INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 28, 1998

• 0914

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare (Carleton—Gloucester, Lib.)): Good morning. I would like to welcome everyone here today.

Pursuant to Standing Order 108(2) we are studying the management and operation of Statistics Canada, the Business Development Bank of Canada, and the Canadian Space Agency.

Today, from Statistics Canada, we welcome Mr. Ivan Fellegi, Chief Statistician of Canada, as well as Bruce Petrie, Assistant Chief Statistician, and Ray Ryan, Assistant Chief Statistician. I do not have the list of witnesses from the Business Development Bank of Canada. Could you please introduce yourselves?

• 0915

[English]

Mr. David Mowat (Senior Vice-President, Emerging Markets, Business Development Bank of Canada): David Mowat, senior vice-president of emerging markets, and Simone Desjardins, senior vice-president in Ontario.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): We will also be meeting with Mac Evans, President of the Canadian Space Agency. Mr. Evans, could you please introduce your colleagues?

Mr. Mac Evans (President, Canadian Space Agency): My colleagues are Mr. Bruneau and Mr. Marion, chief of our computer-based system.

The Vice-Chairman (Mr. Eugène Bellemare): Welcome, everyone. We will begin by asking Mr. Fellegi, Chief Statistician of Canada, to make his statement.

Mr. Ivan P. Fellegi (Chief Statistician of Canada, Statistics Canada): Thank you, Mr. Chairman. Please forgive me, I seem to be losing my voice. I have laryngitis.

[English]

I'm very pleased to have this opportunity to speak to you today and to answer your questions.

I understand that one of the committee's major concerns is the year 2000 problem. I will address Statistics Canada's preparedness for that problem and what we have done to handle this issue, both within Statistics Canada and to provide assistance for a better understanding of the state of preparedness of Canadian business.

I would like, first of all, to take a few minutes to talk about some of the major achievements by Statistics Canada in the last year.

[Translation]

I'll start off by telling you about a project called PIPES—the Project to Improve Provincial Economic Statistics. This project, to be fully implemented over four years, is one of the largest and most complex undertakings by the agency, and one with high impact. It is responding to the immediate challenge of the need to divide up the new harmonized sales tax revenue among the participating provinces. At the same time, it represents a major reengineering of the entire range of economic statistics, with particular emphasis on improved accuracy of provincial economic statistics, and much increased and analytic usefulness.

The international leadership shown by Statistics Canada is the second initiative I would like to tell you about. Statistics Canada was the leader of a multinational effort to improve the international comparability of statistics on the treatment of service industries and their outputs—a major issue in the context of the General Agreement on Trade in Services. This important work has given the U.N. Statistical Division and the International Monetary Fund a model for integrating trade and production statistics on a worldwide basis. Another area of Canadian leadership is the harmonization of industrial statistics between Canada, the United States, and Mexico. This should result in significantly improved analysis of NAFTA region economic developments.

[English]

Science and technology is a third domain that I want to mention. The development of evidence-based decision-making in the field of science policy has been a government priority. With funding from Industry Canada, Statistics Canada undertook a two-track approach to revamp our information support capacity in this area.

First, in a conceptually ground-breaking work, we developed a coherent framework, which highlights analytically useful questions and which therefore can guide the development of policy-relevant science and technology statistics.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): Could Mr. Fellegi slow down please? The interpreter is having trouble keeping up with him.

[English]

Dr. Ivan Fellegi: The second track consists of new data developments. We released a range of new information on business sector research and development expenditures on software, pollution abatement and control, and biotechnology.

• 0920

I'm also very proud that the agency is not only providing data but we are trying to provide information that is useful for the citizens of the country and the decision-makers in the federal government, the provinces, the business sector and the cultural sector—in all domains. And I just want to highlight a few of the domains in which we try to provide insights, as opposed to just data.

These include a study of earning inequalities that sheds light on income inequality among families and inter-generational income mobility. Our population health model, which we are in the process of developing and extending, was already used to evaluate the cost-effectiveness of various cancer treatments. Growing up in Canada”, published jointly with Human Resources Development Canada, is a landmark publication that examines child and youth development issues, including early childhood development, roots of aggressive behaviour, the impact of family structure and parenting styles.

Successful New Businesses: Creating the Capacity for Survival and Growth is a publication in which we developed a comprehensive picture of growing new businesses and how they differ from those that are not growing. Reading the Future: A Portrait of Literacy in Canada focused attention on literacy issues important to educators, employers, and the public.

Now I will turn to your central concern, which is the year 2000 issue. Statistics Canada recognizes the seriousness of this issue and has given it the highest priority. In 1996 the agency began planning to convert its computers for the year 2000 compliance. Although I feel confident that we have the issue well in hand internally, I believe that some of our clients, data suppliers, and others may not be fully ready to meet the challenges of the new millennium.

We are working on three main fronts. First, we are adapting and testing our own systems so that we can continue to supply the information required by our clients before, through, and after the year 2000. Second, we are alerting our data suppliers and partners to the year 2000 problem and negotiating arrangements that will ensure our data exchanges will continue to function through the year 2000. Third, we are conducting a survey of the state of preparedness of Canadian businesses as recommended by Minister Manley's Task Force 2000.

I would like to address each point in order to provide you with a global view of our level of preparedness and the degree to which we will be able to meet our objectives to be year 2000 compliant.

Although Statistics Canada does not have any government-wide mission-critical systems—that's the terminology that is used by the Treasury Board—we have identified a number of key economic indicators as mission-critical to our agency. These are the monthly labour force survey, which is the source of employment and unemployment data; the monthly consumer price index; the labour and income component to the survey of employment, payroll, and hours, which is a component of the national accounts. Its importance derives from that fact primarily. Also, there are the monthly international trade statistics, imports and exports; the monthly survey of manufacturing, which is monitoring the health of the manufacturing sector on a monthly basis; the monthly wholesale and retail trade survey; the monthly and quarterly system of national accounts; and the quarterly financial survey. Again, that's a feeder for the national accounts, and its primary urgency derives from that. The others are the industrial price indexes, which, again, are needed for constant dollar estimates of the national accounts; and of course our own pay and cash-handling systems, which are necessary for the continued management of the agency on a sound basis.

• 0925

The mission-critical problems use some 134 major computer applications out of the department's approximately 1,100 computer applications, somewhat less than between 10% and 15%. We are planning, however, to have all our mission-critical computer applications converted by September of this current year. Contingency plans are in place for each of them should we miss those dates for any reason. The end of testing of each mission-critical program is slated for completion by early next year.

All other departmental computer applications are planned to be converted or replaced before January 2000. In other words, we are planning to have the formal conversion of all our mission-critical systems by this fall, testing of the cognition-critical systems completed within three to four months after that, and everything else by the end of the time that is available to us at the end of 1999. We will, of course, be giving priority to the mission-critical systems.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Fellegi, you state that in some sectors you will be ready by a certain date. Could you please let us have a letter confirming that you should achieve preparedness by the end of September, and will certainly achieve it by early October. Secondly, in early 1999, perhaps in January, could you please let us have a letter on Y2K preparedness, without our having to ask for it?

Mr. Ivan Fellegi: Of course.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you.

Mr. Ivan Fellegi: I would even say the pressure is welcome, because it is one of the methods I used to manage the Y2K conversion and preparedness program. It's a question of priorities, pressure and concern from management at the highest level. The pressure is welcome.

[English]

To date over half our mission-critical systems are judged, or have been tested, to be compliant. We are well on our way to achieving our goal. In fact Treasury Board's year 2000 review team is impressed with our progress and stated that “the department has a good management awareness of the Year 2000 problem, and is well organized to address it.”

The second area is interfaces with data suppliers and partners. We are concerned about our business survey respondents' ability to provide the data based on the first survey taken of business preparedness, and I'll mention that in a minute.

Even if all systems throughout government were made compliant, the interface with non-compliant systems in the private sector could cause serious problems. We have mapped out all the data dependencies in the system of national accounts, and we have reached bilateral understandings with the key data suppliers. As well, we have drawn up contingency plans in case of some missing data.

Similarly, we are in the process of discussing preparedness with other government departments on which we depend for a wide variety of information. We are also working with industry associations to encourage businesses to seriously address their year 2000 problems.

