INST Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Tuesday, May 27, 2003

¹

1545

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.))

Hon. Andy Mitchell (Secretary of State (Federal Economic Development Initiative for Northern Ontario))

¹

1550

The Chair

Mrs. Cheryl Gallant (Renfrew—Nipissing—Pembroke, Canadian Alliance)

Mr. Andy Mitchell

Mrs. Cheryl Gallant

¹

1555

Mr. Andy Mitchell

Mrs. Cheryl Gallant

Mr. Andy Mitchell

The Chair

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)

Mr. Andy Mitchell

º

1600

Mr. Brent St. Denis

Mr. Andy Mitchell

Mr. Brent St. Denis

The Chair

Ms. Jocelyne Girard-Bujold (Jonquière, BQ)

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

º

1605

Mr. Andy Mitchell

Mr. Larry Bagnell

Mr. Andy Mitchell

The Chair

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance)

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

º

1610

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

º

1615

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

Mr. James Rajotte

Mr. Andy Mitchell

The Chair

Mr. Andy Savoy (Tobique—Mactaquac, Lib.)

Mr. Andy Mitchell

Mr. Andy Savoy

Mr. Andy Mitchell

Mr. Andy Savoy

Mr. Andy Mitchell

º

1620

Mr. Andy Savoy

Mr. Andy Mitchell

Mr. Andy Savoy

Mr. Andy Mitchell

º

1625

The Chair

Mrs. Cheryl Gallant

Mr. Andy Mitchell

Mrs. Cheryl Gallant

Mr. Andy Mitchell

º

1630

Mrs. Cheryl Gallant

Mr. Andy Mitchell

The Chair

Mr. Larry Bagnell

Mr. Andy Mitchell

Mrs. Cheryl Gallant

Mr. Andy Mitchell

º

1635

Mrs. Cheryl Gallant

Mr. Andy Mitchell

The Chair

Mr. Andy Mitchell

The Chair

Mr. Andy Mitchell

The Chair

The Chair

Hon. Claude Drouin (Secretary of State (Economic Development Agency of Canada for the Regions of Quebec))

º

1645

º

1650

The Chair

Mr. Brian Fitzpatrick (Prince Albert, Canadian Alliance)

Mr. Claude Drouin

Mr. Brian Fitzpatrick

º

1655

Mr. Claude Drouin

Mr. Brian Fitzpatrick

Mr. Claude Drouin

Mr. Brian Fitzpatrick

Mr. Claude Drouin

Mr. Brian Fitzpatrick

Mr. Claude Drouin

The Chair

Hon. Gilbert Normand (Bellechasse—Etchemins—Montmagny—L'Islet, Lib.)

»

1700

Mr. Claude Drouin

Mr. Gilbert Normand

Mr. Claude Drouin

»

1705

The Chair

Ms. Jocelyne Girard-Bujold (Jonquière, BQ)

The Chair

Ms. Jocelyne Girard-Bujold

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

»

1710

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

Mr. Claude Drouin

Ms. Jocelyne Girard-Bujold

The Chair

Mr. Serge Marcil (Beauharnois—Salaberry, Lib.)

»

1715

Mr. Claude Drouin

The Chair

Mr. Claude Drouin

Mr. Serge Marcil

Mr. Claude Drouin

Mr. Serge Marcil

Mr. Claude Drouin

The Chair

Mr. André Bachand (Richmond—Arthabaska, PC)

Mr. Claude Drouin

Mr. André Bachand

»

1720

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

»

1725

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

Mr. Claude Drouin

Mr. André Bachand

The Chair

Mr. Larry Bagnell

Mr. Claude Drouin

Mr. Larry Bagnell

Mr. Claude Drouin

The Chair

Mrs. Cheryl Gallant

»

1730

Mr. Claude Drouin

Mrs. Cheryl Gallant

The Chair

Mr. James Rajotte

Mr. Claude Drouin

Mr. James Rajotte

Mr. Claude Drouin

Mr. James Rajotte

Mr. Claude Drouin

»

1735

The Chair

Mr. James Rajotte

The Chair

Mr. Claude Drouin

Mr. James Rajotte

The Chair

Mr. James Rajotte

Mr. Claude Drouin

Mr. James Rajotte

»

