INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 22, 1998

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[English]

The Chair (Ms. Susan Whelan (Essex, lib.)): Order.

We now have, pursuant to the standing order of the House dated February 26, 1998, the main estimates for the fiscal year ending March 31, 1999, Industry, 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 and 120.

So we have a lot to discuss today, and before us today we have the Honourable John Manley, Minister of Industry, and the Honourable Ronald Duhamel, Secretary of State.

My understanding is that the Minister of Industry will be with us for one hour, after which Mr. Duhamel will give us a statement and will be with us for the second hour. If that is not correct, someone can let me know; otherwise, I will now turn it over to the Honourable John Manley, the Minister of Industry, for his opening comments.

The Honourable John Manley (Minister of Industry, Lib.): Thank you very much, Madam Chair. Yes, that's right, Dr. Duhamel will be speaking later in his capacity as Secretary of State for Western Economic Diversification. In the meantime, I've asked him to join me in his role of Secretary of State for Science, Research and Development, so that if there are questions that pertain to the overall science and technology aspects of the ministry he may have comments to add as well.

In addition, I have with me, as is normal when we deal with estimates, Kevin Lynch, who is the Deputy Minister of Industry. And just as a side benefit we have with us Konrad von Finckenstein, whom you have met recently, the director of investigation and research and soon to be the commissioner of competition under the Competition Act, in case there are any questions that pertain to his specific role as director. But the main purpose, of course, is to discuss the report on plans and priorities for the industry portfolio, so we'll plunge right into that directly.

[Translation]

When we met last October, I outlined the challenges and opportunities that face Canada as we move into the rapidly-developing global, knowledge-based economy. I spoke about how Canada, like all industrialized nations, is facing gaps in productivity, innovation, human resources, trade and investment— gaps that we must reduce to build long-term growth and job creation. I spoke about how the Industry Portfolio will work in our government's second mandate to encourage and promote improvements in Canada's performance in innovation, skills development, and trade and investment. I also outlined my agenda for Connecting Canadians.

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Since we last met formally, the Industry Portfolio has been the focal point of an ambitious legislative and policy agenda. And I want to thank this committee for your role in that process.

[English]

We particularly appreciate the committee's work on the cooperatives bill, Small Business Loans Act, and the telecommunications legislation.

You've taken up some other important matters as well, especially the recent work to assess Canada's readiness to deal with the year 2000 computer transition. You will know that I share your concern about this issue, and it ranks high on our priority list as well.

As you know, we've brought together a task force involving a wide range of Canadian business leaders to examine the state of preparedness of the Canadian business community as we approach year 2000. The task force has appeared before you, having reported back in February, four months ahead of schedule, because they realize that the time for action is now. The most pressing message that they're bringing consistently to the Canadian business community is don't wait; take action now.

The federal government is also helping wherever it can. In collaboration with Task Force 2000, we've developed an informative and practical web site to help Canadian businesses. It includes many planning tools, checklists, and an updated list of service providers. The task force will reconvene in June to review the latest Statistics Canada survey on the state of year 2000 preparedness. That survey will be conducted in May and June of this year.

Now I want to highlight some of the other areas of work that are the substance of the industry committee report on plans and priorities for the fiscal year. I want to demonstrate how we are following through on the commitments that we made in the Speech from the Throne last October and how we're building upon the achievements from the last mandate.

On page 6 of the RPP, you can see our five strategic objectives: increasing Canada's share of global trade; improving conditions for investment; improving Canada's innovation performance and the transition to the knowledge-based economy; making Canada the most connected nation in the world; and building a fair, efficient, and competitive marketplace. I'll touch on each of these objectives to point out some of our highest-profile priorities between now and the year 2000.

First, I want to talk a little bit about Canada's share of global trade. As you know, Canada has the most trade-oriented economy of any in the G-7. Still, we have too few exporters, particularly among small business. Our top five exporters—the pie chart demonstrates this—account for 22% of Canadian exports. The top 50 exporters account for 47% of exports. Fewer than 10% of SMEs now take advantage of globalization at all, and this is simply too narrow a base upon which to build a trading economy. Changing this situation is a major priority for many parts of the industry portfolio.

In the spirit of Team Canada Inc., our objective is to help more companies become ready to export. The specific goal we've set, together with the Department of Foreign Affairs and International Trade and the Department of Agriculture and Agri-Food, is to double the number of companies that are exporting, by the year 2000.

[Translation]

The second strategic objective is our work to improve Canada's attractiveness for international investment.

At one level we have done well—or so it would seem. Foreign direct investment has doubled in the past decade. However, during that same time, overall investment levels have risen so much that our share of global foreign direct investment has dropped by half.

The Department of Foreign Affairs and International Trade has lead responsibility for attracting investments to Canada. Through Investment Partnerships Canada, Industry Canada works with them to develop and implement investment promotion strategies targeting the countries that are the sources of 90% of our investment. Those strategies are emphasizing key sectors of our economy.

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Our work through IPC is part of our overall commitment to expand information and awareness of Canada's advantages as a place to invest. It is linked to our work with small and medium-sized businesses, to help them find potential international alliances.

[English]

I'll move on to the third objective, which is improving Canada's innovation performance.

When I met with you last October, I outlined the critical importance of innovation to our economic and social goals. I spoke about the need to address what the OECD has described as Canada's innovation gap.

For example, our small and medium-sized businesses lag those in the United States when it comes to putting new technologies to work. That cuts our potential productivity. The 1998 budget expands and deepens the government's efforts to promote the growth of a more innovative Canadian economy. It launches new initiatives and provides new resources for key programs that invest in people and technology.

There's a strong emphasis across the industry portfolio on promoting innovation to position Canada as a world leader in the development, adaptation, and diffusion of science and technology. With programs ranging from basic research to marketing, the portfolio members are important partners to the private sector and as well to the education community.

We are at the leading edge in a number of areas. For example, as we speak now, a Canadian astronaut, Dr. Dave Williams, is in space on the STS-90 Neurolab mission. This week also saw the start of training for the astronauts from the United States and Russia, who will use the next generation Canadarm when they are on the space station. That Canadarm is going to begin being assembled late this year or early next year.

We are increasing the funding for university research and the development of highly qualified people by increasing the budgets of the three university granting councils by more than $400 million over the next three years. The granting councils are clearly in a leading role in helping to train the human resources we need for the knowledge-based economy.

We're expanding the National Research Council's industrial research assistance program, IRAP, by an additional $34 million a year to provide greater support for Canadian small business in adopting new technologies and developing new products and processes for commercial markets. The IRAP network, which comprises about 250 advisers across the country, works with some 10,000 small and medium-sized businesses every year to help them to address technology challenges.

The National Research Council, I also believe, is an important tool in our mission to close the innovation gap through its various research institutes, which support a wide range of direct and applied research, such as the non-destructive testing of industrial materials and pollution prevention in the manufacturing process. Those are just two examples out of many.

The investments and innovation provided for in the 1998 budget will complement other measures we've taken, such as the stabilization of the networks of centres of excellence program and the creation of the Canada Foundation for Innovation and Technology Partnerships Canada.

This last program, TPC, has already invested heavily in the development and commercialization of innovative technologies across the country. Since its inception TPC has invested in projects from Victoria to Montreal, from St. John's to Calgary. TPC is an innovative investment approach, a fundamental departure from the past practices of grants and subsidies. All TPC investments are repayable. The government shares in the upside profits from successful projects.

TPC is also proving to be a fiscally responsible investment tool to support growth sectors of the Canadian knowledge economy, including the environmental and aerospace sectors and the enabling technologies. It levels the international playing field, enabling companies to make sound business decisions, which impact on new investment, job creation, and economic growth in Canada. For every dollar we invest in TPC, we expect to leverage more than $4 of additional private sector innovation investment.

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The fourth objective you've heard me on before is connecting Canadians. We've set out a six-part agenda, with the objective of making Canada the most connected country in the world by the year 2000. The budget invested $202 million over three fiscal years to connect Canadians to learning networks. One place that money will go is to the Community Access Program, or CAP.

We are now building on our plan to include a CAP site in all rural communities with more than 400 people by the year 2000. It will now support as well the creation of up to 5,000 community access sites in urban areas. In total, that will mean 10,000 communities on line.

To date, CAP has helped some 2,200 rural and remote communities to become connected to the Internet. CAP had become a focal point for community-led efforts to gain access to the enabling power of the Internet as a tool for economic and social development.

Then there is SchoolNet, another initiative to connect Canadians that we will build upon in this fiscal year and beyond. The private and public sector partners in SchoolNet are very close to completing the initial mission, which is to connect all of Canada's 20,000 schools and libraries to the Internet.

The next slides show how, under this program, which was a fledgling program in 1994, when we started it, connectivity is spreading to schools and libraries throughout the country. You can see that we started with none in 1994. By 1995 it was 3,000 schools. By 1996 it was 7,000. By 1997 we were at 11,000. By the end of this year, we will have all 16,500 schools and 3,400 public libraries, including 350 first nations schools, connected to the Internet.

Our agenda for connecting Canadians' next phase is to move from connecting every school to connecting every classroom.

SchoolNet is also about content. What you see on the screen is the main page of the website that includes a collection of Internet-based educational services and resources for both teachers and student. It includes career guides, university and college course calendars, thousands of teacher-designed projects and lesson plans, and virtual tours of institutions that range from the Louvre to the Canadian Museum of Civilization. The digital collections program contracts with organizations to hire young people to digitize material for display on SchoolNet. Almost 1,000 young Canadians have worked through this program to produce more than 180 collections, which are now available to all Canadian youth through SchoolNet. It's attracted world attention. Agreements have been signed with five countries to emulate the SchoolNet model.

