment, including the Gemini
project and the space telescope project. There is the Long-Range
Program on the drawing board at the moment that will involve
expenditures of some $16 million. The request is on the table along
with that for some facilities relating to neutrons, optics,
proteins and proteinomics.
As I said, all these people make their requests and, at this
time, I think the requests total some $16 billion. So, clearly we
will have to make some choices and find some partners—yes, this
must be done—in foreign countries or within certain foundations.
Personally, I have made some representations with an English
foundation called Wellcome Trust, a company that Genome Canada
visited as well. At the moment, Genome Canada is about to enter
into an agreement with this company. I have also made some
representations with other countries. We also do this in certain
sectors of activity, because by itself, Canada will never be able
to support all this research in all these areas.
As regards international exchanges, the Canadian Foundation
for Innovation received a budget of $200 million, specifically to
set up this type of exchange program between universities or
Ms. Paddy Torsney: Yes, but that was not my question. I was
saying that from time to time there are some projects that are on
a larger scale than others. For that reason, we need a different
system in order to support the project. The timetable in other
parts of the world may be different from ours.
Are you confident that you have a system in place that
allows you to fund, and to deal appropriately with, these
Mr. Gilbert Normand: That is very difficult to say. When
people submit a project—you were thinking particularly of an
astronomy project—obviously, they are going to lobby for their
project. This is a very important and very interesting project, at
least I find it interesting.
They will meet with the people involved in finance, in
industry, members of Parliament, officials and so on, to try to
convince them, so that all the decision-makers are on the same
The choice is made by a group of individuals, not by a single
person. The procedure is somewhat like government programs, such as
Technology Partnership Canada. We receive many applications from
companies in various areas of activity, and we have to make choices
on the basis of the government's current priorities. I think
astronomy has always been well served by the government. Canada has
been involved in this area for a number of years, and we will have
to wait for the next budget to see what will happen with the
Ms. Paddy Torsney: Thank you for the information,
but perhaps that's really my point, that sometimes there
are international timetables that can't wait for the
next budget, and we need perhaps a different system
both because of the timing and the
commitment being ten years, which is beyond
our budget projections. The international
players need to know whether we are or are not
going to be there.
So there is, I would suggest to you, some need to have
either a side structure or a different structure for
some of the very big projects—bigger than
NSERC, bigger than SSHRC, bigger than
NRC—because there is a huge international opportunity
we can piggyback on, and across cabinet you
need to have an additional structure or another
structure to invest in these kinds of big initiatives.
Mr. Gilbert Normand: I have made a note of your suggestion. I
worked at the municipal level. We could make a decision in a few
days, in less than a week. At the provincial level it takes a
month, and at the federal level, it takes a year.
Ms. Paddy Torsney: Thank you.
The Chair: Thank you very much, Ms. Torsney.
Minister, we want to thank you very much for appearing
this morning. We appreciate the time you've taken
to meet with us, and we appreciate your frankness in
answering our questions.
We look forward to some return answers that we were
unable to get earlier today—
Mr. Reg Alcock: Let's bring him back.
The Chair: Well, I'm sure you'll be back sometime
soon, and we appreciate that.
We're very pleased to have, as our second witness
Honourable Robert Thibault, Minister of State
for the Atlantic Canada Opportunities Agency.
Minister, you have an opening statement, which I'm
sure is not too long.
Hon. Robert Thibault (Minister of State (Atlantic
Canada Opportunities Agency)): Oh, it's a long
The Chair: Just so you know, I'll cut you off if
it's any longer than ten minutes. We'd like to hear your
opening statement, and we have lots of questions for you.
Mr. Robert Thibault: Did you say twenty minutes?
No, I'm going to keep it short. My voice is going because
I have a cold.
I look forward to discussing
the Atlantic Canada Opportunities Agency and all aspects of
economic development in Atlantic Canada—our efforts,
results, plans, and priorities with respect to economic
ACOA works with Atlantic Canadians to create jobs and
raise earned income, and has played and continues to
play a very important, relevant, and successful role in
the life of the region.
The Agency continues to improve and adapt its programs and
services to meet the changing demands of today's economy. There can
be very little doubt that in order to prosper in the long run,
Atlantic Canada must move forward into the global, knowledge-based
ACOA continues to support the growth of the Atlantic economy
by focussing on entrepreneurship and business skills development;
on access to capital and information for business; on trade,
tourism and investment; on innovation and technology; and on
community economic development.
It is worth noting, by the way, that fully 92% of
ACOA's clients are small and medium-sized businesses,
each of which employs, on average, fewer than 100
Our focus on small and medium-sized business is
deliberate. They create most of the new jobs in the
After more than a dozen years in operation, I think
it's safe to say that ACOA is working, and working
exceedingly well. Consider that every $1 that ACOA
invests results in a $5 increase in the Atlantic gross
domestic product, or that the $3.2 billion ACOA has
invested since 1987 has generated tax revenue of $3.8
billion from agency-assisted firms.
According to Statistics Canada data, the five-year survival
rate of ACOA-assisted start-ups is two and one-half times higher
than that of all new businesses in Atlantic Canada. Also, over the
past five years, ACOA has invested in 4,300 commercial projects,
helping create and maintain 61,000 jobs in the region.