1740

Mr. Claude Drouin

Mr. James Rajotte

The Chair

Mr. Claude Drouin

The Chair

Mr. Claude Drouin

The Chair

Mrs. Cheryl Gallant

The Chair

---

CANADA

Standing Committee on Industry, Science and Technology

---

NUMBER 046

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, May 27, 2003

[Recorded by Electronic Apparatus]

¹  (1545)  

[English]

    The Chair (Mr. Walt Lastewka (St. Catharines, Lib.)): I call this meeting to order. Pursuant to the orders of reference of the House dated February 26, 2003, we are considering the main estimates for the fiscal year ending March 31, 2004, votes 60 and 65 under industry.

    Appearing today we have the Honourable Andy Mitchell, Secretary of State for the Federal Economic Development Initiative for Northern Ontario. I'd like to welcome the minister.

    Minister Mitchell, please proceed for nine or ten minutes, and then we'll get right into the tough questions.

    Hon. Andy Mitchell (Secretary of State (Federal Economic Development Initiative for Northern Ontario)): Thank you very much, Mr. Chairman, and hello to all of the committee members.

    I appreciate the opportunity to be back in front of the industry committee. Having been a member of this committee and vice-chair in years past, I know what important work the committee is doing.

    I'm going to be brief in my opening comments, as you suggest, Mr. Chair, to provide members an opportunity to ask questions.

    The FedNor program, created in the 1980s, has gone through a number of transitions since that time. Essentially, from my perspective, FedNor's primary job is to create an opportunity to create an environment within which wealth and jobs can be created. Essentially, Mr. Chairman, we're trying to ensure that the young people of northern Ontario have a legitimate choice, so they can see they have an economic and social future in northern Ontario and can make a choice to live in that particular area.

    I'm a firm believer, Mr. Chairman, that in order for this to happen, it's important that we have a bottom-up approach, or one driven by the citizens, the communities, and the institutions of northern Ontario themselves. It was to that end last year that FedNor engaged in a significant citizen engagement process, including a number of regional consultations, leading to a pan-northern citizen engagement forum held in Sault Ste. Marie in November.

    Coming out of that forum was an action plan prepared by the citizens of northern Ontario, detailing priorities for us as a government to work in four particular areas. The first area was that of access to capital, to ensure that our entrepreneurs have an opportunity to expand their businesses and to create new businesses and, as I said, to create wealth and jobs.

    The second area, Mr. Chairman, was access to a competitive business environment, to make sure the businesses of northern Ontario can effectively have a marketplace of not just northern Ontario, or of Ontario or Canada, but indeed of the world. There are a number of actions outlined in there to ensure we are able to do that in an innovative manner.

    Third, the citizens outlined their priorities in the area of access to infrastructure, particularly access to telecommunications infrastructure. One of the tools becoming available to northern Ontario, and indeed becoming available to citizens in all parts of rural, remote, and northern Canada, is high-speed or broadband Internet access, and the opportunities presented by it.

    Finally, Mr. Chair, there were a number of actions in the area of access to quality of life. Just in the last three weeks, Mr. Chair, I tabled the citizen engagement forum action plan. It detailed the specific actions in those areas, indicated who we would be looking to partner with in those respects, and provided some timeframes within which we hope this would be accomplished. And I made the commitment, Mr. Chair, that every four to six months we would be tabling a report card on our success in achieving the objectives our citizens outlined to us.

    Just very briefly, Mr. Chair, I should mention that we have already begun to take action. In many cases, the actions outlined by citizens are ones we had diligently been working on in the past. In terms of access to capital, these include, for instance, the establishment and expansion of the Community Futures program; the two loan-loss pools we've made with third parties; our pre-commercialization fund; and two very innovative pilot projects we have undertaken with our Community Futures program.

    In terms of access to a competitive business environment, Mr. Chairman, I'm very proud of our tech centres, which provide an environment within which our small businesses can create product, and opportunities to sell that product around the world.

    Just recently, Mr. Chair, I announced a new trade initiative, establishing an international trade centre in Sault Ste. Marie to give rise to and realize that the world is indeed the marketplace for northern Ontario.