[Translation]

The Computers for Schools Program is a building block in making Canada the most connected nation in the world. To date, with the support of a vast network of private and public sector partners, we have installed more than 50,000 recycled and refurbished computers in Canadian schools to open electronic doors to Canadian students. We have challenged businesses and governments to work with us to install 250,000 computers by the year 2000.

I will now talk about VolNet. The private and public sectors, along with our schools, have taken to the Internet quickly. A major challenge is to link Canada's voluntary sector. We believe that people in the voluntary sector can achieve a great deal by connecting to each other. They can benefit from taking advantage of the many and expanding resources on the Internet. We will soon launch Voluntary Sector Network Program, or VolNet. Our goal is to link 10,000 of these groups to the Internet, and to link them as a virtual community across Canada.

[English]

Next is CANARIE. To deliver programs such as SchoolNet, Community Access, and VolNet, we need to make sure the wiring is there. People are not willing to stay at a computer terminal if in fact it's the Worldwide Wait, if it takes too long to download information and images.

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The next generation Internet will respond to this challenge. Today one page of text may be downloaded in about 10 seconds, with a 28.8 bawd modum. With the next generation learning network 1,000 pages—in other words, the entire Canadian encyclopedia—will be capable of being downloaded in the same 10 seconds. That's fast.

The CANARIE program is a private sector-led initiative. It involves 120 member companies, universities, and public organizations in building and promoting the development of technologies and applications for Canada's network infrastructure. We've invested an additional $55 million in CANARIE to build this next generation Internet, CA*Net3, which will be the world's first all-optical, broadband network.

This will be the platform that will make SchoolNet and the community access program even more effective. It will give our universities the capacity they need for researchers to work together, regardless of where they are, regardless of the distance in Canada.

The final objective I want to mention is our continuing commitment to build a fair, efficient, and competitive marketplace for businesses and consumers. We expect to proceed with legislation to improve, once again, the Small Business Loans Act and to modernize the Canada Business Corporations Act. We will continue the many activities that give Canadians confidence in the fairness of our marketplace and that promote the growth of globally competitive Canadian businesses.

While there are many other aspects of this work I could mention, I want to discuss one in particular, which is electronic commerce.

Our goal here is to create a legal and regulatory framework for electronic commerce that will make Canada a global centre of excellence. We want to make Canada a location of choice for developing electronic commerce products and services to capitalize on the phenomenal growth of on-line business. On-line revenues from business and consumer transactions are projected to reach $1.4 trillion U.S. by the year 2000. That is more than three times the level in 1996. With the right government framework, growth could be much greater.

The most gains from electronic commerce will go to those countries I believe that create the environment for them to flourish ahead of other countries. To get there we will be developing and implementing the policies that will make electronic commerce safe, secure, and effective for both sellers and consumers.

We'll be hosting a ministerial meeting of the OECD here in Ottawa in October. It will cover important issues such as privacy and consumer protection in the global cybermalls of the future. It will move industrialized countries forward in concert on the common technical standards we need to accelerate the growth of electronic commerce.

There's much more that the industry portfolio will be doing in the coming year. Our ongoing programs and services assist all sectors of our economy in line with our strategic objectives, but as you can see, the industry portfolio is at the centre of many of the government's most important policy initiatives.

Now the chair of the committee has asked that I indicate areas of future work that would address issues on this agenda. I'll offer the following suggestions, some of which you may want to take and others you may want to look to.

Year 2000 is a continuing priority, and I think the committee has done a superb job of creating momentum on the year 2000 computer challenge. I look forward to the report you're planning to table, and I encourage the committee to continue to build on the momentum it has already generated by reviewing the results of the next StatsCan survey when it comes out and offering advice to the government on what we can be doing to increase our assurance that the necessary measures are taken to ensure Canada is ready for January 1, 2000.

On the biotechnology strategy, the committee may wish to review the 1998 report of the National Biotechnology Advisory Committee, and I have forwarded that report to you. This is an important document, and I hope you will take the time to look at it and to hear some witnesses as we move forward to preparing the next phase of the Canadian biotechnology strategy.

On internal trade, the committee may wish to consider a wide-ranging review of problems in moving forward with the agreement on internal trade. This could serve to focus attention on an important national issue, where new ideas, I have to say, are needed on how to best move forward from where we are now.

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[Translation]

Of course, the committee will be busy with its review of the proposed amendments to the Competition Act and I look forward to its report, as does Mr. von Finckenstein, who apparently wants to change the title.

This committee makes an important and valued contribution to the work of the Industry Portfolio. We are determined to help individual Canadians, our private sector, our voluntary sector and our communities succeed in the new economy. In response to fiscal imperatives, we have reallocated resources internally and earned new reinvestments in order to position Canada to reach its goals for economic growth.

[English]

With that, I hope I haven't taken too much time, Madam Chair. I'll be happy to entertain questions.

The Chair: Thank you very much, Minister.

We're going to begin questions with Mr. Schmidt.

Mr. Werner Schmidt (Kelowna, Ref.): Thank you, Madam Chair.

I have a number of questions I'd like to ask, and so has my colleague, so will we be able to both enter in on the discussion? How are we going to do this?

The Chair: We'll go back and forth.

Mr. Werner Schmidt: All right. Thank you, Madam Chair.

The Chair: You told me you had three questions.

Mr. Werner Schmidt: I have many more than three, but we'll start with that.

First of all, Mr. Minister and your officials, may I thank you for coming. It's good to meet with you. I wish we had time to discuss all the areas.

I appreciated your honesty, Mr. Minister, about analysing, suggesting, and admitting that we do have an innovation gap, we do have a reduction in our foreign investment in Canada, and some of the problems you've laid on the table. I appreciate that honesty and that candidness.

You can't cover everything in 20 minutes, so I do want to ask you about some very specific areas that I don't think you did touch, and they involve several areas.

For example, there is beginning to develop a certain brain drain that's happening. We are losing some key people from our industries to other countries of the world.

You also mentioned the issue with regard to education, and you said the Internet and the CallNet and all of those things would have to do with substance.

I would like to ask you not so much about the content there, but the content in particular and the programs in particular that exist in our post-secondary institutions to get people ready to fill that innovation gap. On the one hand we're losing to other countries people who are skilled and trained, and on the other hand we're not developing enough people even if we had all those people retained in Canada. Just last night, for example, I met a gentleman who is employing some 7,000 people in the IT field, and he says he has right now vacancies for 600 additional people, and they're not available.

So I ask you, what is it? Where is the incentive for our post-secondary institutions to change their programs?

I remember so clearly the statement made by the executive director of the Advanced Technology Association that the engineering programs offered today in many Canadian universities—and the president of the University of Alberta reiterated exactly the same criticism—are the exact same programs that were there 27 years ago. They're so similar that you can hardly detect a difference.

So, Mr. Minister, if you could address those questions, it would help a lot to perhaps add to the many ideas you have already to explain the innovation gap and things of that sort.

Mr. John Manley: Thank you. It's a very important question.

We have struggled within the department with getting good metrics on what the reality of the brain drain is. In fact there were articles today suggesting that there are differences of view between Statistics Canada and other sources on whether or not there is a brain drain. Stats Can is saying there are people coming in as well as people going out. Bilaterally with the U.S., there tend to be more going out than coming in, but when you take into account others, there are people coming in as well.

What we don't have a qualitative analysis of is what kinds of people are leaving and what kinds of people are coming. When you trade Wayne Gretzky, you don't necessarily get the equivalent value coming back in. We don't have that analysis, and we're struggling to see how we can go about getting the analysis.

In the meantime, it's important to note that shortage of technology workers is not unique to Canada. It's true of other countries as well. It's true of all other countries in fact. So it's a challenge that is shared with the rest of the world.

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In addition, I would say on the brighter side that very recently I met with an important U.S. high-technology company that told us they found an advantage in being in Canada in their ability to retain high-technology workers. They didn't want to make an additional investment in Silicon Valley in the U.S. for the simple reason that there is so much mobility within that group of companies that they can't keep people long enough to make it worth their while. So they're saying that even though there may be a shortage in Canada, once we get good people, we tend to keep them longer and that there's value in that. So that's on the plus side of the ledger.

With respect to your question on the schools, clearly, the bulk of responsibility here lies at the provincial level. What we tried to do in addition to restoring funding for the university granting councils, which I think is an important part of it, was also create the Canada Foundation for Innovation, which we hope will enable the post-secondary education institutions to make some of the investments that are necessary to upgrade their research infrastructure. That would be in the teaching hospitals as well.

Making permanent the networks of centres of excellence program was another uniquely Canadian measure. It was introduced by the previous government. It's a very good program. It has worked well. We made it permanent as a means of retaining and encouraging the quality of people who we want.

So all of these things have to contribute to the solution of a complex problem that we don't really have a complete picture of in terms of how deep it is.

Mr. Werner Schmidt: I know, Mr. Minister, that you're an entrepreneur. You have stated on several occasions as well as in your presentation this afternoon that you would like to have a competitive marketplace and that it should be fair and level. I wonder, Mr. Minister, if you have ever given any thought to introducing a competitive element into the post-secondary institution arena. Now I appreciate that education is a provincial matter, especially when it comes to the public and elementary levels, but the federal government is involved in a major way at the post-secondary level.