We are committed to working with our survey respondents to ensure a smooth transition, and in this sense we are of some help perhaps to the general awareness-creation efforts of the government. But we hope that the biggest help in that respect comes from two surveys that we have conducted, commissioned by Minister Manley's year 2000 task force.

[Translation]

To see how well-prepared businesses are, the Minister of Industry's Task force on the Year 2000 commissioned us to conduct a business survey. This survey was completed from initial consultation to the delivery of results in a record-breaking two months, breaking the former record for a business survey. Results from the survey showed that 90% of all businesses have no formal plan for tackling the problem. Even among large businesses having more than 500 employees, only half of them had a formal plan as of last October.

• 0930

The results were judged by Minister Manley's task force to be sufficiently serious to bring forward the public release of their first report by several months. Their recommendations have already resulted in a wide range of initiatives by the government, industry associations, and others.

Statistics Canada is in the midst of conducting another survey of the progress businesses have made towards dealing with the year 2000 computer problems. We will release the results in June 1998, that is, in a few weeks. The Minister of Industry's Task force will use the survey results to recommend further policy action aimed at minimizing the disruption that the year 2000 problem could cause.

[English]

Thank you. I will be pleased to answer your questions.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): We will hear our two other witnesses before moving on to questions.

The next statement will be by David Mowat, Senior Vice-President, Emerging Markets, Business Development Bank of Canada. Mr. Mowat.

[English]

Mr. David Mowat: Thank you, Mr. Chairman. It's a pleasure to be here in front of the committee again. I will go quickly to your main interest, the year 2000 issue. I'll just draw your attention....

There's a pamphlet in the fold-out that describes some very specific initiatives on the year 2000, and there's a set of overheads there as well. I won't take you through that—I know you want to move on quickly—but they're there in the package for your use.

I'll literally take two minutes to give you the breadth of the bank's operations. I think it's important when we get to the key issue of providing tools for businesses to deal with the year 2000 and to raise awareness.

I'm sure many of you have seen our advertising. We're a different kind of bank. Small business is the only business of the bank. We target our products at companies that fall between the cracks of other offerings in the financial community.

To a large degree the bank has to be a bit like our clients. We service niche markets, so we have to be nimble enough to move from one to one and try to service the demand as we can see it in the marketplace.

We've built the bank to try to be a provider of solutions, not simply an amount of money, but more of a solution to business issues. This is where we are drawn to the year 2000 issue. We are bringing it not only into our financial product offerings, but into our consulting array of products.

Since Parliament passed the new act for the bank in 1995, the most visible thing that has changed is that we became the Business Development Bank of Canada. But things have moved very quickly. The bank has increased the level of activity more than 50% during that time.

Probably most importantly, we've developed a whole range of products. That really sets the stage for the bank to walk through any door of any small or medium-sized business in Canada and have relevant financial and management consulting products to offer them. The range includes micro-business loans, financing for young entrepreneurs, tourism financing, and some very special products for high technology and export-oriented firms. So we've developed venture loans, patient capital and a whole range of working capital products to help companies grow in the technology and export ends of the market.

In each case we complement our products with a range of management consulting solutions. Oftentimes we see that it's not just money that is required to make companies grow, but management support is required. We have a whole consulting group that deals specifically with small and medium-sized business issues.

What you're most interested in is the year 2000 issue. To us it has two aspects. One is what we're doing internally. I will go through that quickly, but I think that what is probably most interesting is what we are actually offering the business community. Simone, who is our senior vice-president in Ontario, is going to take us quickly through that.

• 0935

So when we look at our internal issues, inasmuch as we have 80 branches across the country, we're still a small financial institution. But we've committed a very significant amount. We've spent $ 14 million internally on our systems. We had originally targeted to be year 2000 compliant by March 31, 1999. At this stage we're running about two months ahead of that pace. So we anticipate being fully compliant by March 31, and potentially earlier than that.

We've also taken steps where we're into our—

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Forgive me for interrupting you. Could you please let us have a letter in April outlining your state of preparedness?

[English]

Mr. David Mowat: Certainly.

The government's year 2000 task force talked about a number of issues affecting both business and government, particularly the relationship with our clients. I believe recommendations 3 and 11 talked about banks and financial institutions creating a requirement for companies to get financial assistance in order to have a year 2000 readiness plan. As of April 1 this year all our customers to whom we make loans are required to have an action plan for year 2000 preparedness.

Recommendation 16 called on all the organizations to facilitate an awareness of the year 2000 issue. Again, Simone is going to provide the information on how the bank is playing a very active role in making sure that we can help in the effort to build awareness.

When it released its interim report last week, this committee talked about the need for the wide dissemination of information on the year 2000 issue. We operate in the business community every day. We echo your concerns. We can see it. It's starting to build.

One of the things you talked about that's probably had the most awakening effect is the fact of talking to businesses, that it's not just your company, it's the suppliers in front of you and behind you. If there is a watershed in awareness, this is one issue you've brought forward. It's making people think that they don't have to look just inside their own shop; they have to look behind and in front of them.

With some of the things we are doing we can now see that this is starting to build some awareness further down. Everybody has to deal with it in the big companies. The smaller people are now taking note of the issue.

Maybe I could pass to Simone to talk about what we're doing externally for our customers.

[Translation]

Ms. Simone Desjardins (Senior Vice-President and Area Manager for Toronto, Business Development Bank of Canada): Thank you, David. With respect to our external preparedness as it relates to our clients, BDC has created a year 2000 Ready Program, the only such program offered by a financial institution. The program is directed both at providing additional flexible financing as well as building awareness.

A 50-million dollar loan fund is available to small business owners across Canada, whether they are current customers of BDC or not. Loans can be between $ 5,000 and $ 50,000, with exceptions for the manufacturing sector, where loans can be larger. I'm very happy to announce that, this week in Toronto, we announced our very first loan—$ 10,000 to a travel agency with two offices in Barrie, two offices in Peterborough and one office in Orillia. We lent $ 10,000 on a promissory note. That is the kind of loan we are making.

The loans are based on need and commercial viability, and funds can be used to finance consulting fees, hardware, software, or any costs associated with the development of formal, verifiable action plans to become year 2000 ready.

As is usual for BDC loans, we establish re-payment terms according to our customers' specific requirements and re-payment abilities. Principle re-payments on these loans can even be postponed until January 2000, if necessary. And a reduction in interest rates is offered as an incentive for those customers demonstrating year 2000 readiness.

A recent sample survey of our customers suggested that 25% of them may require financial assistance. It was also interesting to learn that most respondents were aware of the year 2000 issue, and had implemented or were about to implement remedial actions.

• 0940

As part of our mandate to assist small businesses, we believe that we have to play an active role in informing and assisting businesses with their plans to address the year 2000 challenge. This is what we call the awareness component of our approach.

The Bank is contacting all of its clients both in writing and by telephone. We provide them with information packages explaining the risks associated with not being year 2000 ready. And if they are not, we urge them to act promptly. The package also includes a detailed self-assessment questionnaire, and guidelines on How to Select a Consultant. In Toronto, we are currently organizing awareness sessions. Next week, on June 3, we will be arranging a breakfast session for small businesses in Scarborough. There will be another breakfast in Toronto as well.

As some recent surveys have shown, even though small businesses may be aware that year 2000 poses some challenges, the response to our invitations was poor. We sent out 1,200 invitations to the June 10 session by fax, and to date only 10 participants have registered. So there is a great deal of work to be done in raising awareness and attracting small businesses and other clients to our awareness sessions.

As Mr. Mowat's said, we have also updated credit criteria for new borrowers to incorporate a year 2000 readiness clause. As of April 1st, clients will have to have a year 2000 plan in order to access BDC loans.

We are also partnering with Industry Canada to increase public and business awareness of the year 2000 issue. Advertising by means of posters and various media will be involved.

We want to take a positive, helpful approach in assisting our clients. Over all, we think that this is a win-win situation. It will reduce the risk to our clients—as well as to the bank—associated with the year 2000 challenge.

We have designed a new section on year 2000 issues, which is now part of the BDC web site. Our published guide, Year 2000 Ready—Getting the Right Help is another part of our communications approach.

The BDC toll-free call centre is ready to respond to questions from small business owners seeking to become year 2000 ready. Finally, BDC employees are being trained to deliver year 2000 financing.

[English]

Mr. David Mowat: Mr. Chairman and members, on behalf of the bank, we thank you for the opportunity to be here today, and we'd be pleased to answer any questions at the end. Thank you.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. David Mowat.