Finally, according to Statistics Canada data, the Atlantic
unemployment rate is 2.8% lower as a result of ACOA programming.
And our strategic approach has also proven effective: ACOA has made
significant headway in the areas of export readiness, innovation
and technology, youth and entrepreneurship education, tourism and
In the past year alone, ACOA has helped more than 80
small Atlantic firms begin to export and has provided
another 300 companies with export readiness training.
Since 1992, exports from Atlantic companies have
increased by 256%, from $6.7 billion a year to $17.2
Since 1997, ACOA has provided more than 1,700
low-interest loans to young entrepreneurs, who in turn
have helped create nearly 2,300 new jobs in the region.
More than 250 students, from entry level to grade 12,
now learn about entrepreneurship and business values
thanks to teaching materials produced with assistance
The ACOA-administered Canada Business Service Centres, or
CBSCs as they are known, provide one-stop access to business
information for Atlantic businesses. During the 1999-2000 fiscal
year alone, CBSCs in the region helped more than 246,000 clients,
and enjoyed an 87% satisfaction rate for the service they provided.
Finally, I would like to mention that ACOA is on the verge of
launching a very powerful new development tool: the five-year,
$700 million Atlantic Investment Partnership, a key feature of
which is the $300 million Atlantic Innovation Fund. It is a
balanced mix of strategic investments and initiatives that will
strengthen the capacity of Atlantic Canadians to innovate and
compete in the global, knowledge-based economy.
The AIP will infuse ACOA's existing activities with
renewed strength and fresh resources. Its focus is on
helping to close the region's skills, innovations, and
productivity gap with other parts of Canada and with
the world. Its method is by way of partnerships,
partnerships with other levels of government,
communities, businesses, universities, colleges, and
This kind of collaboration will
be important because the Atlantic Investment
Partnership is not a short-term fix. It is an
investment by the Government of Canada, intended to help
create the climate for long-term sustainable growth, and
to be successful it will require cooperation,
commitment, and investment by all of those key
As you can see, ACOA continues to be relevant,
and useful in the lives of Atlantic Canadians. Our
investments are truly at work helping to build
regional economic capacity today and for the future.
Merci. Thank you.
The Chair: Thank you, Minister.
We will now begin with questions.
Mr. Rajotte, please.
Mr. James Rajotte: Thank you, Madam Chair.
First of all, good morning, Mr. Minister. Thank you
You talked about some of the harshest
critics out of ACOA sometimes coming from Atlantic
Canada itself. One of those critics is the Atlantic
Institute for Market Studies. They have a
philosophical problem with ACOA. They argue that
takes scarce tax dollars
and disburses those dollars in terms of regional
development, actually suppresses growth in Atlantic Canada. I
just want you to address that from a philosophical
point of view.
Mr. Robert Thibault: I certainly would argue with the
premise. There are different programs
we administer, but the principal one, for me, in
economic development would be our business
development program. What we do there is supply
interest-free loans, unsecured, to businesses as
just part of their entire financing package. So we don't
participate, or very rarely—I could almost say never—with
any institutions or businesses that are growing or
starting up that don't have other commercial lenders on
board. We assist in getting them to leverage the
money so that they can participate.
It's a lot more difficult in Atlantic Canada than it
may be in other areas for start-up or expansion of
businesses because of the lack of commercial venture
capital. There isn't as much as you might find in
other areas. There isn't that synergy that's created
by having a lot of people in the same industry, or
similar industries, where you can have specialized
lending institutions or venture capitalists performing
in one industry and looking for investments like you
might find in IT sectors and other parts of the country
or other parts of the world.
Therefore, I think our
investments, which are a small part of the entire
leverage a lot of activity and assist people in getting
to the next step or getting off the blocks in business
development or business growth.
Mr. James Rajotte: And you talk about that on page 3
of your comments, when you say:
ACOA is working, and working exceedingly well:
Consider that every
dollar ACOA invests results
in a $5 increase in Atlantic GDP; or that the $3.2
billion ACOA invested
since 1987 has generated tax
revenues of $3.9 billion...
You're saying here
that there is a link between the amount invested and the tax
revenue, and it's always in the positive, then?
Mr. Robert Thibault: Yes. I don't know if the
link would remain true if
we invested $100 billion,
but we've been able to use our funds strategically.
Mr. James Rajotte: That was my second question.
Mr. Robert Thibault: Well, I'd certainly like
Voices: Oh, oh!
Mr. Robert Thibault: We've been able to use
our funds strategically
and have had a lot of success with the
businesses that we do participate with and assist.
If you look at
that revenue to the federal treasury, it is very
interesting, but you also have to consider the impact
it has on local government, on provincial governments,
and on the economy in general in terms of spin-offs. I
think it's very significant.
Mr. James Rajotte: If you did increase by $10
billion, do you think you would actually turn out, say,
$15 billion in net return to the provincial treasuries
and the federal treasury?
Mr. Robert Thibault: It's always a struggle for
ACOA to try to meet the demand. There are more
demands than there are funds available, so we try to do
the best we can.