I was wondering if perhaps you had given any consideration to the voucher system so that in fact the money would follow the student rather than be given as a grant to an individual institution, thereby introducing a form of consumerism into the post-secondary education field. So in fact the institutions would be competing for students on the basis of the quality and direction of the program rather than simply on the basis of being there and so they come.

Mr. John Manley: Well, I'd have to say, Mr. Schmidt, that if a government were going to do that, it would need to be a government at the provincial level. Any support—

Mr. Werner Schmidt: Why can't the federal government do its part that way?

Mr. John Manley: Because we don't make direct contributions, except in the R and D area through the granting councils to individual academic institutions. Any support that flows to post-secondary education does so through the transfer payments that go to the provinces.

The research grants, however, are done competitively. It's not with a voucher system student by student, but the peer-review system forces projects to compete one against the other in order to get funded. To that extent, the competitive model is followed in the area that we fund directly through federal dollars.

Mr. Werner Schmidt: I think that's fair, and I think that system is working to a degree. I don't want to get into that part of it directly because there are some other elements that are operating in the granting councils that perhaps sort of take away the competitive element. There is sort of an old boy's club that's operating there, but we won't get into that right now.

But I do ask the question: couldn't the federal government impose certain conditions on the grants that are given to the provinces as they do in health care, for example? There are conditions imposed. Isn't that something the federal government could do?

I think, Madam Chair, that the issue is serious enough for us to build in incentives that bring about a change in the way post-secondary education is done. It's not meeting the needs of our country.

Mr. John Manley: I think the federal government would be reluctant to start down the road of trying to manage how the provinces will handle the post-secondary education portfolio on their own. I think it may be theoretically possible to impose conditions as they exist under the Canada Health Act, but I don't anticipate that we would want to make that policy choice.

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Mr. Werner Schmidt: Madam Chair, may I move to another subject?

The Chair: Actually, Mr. Schmidt, I have to move on now. I'll get back to you.

Mr. Werner Schmidt: All right. Thank you.

The Chair: Mr. Peric.

Mr. Janko Peric (Cambridge, Lib.): Madam Chair, I want to continue on Mr. Schmidt's questions.

Minister, I've been talking to some in the private sector, and according to them, by year 2003 there might be a 350,000-person shortage in high-tech industry. Is your department in contact with the private sector? Are they aware of those figures, of the shortage? What is the feedback from the industry?

Mr. John Manley: Certainly a variety of the industry associations, as well as many individual companies, point out that there's a shortage of qualified people. We know we're not producing enough electrical engineers, computer engineers, and aerospace engineers. Even maritime engineers are in short supply. We know in certain scientific disciplines we aren't producing enough people.

That's a challenge for a country like Canada. We don't have the direct levers to say we're going to shift production, like a manufacturing facility, out of brown shoes and make black shoes. We can't do that in education. Students can't necessarily self-select, in the sense that I certainly would never have been able to get into an electrical engineering course today with the marks I had when I got out of high school. I'm told that you need 94% or 95% in order to get into most of those programs.

Right here locally, we have a very bright engineer by the name of Terry Matthews who has not only created a lot of jobs, but he's made a lot of money. With what I know of his academic background, I don't think he'd have got into an engineering school in Canada if he were applying today. So it's not just the bright academics we need. We need lots of others going into those schools.

Clearly, we have a shortage. But I'd reiterate that I think provincial governments, with responsibility for education, need to tackle that issue as well.

At the federal level, we have, as you may know, experimented with some programming. For example, Ovitesse is a program we established here in the national capital region, which is taking people and re-qualifying them to work in fields in which there is demand, where they have already a university degree of some description. That seems to be a promising way to go. That particular program is largely funded by the private sector and uses the University of Ottawa and Carleton University to provide the instruction. I would hope that a lot of other institutions would look at similar techniques.

You also have to remember that it's not easy to suddenly attract a lot of high-flying electrical engineers out of companies like Nortel and Newbridge and make them university professors. This is a very difficult problem that the companies themselves are going to have to help us, as a society, solve.

The Chair: This is your last question.

Mr. John Manley: Time flies when you're having fun.

Mr. Janko Peric: As we know, the government cannot do it on its own. The educational institutions, of course, and the private sector have to work together. Are the educational institutions putting any pressure on provincial governments to do anything in that sector?

Mr. John Manley: I'm sure those exchanges occur.

There was quite a well-publicized remark by the president of the University of Western Ontario when he participated in our knowledge-based summit here in Ottawa last fall, about the fact that he loses money on every engineering student that he produces and makes money on every art student. This has led, I understand, to some consideration of reforms in the province of Ontario.

The Chair: Thank you, Mr. Peric.

If I could remind everyone, shorter questions and shorter answers would ensure there are more questions and more answers.

Mr. John Manley: Easier questions produce easier answers.

[Translation]

The Chair: Mr. Dubé please.

Mr. Antoine Dubé (Lévis, BQ): Mr. Minister, I noted that you did not fall into the trap proposed by the Reform member by moving further into education, which is an area under provincial responsibility.

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I have one observation to make about your estimates. They indicate a drop in program spending while at the same time there is an increase in spending on administration.

My first question deals with the Copyright Board and its budget. There's been a decrease in the amount allocated. In 1989 it was $1,225,000 and now it is $803,000. However, with the adoption of C-32, the Board has more responsibilities. From some quite specific information we have received, it would appear that together with your colleague from the Department of Canadian Heritage, you intend to adopt a cost recovery, or user-pay, system to fund the Board. Is there any basis to that rumour? That is my first question.

As regards research and development, the documents prepared by the Library and other sources indicate that we share last place with Italy among G-7 countries. I would therefore like to ask two questions. Why has funding been cut to the Canadian Institute for Advanced Research, and also to organizations, associations and individuals working to increase public information and awareness in the area of science and technology? Why has funding to granting agencies been reduced to the 1994 level rather than being increased by 50%, as requested by the Canadian Consortium for Research?

If I may I'd like to ask a third question. The last time you appeared, I asked you a question about shipbuilding. And you took note of my question. I also asked you whether you intended to follow up on a commitment made by the Liberals in 1993 to hold a summit on the future of shipbuilding. I saw that the provincial premiers at the St. Andrews conference last August reminded the government of its commitment, and recently a resolution was adopted to that effect by Liberal supporters. I myself recently asked a question in the House, and the Parliamentary Secretary answered that everything was fine. So I will ask you this question again. Do you intend to follow up on the 1993 commitment to hold a summit on shipbuilding in Canada?

Mr. John Manley: Thank you. I would first like to say that Ms. Lalonde indicated to me that you would ask a question about the Copyright Board, and that greatly helped me to prepare. If you ask me a question that I'm not expecting, it is more difficult for me to answer. I can tell you that no decision has yet been taken.

There have been cuts across the board in the Industry Portfolio. With the 1995 reductions, total cuts came to 42% or more. Therefore, reductions had to be made across the board. Politically, that was difficult for me, as a member from the National Capital Region, because there was also downsizing in my department. I know people who were laid off by my department. It's not easy to implement that policy, but it was necessary. We have cut spending across the board and we have tried to do things more efficiently.

It's true that the Copyright Board has seen an increase in its responsibilities resulting from the legislation adopted before the election. Therefore, a way will have to be found to increase its resources. In consultation with the groups affected by this decision, we will have to consider whether it is possible to have users contribute, as is done in the case of the CRTC. We'll see. I have not taken any decision for the moment. We will look at the issue and discuss it with the groups concerned.

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It was difficult to make cuts to the granting councils and to the National Research Council. I would just say that when the department had its budget reduced by over 40%, in fact almost 50%, the budgets of the councils were reduced by 14%, which is much better than 40 or 50%.

Because of these budgetary constraints, these measures were necessary, and I think the Canadian people were generally in favour of them. I think everyone accepted them, because everyone was affected by these measures, which were fairly equitable across the board.

Why have we not increased the budget more? We have increased it to the 1994-95 level, and we expect another increase in the next two years. Personally, I am in favour of a further increase, that is clear. I believe Mr. Duhamel will be supporting the arguments in favour of the budget increase. I hope the committee will say as well that this is a very valid expenditure for the government and that this will be helpful to us. This is something to be considered in the upcoming budget on government priorities.

Third, you spoke about shipbuilding. I have been a minister since 1993, and I never made any promise about holding a summit. We had a discussion with representatives from all the various associations. We studied all the recommendations that were made. Most were about revenue or support for sales outside the country, and these issues do not come under my department. I tried to pass them on to the Secretary of State for International Financial Institutions, Mr. Peterson, who is studying recommendations regarding changes to the income tax system, such as deductions for rent or other similar measures. Mr. Marchi is the minister responsible for issues related to the EEC.

As Mr. Lastewka said in the House of Commons, we do have a policy on the shipbuilding industry. There has been a faster depreciation rate for ships built in Canada. We have a tariff on imported ships. We also have a policy on the purchase of ships by the government. There are definitely some problems in this highly competitive sector in which we must sell internationally, because the Canadian market is too limited for a large shipbuilding industry in Canada. We must sell our products internationally.

[English]

The Chair: Thank you, Mr Dubé and Mr. Minister. That wasn't quite what I had in mind. We'll keep going.

Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): Mr. Minister, I'd like to—

The Chair: Briefly. A short question.

Mr. Alex Shepherd: I haven't started yet.

An hon. member: It's a warning.

The Chair: I may cut you off. I'm warning everyone now.