[Translation]

Thank you, Ms. Desjardins.

The committee now has to deal with a couple of housekeeping issues. We have two motions to look at. Do all committee members have a copy of the motions?

Here is the first motion: "That the Chair, with the approval of the Steering Committee, prepare and send a letter to the Minister of Industry concerning the report entitled «Leading the Millennium» by the National Biotechnology Advisory Committee."

Ms. Lalonde.

Ms. Francine Lalonde: I thought we agreed there would be a draft letter. I received it late yesterday afternoon. I have some corrections to make. Will we deal with the corrections now, or should we just hear our witnesses first, then stay behind at the end of the committee meeting and make any corrections required then?

The Vice-Chairman (Mr. Eugène Bellemare): I am told that the Chair wants to make changes too. So she will prepare the letter, then the letter will come back to us to be verified and approved.

Ms. Francine Lalonde: But will we have an opportunity to suggest changes too?

The Vice-Chairman (Mr. Eugène Bellemare): Of course.

• 0945

Ms. Francine Lalonde: I would not agree to her sending the letter without our authorization.

The Vice-Chairman (Mr. Eugène Bellemare): I agree, Ms. Lalonde.

So, we authorize the Chair to...

Ms. Francine Lalonde: prepare...

The Vice-Chairman (Mr. Eugène Bellemare): ... make corrections to her letter and send it back to us.

Ms. Francine Lalonde: However, this is not what the motion says. The motion says "prepare and send".

The Committee Clerk: It also says "with the approval of the steering committee", of which you are a member.

Mr. Antoine Dubé (Lévis, BQ): But that's not in the motion.

Ms. Francine Lalonde: The motion doesn't say that.

Mr. Antoine Dubé: Oh yes, it does: "the steering committee".

The Vice-Chairman (Mr. Eugène Bellemare): It does say that: "That the Chair, with the approval of the steering committee...".

Mr. Antoine Dubé: Right.

Ms. Francine Lalonde: But approval is still pending. We do agree on that.

The Vice-Chairman (Mr. Eugène Bellemare): Yes.

Ms. Francine Lalonde: That's fine, then.

The Vice-Chairman (Mr. Eugène Bellemare): Will someone move the motion?

[English]

M. Walt Lastewka (St. Catharines, Lib.): I do, Mr. Chairman.

[Translation]

(Motion carried)

The Vice-Chairman (Mr. Eugène Bellemare): The second motion reads as follows: "That the committee approve a budget of $ 10,000 for witness expenses from May 25, 1998 to March 31, 1999 and submit the budget, as approved, to the Budget Sub-Committee of the Liaison Committee.

Ms. Francine Lalonde: This is the first I have heard of this, Mr. Chairman. We should at least have some information. I don't see why this is being rushed through like this.

The Vice-Chairman (Mr. Eugène Bellemare): There is nothing unusual about this procedure. If we want to invite witnesses, we need money to cover their expenses and fees.

Mr. Antoine Dubé: Could we have some idea of what this has cost in the past?

The Vice-Chairman (Mr. Eugène Bellemare): We could check that.

Mr. Antoine Dubé: I'd like to know what these costs were for last year. That would cover about a year.

The Vice-Chairman (Mr. Eugène Bellemare): Yes.

The Clerk: I can get those figures.

Ms. Francine Lalonde: We're not against the motion. It was just completely unexpected.

The Vice-Chairman (Mr. Eugène Bellemare): The clerk tells me that she will prepare a report on expenses for you.

Ms. Francine Lalonde: Thank you.

The Clerk: Agreed.

The Vice-Chairman (Mr. Eugène Bellemare): Will someone move the motion?

[English]

M. Walt Lastewka: So moved, Mr. Chairman.

[Translation]

(Motion carried)

The Vice-Chairman (Mr. Eugène Bellemare): Thank you for your patience. I do apologize to our witnesses.

We will now move on to the Canadian Space Agency. Your main witness is the CSA President, Mr. Mac Evans. Mr. Evans.

[English]

Mr. Mac Evans (President, Canadian Space Agency): Thank you very much, Mr. Chairman and members of the committee. It gives me great pleasure to be here today to talk to you about the Canadian Space Agency and to answer your questions.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Forgive me, Mr. Evans. Ms. Lalonde.

Ms. Francine Lalonde: Mr. Chairman, I have noticed there is no French version of Mr. Evans' text.

The Vice-Chairman (Mr. Eugène Bellemare): Is there a French version of the text?

Ms. Francine Lalonde: The Canadian Space Agency is subject to the Official Languages Act, I believe, and today is appearing before an official parliamentary committee. I therefore feel that they should have provided a French version of their text.

The Vice-Chairman (Mr. Eugène Bellemare): One moment, Ms. Lalonde. Let me ask Mr. Evans.

Do you have a French version of your text, Mr. Evans?

[English]

Mr. Mac Evans: The text we produced is a bilingual text. There's some French and some English. We do not have a separate text.

[Translation]

Mr. Antoine Dubé: Yes, but that is just a paragraph on every page. That is not a translation. You are a federal organization.

Ms. Francine Lalonde: Anyone who is not bilingual cannot follow this text.

Mr. Antoine Dubé: No, but...

The Vice-Chairman (Mr. Eugène Bellemare): One moment, please.

Mr. Evans, the issue of bilingualism is a very sensitive one for committees. I will allow you to continue, but my colleagues are quite right. Since you are a federal government agency, your text should have been provided in both French and English. Please see that your text is translated next time you appear. Thank you.

It's just a small glitch. I know that you are more interested in space than in committee reports.

[English]

Mr. Mac Evans: No, I'm sorry, Mr. Chairman, it's our fault, and we should have had both versions here. I apologize to the members for this oversight on our part.

• 0950

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Evans, please continue. We do still like you, you know.

[English]

Mr. Mac Evans: And I said that I apologized for a mistake on our part.

As you know, the CSA was established in 1989 with the mandate to promote the peaceful use and development of space for the social and economic benefit of Canadians. Our headquarters is located in Saint-Hubert, Quebec, where, by the way, during the ice storm of January we were able to open the agency to shelter many of the victims of that ice storm. We had up to 900 people there each day getting warm water and warm food.

In 1994 the government approved the long-term space plan II with the overriding objectives of meeting Canadian needs and developing an internationally competitive space industry. One of my priorities is to deliver this plan, the LTSP II initiatives, namely the Canadian space station program, the astronaut program, RADARSAT I and the earth observation support programs, the advanced satellite communications program, a scientific satellite program, microgravity sciences, and our relationship with the European Space Agency, on schedule and within the approved funds.

The first slide I would like to show illustrates better than a thousand words the funding situation at the Canadian Space Agency as a result of the long-term space plan II. As you can see, the funding starts to decline rapidly next year, and reaches a level that is not sustainable for a vibrant Canadian space program beyond the year 2000. Therefore, another one of my priorities is to develop and submit to the government what we will call long-term space plan III. We hope this will be considered by the minister and the government some time early in 1999.

[Translation]

Today, the Canadian Space Industry has become one of the cornerstones of our knowledge-based and high-technology sectors. In 1996, it was estimated that the Canadian Space Industry generated revenue on the order of $ 1 billion, of which almost 30% was attributable to exports, primarily to the United States. Of course, 60% of revenue comes from communications. The space industry employs some 5,000 people.

All regions of Canada participate in space activities. The regional distribution policy which the agency has applied to space contracts since it was created has strongly contributed to the development of an industrial structure based on each region's individual advantages. The policy made it possible for us to establish space-oriented activities in Atlantic Canada, where there were historically absent, particularly in the area of technology applications and satellite data. The policy helped foster SME growth in the region, without inhibiting growth in the Quebec and Ontario industrial core, which generates 75% of space-related revenue and jobs.

[English]

Now I would like to share with you a few examples that demonstrate how space plays a key role in Canada's transition towards the new knowledge-based economy.

RADARSAT, Canada's first earth observation satellite, was launched in November 1995. After two years of operation, RADARSAT is performing better than ever. This past year was highlighted by unprecedented accomplishments, such as the first complete coverage of the Antarctic and the earth's complete land mass. As a result, Canada possesses a unique archive of imagery that offers users unparalleled opportunities to immediately obtain images of any place on the earth's land mass.