    I'm particularly proud of a project called “Discover Abitibi”, a geoscience project helping to enhance one of our primary resource industries in northern Ontario, our mining industry. And I'm proud of a number of activities supporting our community colleges and ensuring that our people are able to participate in the innovation agenda and innovative environment.

¹  (1550)  

    In terms of access to infrastructure, Mr. Chair, the BRAND program has obviously been a success in northern Ontario in terms of telecommunications and high-speed broadband. FedNor is partnering with that other Industry Canada program. We've also been able to have infrastructure investments help lever private sector investments, including one that came up in previous committee meetings, the industrial park in Kenora. And through the Canada-Ontario infrastructure program, there has been over $70 million in approvals for infrastructure in northern Ontario.

    In terms of access to quality of life, Mr. Chairman, we have provided assistance for such things as the establishment of the new medical school in northern Ontario, our youth internship program, and our partnership with the community colleges to provide lifelong learning.

    Those are some of the activities we've been undertaking. But rather than spending a lot of time in making opening comments, I look forward to answering questions from members.

    The Chair: Thank you very much.

    I'd also like to welcome Louise Paquette, who is the director general of FedNor.

    I'll go to Ms. Gallant to lead off the questioning.

    Mrs. Cheryl Gallant (Renfrew—Nipissing—Pembroke, Canadian Alliance): Thank you.

    Minister, I'm pleased that you responded to my question of May 16 in the House, and I'm encouraged by tomorrow's meeting between a FedNor representative and the Friends of Algonquin Park regarding the expansion of the visitors centre at the east gate.

    As you can appreciate, the softwood lumber dispute and the decreased U.S. dollar are contributing to a worsening unemployment rate in that area, and an investment into the local tourism industry in eastern Ontario is greatly needed. I encourage you to support the expansion proposal of the Friends of Algonquin Park.

    Tourist operators outside Toronto are bracing for a 35% to 50% drop in business due to SARS, Iraq, the West Nile virus, and BSE. What is your ministry going to do to assist the small and medium-sized family businesses that make up the bulk of the businesses in rural Ontario?

    Mr. Andy Mitchell: Really, there are four different approaches on the issue of tourism.

    I'm pleased that we have an opportunity to work with the Friends of Algonquin Park. We've worked with them in the past. I've personally met with Ernie Martelle and talked to him on the phone. As you mention, there will be some formal meetings, and we'll certainly work on trying to expand the tourism economy in Ontario.

    In terms of the four particular approaches, FedNor attempts through partnerships of various sorts, including with the provincial government, to assist in the marketing of northern Ontario as a destination location.

    Secondly, in terms of providing support for specific events, oftentimes a particular event can be a catalyst to attract people from away, from other parts of Canada, from the United States, from foreign markets, and FedNor enters into partnerships in that respect.

    Thirdly, we've partnered in terms of developing tourism infrastructure--again, the basis of it being to attract visitors to the area. Obviously if there are more visitors to the area, a larger expanding market, that means more business for the small business operators in the area.

    Finally and fourthly, the Community Futures program will provide assistance to individual entrepreneurs who may wish to borrow funds to support their tourism operations, as well as other operations.

    Mrs. Cheryl Gallant: So the infrastructure aspect of those four approaches would blend well with the east gate expansion of the visitor centre.

    As the minister is aware, the assistance under the $100-million softwood industry and community economic adjustmentinitiative is only triggered by a layoff announcement. The official number of layoffs, according to your FedNor bureaucrats, is two, so eastern and central Ontario have seen no assistance to deal with the debilitating effects of the 29% tariff.

    However, information provided by HRDC in their Ontario softwood lumber tracking project, which I understand is provided to your ministry on a monthly basis, paints an entirely different picture. EI claimants as of March 31 in the Kingston-Quinte region show 99 unemployed softwood industry workers, and this number does not include the 88 workers at Commonwealth Plywood in Pembroke who were laid off last Friday, or the recently laid-off workers at the fibreboard plant in Bancroft. So why has FedNor not responded to the growing unemployment in the softwood lumber industry in Ontario?

¹  (1555)  

    Mr. Andy Mitchell: In fact, Ms. Gallant, we do respond to it.