Mr. Alex Shepherd: On the $34 million increase to IRAP, I talked to one of my local people who divvy up these funds for you. Their one concern was that the program was too specific in the sense that it relates to incorporated companies, and that there wasn't money to deal with innovation at an unincorporated level or the very small innovation level. Is that a valid argument?

• 1650

Mr. John Manley: I honestly couldn't tell you if IRAP is limited to incorporated companies. If that rule exists, I don't know.

Mr. Alex Shepherd: The administration of the program—has that now changed, out of the National Research Council?

Mr. John Manley: Mr. Shepherd, as I said, there was an additional $34 million in the budget, and in addition to that, we've asked IRAP to become the delivery agent for small business for the TPC program. We've augmented the IRAP budget as well by $15 million from TPC, so that in fact with $15 million from TPC and with $15 million from the new $34 million, IRAP will be able to deliver $30 million in TPC-like assistance to small business.

The key item here is that TPC, as I keep reiterating, is and always has been repayable. IRAP traditionally has not been repayable. Very often it's not that close to market in any event, so it's not necessarily producing an innovation that's easily made repayable, as the TPC ones are.

One of the problems we've had with TPC, frankly, has been trying to get the outreach to the small business community. We have 250 of these technology advisers out there. They are are a very good tool to reach out to the small business community, so we're giving them some additional money and asking them to do TPC for small business. They will still have additional money from the $34 million—in other words, $34 million minus $15 million—to go into the traditional IRAP program as well, to augment what they're able to do there.

Mr. Alex Shepherd: Okay. Well, we're very thankful that that money is there.

When I look at your overall budget projections into the future, they seem to go down by about 25%. In other words, I look at the forecast spending for 1997-1998 as $1.2 billion, and by 2000-2001 it's down to $918 million. Is that giving us enough funding to match this concern for innovation as we move into the next millennium?

Mr. John Manley: No, what that relates to really is the continuing implementation of previous budget cuts. In other words, in 1995 we basically eliminated almost all the programs that we had. Some of them continued to have contribution agreements applicable to them, so there is still money flowing out under old programs. There is no new money being authorized under old programs, but there may be commitments to make payments, and where we have legal obligations, those have to be respected. As those obligations are met, no new ones are taken on, and the reference level then declines accordingly.

Have I got that right?

A voice: Plus the Ontario infrastructure.

Mr. John Manley: Plus of course in those numbers you have the infrastructure program being delivered in Ontario, which is a significant reduction in the overall levels.

The Chair: Thank you, and thank you very much, Mr. Shepherd.

Mr. Jones.

Mr. Jim Jones (Markham, PC): Thank you very much.

I would just like to pick up on what Mr. Schmidt had said. Why are our best and brightest leaving this country? Generally the best and brightest would like to stay here, but I know their income range is in the $50,000 to $100,000 range; they're not the zero to $50,000.

Also, why aren't we getting our share of the large companies in the U.S. and so on coming up here and locating their research laboratory facilities, their large-scale chip and integrated circuit facilities? For example, Intel sells a lot of Intel processors in computers in this country, and yet all they do is ship their product up here; there are no facilities here. I did hear rumblings that Microsoft might be locating a software lab in Mississauga or some place like that. Why aren't we attracting these companies up here? We're losing our best and brightest and we're also not attracting the high-technology companies up here.

• 1655

Mr. John Manley: That's a good question. I think we are working to attract many. What I found—as recently as last week, when I was doing a pitch to a large U.S. company that actually does have a presence in Canada, and the issue was expanding it—is that there is still a very low level of awareness among a lot of large U.S. firms about the advantages here in Canada.

We've used the advice of location counsellors in the U.S. to tell us what needs to be done in order to raise interest. They tell us that Canada's profile has been too low. This is what Investment Partnerships Canada is all about—to target specific regions, including the U.S., and companies and take a very organized sales-like approach to identifying the prospects, pitching them and seeing whether we can't move them into Canada as real prospects for Canada.

All of our numbers now indicate that in terms of the R and D tax incentives, the overall corporate tax rates, the cost of construction, the cost of land—all of those things favour Canada. KPMG has done a very comprehensive survey to demonstrate that, and we use that as a marketing tool as well. So I'm optimistic that we will begin to see more successes. The automotive industry is one in which we've had great success—not, I would maintain, because they particularly like Canada, but they can make money here. That's why we're producing 20% of the cars made in North America even though we only buy about 10%. Those same advantages are available in the high-tech area.

Why are individuals leaving? That's one of the things we need some solid analysis on. There are lots of hypothetical reasons. Yes, personal income taxes are lower in the U.S. and salaries are higher, but it's one of the advantages we have on our selling sheet. They pay engineers and scientists more in the U.S. than they do in Canada. It's one of the things we use to attract companies here, but it's still one of the things that attracts our people out.

If you're 22 and you have a ticket to southern California, it doesn't necessarily mean you're gone for life, but sometimes that's hard to resist. I think we'll find that there are many reasons why people leave, but I think we have to work really hard at addressing the problems we can solve. As far as I know, we can't solve the climate, although there may be ways to do that too. We've got to try to fix some of the deficiencies and do a better job of promoting Canada as a place for companies to locate.

The Chair: Last question.

Mr. Jim Jones: I never understood what you were trying to say in the electronic commerce area. I would have thought that the private sector would drive electronic commerce. They're moving pretty fast in it. I don't know why you would want to be in that business unless you're going to be a regulator and improve the regulations in that area. I know that the private sector is investing tremendously in electronic commerce.

Mr. John Manley: I agree with that. We want them to do that in Canada, but there are certain legal frameworks that are relevant. If you're going to have effective electronic commerce, you must have a means of recognizing digital signatures, for example. That's a legal issue. My department and the Department of Justice have jointly put out a discussion paper on how we go about doing that. If you have a legal framework for that issue, then you have one of the requirements to have really effective electronic commerce domestically.

Likewise, there are issues surrounding protection of private information. The OECD is a model agreement. Some countries in the OECD are adopting, by law, privacy codes. The province of Quebec has done so in Canada. We need to look at that as being one of the framework issues that's necessary.

Likewise, the exportation of cryptography. Strong cryptography cannot be exported from the United States. This is an issue that's very pertinent to a lot of the companies that are involved in this very sophisticated area. There was a lot of media recently on it. We're consulting on it. We've put a paper out on it, as we have on privacy. Those are areas that fall within our domain.

• 1700

I'll be hosting here in Ottawa in a week's time another knowledge-based summit on electronic commerce, with a lot of the companies, academics, and people involved in this. If we get our act right—

I'm not saying I'm going to spend money on electronic commerce, although the government should be using it. I hope by the end of this year, Kevin, our department will be fully able to deliver our services electronically—in other words, incorporating companies, accepting patent applications and trademark applications, etc. We should be able to use electronic commerce for those things, and other branches of government should as well.

But if we get our act together, then I want somebody in Germany to think, if there's an electronic commerce application, let's see if it hasn't already been tried in Canada, because chances are it has. That's my goal.

The Chair: Thank you, Mr. Jones. Thank you, Mr. Minister.

I'm going to indulge Mr. Pankiw with two brief questions before the minister has to go. Mr. Pankiw.

Mr. Jim Pankiw (Saskatoon—Humboldt, Ref.): Thank you, Madam Chair.

Mr. Minister, the defence industry productivity program was supposed to be a repayable loan program. However, the government has only recovered 6% of the $2 billion that was loaned out. The Canadian Taxpayers Federation says that companies that defaulted on their DIPP loans are now receiving TPC loans. Why is that?

Mr. John Manley: Wrong on both counts. First of all, DIPP was not a fully repayable program. There were some repayable contributions made under it, but they were not all repayable contributions. And secondly, a condition for TPC approval is that a company be in good standing on any obligations it has under other programs.

Mr. Jim Pankiw: Okay.

Mr. John Manley: They blew it. They blew it. Don't believe everything you read.

The Chair: Is that it, Mr. Pankiw?

Mr. Jim Pankiw: No.

What you're saying then is that loans made under TPC now will be completely regained by the government.

Mr. John Manley: Well, let's make no mistake about it: TPC is not a substitute for a bank. We're taking risks on TPC, and we will lose on some of them. There's no doubt about that. That's why I felt the program was necessary.

As for the repayability of TPC, they're not loans; they're investments in particular projects. In almost every case—every case I can think of—repayability is conditional on sale of product that's developed under the project. The parameters are these, and this is how we conceived the program in the first place. They have to put the scared money in first, and at least $4 of their money goes in for every dollar of ours. Then, when the project is complete, we begin to get royalties out of the sale of the product that comes from it. If the project fails, then we don't get royalties and they don't get profits. If the project succeeds, we get royalties, but we're not just looking for repayment; we're looking for profit on that as well.

So I expect we'll lose some TPCs. I would never claim they're all going to be repaid. If they're all that sure a thing, then they can probably get the money elsewhere.

Mr. Jim Pankiw: Thank you.

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

Mr. Minister, we want to thank you for being with us. We don't want to make you late for your next engagement. We'd love to have you stay for the next hour, but I'm sure your staff would not be happy with us.

Mr. John Manley: I'm sure Mr. Duhamel will be very entertaining as well.

The Chair: Yes.

Well, we're going to take two minutes while we change witnesses, so if everyone wants two minutes to stretch or whatever, Mr. Duhamel will begin in two minutes.

• 1704

• 1708

The Chair: If the committee members would please return to their seats, we can begin.

Everyone should have in front of them speaking notes, a copy of the opening remarks for the Honourable Ron Duhamel, Secretary of State responsible for western economic diversification in Canada.