• 0955

I would like to point out the significance of the Antarctic map. It's the first time ever that Antarctica has been mapped completely. Its importance stems from the fact that approximately 70% of the world's fresh water supply is in Antarctica. So observing that continent is of extreme importance to the climate issues this earth faces.

Another advantage of RADARSAT is its unique capability to quickly respond to emergencies. This slide shows the flooding of the Red River in the spring of 1997. The red line is the normal course of the Red River, and the blue area shows the extent of the flooding. Images like these were taken daily during the disaster, and were used by the people on the ground to help them curtail the damage.

RADARSAT markets its data worldwide. RADARSAT International, a B.C.-based company licensed by the Canadian Space Agency to process, market, and distribute data from RADARSAT, has now signed up 55 distributors in 41 countries who deliver data products to nearly 400 users worldwide.

[Translation]

The trend towards commercialization of the remote sensing sector observed with the growth of RADARSAT data sales and the industry's commitment to RADARSAT II confirms that Canada's vision of this sector and its future development is the correct one.

On February 27, 1998, the government selected MDA of Vancouver to manage and build RADARSAT II. For half the amount it cost to build RADARSAT I, MDA will implement a state-of-the-art system, and build a lighter, higher-performance satellite. I have brought two pictures here today to illustrate the difference between the RADARSAT I image and the RADARSAT II image. I can hand these out if you wish. The images clearly show that RADARSAT II provides significantly higher definition that RADARSAT I. During the four years it will take to build RADARSAT II, 300 jobs will be created, primarily in British Columbia and Quebec but also in all other parts of Canada.

MDA will invest $ 80 million—25% of the total RADARSAT II development cost—while the Canadian Space Agency will contribute $ 225 million. If we compare this to RADARSAT I, the industry had invested only $ 10 million, or 2% of the total cost of building the satellite.

[English]

Another one of our major priorities is Canada's participation in the International Space Station. Our contribution is to design, manufacture, and operate a robotics system, the next generation of the Canadarm, called the mobile servicing system.

The MSS includes a 58-foot-long space station remote manipulator system, the next generation of Canadarm, designed to handle large loads onboard the station. The base system to move this arm along the station and the special-purpose dextrous manipulator, a sophisticated dual-arm robot designed to take care of more delicate work, an artificial vision system and a workstation for astronaut training complete the space station program. The slide I showed you is the artist's conception of this arm.

Impressive progress has been accomplished in the development of this highly complex system. The arm has now reached final performance tests, and it's scheduled to be delivered to NASA in September of this year. It will be launched in 1999.

• 1000

The special-purpose dextrous manipulator, which was approved by the government in 1997, will be delivered to NASA in 2001, and launched in 2002.

In May 1998 Canada achieved an historic milestone with the training of three astronauts—two American and one Russian—in the use of these new robotics tools at the headquarters of the CSA in Saint-Hubert. These three astronauts will be the second crew to live and work on the space station. An ongoing function of the CSA will be to train astronauts from all over the world at our facility at Saint-Hubert.

[Translation]

Neurolab (STS-90) is part of a NASA-initiated series of missions to explore human brain and nervous system function in space. Canadian astronaut Dave Williams played a very important role as mission specialist and official crew physician.

It is important to note that many of Neurolab's 26 experiments have applications for health on earth. For example on the regulation of blood pressure, inner-ear disorders and insomnia.

[English]

Space science has been a cornerstone of the Canadian space program from the very beginning in 1962, when Alouette I was launched, and Canada became the third nation in the world to have a satellite.

The year 1998 is a banner one for space science in Canada, with 10 major missions on shuttles to the Mir space station, satellites, rockets, and high-altitude balloons.

The year 1998 is the culmination of a multi-year investment in space science, totalling over $ 100 million on a broad array of scientific concerns, from finding solutions for ozone depletion to muscular dystrophy.

The year 1998 will see a Canadian scientific payload launched to Mars aboard a Japanese satellite.

[Translation]

Canada's future position on international markets, as well as the future of our high-technology companies will depend on the availability of highly qualified science and engineering personnel. The agency has found an excellent way of arousing interest in science, mathematics and engineering among young people. Our space awareness program uses the mystique of space to interest young people in pursuing careers in science and technology, and offers a wide variety of activities for primary and secondary school students. Among other things, the agency has instituted a National Space Day, celebrated on the first day of National Science and Technology Week to promote Canada's achievements in space.

The agency has also established a network of five space resource centres across Canada, in Halifax, Montreal, Toronto, Saskatoon and Vancouver. To provide students, teachers and the public with access to a wide variety of printed and audiovisual materials on space.

[English]

I would now like to briefly address the future of the Canadian space program.

As indicated by the funding chart shown at the beginning of my presentation, the Canadian Space Agency has no significant A-base budget. Up to now the agency has obtained most of its funds through periodic long-term space plans approved by cabinet. This regime gives the CSA the means to implement specific programs that are limited in both scope and time.

The CSA has initiated the development of the long-term space plan III, and has put in place the consultation process required to formulate program proposals in close cooperation with all our stakeholders.

Some 250 space experts served on different working groups to prepare proposals for this next plan. Proposals ranging from space science research to market-driven satellite communications applications have been received, and consultations are currently being carried out with potential partners in Canada and abroad.

Detailed program options will be developed this fall, and at that time I intend to present the Minister of Industry with a final program proposal for his consideration and consideration by the government.

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The year 2000 status is a key element of our program. A task force has been formed to determine the status of all our systems and equipments, to analyse those risks, propose solutions and to set up our contingency plans.

In particular, we are concerned about the operation of our major programs—RADARSAT and the space station. By January 1999 the whole radar system will have gone through an end-to-end test to verify its compliance to Y2K. We are working closely with our partners at SPAR and NASA to ensure that all Canadian systems for the international space station are year 2000 compliant.

The task force is also acting on the minister's recommendation to raise awareness to suppliers and partners about the year 2000 challenge. We have instituted mandatory Y2K compliance clauses in all of our contracts, and our target to complete our verification for year 2000 readiness is June 1999. In short, we do not expect any major problems as a result of the crossover to the new millennium.

Mr. Chairman and members, I hope this quick presentation gives you a better understanding of what we do in the CSA in our efforts to help Canada build a new knowledge-based economy.

[Translation]

Thank you for your attention. I would be very pleased to take your questions.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you for your presentation, Mr. Adams. We will now go to questions by committee members. We will begin with Ms. Lalonde.

Ms. Francine Lalonde: May I ask each of the three groups a question?

The Vice-Chairman (Mr. Eugène Bellemare): You have five minutes.

Ms. Francine Lalonde: That's not including the answers. Thank you. I'll be brief, then.

Thank you for your presentation, Mr. Fellegi.

You spoke about improving provincial statistics. I believe that includes the model to harmonize statistics. Was this new approach to harmonizing statistics ordered by the government? What specifically are you aiming to achieve by your measures to improve provincial statistics?

For example, are you aiming to make an increasing quantity of data available on the Internet to all Quebeckers and Canadians, or are you planning to sell those data? You are a public service, and in my opinion should make them available for consultation, which is what the Americans tend to do.

Mr. Ivan Fellegi: May I answer now? I'll begin by answering your third question. I can assure you that the data will be available to the public. In general, key data on the economy, the population, and national and provincial demographics are made public. This is of course what we will do with the improvement project initiated by Statistics Canada.

You also wanted some details on the improvement. The improvement will make data much more relevant and reliable. Moreover, we will have access to some new data which in the past were sometimes available only years after the fact. Data on interprovincial trade is a good example. For each provincial economy, we will develop a model that contains as much detail as the one we now have for the country as a whole.

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This means that data on all provincial production will be available in the form of an input and output model, which will make it possible for us to stimulate the provincial economy and ask some questions. For example, in a given province, what would happen to the economy if we stimulated it in a particular way?

We received additional funding because the harmonized sales tax was an immediate incentive. However, our aim is to improve economic statistics. We do not focus on the division of revenue, but on the improvement of economic data.

Ms. Francine Lalonde: I would like to ask you a related question. How will you improve those data? Will you improve them because you will no longer be doing studies, but use government data? And if that is what you are planning to do, will you be co-operating with the provinces, who might disagree with the profiles you prepare?