Certainly, more resources might be helpful, but
generally we've been able to do very good work with the
funds we have. Now we're going into new avenues
and into other areas that hopefully will be even more
Mr. James Rajotte: As my last question, I have a
couple of articles here. One from the New Brunswick
Telegraph Journal—and you can
correct me if these quotes are not right—says you
would consider your work done if you could one day make
your own job obsolete. In another article in the
Moncton Times-Transcript, it says
you would want these programs to continue because they
are so successful. To me, they seem to be somewhat
contradictory, and I'm just wondering if ACOA should
continue, and for how long? Do you think that if it
truly succeeds over time, ACOA should not exist in,
say, twenty years? Is that the ideal?
Mr. Robert Thibault: I think that would be a safe
comment, and I don't think the two articles you quoted
do contradict one another. I think it would be my job.
My job would be successful if ACOA as it exists
now didn't need to exist in the future because we've
had economic success.
Secondly, we're not there yet, so I'm not prepared to
close up shop. I think we still have a lot of work to
do, and there still is significant need for the
services that are provided by agencies like ours.
On the other side, if we are successful and we
continue to grow as we're growing, and if we continue
to have the successes and the AIP goes in the
direction that we're predicting, we'll bring the
Atlantic economy to a level whereby the Atlantic
provinces can participate in other national programs
available in other parts of the country but for which
our research institutions or industries might not be
quite ready, such as the technologies partnership
program, the Canadian Foundation for Innovation,
and other programs. They're available everywhere,
but industries in other parts of the country are more
equipped to benefit from them.
Mr. James Rajotte: So ACOA is really bringing
Atlantic Canada to a level comparable to other regions
in the country. Do we need Western Economic
Mr. Robert Thibault: I'll let Mr. Alcock handle
that, and I'll leave that to the minister responsible
for western economic development. He understands his
economy much better. We're working in Atlantic Canada
to benefit from the opportunities that are there, to
meet the challenges so that we can maximize the
potential of the economy in Atlantic Canada.
Will we ever catch up to Ontario? I hope Ontario
keeps growing also, that we grow, that we always have
some healthy differences in the country, but that we
all continue to grow. I think what's important is that
we maximize our opportunity, and that we do the best we
can for the economy and for the provinces in Atlantic
The Chair: Thank you very much, Mr. Rajotte.
Mr. Savoy, please.
Mr. Andy Savoy (Tobique—Mactaquac, Lib.): Thank
you very much.
Welcome, Mr. Minister. I'd like to talk about two
Number one is regional development. The RDA
groups in New Brunswick, Nova Scotia,
P.E.I., and Newfoundland have gone through some recent
changes, and I understand a proposal is in the works
with regard to that, specifically with regard to New
Brunswick and the new CEDAs. Could you fill us in
on what those changes are and what the mandates or the
new goals of those organizations are?
Mr. Robert Thibault: I'm hoping to have
discussions with Economic Development, Tourism and Culture
New Brunswick and their premier within
the next seven days to discuss
this matter specifically.
It's my understanding that they're looking at changing
the geographic boundaries of their regional development
authorities, and are looking at their make-up and
perhaps their effectiveness. That's probably to make
sure they're doing the best they can with the resources
they have, and I think we share in that.
I think it's time to re-evaluate. With the regional
development authorities all across Atlantic Canada, we
operate a little differently in all provinces, and
that's fair. I think we have to do what works best in
The RDAs are an excellent method of bringing the
community, in the form of local government or local
economic development agencies, commissions, or
institutions on the ground, to work together with the
provincial organizations and federal ones—ACOA in our
case, Industry Canada, and other levels—to make sure
we're all working from the same list of priorities,
we're comparing our priorities, and we're not
duplicating effort. I think it's a good way for all of
us to have a reality check and to make sure we're
focused on where we have opportunities, where there are
significant challenges, and that we're all
understanding them the same way.
Mr. Andy Savoy: The second area is that of
value-added technologies and the transfer of
technologies to the private sector. In our area, we
have a very strong forestry and agriculture sector, and
we have probably what I would say is the pre-eminent
value-added company in the world in food processing,
McCain Foods. Every time I see a load of logs
cross the border, I cringe. Where most people see a
load of logs, I see furniture and I see various
Does ACOA have any specific initiatives regarding
value-added as far as field officers are
concerned, or in terms of policies and programs that
may be more geared toward value-added and basically
geared toward the value-added sector or group?
Mr. Robert Thibault: One of the great strategies
in our economic development policy is to try to do
value-added secondary manufacturing, the development of
new products and new technologies, the use of new
technologies in existing production, and all those
elements. What we try to work with is the private
sector, the research institutes, and the marketing
organizations. We try to work with them to get that
synergy going by getting everybody around and providing
what assistance we can, some stimulus to try to get it
In value-added, one area in which we've been quite
successful is in value-added forestry in New Brunswick.
We still have a long way to go, but we have one client
there who is exporting high-grade architectural
mouldings all over North America. He's above a hundred
employees now. He was a new start. He has been in
business for, I think, seven or eight years now, but he
was a start-up business and has been very successful.
We try to do as many trade missions as we can. In the
last three years, we've done some to the Boston area,
to New England. Shortly, we're heading down to
Atlanta. Some of the businesses on board are in
value-added forestry production.