Doctor Duhamel, whenever you wish to begin—

The Honourable Ronald J. Duhamel (Secretary of State (Western Economic Diversification), Lib.): Thank you, Madam Chair.

[Translation]

Colleagues, friends, ladies and gentlemen,

[English]

it gives me a great deal of pleasure to appear before this committee for the first time in my capacity as Secretary of State for Western Economic Diversification. With me are my deputy minister, Oryssia Lennie, and my Ottawa assistant deputy minister, Judy Ferguson.

In the often bureaucratic language of government, western diversification is charged with diversifying the western Canadian economy by providing services to small businesses, coordinating federal economic activities in the west, and advancing the western perspective in national decision-making. So what does that really mean?

[Translation]

So what does that really mean?

[English]

Well, it means we work closely with the people of western Canada. We work with women, aboriginal peoples, youth, community builders, industry leaders and countless entrepreneurs to build a stronger western Canada, in particular, and a better Canada in general.

[Translation]

In the ten years of its existence, this small department has been a big player in the economic development of the West.

[English]

With only 325 employees, it is both creative in its programming and relevant to western Canadians. In spite of our size, our role in the west has been significant.

Honourable friends, I don't want to take up too much time with my opening remarks, because I know you will want to ask questions. However, I do want to take a few moments to provide you with several concrete examples of WD's interactions with the people of western Canada who have been helped by our activities.

• 1710

Let me begin with my own province of Manitoba, where last year the Red River Valley was devastated by a massive flood. The disaster gripped the attention of the world, but we knew that after the TV cameras were gone a massive rebuilding effort would be required. We knew that people would be in need of assistance to restart their businesses.

The department's response was immediate and creative. It quickly devised a mobile program that had officials going to the victims rather than the other way around. Before the Red River gumbo had a chance to dry we put teams of western diversification personnel on the road to search out affected small businesses, fill out applications for accountable advances on the spot, and return within a week with a cheque so that entrepreneurs would have the start-up money they needed to resume operations. This was the restart program, le programme de redémarrage.

To date WD has provided more than $9 million to 2,000 small businesses and entrepreneurs in order to help them get back on their feet.

[Translation]

Over the years, WD has learned the value of partnerships and co-operation. WD, as lead federal agency for economic assistance to flooded areas, worked closely with other federal departments as well as the province of Manitoba. WD and Manitoba are co-operating in the Jobs and Economic Restoration Initiative, which is helping small businesses rebuild with the aid of interest-free loans. To date, 934 businesses have been helped by this program with WD providing $13.8 million.

[English]

At the other end of western Canada, the Office of Western Diversification again, in the spirit of partnership, brought together federal departments and 12 of its own Community Futures Development Corporations, les Sociétés d'aide au développement des collectivités, to help displaced fishers affected by the changes in the west coast salmon fishery. As a result of this work, WD, through its CFDCs, has made available over $5 million for small-business planning and financing in the affected communities. With help from CFDCs, former fishers will be able to begin their own businesses while existing business can increase employment levels by expanding in ocean-based ventures.

These are just two examples of how we are able to react quickly to help people by forming broad-based partnerships.

Let me speak now of another form of partnership pioneered by WD that allows the department to help small businesses form, grow and expand. WD is partnered with provincial governments, municipalities, community organizations and the volunteer sector to create the western Canada business services network. The main components of this network are as follows: the Community Futures Development Corporations, based largely in the rural west, the women's enterprise centres, the Canada Business Service Centres, and WD's own offices.

[Translation]

Altogether, the Network has more than one hundred points of service in the West. Of course, we're in places like Winnipeg and Vancouver, but you will also find Network Partners in places like Morris, Manitoba; Bruno, Saskatchewan; Bonnyville, Alberta; and Vanderhoof, British Columbia. Over 1,000 Network volunteers, who believe in their communities and the people in them, unselfishly give their time and talents to helping their neighbours grow their economies and create jobs.

[English]

The network is a perfect example of how this government is helping Canadians connect to one another. Through WD-supported human and computer linkages, the network offers a comprehensive array of business support programs.

What can be achieved by the network? Let me give you a couple of typical examples. In 1996 Barbara Dale of Edmonton came to the Alberta Women's Enterprise Initiative association because she had an idea for a business. She received business planning advice and a $100,000 start-up loan. In 1997 her new company, Labor Now Industrial Staffing, a high-end labour placement agency, had sales of over $1 million.

[Translation]

Labor Now Industrial Staffing is forecasting sales of $4 million for this year.

• 1715

[English]

Lorien Henry noticed that Medicine Hat, Alberta, did not have a suitable indoor entertainment facility for young families. She took her idea to the nearest CFDC. All Lorien needed was entrepreneurship training, and the Entre-Corp BDC, which is Medicine Hat's CFDC, was happy to help her out. In May 1996, armed with her training, she opened the first Ton of Fun Family Entertainment Centre.

[Translation]

Today, this is a five-city franchise operation with 180 employees. All it took was a person with a good idea, and an organization that was willing and able to help.

Each of WD's products and services must pass the test of meeting the needs of a specific client group while at the same time following the agenda of the federal government.

[English]

Our programs are successful because they meet the real needs of the small business community. As we so often hear, two such needs are information and capital. WD's network is specially geared to provide both of these key ingredients to clients in urban and in rural areas.

The Canada business service centres, of which WD is the managing partner in the west, are the focal points of the information network for small business. Last year, the four Canada business service centres in the western provinces fielded an average of 33,000 information inquiries and 50,000 web site hits every single month.

When it comes to ensuring that small business has access to the capital it needs, WD's creativity again comes to the fore. Under the department's loan investment fund, WD contributes to loan-loss reserves to lever small business loan capital from a number of financial institutions. The department helps make $420 million available to small and medium-sized businesses.

[Translation]

Every dollar WD puts into the loan loss reserve levers an average of eight dollars from private sector financial institutions into available loans for small businesses. Over 240 loans worth about $55 million have been approved in this still-new initiative. It is important to note that the loans which are provided are based on strong business cases with commercial loans issued, monitored and collected by banks at arms-length from WD.

[English]

What kinds of companies get these loans? Northern Bioidentification Services Ltd. is one. NBS is an emerging biotechnology company specializing in animal DNA typing. NBS came to WD's Winnipeg office in 1996 for help in getting a loan from the WD-Royal Bank biotechnology loan fund. With WD's help, NBS was successful in its application, and is now using that loan for equipment, working capital, and marketing costs.

In addition to the loan investment fund, CFDCs provide needed micro-loans tailored to the needs of the businesses in the communities.

[Translation]

In the first three quarters of 1997-98, the CFDCs provided over 2,100 small business loans which helped create almost 5,800 jobs in rural western Canada.

WD embraces all western Canadians.

[English]

WD embraces all western Canadians. I'm proud, really proud, of our efforts now under way with the aboriginal peoples of western Canada. Recently, we showed our support for the Aboriginal Business Development Centre in Winnipeg with a $950,000 contribution, which will help encourage entrepreneurship among urban Aboriginal people.

In Regina, in partnership with DIAND and the Saskatchewan government, WD recently announced support for the Saskatchewan Indian Federated College in Regina, which is the only Indian-controlled college in Canada. The department contributed $5 million to the total capital project cost of $21 million. The new building will give first nations people access to the tools and opportunities they need to take their place as key players in the economy of western Canada.

[Translation]

Promoting linguistic duality is a key theme of this government and WD is doing its part. Recently under the Francophone Economic Development Initiative, I announced a $1.6 million contribution to the Conseil de développement économique des municipalités bilingues du Manitoba (CDEM)—an umbrella organization representing 11 bilingual municipalities in Manitoba. The funds are to help create the framework for further economic development of these communities and their small businesses.

• 1720

As an aside, I'm proud to tell you that the Commissioner of Official Languages commended WD for the quality of its action plan in support of the economic development of the official language minority communities in the West.

[English]

WD's youth programming dovetails very nicely with the government's youth employment strategy. WD has a number of programs that assist communities and small businesses in employing young interns and post-secondary graduates.

How is it working out? Well, Omer Essen, general manager of Glas Aire Industries, a Vancouver company that manufactures and markets automotive accessories, decided to export the company's products to Japan, which I'm told is a pretty tough market to crack. But through WD's international trade personnel program, the company hired a recent graduate to help break into that market.

The result? They got contracts with Toyota and Nissan. They have now hired a second graduate to work with the German market. Mr. Essen says:

Our Japanese success is largely due to WD. The ITPP program has paid off very well.

The international trade personnel program and its companion programs—first jobs in science and technology program, western youth entrepreneurship program, and the community economic development internship program—though relatively new, which they are, have combined to create more than 900 jobs for young people in western Canada.

I cannot conclude my remarks, colleagues, without mentioning some of the broader activities of WD that WD undertakes to advance the national agenda and promote a stronger economic union.

The department is currently negotiating a round of five-year partnership agreements with western provincial governments. The agreements will see both orders of government collaborating on a specific set of economic priorities. An agreement with the Government of Alberta is already in place, and the other three are nearing completion.

And as you're aware, WD is the federal delivery agent in the west for the infrastructure works program. Under the program, more than 5,200 projects have been approved in western Canada, creating more than 33,000 jobs.

At the end of the day, WD is about western Canada and western Canadians. It's about the aboriginal entrepreneur looking to start a small business in Hudson Bay, Saskatchewan. It's about the young woman in Calgary getting her first job in her chosen field of science and technology. It's about the francophone businessman in Saint Boniface working to expand his business. It's about the company in Vancouver that wants help in exporting its products.