Mr. Ivan Fellegi: I am very happy to say that we have an excellent working relationship with the Bureau de la statistique du Québec. We discuss all our methods among colleagues. It is an open process. We are not a political agency, but a scientific agency working on the basis of scientific principles. That means our methods are open, open to discussion, and open to improvement if someone comes up with a better idea.

As to your question on how we plan to improve our data, we are looking at a number of ways. First, we will be collecting more samples for each survey in this project. Second, some surveys were conducted less often than once a year. Those will now be conducted every year. Third—and this is very important—we will be making greater use of Revenue Canada data, which will make it possible for us to improve our own data without increasing the paper burden of businesses, particularly small business.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Ms. Lalonde.

Mr. Murray.

[English]

Mr. Ian Murray (Lanark—Carleton, Lib.): Thank you, Mr. Chairman. I'd like to ask Mr. Evans some questions about the space agency.

Mr. Evans, that is quite a basket of projects that you have outlined for us today, and you've also shown us the decline in funding you're expecting over the next few years.

Of those projects you're involved in, how many that involve the European Space Agency or NASA, for example, would be difficult to get out if the Canadian government decided the funding you're going to be looking for is not forthcoming? Are we locked into certain projects because of international agreements?

Mr. Mac Evans: Our current arrangement or agreement with the European Space Agency terminates at the end of this year. We are of course looking at the rationale and the possibility for renewal of that, but if no new funds were made available to us, then the current arrangement with ESA terminates at the end of this year.

The other major commitments that we have are with space station with NASA, and with RADARSAT II, because it too will be an internationally cooperative program with NASA.

In the funding curve that you saw, even if we do not get additional new funds, there are sufficient funds there to complete our international agreements with NASA on both those projects.

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Mr. Ian Murray: Okay. Looking at RADARSAT I and II, at these images you provided us with, I couldn't help but go back to the images we saw during the Gulf War. I'm assuming those are from satellite surveillance systems that the U.S. owns. Are you suggesting these would be better quality than those up there now that are used for intelligence purposes? That's one question.

I also question whether there's a great market out there for images of Antarctica, for example. It might be great to be able to provide that, but what kind of demand is there? Is this something that will pay for itself over time, or does it already?

Mr. Mac Evans: There are several questions there.

On the classified programs in the United States and elsewhere, we're not totally aware of what their capabilities are, but I am certain they have higher resolution than those images. The value of those images comes from the fact that they are radar images, which means they can take those images through clouds at night, through storms. So they do not need the sun or a cloud-free day to take the images. They are an all-weather image.

In terms of the importance of the Antarctic, there are several important aspects of the RADARSAT program. One of those is scientific, and that is the study of the earth and understanding the earth's environment and the effects of humanity on the earth's environment. The South Pole, the Antarctic ice mass, is of extreme interest to the members of the scientific community who are studying climate change.

With the RADARSAT program, we have been able to take images that demonstrate for the first time just how fast the glaciers are moving on the polar cap. This is vital information for those people who worry about global warming and the impact on the earth. We will not make money on selling images. In fact, we don't sell the images that are taken for scientific purposes. These are distributed to the scientific community, and that's one of our contributions to climate change studies.

In terms of selling the images, the value of the high resolution images that you see on RADARSAT II comes from the ability of our system with those types of resolutions to produce three-dimensional maps of the world. There's a very high market for that. So that's the new market area that we see RADARSAT II opening up.

Mr. Ian Murray: I have a quick question about the year 2000 problem. We've been told that Canada is ahead of most countries in the world when it comes to accepting that there is a problem and doing something about it. You're involved in an extremely sophisticated area, and you have very sophisticated international partners. Would it be your assessment in dealing with those international partners that Canada is in the lead, or are they so sophisticated that they're way ahead of the rest of the world just by the nature of their business?

Mr. Mac Evans: I think the Y2K problem is of considerable concern among the space-faring nations because there is a large amount of legacy software in a lot of the existing equipment. One just has to remember that the computers onboard the shuttle were built in the early 1970s.

In any event, I know that this is an issue. I'll be attending a meeting in the United States on the weekend, and one of the key agenda items for the partners on the space station is Y2K.

Mr. Ian Murray: I think you mentioned a rocket going to Mars—Japanese-launched but with a Canadian payload. How do we get involved in that sort of a launch? Do we go to the Japanese and say we have something we want to launch, or do they come to us saying you've invented or perfected something and we'd like to launch it? I'm curious as to how this comes about.

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Mr. Mac Evans: In all of our science programs—this is key to understand here—of an international nature, and that's everything we do in space science in Canada, all of the science is chosen by international peer review. So our scientists compete against scientists from around the world. The people who want to launch a mission—this particular mission to Mars, for example—run this peer review process and select the instruments. That's how our scientists are chosen. To me it's a significant tribute to Canadian scientists that they have been chosen for missions of this nature.

Mr. Ian Murray: It must be very exciting.

Thanks, Mr. Evans.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Murray.

Mr. Jones.

Mr. Jim Jones (Markham, PC): I have one question for the space agency. It appears in your brief that you just set up a task force for the year 2000—or have you been addressing that problem for a long time?

Mr. Mac Evans: I think what I said was that we have established the task force. It's just been established. It's a very formal task force. It's not that we haven't been doing anything prior to that, but I was trying to indicate the beginning of the formal process.

Mr. Jim Jones: So you just formalized it now.

Mr. Mac Evans: Yes.

Mr. Jim Jones: Okay.

I have some questions for Stats Canada. First, how big is your population when you do the survey for the year 2000? In the first one, with regard to how ill-prepared small and large business—was it uniform across the country, or were certain provinces more unprepared than other areas of the country?

Dr. Ivan Fellegi: In terms of the population, we do have a register of all businesses. We try to keep it up to date. That's not to say there aren't the odd ones missing at any point in time, but it's a reasonably complete register of all businesses. We selected representative samples of those, so the results should be representative of the complete business universe.

For purposes of this task force we only excluded the smallest businesses, so the percentages that I quoted in one sense are conservative—in other words, too good. Bad as they are, they appear too good because we excluded the very smallest businesses. We only surveyed those having five or more employees. There is clear evidence from the survey that the smaller the business the less likely it is to be prepared, so probably the segment we excluded is even worse prepared than the rest.

I have little doubt about the representativeness of the sample. I didn't look at it in terms of provincial disaggregations. That can be done.

I don't know whether my colleague.... No, he shakes his head.

Mr. Ray Ryan (Assistant Chief Statistician, Business and Trade Statistics, Statistics Canada): We haven't looked at it.

Dr. Ivan Fellegi: We haven't looked at it, but we would be glad to provide information on that. We did look at it by industry, and as you would expect, there were some significant variations by industry. Financial institutions, as you would expect, were better prepared than some of the others. Still not great—I don't remember the numbers. I remember that qualitatively the financial institutions were better prepared, but they were still not great.

Mr. Jim Jones: In your brief you said you would have this second survey out in a couple weeks.

Dr. Ivan Fellegi: Yes, sometime in June.

Mr. Jim Jones: Early June?

Dr. Ivan Fellegi: I don't know.

Mr. Ray Ryan: Towards the end of June.

Mr. Jim Jones: It would be nice if it was the will of the committee that you came back and presented the results of your survey.

Dr. Ivan Fellegi: We'd be very pleased to do that, of course, if we are invited.

Mr. Jim Jones: Then we would get a good flavour of what's going on.

Dr. Ivan Fellegi: The purpose of this second survey is to see whether there has been progress since the large number of initiatives undertaken as a result of the first survey. It really did shake the members of the task force. I think they would agree, I'm not putting works in their mouths, that going into this exercise they did not think industry would be that ill-prepared.

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The survey served a very important purpose in alerting them that the whole process of familiarization of Canadian industry, alerting and putting the pressure on everybody, has to be accelerated. The purpose of the second survey is to see if it worked.

Mr. Jim Jones: Are you surveying all levels of government—municipal, federal, and provincial?

Dr. Ivan Fellegi: No. This is a survey of business only.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Fellegi, is that a commitment that you will be sending us a copy of that survey result?

Dr. Ivan Fellegi: We'll be delighted to do so.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you.

Mr. Jim Jones: Mr. Chair, it would probably be a good idea if he came and presented the results to us.

The Vice-Chairman (Mr. Eugène Bellemare): That should be brought up by the steering committee. Good point. I'll ask the clerk to make sure that point is brought to the committee.