The other thing we'll be able to do with the Atlantic
Innovation Fund is work with the private sector
and the research institutes to maximize the potential
of our forest resource. I know some of the
institutions, again in partnership with the private
sector, are preparing some proposals to put forward
that I think are very interesting. They'll have to be
analysed, like all others, and we'll have an
independent advisory board that will be looking at all
of those, but I think the fact they're coming out is
I've heard some people suggest we could increase our
fibre production by 20% and maintain sustainability
just by using satellite monitoring systems that are
under development and implementation in other parts of
the world now. That would be very good in Atlantic
Canada, so there's a lot of potential.
We work where we can be most effective, and we seldom
take the lead on a file, but we provide the advice, the
expertise, and the stimulus to assist.
Mr. Andy Savoy: Regarding the Atlantic Investment
Fund, there's a section in that called the strategic
community investment fund. I know parameters of the
program are actually coming forth soon, but could you
shed some light on how small businesses, in rural areas
specifically, can certainly promote economic development
with those dollars?
Mr. Robert Thibault: What we're hoping to achieve
is assisting the more rural parts of Atlantic Canada
with economic development by working with the
non-profit sector or the support sectors of economic
development, working with them in creating the
infrastructure necessary for economic development.
This will be a very flexible program, depending on the
opportunities, challenges, or needs that there could be
in communities where they might lack a bit of
infrastructure that would assist in attracting or
accommodating industry, or in assisting existing
industries to grow or expand.
If you look at all of the fund, the $700-million
five-year initiative for Atlantic Canada, the National
Research Council investments—which are to the
order of $110 million—will mostly be in the urban
A lot of the innovations funding will be
carried out in the urban area. So as much as we can,
we're going to try to focus the community economic
development portion of it in the rural areas, to
balance things out and give them a hand up.
If you look at Atlantic Canada, while we continue to
lag economically, and we might not be growing as fast as
the rest of the country—but many of our urban areas
are doing quite well. The oil and gas developments are
giving a lot of potential to areas like Halifax and St.
John's, and there are hopes for many other centres
around Atlantic Canada.
I think it's important that we focus these resources
on other areas that might not have benefited from our
growth in the last ten years, or the growth we're
foreseeing in our urban areas.
The Chair: Thank you very much, Mr. Savoy.
Mr. Thompson, please.
Mr. Greg Thompson: Thank you, Madam Chair.
It's nice to have the minister with us, and I do thank
him for coming. First of all, Madam Chair, just for
the record, I want to say that ACOA has done a lot of
good work in Atlantic Canada, particularly in
southwestern New Brunswick, the area I represent. There
are many examples from the aquaculture industry, which
was funded heavily through ACOA in its early stages.
It's now a $200-million industry. Food processing and
manufacturing have benefited as well. So there are many
successes in southern New Brunswick, which I think is a
tribute to ACOA.
As you know, I was part of the government that
established ACOA. Obviously it did have its start-up
problems. One of the things I was always concerned
about, in those early days, was the operating
expenditures of the department. From the current
estimates, I see now that the department's operating
expenses this year are going to be in the order of $60
million, out of a budget of $277 million.
If I'm correct, that seems totally disproportionate to
me. It seems we've bureaucratized ACOA beyond what we'd
consider acceptable, if you measure ACOA against any
other institution doing the same kinds of work. That's
a little disturbing, Minister. I'm wondering why
there's that huge administrative and operating expense
out of a budget of $277 million.
Mr. Robert Thibault: ACOA is more than program
delivery. It also does regional benefits work and
works with other government departments to make sure
the needs of Atlantic Canada are considered in all
areas. That requires a lot of coordination work and a
lot of work done on research, education,
entrepreneurship training, as well as in areas other
than pure loans or our business development or site
Mr. Greg Thompson: I accept that you do interface
with many departments and levels of government,
Minister, but many of those costs are absorbed by those
departments as well. For example, Industry Canada. You
work hand in glove with that department, but it covers
many of those expenditures.
How many people do you have on the payroll at ACOA
who are specifically funded by ACOA? The
Enterprise Cape Breton Corporation, for example, which
is an arm of ACOA—are those staff considered part of
your payroll? How does that corporation fit into these
operating expenses, or does it operate on its own
Mr. Robert Thibault: I'll ask my officials to
give you the details.
Mr. Michael Horgan (President, Atlantic Canada
Opportunities Agency): Within ACOA, I guess our staff
is a little over 500.
But the Enterprise Cape Breton Corporation is not an
arm of ACOA; it's a separate crown corporation. It has
a staff of around 50. We have a very close relationship
with ECBC—in fact, in my position I'm actually also
its chairman—but it is a separate corporation.
Enterprise Cape Breton delivers ACOA's programs in
Cape Breton through a memorandum of understanding, but
as a crown corporation it has its own separate
appropriation through Parliament. An independent board
of directors operates the corporation.
Mr. Greg Thompson: I'm also concerned about the
outright grants. In the early days of ACOA, I believe
the government of the day got into a lot of trouble
because of some outright grants to corporations. In
some cases, you could question whether the corporations
truly needed those grants. Sometimes a business would
find itself at a very strong disadvantage compared to a
competing business across the street, because one
business was funded and the other wasn't—simply
because one was smart enough to apply and the other
I know you've moved away from grants and now you're
into loans for the most part. But I see in the
estimates that you can, if you wish, still provide
outright grants. What proportion of your budget is
strictly grants, or giving away money?