[Translation]

WD's staff and its network partners are on the ground connecting the West. We're there in the communities working with local people developing the solutions that make sense. WD's community-based, grass-roots approach is built on the strength of its partnerships.

[English]

This is an idea upon which the west was built: working with your neighbours to build strong, thriving communities. The examples I've provided demonstrate what great things can be accomplished by combining a helping hand from WD with the energy, drive, and vision of western entrepreneurs.

[Translation]

Thank you. I would be pleased to answer any questions you may have.

[English]

The Chair: Thank you very much, Dr. Duhamel.

Mr. Schmidt, please.

Mr. Werner Schmidt: Thank you, Madam Chair.

Thank you, Mr. Duhamel, as Secretary of State, and your officials. It's good to see you here. Congratulations on your first presentation to this committee. We have some questions for you that I think should help all of us understand, to a greater degree, what it is that you're doing. In particular, I notice that you make a rather strong case about how you have helped people who were in despair in Manitoba as a result of the flood. I think some very positive things happened there.

I'm wondering, Mr. Duhamel, why the same kind of generosity, care, and compassion was not extended to the farmers in the Peace River country or in the Okanagan Valley when they experienced, in the first case, drought and then excessive rain, and in the case of the latter, hail. These farmers did not receive the kind of compassionate assistance that was available to the people in the Red River Valley.

• 1725

Mr. Ronald Duhamel: Well, let's look at the facts here, as I have them.

Every single disaster across Canada is dealt with in exactly the same way. Federal and provincial governments share the cost of assisting victims under the DFAA. Provinces design their own disaster assistance programs, and the federal government provides support under this umbrella agreement.

Alberta will pay out $15.4 million for flood damages under the DFAA, and the federal share under this program is estimated to be $13.4 million. The scope of the damages not covered by the DFAA were estimated by the province—by the province—at less than $7 million, bringing the total estimated losses from the flood to $22.4 million. This was significantly less than the other four disasters.

Basically, here's what's happened—and I believe that you know this, but probably want confirmation. The DFAA is there to treat all Canadians according to a formula agreed upon by the provinces in the very same kind of way. There have been instances, in fact four, as I recall—the tornado in Edmonton in 1987, the Saguenay flood in 1996, the Red River flood in 1997, the recent ice storms in eastern Canada in 1998—where the level of damage was so high that additional programs did in fact kick in. But we're talking about millions of dollars here, compared to—well, we were talking about millions of dollars in the other instances, but they were much, much, much less.

You should know as well, as a result of a number of discussions that have been held and questions that have been raised, that these guidelines are being reviewed.

Mr. Schmidt, I have a great deal of respect for your sense of fairness, and I believe that those DFAA guidelines were applied exactly the same across Canada. The difference is the magnitude. For example, the flood in Manitoba will probably be over $300 million. Compare that to the estimated damage here of $22.4 million. I think therein lies the difference, and therein lies the difference that's being reviewed.

As you well know, though, even if it's reviewed and it's changed, it will not return to re-examine, if you wish, what has occurred.

Mr. Werner Schmidt: Madam Chair, with all due respect, I think this is correct: there is a tremendous difference in the magnitude of the cases. But in the individual instance, which is where the rubber hits the road, the individual farmer who is now destitute doesn't really care about what the overall magnitude of the problem was. He is out of business. I think that's the issue here.

I want to move to another point that has to do with the operation of WD, the conflict of interest that I think it creates from time to time, and also the way in which it de-levels or makes almost a non-level playing field among businesses competing in the same area.

I wish to draw attention to only one particular instance in this case, and it has to do with the establishment by the government, as is my understanding, of a certain kind of coin-plating plant in Winnipeg. I believe it's close to where your riding is, Mr. Duhamel. This now-government organization in fact will be in direct competition with a private plant that exists in Alberta.

So here we now have a private plant doing essentially the same thing as this plant will do in Manitoba, and yet the global market for these two plants is not an expanding market; it's one that remains more or less constant. There's now a direct competition between a crown corporation and an existing private corporation. How can you explain this kind of conflict?

Mr. Ronald Duhamel: First of all, I suppose one could ask whether that question should be addressed by me. I'll be cautious, because as you know, the mint is responsible to Minister Gagliano, but I know the issue, and I will try to share with you.

The first question is as follows. The mint is in fact a private corporation, and Westaim has made certain claims that perhaps they were not treated fairly. Well, there are processes to follow and they will be following those.

But the mint is a company, if you wish—it's an institution that must in fact be self-sufficient. In fact, in the analysis that was provided, it was shown that by having that particular facility built where it was, we would become much more competitive on the international scale; that we needed to increase significantly our amount of plating, if you wish; third, that we would be saving—I've forgotten the magnitude because I don't have my notes with me, but we're talking about a $9 million saving; and that any moneys the mint would go and get would be gotten from the private sector. There's no government money involved; it is a private source.

• 1730

We could argue about this for a long time, but the other firm to which you refer actually has received government assistance as well. We're talking about significant government assistance. So I don't know where you draw the line.

You have two firms. The main distinguishing factor is, I guess, that one is clearly private sector, private business. And the other one must in fact make its way; otherwise, it doesn't survive. They both received some government assistance over time. Now they have a dispute. I don't think we've tipped it in favour of one or the other. I really don't. I suspect that you've raised it because you disagree with me, but—

Mr. Werner Schmidt: Rather severely. But may I give you another example?

Mr. Ronald Duhamel: But a better one, though, because we're going to be setting millions of dollars for the Canadian people here. With the mint, we're going to be competitive worldwide. We're going to be leading edge. Our technology is the best in the world. So I don't know—

Mr. Werner Schmidt: You and I will probably disagree on this for a long time.

Mr. Ronald Duhamel: Okay.

The Chair: Last question please, Mr. Schmidt.

Mr. Werner Schmidt: Westaim has a whole series of patents they are about to launch as well, so we'll debate that for a long time, I'm sure.

But let me give you another example of two value-added type of companies in the field of agriculture, and I happen to know these particular companies rather well. One of them has received a government grant to the tune of something like $250,000. The other one must go to the private market to get its lending money, about the same amount of money. The first one not only received the $250,000 capital grant, but also received certain moneys from the human resources development group to subsidize the employment of personnel in that particular venture. The other one has to pay 100 cents on the dollar for its personnel.

So here we have two companies doing virtually the same thing, with one receiving a $250,000 advantage with public money and the other one having to compete in its own right. How do these two companies now compete on the same level? They do not. The field is very much in favour of the one company that received government grants as opposed to the other, which has to do it all on its own hook.

Mr. Ronald Duhamel: Did they both apply?

Mr. Werner Schmidt: Yes, they did. One was rejected.

Mr. Ronald Duhamel: One was rejected. And you're telling me what they wanted to produce was the same.

Mr. Werner Schmidt: Essentially the same. It's not exactly the same.

Mr. Ronald Duhamel: Was their business plan equally sound?

Mr. Werner Schmidt: Oh, yes. One is a going operation and the other one is starting. The one that got the government money is starting. There was ample opportunity and a good market—

Mr. Ronald Duhamel: But you see, there's a difficulty in responding to that particular situation. You've clarified that they both applied. Apparently one was rejected and the other one was not. You say that the business plans—

Mr. Werner Schmidt: Yes, but one was rejected because it had—

Mr. Ronald Duhamel: —were equally sound.

Mr. Werner Schmidt: Yes.

Mr. Ronald Duhamel: Was the market potential as great?

Mr. Werner Schmidt: This is the whole point. The market potential—

Mr. Ronald Duhamel: No. I have to take your word, and I know you're not trying to mislead me, but I guess the question I'm asking is are they really equal. It's okay to compare if they're really equal.

And there's another question I wanted to ask. Is this a $250,000 grant, as opposed to a repayable loan?

Mr. Werner Schmidt: Yes. That's the whole point.

Mr. Ronald Duhamel: And can you tell me roughly when that was done, Mr. Schmidt?

Mr. Werner Schmidt: Yes. It was done last fall, to the best of my understanding. I'll get you the details outside—

Mr. Ronald Duhamel: Would you? Because I'm reluctant, as I think you can appreciate, to respond to a specific case without having studied the specifics.

Mr. Werner Schmidt: I appreciate that.

What I'm really trying to do is use this as an illustration of a principle, a principle where WD interferes in the marketplace by giving money to a business that's competing against another business. The taxpayer dollars that this business is paying are actually being used to subsidize a business with which it is in competition. I think that makes the playing field unfair, not level, and I think it creates an advantage to the business that's being supported against this one. I don't think tax dollars should be used to do that. And WD does that all over the place.

Mr. Ronald Duhamel: I don't know that to be correct, because one of the things we try to do is make sure that we don't do exactly that.

Mr. Werner Schmidt: It's still true.

Mr. Ronald Duhamel: We try to make sure that we do not tip the scale in favour of one against the other. We try to be particularly sensitive to that, because we know the arguments that could be made. Since 1995, I'm told, we haven't given a dollar to individual businesses. They're all repayable loans. Anyway, I know the point you're making. You're suggesting that the way in which we operate in fact gives advantages to certain people and not to others.

Mr. Werner Schmidt: Yes, that's right.

Mr. Ronald Duhamel: I disagree, but I'm willing to look at the case you will present to me, and I'll do it in a responsible and professional way. But I disagree unequivocally.