Thank you, Mr. Jones.

[Translation]

Ms. Brown.

[English]

Ms. Bonnie Brown (Oakville, Lib.): Thank you, Mr. Chairman. I would like to address my comments and questions to Dr. Fellegi, on two themes.

Do you have some legislative protection for yourself and your statisticians? I'm thinking of a situation where a powerful person in government is operating according to a certain theory, and one of your studies or reports proves that theory is not having the desired results, or not the results that most Canadians would agree would be the desired ones. The powerful person then hears about this study and what the results seem to be, and might want to pressure you into stifling that report, firing that employee or causing something like that to happen.

Do you have legislative protection? Do you need it? Could we do something to help you? I think the integrity of your operation is tremendously important to the Government of Canada.

Dr. Ivan Fellegi: Indeed, it is extraordinarily important. I have spent 41 years of my life in Statistics Canada—I started as a clerk there 41 years ago. I spent my life with this agency and devoted myself to it because I believe in the fundamental importance for a democratic society of not only good information but credible information. It can be as good as it is, but if it's not believed it's not useful.

I'm exaggerating a little bit, but by and large data cannot be verified by others. It's too expensive to do so. It can be as good or as bad as it is, but the value of it depends on the credibility of the agency. For that reason, we are attaching enormous importance to that credibility.

Ms. Bonnie Brown: I have no doubt that you and your people do—

Dr. Ivan Fellegi: I understand the question.

Ms. Bonnie Brown: —but I'm asking whether you have some kind of legislative protection. Do you have some law that protects you from pressure tactics?

Dr. Ivan Fellegi: No. Generally, I don't think laws can protect really effectively. I think in this kind of a subtle situation of pressure—which doesn't have to be overt, it can be covert—ultimately it is my job on the line. That is the ultimate protection.

I'm not saying this lightly. I'm saying this without any threat or anything. That is understood. It is understood and it has to be understood. The value of that implied sanction is enhanced the higher my own personal standing is. I work quite consciously on having a certain amount of public profile in order to ensure that, should it be necessary, the potential of my resignation would have a consequence.

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I must say—this is very important—that I'm really very proud as a Canadian to say that I have not experienced pressure of any sort whatsoever. Furthermore, if I did—this is of a political sort—it would be resisted.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): And it would be made public.

Dr. Ivan Fellegi: And it would be made public through my resignation. I'm a public servant, so of course I cannot go public unless I am prepared to put my job on the line, and I am. That has to be understood by any chief statistician. It has been understood, I'm glad to say, by my predecessors with whom I have worked, and I have worked with several of them in 41 years.

Ms. Bonnie Brown: Mr. Chairman, if I may, I have one other theme.

There was a cabinet minister from New Zealand who wrote a book called If Women Counted, and she meant it both ways: if women were in charge of the counting, and if they counted in the clout of things. Have you read this book? If not, I'll tell you that she's saying the system by which the western world counts things is essentially based on American ideas and was passed through the UN, and we're still counting that way. Well, in my view, Canada made a big breakthrough in its last census when we began to count the thing called unpaid work.

Now you mention in your presentation that you were the leader of a multinational effort to improve the international comparability of statistics on the treatment of service industries and their output. If you're taking leadership roles in such things as this, are you trying to have an impact on the United Nations-sanctioned system by which most people count most things to make it more reflective of our values, as opposed to only what the marketplace says, which is the counting of things you can touch?

I'll just take one example. In Africa, the women do most of the cooking and growing of food. They even make crafts to sell. The husbands are off in some other country maybe working in a mine. The woman's little business is still counted as a man's business because of the way this system works.

There are 150,000 examples that an analytical woman could find in this counting system that we all approved of in 1947 or something that do not reflect the reality of the world that we live in now. I'm wondering if you are doing any work on trying to make an impression on that system, or are we still just accepting it because the Americans love it?

Dr. Ivan Fellegi: I'm very proud to respond to that question, because we are in fact in a leadership role, and not only in terms of the census initiative that you mentioned. Certainly I think we are the only country so far that has had that kind of question on unpaid work in the census. I'm not aware of any other country that had such a question in their census. But in addition, for quite some number of years—I don't remember, but it's more than ten, so it's not a recent initiative—we started to do experimental work in attaching a numerical value to household work. Now that's conceptually very difficult because it's not paid work. So if by definition it's not paid, what value do you put on it? There's a great deal of judgment.

We have actually worked out two alternative ways of beginning the process of quantifying the value to society not in terms of what would happen if it weren't there, but with some market equivalents. We cannot judge what would happen if a mother didn't bring up her children. Price cannot describe the impact of such a phenomenon. But to the extent that quantifying value provides the beginnings of a better understanding of the value of unpaid work, we have developed measures. We are doing so at regular intervals now. It's part of our program.

I don't remember the numbers. For a chief statistician, not remembering numbers is not necessarily a great characteristic, but we have too many numbers to remember, so I remember the kinds of things we are doing but not the exact numbers.

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I have some colleagues here if you are interested in more detail about the valuation of unpaid work. We have someone here who would be more than happy to answer in more detail should time permit and should you wish to pursue that question.

Ms. Bonnie Brown: It's not just that one theme of unpaid work. It's trying to get other countries in the world to begin to attempt to analyse the value to society of certain things on which it is, as you say, very difficult to put a price.

Dr. Ivan Fellegi: We are in a leadership role.

Ms. Bonnie Brown: They should try to begin to fold those things into their analyses of what should be done next in world cooperation or in the building of an economy of a single country.

Dr. Ivan Fellegi: I'm an elder statesman in that world, and I certainly take a leadership role in this field.

Ms. Bonnie Brown: Good.

Thank you, Mr. Chairman.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): We will now come back to Ms. Lalonde.

Ms. Francine Lalonde: Mr. Evans, is putting out propaganda in the Montreal newspaper La Presse part of your mission?

[English]

Mr. Mac Evans: The member refers to a contract we had with a company to have the Canadian space program as part of a show that is put on for a teenage group in Quebec.

It's part of our mandate clearly to interest youth in science and technology, and we have many ways in which we do this. I mentioned in my speech the resource centres that we have spread across the country. Every one of our astronauts participates in a large number of public events in this country that focus on the youth of the nation, and this was just another example of our attempt to take what we believe is a very exciting field to the youth of this country and make sure that they were aware of the possibilities.

[Translation]

Ms. Francine Lalonde: I was not aware of that example. Thank you for bringing it to my attention, though that is not what I was talking about. I was talking about the $ 225,000 you contributed to a program known as Watatatow in Quebec. That action was denounced in a lead story stating that the Canadian Space Agency, and now the army, are paying to get their plugs on TV.

What is your total advertising budget, and how is it divided in Canada and among the various media? If you cannot answer me right away, I would like an answer later. However, I would still like your comments on this right now.

[English]

Mr. Mac Evans: Yes, I will certainly give you the numbers. Maybe Mr. Bruneau will get them as I talk, but if they're not available here, we'll get them for you.

We have, as I say, a youth and education awareness program in the agency that funds these regional centres. I'm just giving you an idea. Also, with our communications budget, it tries to bring the excitement of space to, in particular, the youth of this country.

Just to correct the translator, when your question came through in English, it said we spent $ 225 million on Watatatow. The total—

[Translation]

Ms. Francine Lalonde: I said $ 225,000.

[English]

Mr. Mac Evans: I know. The translator said “million”.

The Canadian Space Agency put $ 125,000 into this program to provide the material and to get space as part of this program as a way of introducing the audience to the space program. It was just one of several aspects of our attempt to bring the Canadian space program to Canadian youth.

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Being in the shadow of the United States and their very large space program, it's very easy for Canadian youth to believe that space is the realm of the United States. One of the things we are trying to do is let Canadian youth know that there is a very important Canadian space program. It's with initiatives of this nature that we try to bring that message to the children.

[Translation]

Ms. Francine Lalonde: You could have told me it was quite natural for you to invest in advertising. But this approach is fundamentally different, since you are taking control of the scenario. I get the impression that this is a great deal more than just advertising.

I have another question—it's on RADARSAT II. You read the papers, just like I do, and you must be aware that Spar Aerospace expected to get that contract. Since they did not get it, they had to lay off part of their workforce. In particular, they were unable to go ahead with the job creation program that would have opened up about 400 jobs. This information was in the newspapers.