    First of all, one of the innovative approaches we've taken is to work with the Canadian Wood Council on developing innovative products coming out of the forestry industry. They're working with architects; they're working with potential builders of buildings and providing to them ideas on how wood can be used where other products were used in the past--in other words, to expand the local market. It goes under the brand name “Wood WORKS!”, and they have received dollars under that particular program.

    We've assisted with layoffs in the Mattawa area that have been taken and are providing assistance to that community.

    FedNor's officers on the ground stand ready to deal with communities that are suffering layoffs as a result of the softwood lumber dispute. We've done this work in the past and will continue to do it in the future.

    Mrs. Cheryl Gallant: The softwood lumber dispute has put pressure on all species as mills change production to stay in business. So the crisis in Ontario is now moving to the entire lumber industry, not just softwood. The small independent operators in eastern Ontario will not survive without help. So will the government now extend assistance to the entire lumber industry?

    Mr. Andy Mitchell: We will work with the industry to assist in the areas we have indicated.

    I'm sure you share with me the pleasure today of the ruling that Canada's stumpage fees were not subsidies. That was part of our approach, to deal on the international scene to make the case clearly that the U.S. position is not appropriate, that it doesn't have any basis in law, and I was pleased with today's ruling that indicated that. I'm hopeful that ruling will be an impetus to the Americans to conclude our negotiations in a reasonable way so that we can have the marketplace conducive to those small operators that operate throughout eastern Ontario and through northern Ontario and other parts of the province to provide them with the market opportunities to continue to produce wealth and to produce jobs.

    I'm pleased with the three-part approach the government took in responding to this: first, in helping the industry in terms of expanding in markets and research and development activities; secondly, through the EI program, taking some innovative approaches to help the individual workers; and thirdly, through Industry Canada to assist communities.

    We've been there, and we will continue to be there as the need arises in individual communities.

    The Chair: Thank you very much.

    I forgot to mention that we're trying to keep it at six minutes. So be brief in your questions, and clear and concise, and I'm sure the answers will be the same.

    Mr. St. Denis.

    Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair, and thank you, Mr. Minister and Ms. Paquette, for being here.

    Like yourself, I'm quite familiar with the unique and special nature of northern Ontario, and in particular, its people. I have been struck over the years with the quality of people who have made up our local Community Development Corporations, or CDCs. They draw upon local volunteers to create a board of directors to provide local decision-making on what's appropriate for the local business community and for local communities. So I'm wondering if you could talk a bit about your experiences with the empowerment that FedNor is able to provide to local communities through its partnerships with local people.

    Mr. Andy Mitchell: Thank you, Mr. St. Denis.

    I'm very pleased with the Community Futures program. I think it is one of the most successful government programs that exists today. It operates throughout northern Ontario. It operates right through Ontario, and indeed through the rest of Canada.

    I think it's successful for a couple of reasons, both of which you've touched on. First of all, it's a bottom-up process in the sense that it is local communities that decide on what are the appropriate investments for their communities, based on the types of challenges and issues in their communities.

    For instance, what a Community Futures might do in northern Ontario could be very different from what one would undertake in a fishing community in Newfoundland or in British Columbia, or an agricultural community on the prairies, or a mining community in northern Ontario, or a forestry community in British Columbia. I think that's one of the great successes of the program, that although there's core funding provided by the federal government, the decisions are made locally by local boards of directors.

    I think the other reason for the success in the program and the empowerment you talk about is that the local boards of directors are chosen from community members themselves. These individuals are volunteers.

    If you think about it for a minute, there are some 260 Community Futures corporations that operate across Canada. With 10 board members apiece, that's 2,600 or 2,700 men and women who volunteer their time and energy to make this program work. It's one of the reasons there's great success in the program, because the actual dollars invested are just a small portion of the actual value that you receive because of these community volunteers.

    I would be remiss if I didn't compliment also the paid professional staff who support these volunteer boards. These are men and women who have difficulty understanding the word “no”, who do this out of a deep commitment to their communities and work far beyond what would normally be expected. To all of them, I want to say a big thank you, because they make this program work.

º  (1600)  

    Mr. Brent St. Denis: Thank you.