• 1735

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

Mr. Shepherd, please.

Mr. Alex Shepherd: Thank you.

Getting into the basis of lending here, you talked about grants. I think you've clarified that you're not in that business any more. You don't do grants. Your basic methodology of funding is loans. Is that correct?

Mr. Ronald Duhamel: That's correct.

Mr. Alex Shepherd: So we don't entertain the concept of taking equity positions in some of these junior companies?

Mr. Ronald Duhamel: Let me tell you— and then the staff may be able to provide more details.

There are basically two large sources of loans. One is that up to $420 million can be activated for the banks. We have a $54 million loan-loss reserve. In other words, we afford some type of protection. Obviously, if they're all paid back, then we're in a good position. If they're not, depending on the amount that would be lost, then the impact is different. It's been coming along rather well.

The other one involves the CFDCs, or Community Futures Development Corporations. We have close to 100, which are operated—and I suspect you know this—by volunteers who make micro-loans in the communities because they know their communities and they know better than others what will work and what will not work. Those are repayable. Otherwise, those entities could not continue to operate.

In both instances, they are indeed repayable. When I say that, I mean it's virtually everything. There may be the odd non-profit organization that benefits from some modest— And it is modest. There's not a whole lot of money left. In fact some people would argue there's no money left.

Mr. Alex Shepherd: On the Alberta Stock Exchange I notice a lot of these companies—and maybe it's a coincidence—do in fact have Western Economic Diversification loans on their balance sheets. I've often wondered, getting back to what we're doing in the TPC program, whether in fact Western Economic Diversification wouldn't be more effective in maybe breaking up those instruments between loans and equity participation in the sense that for your return on investment, if you will, it's just getting interest back on high-risk ventures, or whether in fact it wouldn't make more sense for the government to at least take an equity position of some kind, where they can actually share in the success of the company as well.

Mr. Ronald Duhamel: You make a good point. In fact, I know of at least one that's been approached that way during the last few weeks. It's something we're willing to explore further, because it potentially offsets those losses you might have, providing some have a high yield.

So I appreciate the question. It's not lost, I assure you.

Mr. Alex Shepherd: Okay.

To what extent are you active in the whole Saskatoon biotechnology, that whole ballooning, mushrooming industry that's making Canada very famous not only domestically but also internationally? Have you done a lot of lending in that area?

Mr. Ronald Duhamel: I would have to ask my officials whether or not we have. My understanding is that there has in fact been some, but I don't have those details.

Ms. Oryssia Lennie (Deputy Minister, Western Economic Diversification Canada): There has been some in the past. There is a biotechnology loan investment fund in partnership with the banks. Since 1995 essentially there hasn't been assistance given directly to individual companies. Any assistance that would have gone to biotechnology firms specifically would have occurred before then.

Mr. Alex Shepherd: I guess I'm looking at the critical mass of information technology and knowledge-based industries. One area is Saskatoon and another one is Calgary. Of your loans, what would be the percentage going into those areas?

Ms. Oryssia Lennie: Into Calgary?

Mr. Alex Shepherd: If I took your biotechnology loans, what percentage of those would be going to, say, critical mass areas like Calgary or Saskatoon, where there is an emerging technological environment?

Ms. Oryssia Lennie: As a point of clarification, are these the loans made before 1995 or are these our partnerships with the banks, the investment loans?

Mr. Ronald Duhamel: I think my colleague is referring primarily to partnerships with the banks, because I made a reference to the $420 million. I think we may have the loan funds here, and can give an indication.

Ms. Oryssia Lennie: Okay.

Mr. Ronald Duhamel: I'll very quickly give you an indication of the kinds of loan funds we have. We have biotechnology; there's a special one. We have agriculture value-added, knowledge-based industries, health, information technology and telecommunications, environmental industries— I'll stop there. It's just to give you a flavour.

• 1740

We're trying to be on the leading edge in those sectors that are seen to be growing and that have in fact high science, high innovation, and high technology.

I don't know if the staff has the distribution of the loans, because that's what you were interested in. For example, in biotechnology right now, if I'm reading this chart correctly—and if I'm not, somebody will jump up—I think we have just started, and we have $500,000. We have $2.25 million in the agriculture value-added. In knowledge-based industries we have almost $1.5 million.

So in terms of your own query, Mr. Shepherd—

Is that correct? Did I read that correctly? Did you want to add?

Ms. Oryssia Lennie: That's right. I'd just add that we don't break it down by province, so I couldn't tell you what the provincial breakdown might be in terms of—

Mr. Ronald Duhamel: But we break it out by seam, if you wish. And it's still modest in that sector, but you're right, it's a growing sector, and you're right, there is some significant additional demand. But you probably know it may be one of the sectors where it's easier to get some capital than in others, because it's been around a bit longer than some of the others have.

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

[Translation]

Mr. Dubé.

Mr. Antoine Dubé: I would like to talk about the programs you set up to handle emergencies and natural disasters, such as the flood in Manitoba. You mentioned some which occurred in 1987, but I will not go back so far. I will take different examples.

Did you get any additional funding from the federal government for the assistance you provided at the time of the floods in Manitoba? I understood that it amounted to some $300 million. Was this money taken from budgets already available for the West generally?

Mr. Ronald Duhamel: I would not want to mislead you. When I mentioned the $300 million—if I recall correctly—I was referring to the estimated total costs. To date, we may have spent $150 million. This amount takes a number of factors into account and covers some government initiatives. If you like I could describe a few cases for you.

We must realize that there are two very important components to the assistance. First, there is the main agreement between the federal government and the provinces, which is administered according to a formula which provides for a certain amount to be transferred to each province. There is no variation in that. You were asking how much additional funding had been requested. I gave four examples including the tornado in Edmonton in 1987, I believe; the Saguenay floods in 1996; the Manitoba situation in 1997 and the situation in Quebec, Ontario and New Brunswick in 1998. I have no cost estimates for these natural disasters, but there was significant damage that may amount to over $300 million.

According to what I've been told, and what I believe, the difference between the Peace River and the other situations was the extent of the disaster, Mr. Dubé. Mr. Schmidt and other members also asked whether that assistance was fair and sufficient. So, we reviewed the main agreement so as to determine whether there might be better ways of doing things.

In short, when some kind of disaster occurs, the main agreement is calculated according to a formula, which is applied to everyone in the same way. However, other factors do come into play, depending on just how serious the catastrophe is. Of the four examples that I gave you, I believe that the 300 million dollars for Manitoba is the smallest compensation package. When the disaster wipes out nearly the entire provincial economy, we can allocate greater compensation. That's why our colleague Mr. Schmidt was wondering whether it was fair and if there wasn't some other way of doing it.

I don't know whether I was able to answer your question adequately. If not, I can try to give you more explanations.

Mr. Antoine Dubé: You may not be able to respond right away, but I think it would be a good idea to look more closely at this issue. I'm not saying that your answer was bad.

Mr. Ronald Duhamel: No, I understand. You are trying to clarify the question.

Mr. Antoine Dubé: I'm trying to find out what happened. You were saying that it wasn't over, and only half of the money allocated had been spent. I would certainly like us to get that information. If I understood you correctly, when you were answering questions from my colleagues, you said that there was no provincial breakdown of the programs.

• 1745

Mr. Ronald Duhamel: It depends on the program. For example, we set up a loans program in co-operation with a number of banks— which we are all familiar with—for various initiatives in different areas relating to added value, particularly in the agrifood industry. We haven't considered breaking them down by province, but we just tried to find out how many people in the agrifood industry had requested loans. I believe that total is approximately one and a half million.

But the allocation for the program is $420 million, which can be called up and that's where we are. If an entrepreneur submits a good, solid business plan to us, we act as a broker, so to speak, and we ask him to meet with a bank manager so as to come to an agreement as part of our program.

Mr. Antoine Dubé: I looked at the funding for the former Federal Office of Regional Development (Quebec) which is now called the Economic Development Agency of Canada for the Regions of Quebec, and I saw that the information is broken down by riding. That's three months after the announcement, the least amount of time necessary to draw up such a list. Do you do the same thing?

Mr. Ronald Duhamel: No. I am aware that there are some disagreements, not necessary between you and me, since we haven't had an opportunity to discuss the matter, but between the members of the Reform Party and the members of the party that I represent regarding the very existence of regional economic development offices. In my view, the strength of the economic development office that I manage is that our programs are tailor-made in accordance with the needs of people in our region. Furthermore, the other offices, which operate in Quebec, the Atlantic provinces and northern Ontario, are strong because they design their programs in accordance with their own visions of what should be done. As you put it so well in your analysis, we tend to do things somewhat differently. We are here to develop and diversify the economy, naturally, but we do that in our own way. There are some similarities, but there are also major differences.

Mr. Antoine Dubé: Mr. Duhamel, I recognize your abilities as a communicator, and I appreciate them, except that you are awfully good at making motherhood statements.

Mr. Ronard Duhamel: I'm pleased that you aren't against me.

Mr. Antoine Dubé: No, not at all. I recognize your ability. However, when I listen to your answers, I'm still unsatisfied.

Mr. Ronald Duhamel: So ask me a specific question, Mr. Dubé.

Mr. Antoine Dubé: There's really not much data in this report, nor is there much in the report that was so well prepared by the Research Branch of the Library of Parliament. We can't determine where the funding was allocated, nor how is was allocated. Perhaps it's more difficult for me because I'm not from the West. We are having a hard time figuring out what the funding was used for. I think that an activity report should be prepared. If there already is one, I would appreciate your sending it along to us.