Mr. Robert Thibault: Grants are not made to the
commercial sector in any way. We do administer
programs such as fisheries restructuring and adjustment
measures, the base closure program, and other
government programs. As well, the federal-provincial
agreements on economic development do, in some
instances, make grants to the not-for-profit sector.
Mr. Greg Thompson: Those grant moneys do not come
out of your $277 million budget this year?
Mr. Robert Thibault: Not out of the business
development program side of it. There are no grants to
businesses. There are only repayable contributions.
Mr. Greg Thompson: In other words, you're telling
me that of the $277 million that will be appropriated
to the agency this year, not a nickel will go out in
Mr. Robert Thibault: Not in the business
development program. Some of the appropriations funds
would be for the fisheries restructuring and adjustment
measures, for Canada-Nova Scotia and Canada-New
Brunswick, and for
those grants. Perhaps Peter can tell you.
Mr. Peter Estey (Vice-President, Finances,
Corporate Services, Atlantic Canada Opportunities
Agency): The specific answer to your question, sir, is
less than one-third of 1%. In other words, in fiscal
years 2001 and 2002, the agency will give out less than
$1 million in grants.
Mr. Greg Thompson: Okay, that's the answer I was
looking for. Thank you.
The Chair: Mr. Alcock, please.
Mr. Reg Alcock: Thank you.
It's a pleasure to have the opportunity to talk to
ACOA, because we also have an agency in the west, and
it's interesting to note some significant differences
between the two agencies. At times, we in the west have
looked at the Atlantic provinces and their economy with
some smugness, because they were obviously struggling.
But in fact, if you get into the data, Atlantic Canada
has done quite well in terms of its share of national
wealth. That share has gone up slightly over the last
two decades, whereas Quebec's, Manitoba's, and
Saskatchewan's shares have gone down substantially.
There is always this debate about whether these
agencies are effective. As I look at the year-to-year
transits, I have to think that since the arrival of
ACOA, there is a steady, fairly positive growth in the
Atlantic region's share of national wealth.
One of the things I note about ACOA is that you seem
to have a planning capacity that takes into account a
broader strategic objective—and not just the regional
demand, because there's always a demand for business
assistance in small economies where it's hard to access
capital. I'm interested in how you go about creating
Mr. Robert Thibault: One thing we do very well is
coordination and consultation with the communities,
universities, research institutes, provincial
governments, and local governments. I was just
discussing the RDAs, the regional development
authorities, which have been a very positive
I used to be in municipal government, and I find the
RDAs very interesting vehicles. We can take municipal
resources that are effective in economic development
and match them with provincial and federal resources.
That way, we can get all the people who work in the
same field around the table regularly, to compare notes
and make sure we're working in the same direction. We
can also know what the regional development authority
in the neighbouring community is doing, so that we can
work with them, combine forces with them, and achieve a
synergy—get a lot more effect for the same money.
We can get all the knowledge that may
be out there—all the information provided by ACOA's
research divisions, or by the RDA studies, or by the
provincial economic development agencies or
departments. Everything comes into play in the same
I believe it's a lot easier to do long-term planning
and gain a strategic perspective that way, because most
people are well aware of the territory, of what exists
out there, and what the opportunities and challenges
are. It's easier to find partners to do positive
Mr. Reg Alcock: And is that part of ACOA's annual
Mr. Robert Thibault: In Nova Scotia's case—my
officials will correct me if it's different in the
other provinces—the regional development authorities
always produce an annual report that presents their
plans and priorities to ACOA, as well as to the
provincial government and municipalities that are their
partners. That report shows what the priorities are
On ACOA's part, the planning and adjustments are
ongoing and continual. There's always an annual plan,
but the analysis continues on a day-to-day basis. So if
any opportunities or challenges arise, we're aware of
them and we're in a position to react.
Mr. Reg Alcock: Thank you very much.
The Chair: Thank you very much, Mr. Alcock.
Mr. Greg Thompson: Madam Chair, as the fifth party,
I'm having a great opportunity today, because there are
so few members on the opposition side for a change.
Mr. Minister, in any department there are always
concerns about abuse of the system. I know that early
this spring there were approximately 14 cases under
investigation by the RCMP that concerned fraud by some
who had obviously tapped into
I want to ask specifically, what has been the outcome
of those cases? Have any of them been pursued? Are any
before the courts?
Mr. Robert Thibault: You understand, Mr. Thompson,
that I can't comment on specifics. But I think it's
important to recognize that although the RCMP is
investigating ACOA clients, in none of those 14 cases
is ACOA itself—or any of its agents or
Mr. Greg Thompson: I want to make it perfectly
clear that I understand that and accept that.
Mr. Robert Thibault: I'm working from memory here,
but I believe that in seven of those cases, the
questionable practices were brought to the RCMP's
attention by us, through ACOA's audit
In some other cases, it was a third party that brought
them to the attention of the RCMP—it may have been a
creditor or someone who had loaned money to one of
those clients and saw the questionable practices.
Others were discovered purely through RCMP
investigation. But I think it's important to note that
the matters don't relate to ACOA directly.
Mr. Greg Thompson: I understand that.
Is it true that most of the loans ACOA provides
Mr. Robert Thibault: Yes.