    In your presentation you mentioned broadband, and it's certainly a commitment that this government has made and repeated several times. I wonder if you could expand a little bit on how you see our progress from the big-picture point of view and whether you still agree, as I think you do, that making sure our rural communities are connected to the world is a way of making sure our rural communities keep up with the rest of the country as economic growth continues.

    Mr. Andy Mitchell: Absolutely, Mr. St. Denis, I'm a big proponent of the need to fulfil the government's commitment to have high-speed broadband Internet access available to all communities by the end of 2005.

    It's not about getting e-mail faster or being able to download music or whatever. Having high-speed broadband access is about rural Canadians having access to health care, education, lifelong learning, and a competitive business environment. It's making sure that rural Canadians, like all Canadians, have access to those basic services.

    I'm particularly pleased with the approach we're taking because we're trying to complement, and not crowd out, investment by the private sector. Where the private sector is able to and willing to make those investments, because the market size is of a sufficient nature to give them a return on their investments, they're going ahead and doing it.

    There are other areas where the investment required may be more than the revenue stream that is going to be generated would justify for the private sector. There we'll partner with the private sector. We'll take up that portion beyond what the revenue stream will mandate, making sure, therefore, that the access is there and that the system created is sustainable by the private sector into the future.

    I think that, first of all, the objective of ensuring that broadband high-speed Internet access is available is an important one. I think that the approach we are taking is the right approach and one that will prove to be successful.

    Mr. Brent St. Denis: Thank you.

    The Chair: Thank you, Mr. St. Denis.

    Ms. Girard-Bujold.

[Translation]

    Ms. Jocelyne Girard-Bujold (Jonquière, BQ): No.

[English]

    The Chair: Mr. Bachand.

    Mr. Bagnell.

    Mr. Larry Bagnell (Yukon, Lib.): As you might know, in this great nation, the only part of northern Canada that doesn't have access to regional development funding is north of 60. In fact, I think that the Yukon, my riding, is the only territory or province in the country that doesn't have Community Futures. You talked about that and how important it was.

    I have three questions related to that. One, would you bring this message to cabinet? Secondly, being involved in regional development in a northern area with some similarities to mine, are there any lessons you would suggest on the structure of regional development in our area, if we can achieve it? Thirdly, are you familiar with or have you visited my riding?

º  (1605)  

    Mr. Andy Mitchell: First of all, I will bring that to cabinet. I do believe there is a need to look at the issue of regional development north of 60. It's one we should be taking a look at. Obviously some of the programming being undertaken is being delivered in northern Canada, regardless of whether there's a regional development agency. The infrastructure program or broadband is an example. We will deliver that north of 60 without that particular structure. But I will certainly bring that message to my cabinet colleagues.

    In terms of visiting your riding, I've had an opportunity to be in the Yukon five times, most recently last week. I had an opportunity to meet with the municipal association of the Yukon and a chance to address them in a formal speech and, I think more to the point, in a round table. They had an opportunity to ask me a number of questions and put forward their priorities.

    One of the things you asked was what some of the lessons learned would be. I think one of the most important lessons is the whole concept of being a bottom-up process. It's important that communities themselves find the manner in which they want to achieve sustainability.

    Although there are many similarities with other parts of rural Canada and other parts of northern and remote Canada, there are many challenges unique to the Yukon. The programming and initiatives we undertake must be tailored flexibly to deal sufficiently with those differences. So if I were to make a suggestion, as I did when I was there, it would be to make sure we take a bottom-up approach, to make sure we empower the communities.

    If you take a look at those men and women we met with in the Yukon, they have a great wealth of experience. They have great and deep commitment to their communities and to the territory. As senior levels of government, we need to provide them with the tools they will use in what I believe will be very competent ways to ensure the long-term sustainability of their communities and the territory.

    Mr. Larry Bagnell: I just have a closing comment.

    It's true we have infrastructure and broadband, but I don't think it's fair to suggest we're dealing with all of the other problems that way, because the rest of the country has that too. But I do want to compliment the government for giving us above-average money for infrastructure, and we are one of the most connected communities broadband-wise. I think only two communities are not connected. So those are great.

    The problem is that we're still the third-worst economy in the country, so regional development is essential at this time in our development, particularly as there's really almost nothing going on in the private sector. The little bit that there is.... Mines are closed because of world metal prices, and tourism is down because of SARS, etc.