Mr. Ronald Duhamel: Obviously, I have nothing to hide, and you didn't accuse me of wanting to do that.

Mr. Antoine Dubé: No, not at all.

Mr. Ronald Duhamel: I understand that, and I'm putting that on the table. If you have specific questions, please send them on to me, and we will do our best to get you the information you need.

Obviously, I have rather strong prejudices in favour of this office. I believe in it. If you would like to get specific figures or information, ask for it, and I will give it to you if at all possible.

Mr. Antoine Dubé: How long will that take?

Mr. Ronald Duhamel: I beg your pardon?

Mr. Antoine Dubé: When can we expect an answer?

Mr. Ronald Duhamel: Listen, we will do that as quickly as possible, without any inordinate delay. I hesitate to give you a specific date. If I say 30 days, and I need two more days, I could get massacred. I really wouldn't want that.

• 1750

Mr. Antoine Dubé: Fine. Thank you.

[English]

The Chair: Mr. Dubé, you may not have with you the separate report for Western Economic Diversification Canada. You only have the large Industry Canada one in front of you, but each economic department has its own report. When we have Minister Cauchon and Minister Mifflin, there will be individual ones. You have the big one, but there's a separate one for each secretary of state we'll be meeting with. You should have them in your office. If you don't, get in touch with the clerk so you do have them.

Now I'm going to turn to Mr. Pankiw.

Mr. Jim Pankiw: I have two questions. First, on page 22 you outline that planned spending for contributions to the western diversification program will go up this year, but there's no real explanation of the spending increase in the estimates. Could you provide some clarification of that?

Mr. Ronald Duhamel: Mr. Pankiw, the point you're making is that the spending will go up. That's the one you're questioning. I will provide some details for you, because I'm a little sensitive to what my colleague Mr. Dubé has said. There are a couple of good reasons that are very obvious, but I'll turn it over to my officials for the specifics. We're reprofiling some infrastructure project. We have have expenses from the flood and all of that in there, so it artificially increases the amount of money there.

Mr. Werner Schmidt: There's nothing artificial about money.

Mr. Ronald Duhamel: No, I said the increase was artificial, as opposed to the money.

Mr. Werner Schmidt: No, it's not artificial; it's real.

Mr. Ronald Duhamel: It's artificial in the sense it doesn't continue. We do not expect to have a flood every year in Manitoba.

Mr. Werner Schmidt: Okay.

Mr. Ronald Duhamel: We know the infrastructure program is coming to an end. Those are but a couple of examples.

The Chair: Mr. Schmidt isn't expecting the flood to continue every year either.

[Translation]

Mr. Antoine Dubé: He doesn't want to have one in his area.

[English]

Mr. Werner Schmidt: Good for you.

Ms. Oryssia Lennie: The two biggest increases are expenditure requirements for the infrastructure works program and the estimated increase in statutory payments for the Small Business Loans Act. There are some smaller increases, although nothing is small.

I should give you the exact figures. There is $24.4 million for the infrastructure works program expenditure requirements and $27.5 million for the increase in the statutory payments under the Small Business Loans Act. We have no control over those. They depend on the claims the banks file. The $2.4 million comes from increased operating requirements for the Canada business service centres, the federal regional councils and the statutory employee benefit plans.

Mr. Jim Pankiw: The Canadian Taxpayers Federation recently reported that only 15% of government loans to businesses are repaid. That would suggest to me your department should do a review and completely rethink its economic development policies. Do you agree?

Mr. Ronald Duhamel: We're continually reviewing. We want to make sure we're as up to date as possible. But let me give you some real facts here. First of all, WD has dispersed $696.6 million. That's specific information. WD has collected $247.7 million, or 36%. The amount not yet due is $364.5 million, or 52%. The amount due and being pursued is $50.6 million, which is about 7%. The amount written off is $33.8 million of that $696.6 million, which is roughly 5%.

We're doing reasonably well. You never do as well as you should. I'm told even banks that have around a 3% margin would like to do better than 3%, and we'd like to do better than we're doing. But we've tightened it up. We're more aggressive about it and we have better procedures. In fact, a large part of our appropriation depends upon what we get back, so we take it very seriously.

Yes, my colleague, I can assure you we continue to review, because that's our responsibility and our livelihood.

The Chair: Are you finished, Mr. Pankiw?

Mr. Jim Pankiw: Yes.

The Chair: Thank you.

Mr. Lastewka, do you have any questions?

Mr. Walt Lastewka (St. Catharines, Lib.): No, madam.

The Chair: We have five minutes left. Mr. Schmidt, do you have a final question for us?

[Translation]

Mr. Antoine Dubé: When are we having dinner?

Mr. Ronald Duhamel: That's a good question, because he wanted to leave.

• 1755

[English]

The Chair: Mr. Duhamel set aside an hour, and I want to make sure we utilize that hour.

Mr. Werner Schmidt: He'll get his hour.

The question has to do with overall science policy for the Government of Canada. I notice by the subtitle that you're Secretary of State for Western Economic Diversification. Are you not also involved with science and technology to a degree?

Mr. Ronald Duhamel: Yes, I am indeed, and that's why I am sitting with Mr. Manley.

Mr. Werner Schmidt: The question I have then has to do with the coordination of science endeavours in Canada, the research and development. There are about 16 major departments that have a major science and research and development component attached to them. The cabinet does not have a particular science advisory group that advises it specifically. There is a consultation group that exists at the present time, but there's no particular coordination effort of all of this science and research and development money. What is your view with regard to establishing such an office? There are many major nations, the United States, for example, that have such an office.

Mr. Ronald Duhamel: And there are, as you well know, many major nations that do not, that choose not to.

We have a number of mechanisms in place. I'd rather see how we fare with those. There are some that are new until we make that kind of decision. Obviously, if it didn't work we would want to look at other options. For example, we have the advisory committee to the Prime Minister on science and technology. We have a number of internal committees of assistant deputy ministers of those departments. We have science advisers in those particular committees who also—

Mr. Werner Schmidt: How does anything get done with all those committees?

Mr. Ronald Duhamel: Quite a lot gets done, because for the size of the nation and the expenditures towards science and technology we are considered among the leaders. We have leading-edge science and technology in every single part of this country.

Mr. Werner Schmidt: Let me be specific on the biotechnology thing that has just happened, where you're going across the country. What has the advisory council done to advance the biotechnology sector in Canada?

Mr. Ronald Duhamel: I suppose we should probably more properly ask them the question, but let me tell you what I know they've done. They've highlighted it as a growing, leading-edge growth industry.

Mr. Werner Schmidt: We didn't need them to tell us that; we know that.

Mr. Ronald Duhamel: They've identified which sectors of that— Because it's not just biotechnology; we have it in any number of sectors, and perhaps some additional investments ought to be made. In my own Department of Western Economic Diversification I mentioned we had a special fund in order to enhance the developments in that area. We have a number of departments that are in fact involved in biotechnology.

Mr. Werner Schmidt: Mr. Secretary of State, please, western economic development and the biotechnology sector, those are two extremely different levels. The western economic development industry is there to help fledging companies just getting started. The biotechnology sector in many instances is extremely well developed and it has some very profitable enterprises. Surely those two are not operating at the same level.

Mr. Ronald Duhamel: No, Mr. Schmidt, but you and I have a fundamental philosophical political difference.

Mr. Werner Schmidt: That may be.

Mr. Ronald Duhamel: It is absolutely certain, sir. Just because something has been around for a while doesn't mean to say there are not new niches being created all of the time. That's number one.

The whole notion that all of a sudden if we had someone who looked after coordination everything would turn around and be much better— This is, as you pointed out yourself, extremely complex. We're not talking just about biotechnology; we're talking about any number of fields. How would it improve our contributions and our successes in the space initiatives? How would it improve the whole organization of CFI? Would it improve the performance of centres of excellence if we had such a person in place?

What we need to do is to recognize that we are in the leading edge, that we are respected worldwide in any number of sectors, including the sector you've just mentioned, and a number of other sectors. We need to let the mechanisms that we have in place work to see whether or not they produce the results that we as Canadians want. It's only after this, surely, that we ought to be looking to see if there are alternatives; before that, it's premature.

Mr. Werner Schmidt: Can we carry on? I like this.

The Chair: Mr. Dubé is also enjoying it, and I will give Mr. Dubé the very last question.

You have 30 seconds, Monsieur Dubé.

• 1800

[Translation]

Mr. Antoine Dubé: Mr. Duhamel, are there provincial regional development offices in the West, as there is in Quebec? In other words, is there a parallel structure? If so, is there one in each province, and how do you work with them?

Mr. Ronald Duhamel: Mr. Dubé, to the best of my knowledge, each province in the West has one such agency. The provinces and the federal government, including a number of agencies, work together closely. Yes, that is part of the mandate or mission of the Western Economic Diversification Office.

The Chair: Thank you.

[English]

Minister Duhamel, we want to thank you for being with us this afternoon and for giving us one full hour of your time—actually two full hours of your time, because you were here while Minister Manley was here. We appreciate your cooperation.

Mr. Ronald Duhamel: Thank you.

The Chair: Although some may agree to disagree, that's fine.

Mr. Ronald Duhamel: I appreciated it as well, and I even enjoyed my questions from my colleague, Mr. Schmidt, for whom I have a great deal of respect.

The Chair: That's good.

Tomorrow morning we're meeting with Minister Mifflin regarding ACOA. Don't forget.

The meeting is now adjourned.