In your statement, you said that there will be jobs in Quebec. I have not seen anything official on this, and I look forward to receiving your text. I would like you to answer my question, and to explain how it is that the government is contributing the larger portion of RADARSAT costs, while the satellite, if I understand correctly, will remain in the private sector because it will belong to MDA.

[English]

Mr. Mac Evans: I'll try to give you a succinct answer to that. The process we're following with the RADARSAT I and the RADARSAT II programs, and hopefully follow-on programs, is the commercialization of earth observation. We believe quite strongly that there is a worldwide market that is capable of supporting a private sector operation in earth observation.

What we're trying to do as we move from RADARSAT I to RADARSAT II is increase the private sector investment and control in the program so that the program is more aimed directly at markets. We don't believe the Canadian Space Agency is the best place to do the marketing, we believe Canadian industry is the best place to do the marketing.

If you were to go back 25 years ago, the whole era of satellite communications was in the same mode. The Canadian government had run satellite communications programs and through a very distinct and deliberate policy moved those programs from the government progressively into the private sector.

That has been a tremendous success. We're trying to follow the same pattern here with the earth observation program, our RADARSAT program. This is a specific and deliberate approach to move a government technology into the private sector.

That's why in RADARSAT II, as I mentioned in my notes, the percentage of private sector investment is up to about 25%; it was 2% on RADARSAT I. The expectations are that by the time we move on to the next generation in 2005-07, the private sector will carry most of the burden of this operation. That's the process we went through.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Ms. Lalonde. Ms. Jennings.

Ms. Marlene Jennings: I have a question for each of you. I'll begin with Mr. Mowat.

[English]

Mr. Mowat, you said that the BDC now requires formal Y2K plans as a prerequisite for businesses receiving loans or money from government. How many businesses currently have loans with BDC? What percentage of those have Y2K plans?

I'm assuming for instance that if it was April 1, 1998, that BDC began to require this clause to appear in any contract, then you know how many contracts you've actually agreed to and you know how many contracts actually have that. You're going to have say between now and December 31, 1998, a number of contracts that are current but will expire over the space of the year.

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Would it be possible for you to send us a document that would say that between now and December 31 here are right now, the date today, May 28, the number of contracts we have and the number that have the Y2K requirement as a prerequisite? By December 31, of the ones that exist now, how many will have expired?

We know you can't foresee how many contracts you'll be giving out between this date and December 31, but you'll be able to say how many contracts will have expired. So we can presume that if that particular company comes to you for another loan, a renewal of the loan, it will have the clause in it. If it goes to one of the other banks, the banks will also be requiring it. It will give us an idea of how many loans will still be in existence that have no Y2K requirement, because they'll still be in operation after December 31. Those are the critical ones. Right?

Mr. David Mowat: Right.

Ms. Marlene Jennings: I want to make sure I get my questions out. So once I finish my questions then you can give the response.

A voice: You might not get your answer. You have five minutes.

Ms. Marlene Jennings: Five minutes for questions, that's what Madam Lalonde required.

The Vice-Chairman (Mr. Eugène Bellemare): Order, please. I will chair the time.

Ms. Marlene Jennings: Mr. Evans, you said you were asked what the status of our space agency was in terms of Y2K readiness as compared to the other international agencies. You said you couldn't really respond to that, but it's a real preoccupation; you're going to be attending a meeting and it's on the agenda.

Would it be possible, after your meeting, to send us a little letter or note telling us, in terms of comparison, how our Canadian agency fits up against the other ones? If you're unable to do so because they haven't been forthcoming with information at this meeting, let us know that too.

Thank you.

Dr. Fellegi....

The Vice-Chairman (Mr. Eugène Bellemare): Just a moment. To make that proper, the chair would direct you to do that.

Ms. Marlene Jennings: Thank you. I apologize for not stipulating it.

The Vice-Chairman (Mr. Eugène Bellemare): Don't worry about it.

Ms. Marlene Jennings: Dr. Fellegi, you were asked if it would be possible to have a study that would break it down provincially so that we could actually get a sense whether there are some provinces that have dealt with the Y2K problem across industries or not. Is it possible or is it just standard?

I know a little bit about statistics, but obviously nowhere near what you know. It is possible, if you do such a study, to be able to actually then compare.... We would have the one you've already done, nation-wide industries, sectors. If you did a provincial one, I would actually be able to say, for instance, the manufacturing industry did really well nation-wide, a 92% Y2K readiness. When I look at the provinces 90% of that manufacturing sector in one particular province is not Y2K ready. In all of the other provinces it is.

Is it possible to get that kind of information?

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Fellegi, can you accommodate the committee with that information?

Dr. Ivan Fellegi: It's a question of the sample sizes running out on us if we break it down too fine. We'll look at it and see how much detail we can provide you by province and by industry. It's a question of not being a very big sample. The emphasis is on quick turnaround so we can get a quick reading. Depending on the sample size, we will be able to give you whatever detail we can, and we'll look at the provincial industry breakdown.

I suspect it will be either mostly provincial and very little industry detail, or mostly industry and very little provincial detail, and not the two crossed, because then the sample sizes become too small.

The Vice-Chairman (Mr. Eugène Bellemare): As chairman, I would make that request to you.

Madam Jennings.

Ms. Marlene Jennings: Thank you.

I think Mr. Mowat wants to say something.

• 1050

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Please go ahead, Mr. Mowat.

[English]

Mr. David Mowat: You asked a very good question. We have 16,000 customers across the country. One of the peculiarities the business community really appreciates about the bank is our loans are non-demand, so they don't renew.

I don't have a renewal date that I can inflict on this requirement, but we've looked at this. What we are going to do is send each and every one of our 16,000 customers a letter. It's not just going to be a letter. It's going to be a questionnaire on the year 2000 preparedness for their business. There will also be a hotline, a 1-800 number they can call for professional assistance.

Secondly, we're going to actively promote Y2K loans. We're going to be in the community making sure that people for whom it's the biggest issue are aware we can finance their business. During the next year 6,000 businesses will get loans from us, and each and every one of them will either have a Y2K plan in place or there will be an underlying condition of our loan that one be put in place.

That would be the impact. We're going to contact 16,000 businesses. We're going to urge them, encourage them, and actually give them a tool. In the 12-month period going forward we'll provide about 6,000 new loans for which a requirement will be there.

[Translation]

The Vice-Chairman (Me. Eugène Bellemare): I would now like to give Mr. Lastewka a chance to ask a question.

Ms. Francine Lalonde: Mr. Chairman, I would like a chance to speak again after that. I should not be penalized because my colleagues have left.

The Vice-Chairman (Mr. Eugène Bellemare): Ms. Lalonde, I am sure you will be generous since you have already been on for two rounds.

Ms. Francine Lalonde: But I have not had a chance to speak to this gentleman.

The Vice-Chairman (Mr. Eugène Bellemare): You have had 20 minutes in all. I assumed you would give Mr. Lastewka a chance to speak for a few seconds.

Ms. Francine Lalonde: Of course, as long as he asks the right questions.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Ms. Lalonde. Mr. Lastewka.

[English]

Mr. Walt Lastewka: Thank you very much, Mr. Chair.

I want to ask each of the groups a question, in particular the Canadian Space Agency and Statistics Canada. I know some of the people have already touched on the question a little.

One of the problems we continue to have from corporations or crown agencies like yours is to be able to show or explain to the people who aren't involved, to the Canadian public, the benefits of doing your work. It's the same thing in the space agency. The people who are involved in the space agency or the people who get the direct results of the space agency know the value.

How are you explaining to Canadians—and I've heard a little bit about the space agency and I've had many requests from members of Parliament to have astronauts visit their area—to the people who are not involved or using your information, to the rest of the country?

Dr. Ivan Fellegi: That's a very important question indeed, because, again, the legitimacy of what we do depends on the willing cooperation of the public. So much of what we do is essentially voluntary. That cooperation has to be based on an intuitive understanding at least, not necessarily a precise understanding that this agency is providing an intrinsically important function.

How do we approach that? We don't have a publicity budget, except in preparing for the census. That expires. It's a limited event and it's focused.

Whether it's a report on the health of the manufacturing sector or the aging of the population and population estimates, migration, whatever, we put a tremendous effort into not only putting out data, and that's a new orientation in the last ten years, but also putting out analysis, information that is not politically charged, of course.