Mr. Greg Thompson: That is somewhat troubling. How
many of those loans have gone into default, and how
much money from the estimates have you set aside for
Mr. Robert Thibault: We're currently experiencing
a 90% success rate, which means a 10% default rate on
outstanding loans. Because these loans are unsecured
and would be considered “high risk” by any
commercial lender, I believe that's a very good success
But even of those loans that are in default, we will
recover some of them—and we continue to try to recover
a lot of them, or all of them. Some could have forecast
their repayments to start in September, and come
October, repayment hasn't yet started.
Mr. Greg Thompson: Thank you, Mr. Minister. That's
acceptable. I'm trying to cram a lot into a short time
here, and I appreciate the chair's generosity.
Another question that concerns me, although you could
say this is petty and unnecessary whining... Yesterday a
member of Parliament, Mr. Wappel—you know about this,
it was the top story—wouldn't support one of his
constituents because that person didn't vote for him.
I know you can't control individual members of
Parliament. But one of the aspects of ACOA I have
experienced talks about empowering members of
Parliament. I hope you can do this, because most
MPs—regardless of their political stripe—work with
your agency, with their provincial governments, and
through their municipalities. You know that well,
having been there.
But when it comes to announcements, they conveniently and
consistently leave out of the platform, in any kind of
announcement, individual members of Parliament, unless
you happen to be on the government side.
I know all is fair in love and war and politics,
but the truth is many members of Parliament invest a
lot of time in working with their municipalities, with
the provinces, as you well know. And given what
we're seeing playing out in the media today in Canada
and this sort of distasteful sense of
politicizing access and so on and so forth, which I
believe none of us in this room would agree with, can
the department take steps to ensure that when these
announcements are made, individual members of
Parliament are recognized for their efforts on behalf
of their constituents?
Mr. Robert Thibault: I think I understand your
frustrations because we often have the same ones
working with municipal and provincial governments.
Most of the time we fund 70% of programs we're doing
jointly with them, and sometimes they announce it without our
presence and it does frustrate us.
I certainly would consider trying to find a way
whereby we could accommodate everybody. It seems to make
sense to me.
Mr. Greg Thompson: I appreciate that. We can
leave it at that and we'll see what happens in the next
It is my understanding that ACOA—
Am I finished, Madam
The Chair: Shortly. You may have another
question. I have other people who want to ask
Mr. Greg Thompson: Go ahead, Madam Chair. I don't
want to hold up the other members. We'll maybe have
some time later.
The Chair: Mr. Savoy.
Mr. Andy Savoy: Mr. Thompson brings up a very good
point on that issue specifically. I think we might
want to look at speaking with our provinces in Atlantic
Canada in the same fashion, because we see that very
Mr. Greg Thompson: For the record, I agree with
Mr. Andy Savoy: Maybe scheduling the announcements
is something else we can look at both provincially and
As you know, my riding is very rural and has a strong
presence in agriculture, forestry, metalworking, and a
variety of sectors. Being a rural riding, there are
some issues around access with regard to economic
development agencies and ACOA. Aside from the
strategic community investment fund, what other
areas are you looking at in terms of rural initiatives,
rural service? How do you ensure that small
rural businesses receive the same level of service that, say,
those in the centres receive?
Mr. Robert Thibault: What should be understood I
think, or is not known well enough, is that most of our
activities, and most of the business development loans
and most of the work that's carried out by ACOA, are in
the rural parts of Atlantic Canada, in the smaller towns
in the rural areas. As I was mentioning earlier, the
urban areas tend to do very well. We do end up doing
some investments in those areas when the opportunity is
there and when the need is there, but the vast
majority of the investments we're involved in with
business under the business development program are in
the more rural areas of the Atlantic provinces.
Mr. Andy Savoy: Secondly, also in my riding there
is an issue or a fact, a situation, with seasonal
industries, specifically forestry and agriculture.
What's ACOA's policy on this, or is there a specific
strategy with regard to seasonal industries, seasonal
Mr. Robert Thibault: We have
to have a look at some of our practices to see
if we can improve work in
that area. The strategic priorities are always in
value-added, being able to do more with the primary
resources we have now in terms of new markets, new ways of
manufacturing, new technologies, and value-added secondary
manufacturing, so that we can go to the next level,
and, rather than just being harvesters or producers and
shippers, become manufacturers.
The private sector has had great success in
certain areas in Atlantic Canada. The McCain family
would be a great example of this, where they've taken
potatoes and now all sorts of food products...and the
amount of jobs they create.
I think there are a lot more opportunities out there.
We're always ready to work with them. We work with
Export is an area we're putting a lot of renewed
emphasis on, and we're working with the Atlantic
provinces to take those industries, those companies,
that are already export ready and bring them into the
market and help them export, help them do the
follow-up, help them do the training and get the
expertise they need to be successful in the export
market. Then hopefully we can help to bring them to
the next level. New England has been our target for
the last three years. This year we're taking a lot of
companies that have had success in New England and
we're bringing them down to the southeast United States,
which is the fastest growing market in the U.S.
When you look at what that market means to Canada, in
that market alone we export more product than to our
second biggest national trading partner, which would be
Japan. So the potential is huge.
We are traditionally
very good traders, but we have to bring it to the next
level and try to get more people exporting, give them
the expertise, make them export ready. Then it gives
them a much wider range of final products they can make
with their primary resources as they have more markets.