• 1055

We have an invisible line in the sand. We don't cross into the area of recommendations or even get close to recommendations on policy. We do try to communicate what we have found. It's not just a matter of what numbers have we found, but what's the story, what's happening?

We put a great deal of emphasis in writing our releases in such a way that the media can pick up on them and in fact reproduce them so that they don't have to invent a story. We say this is what we think we have found.

I personally spent every Friday afternoon for a year in a seminar mode with our people who are involved in writing these releases to find a way of communicating these findings in a manner that is comprehensible to the average person.

If you look at the style of our releases, perhaps five years ago versus now, you will find, I hope, a tremendous improvement. And as a result you can hardly open the newspaper without noticing that Statistics Canada reported this, Statistics Canada reported that. It's a daily event. I scan our press clippings every day, and it's a thick volume.

It is our expectation, our hope, and certainly our empirical finding that this has an impact on the legitimacy of the agency. When we contact Canadians they really do cooperate with us. And it's based on this intuitive understanding that this is an accumulation of these daily media reports that Statistics Canada reported so and so, Statistics Canada announced such and such. I don't have a better way of doing it.

Mr. Mac Evans: I would like to give the number that Madam Lalonde asked for earlier. Our communication's budget this year is $ 2.8 million, which is about 1% of the total agency's budget. We try to show the relevance of our programs to Canadians in several fashions. One is of course our astronaut program...very highly visible. Whenever a Canadian astronaut flies it is front-page news and it is on the TV news at night.

We use the web site as a major tool of communicating, and we do get a large number of hits on that. We often have our scientists and engineers in demand for group discussions and talks at various locations across the country. So we have a speaking service.

We produce written material, brochures on all of our agency programs. We are in the process of preparing some multi-media presentations, video clips so that these can be used in schoolrooms. And these are distributed throughout our resource centres.

We have been involved in the development of some material that schools could use in their curriculum, in particular in the life sciences area. So we have a whole host of tools that we use to communicate the agency's business.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Could you please send us an information package, or is that too much to ask? Is the material too bulky?

[English]

Mr. Mac Evans: I'm sorry. Had I known it was appropriate to bring material like that I would have done so. We have lots of it to give to every one of your members.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Lastewka.

[English]

Mr. Walt Lastewka: I was going to go along the same line, Mr. Chair. I see a lot of these StatsCan releases and so forth. Do those releases go to all members of Parliament?

Dr. Ivan Fellegi: We have discontinued a printed version of that daily announcement. We make it available on the web. It's on the network.

• 1100

Mr. Walt Lastewka: Yes. I think it would be good, especially on the space agency, and I'll give you my example. There are probably examples in other areas among people who in are border towns. We get into discussion of the American astronauts coming to Buffalo because there happens to be an international airport there in western New York. We're always being asked across the border, where are our Canadian astronauts? So I'm starting to get that from a number of areas across the country, and I thought, that's a new phenomenon, whether it's only because NASA happens to be sending astronauts along the border or whatever it is.

Mr. Mac Evans: The only thing I can say is I'm pleased that the people you talked to are aware we have a Canadian astronaut program.

You can imagine that the number of requests far exceed the availability of our astronauts, so we have a very rigorous process for deciding where these people go and when they go. They spend most of their time in Houston training for missions, so getting them to Canada is another problem. But when they are in Canada they do a large number of activities. So the only suggestion I have is that you make us aware of these requests and we'll fill as many of them as we can.

Mr. Walt Lastewka: I think what's happened is with recent astronauts going into space, and the conversations with the industry minister or the Prime Minister, and the fact people understand that Canadians are very much involved, it's good news, but the other side is now you're going to get more requests.

Thank you, Mr. Chair.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Lastewka. We will now ask Ms. Lalonde to put one last tiny question, so I get a chance to ask two questions that I have.

Ms. Francine Lalonde: Mr. Mowat, in order to prepare for the year 2000, small businesses need to know that money is available. In some cases, achieving compliance could be quite costly.

I was very pleased to hear that Mr. Manley announced your loan program, even though the program was not actually in place yet. On the following morning, we tried to get a pamphlet on it, but there were none available. Now everything is in place, and that's wonderful, except that it is not enough.

Some companies are already having difficulties or are too much in debt to get another loan to meet the year 2000 requirements. That is why the committee unanimously recommended that the Minister of Finance announce a full amortization of expenses incurred between now and June 1999 to encourage companies to get this work done.

If the Minister of Finance were to make such an announcement, that would help you provide loans to enable these companies to incur these expenses as soon as possible. We are all afraid that they might wait if they don't have enough money. The longer they wait, the worse things will get, and there may be a shortage of personnel and replacement products.

[English]

Mr. David Mowat: In regard to your last point, that companies will wait, I think it's the good work of the committee and it's something we're trying to do, to make sure our customers don't wait. So we have to deal with the financial conditions of the business. We're looking for businesses that are going to be going forward, so we'll certainly make the loans available.

I know there's discussion now about some kind of an accelerated capital cost allowance for Y2K expenditures. This might be something else that gets businesses to think about this issue earlier. But certainly the business the bank is in is the lending business. We don't provide grants. We don't have that facility. But I think what's more important than whether it's a grant or whether it's a loan—and you've touched on this biggest issue—is that we have to get them to do it now rather than later. And we're going to do all we can with our customer base and everyone we talk to to make sure they're aware.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Ms. Lalonde. My question is to the representatives from Statistics Canada, the Business Development Bank and the Space Agency. My question will be in three parts, and the answer should require only three words.

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I am sure you have set aside a certain amount of money to study the Y2K problem. How much have you set aside? Has this figure changed? How much of it has already been spent to date?

I will begin with Statistics Canada.

[English]

Dr. Ivan Fellegi: Yes, we do have a budget for it. My memory says it's $ 7 million. I can't tell you what proportion of it we have expended to date, but that information we can provide to you.

The Vice-Chairman (Mr. Eugène Bellemare): Please do.

Mr. David Mowat: It's $ 13 million, $ 8 million, and yes.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you.

[Translation]

And the Space Agency?

[English]

Mr. David Mowat: If you wanted me to use three words, I'd be happy to do it.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): That's fine. That's fine.

And the Space Agency?

[English]

Mr. Mac Evans: All of the activities that we have under way for Y2K are built into our normal programs, so we haven't pulled those numbers out.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Could you provide them for us?

[English]

Mr. Mac Evans: We could do that, yes.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Does the Space Agency in particular think that this summer, if not sometime between now and the year 2000, there will be problems with satellites, not necessarily your satellites, but satellites generally, that will have an impact on the industry and on Canadian security?

[English]

Mr. Mac Evans: I don't believe so, and the reason I say that is for most, if not all, of the satellites I'm aware of, the major software component of those satellite systems is in the ground, on the ground control systems, not in the satellites themselves.

What we're doing on RADARSAT, for example, is taking a good close look at all our software, which is primarily on the ground, so that suppose there was a problem, the satellite's not going to fall out of the air, it's not going to lose control, it's not going to whatever, and it would not be a catastrophic problem. If there is a problem going into the new millennium, it will be in the ground software, and when the problem is identified it will be easily fixed.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Is it not true that there could be a disaster if communications were to break down at all police stations or if the bank systems were to fail? I believe the automatic tellers operate using satellite technology. Consequently, if there were a failure, could there not be an economic disaster or even a major safety problem in the case of the police?

[English]

Mr. Mac Evans: I wasn't trying to minimize the impact if a problem occured. My point was that it's not as if you had a satellite that was up there and it was not capable of going into the new millennium and therefore was totally lost. I don't believe that will be the situation. I think the situation would be one where it is a recoverable problem and not a total loss.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Earlier in the meeting, you said that there would be a meeting in the United States with your colleagues from other agencies. Could you please inform us if you have any concerns after that meeting, so that we can take some action if required?

[English]

Mr. Mac Evans: Yes. I certainly will provide whatever information comes up. The meeting in the United States on the weekend is solely related to space stations, but I will undertake, if the committee wishes, to talk to my colleagues at Telesat Canada, who are the major provider of the satellite systems here in Canada, to ascertain what their approach to Y2K is.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): The meeting is drawing to an end, and I would like to thank the representatives from Statistics Canada, the Business Development Bank of Canada and the Canadian Space Agency for their patience and for all the information they provided.

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The meeting is adjourned.