Rather than just sending fish to the Fulton
Fish Market, hopefully they can sell Coquilles St.
Jacques in Atlanta.
Mr. Andy Savoy: Thank you very much, Mr. Minister.
The Chair: Thank you, Mr. Savoy.
Mr. Greg Thompson: Thank you again, Madam
Chairman, for your generosity. This is again
unexpected. I'm going to have to come back more often
to your committee.
The Chair: Don't get your hopes up.
Mr. Greg Thompson: Mr. Minister, I know there's no
direct relationship, although I suppose that economists could
argue there would be... But I do know that one of
the raging topics in Atlantic Canada now is the
equalization formula and the cap the federal
government has put on it. There seems to be a little
bit of disagreement within the federal cabinet on
whether the cap should be removed or not. Obviously
you know what the positions of the premiers are, and I
guess none of us are going to argue with their
I have read some of your comments on that.
the record, I'd like you to tell us what your
position on the equalization formula is, Mr. Minister.
I'm going to tie this into ACOA once you finish
your comment, if I may.
Mr. Robert Thibault: Of course, I don't speak for
cabinet on this matter—the Prime Minister and Minister
of Finance do—but as a Nova Scotian and as an Atlantic
Canadian, I'm always willing to reopen the equalization
formula and rewrite it in a way that's of better
benefit to Atlantic Canada. But that has certain
elements of risk. If you look at the current time...a
huge part of our provincial budget is coming from
equalization transfers. I don't know exactly what the
figure is in New Brunswick, but—
Mr. Greg Thompson: It's the single biggest item,
the single biggest infusion of revenues from the
Mr. Robert Thibault: So if we go to the table and
we open it up, maybe Alberta and Ontario will want
to pay more into the system and assist us and maybe
they won't. We have risks of winning; we have
risks of losing.
So that's a risk.
I believe in 2005 it
comes up for renegotiation and for re-discussion and
In terms of raising the cap, again I
have no problem with raising the cap, and that would
assist the Atlantic provinces, but very little in
relation to the cost to the federal treasury.
We put in—and I'm working from memory again—I
believe $1.7 billion more this year, and most of
that went to one province in the order of $1.5 billion.
Manitoba, Saskatchewan, and Atlantic Canada
distributed the rest and so ended up with very little.
To be able to do initiatives such as the $700 million
initiative we're doing now, to have the funds for
infrastructure programs... We have interesting challenges in
Atlantic Canada, such as the St. John's harbour clean-up,
the Halifax harbour clean-up, or Corner Brook... We need
some assistance on highway development, highway
upgrading. It requires some funds from the treasury.
If they move all their funds to equalization, I don't
think it's the answer for Atlantic Canada.
Mr. Greg Thompson: But I don't want you to be able
to fool us into thinking that the transfers are
basically a designated tax within the have provinces,
which obviously it is not. We all contribute to
general revenues, and the transfer payment is coming
out of general revenues, not out of a specific fund
based on the very complex formula. But I do want to
quote something you said earlier in the spring.
The Chair: Last question, please.
Mr. Greg Thompson: I'll conclude, Madam Chairman.
You were talking about Nova Scotia particularly, they
carry too much debt, and talking about the obstacles to
removing the cap, but at the same time, it says “Mr.
Thibault said there's a need to look at other
programs”, without designating what those other
programs would be, to help Atlantic Canada “over the
hump and allow the economy to grow to its full
potential.” So what did you have in mind when you
were talking about other programs in addition to
equalization to help Atlantic Canada?
Mr. Robert Thibault: I'm in discussion now with
members of caucus. I hope to have discussions with the
provincial governments, with the premiers. We're
looking at having an Atlantic Canadian conference to
deal with economic development matters, a
brainstorming session, trying to organize that within
the next seven or eight months, to find out exactly how
we could have a strategic impact with federal programs
that would assist Atlantic Canada beyond what we're
doing now. If we can find that program, if we can find
those elements, I'll be very happy to approach cabinet
and try to get those resources for Atlantic Canada. I
think we've got a better chance of assisting Atlantic
Canada that way than we do by going the route of
Mr. Greg Thompson: When you say caucus, I'm hoping
you might extend it beyond your caucus to others that
are involved in representing Atlantic Canadians.
Mr. Robert Thibault: You're absolutely right, we
should broaden the discussions and get the ideas out
from everywhere. I'll be waiting to have a discussion
with the Atlantic members from your party at any time.
The Chair: Thank you very much, Mr. Thompson.
Lastly, Mr. Lastewka, please.
Mr. Walt Lastewka: Thank you, Madam Chair.
First, I want to compliment the ACOA people for all
their hard work. I've had an opportunity to work with
all three of the executives from time to time, and I
think the fact that you've been focused and very
strategic in helping small business has been good. The
evidence is there with more and more small businesses
starting and growing, and I know you've done a lot of
work on entrepreneurship training. I wonder if you or
the executive could share with us their work on the
entrepreneurship training programs.
Mr. Robert Thibault: I will open it up. I want to
tell you a nice little story.
I went to Moncton to speak—we have a group called
SEED. We work through the schools with young
entrepreneurs. Actually, they're school-aged people
and we hope to instil in them an understanding of
entrepreneurship, that it is a way of life, that it is
a potential career, and the importance it has in our
economy. They might have that in the back of their
minds later. I met a young man who they told me a year
before was in a youth detention centre. The
counsellors recognized that he had a low self-esteem
problem, looked for a method to work on his
self-esteem, introduced him to the SEED program, and he
worked there. I spoke to the guy. He told me he's in
grade 11 now, doing well at school, and his dream, his
goal now is to open and run his own small business
after he goes to university. I don't know if he'll
ever achieve that, but it's a far more positive dream
than robbing a bank or running a bookie business on the
So I think we should work with people of all ages on
entrepreneurship and also give them the knowledge, the
skills, and the ability to bring their ideas to a
business level, small business, to export level. Often
it's intimidating for people. They might be very good
craftsmen, they might be very good managers of people,
but going to the next level, to the bureaucracy, to the
export documentation, to the customs brokers, all those
elements can be quite intimidating. So I think with a
little bit of money assistance from ACOA we've been
able to do quite a bit.
Mr. Walt Lastewka: Paul, do you have anything?
Mr. Paul LeBlanc (Vice-President, Policy and
Programs, Atlantic Canada Opportunities Agency): We
realized long ago that there was an obvious deficiency in
commercial investment moneys for small business
start-up and early-term growth. That's very important,
and a lot of people knew about that, knew ACOA did
that. We knew in the model that wasn't enough. You
had to address awareness about business
entrepreneurship. You had to address attitudes.
There's a cultural, attitudinal, values issue that had
to be worked on for the medium and longer term, and you
had to help instil greater skills about business.
That in essence has been our entrepreneurship
development model, and it's actually taken shape in a
lot of ways. The minister talked about 250,000 young
people in Atlantic schools who have entrepreneurship as
part of their public school system curriculum—there
was almost none seven or eight years ago. That's one
of the results. There are youth entrepreneurship
drop-in centres that help early adolescents get
acquainted with the values of business and learned
skills, entrepreneurship strategies tailored to the
needs of women, women-based networks to help women
entrepreneurs and augment their businesses in a helpful
climate, where there's exchange of information, etc.
The model has also included helping television
programming, broadcast all over Atlantic Canada, that
featured young and not-so-young Atlantic entrepreneurs,
to try to cast entrepreneurship as a credible, laudable
career choice. And we've seen differences. We've been
tracking the attitudes of high school and university
level people about small business in Atlantic Canada,
and we've seen their desire to take business as a
career opportunity steadily increase in the region, we
know in part as a result of these strategies.
Mr. Walt Lastewka: In addition to your youth
initiatives, the women and business conferences have
probably been some of the best I've seen across the
country. I think the more we do that type of training,
not blocking anybody from going into business, the
better. We've talked about people who've been in
detention, the youth, the women in business—this has
been a success.
I want to bring up a possible irritant, though. As we
get into more and more businesses and the Atlantic area
gets its fair share of the 145,000 new businesses that
are established every year, the question becomes, how
is ACOA watching or monitoring to make sure, because
there is an ACOA, for example, in Atlantic provinces
and there's no development fund in southern Ontario,
that we're not just moving jobs?
Mr. Robert Thibault: A great majority of those
businesses we've been assisting are with Maritimers who
are starting up or expanding. We've had some success
lately in attracting call centres. But very few of
those were moving from one area to the other; they were
expanding their activity. They were in the United
States or they were in central Canada. They needed more
facilities and they've come in.
We just did one in Yarmouth, Register.com, with
300 jobs, in every rural part of the province.
Register.com was operating out of New York City, had a
huge problem with workforce, turnover was too fast,
they couldn't pay enough to make the people pay the
transit fees and all that to get to Manhattan to work
out of a call centre there, the rent was too high...
They've come to Yarmouth and they're very happy with
All the employers I've talked to have made some
investments in Atlantic Canada. At Tesma, which I
was just speaking with in North Sydney, they did an
expansion to over 1,000 employees. Everywhere you hear
the same thing. It's the workforce that makes it work
when they discover it—very loyal, low turnover rate,
The community college system we have and have been
working very hard with provincial governments to
develop and to make as pertinent as possible is doing
excellent work in servicing the businesses that want to
expand or want to come in.
Mr. Walt Lastewka: But my concern is that we don't
get ourselves into a position where we're using federal
tax dollars just to move jobs or to help the business
Mr. Robert Thibault: We can't do that. You can't
even have competition between the provinces or in
others. We have people who are expanding, and the
great majority are people from the Maritimes who we're
trying to bring to the next level, helping them
increase their business, or new start-ups.
I'd just like to add, if I
could, one word on women in business. We do
participate in funding the Mount Saint Vincent Centre
for Women in Business. Its executive director is
Daurene Lewis, who was the first black female mayor
in Canada and is certainly used to breaking new ground.
Women entrepreneurs are
probably more successful by their percentage. A lot,
if the not the majority, of new businesses are started
by women entrepreneurs.
Mr. Walt Lastewka: Let me conclude by saying
congratulations to ACOA and their team for staying
focused, which I think is very important.
The Chair: Thank you very much, Mr. Lastewka.
We want to thank the minister for being here today. We
have to move out of here because there's another
committee waiting to move in. We do appreciate your
time very much. We look forward to meeting with you
again in the future.
The meeting is adjourned.