    Mr. Andy Mitchell: I think you make a very good point, Mr. Bagnell.

    The Chair: Mr. Rajotte.

    Mr. James Rajotte (Edmonton Southwest, Canadian Alliance): Thank you, Mr. Chairman. Thank you, Mr. Minister.

    The first question I have is about a couple of cases I have come across in going through the estimates. I wanted to get some details on these.

    Can you enlighten us on how much the Searchmont Ski Resort has received from FedNor, and during which years?

    Mr. Andy Mitchell: I don't have the exact amount with me, but I'll get it for you.

    Mr. James Rajotte: Okay. I thought we were here to do the estimates, but you don't have those figures with you today?

    Mr. Andy Mitchell: I have the figures for the estimates, but FedNor probably does some 300 to 400 projects a year, so if you want detailed information on each individual project you're going to have to give me a little notice that's indeed what you want.

    Mr. James Rajotte: Are you at all aware of this project, then, or is it one of the projects you're not aware of?

    Mr. Andy Mitchell: Yes, I'm aware of the Searchmont project, if you want to ask me questions about it.

    Mr. James Rajotte: Well, according to the information we've collected, in July 2000 the Searchmont Ski Resort declared bankruptcy, but apparently FedNor was an investor before this, and it continued to be an investor afterward. Then an American investment banker purchased the resort in May 2002, with the mandate of contributing to the quality of life of Canadians. Yet according to reports from The Sault Star, all he has basically done is upgrade the website.

    Now, how does FedNor justify an investment in a project of this kind?

º  (1610)  

    Mr. Andy Mitchell: Very simply, the resort was not going to operate. The people who worked at that resort were out of work. The people who travelled to Sault Ste. Marie to utilize that piece of tourism infrastructure were not going to travel there any longer and they were not going to spend the money in the local business community and the local hospitality industry. So to justify, the investment was to allow for the ongoing creation of wealth and the ongoing maintenance of jobs and to help support the economy of Sault Ste. Marie. That's the basis of the justification.

    Mr. James Rajotte: So jobs have been maintained by the investment by FedNor?

    Mr. Andy Mitchell: I'll get the exact number of jobs for you. At the same time, I'll also get the estimates for the economic activity that the number of visitors create and provide to the local community.

    Mr. James Rajotte: Could you get the number of jobs, when they were created, the number of people who have visited the resort and when, and--I don't know if you know this offhand--how much this investment banker has actually put into the community and put into this specific project? Because one of the arguments for government investment is that you always get a return beyond what the government agency puts in.

    I assume with this you're stating that government actually gets a return on its investment better than a dollar-per-dollar investment.

    Mr. Andy Mitchell: I think it's also important to remember in this case that as a result of the not-for-profit organization that was established, which saw Searchmont survive in the interim for that year, the infrastructure was maintained and a private sector investor was able to buy it and maintain it as a private entity. The FedNor dollars were used in a bridging capacity to maintain the infrastructure and to maintain the operation of that facility.

    I'm happy to disclose all of that information. I'll provide you with a letter that does that. But I think that was a very good example of the federal government taking action that sustained a critical piece of tourism infrastructure, a critical piece of the economy, and at the end of the day it was able to be returned to the private sector and become an ongoing concern into the future.

    Mr. James Rajotte: Just to clarify, then--this is the last question on this--what was the role of the non-profit organization in this case?

    Mr. Andy Mitchell: The non-profit organization was an interim operator of the facility, whilst a search went on for a private sector buyer.

    Mr. James Rajotte: There's a second case I'd like to ask about. In July 2002 FedNor announced funding of $800,000 to the Community Development Corporation of Sault Ste. Marie. According to the information we have, $750,000 of that $800,000 has been allocated for basic administration costs over three years. According to what we've discovered, the CDC is actually governed by a local volunteer board of directors, which leads to the question of why $750,000 of an $800,000 grant is going toward local administration costs.

    Can you explain?

    Mr. Andy Mitchell: First of all, the standard operating amount for the Community Futures program is $250,000. Now, there is a volunteer board of directors that makes the decisions about the investments that are made and oversees the operation. But as I also said, there are also paid professional staff who are part of the Community Futures program who need to be paid, who do some of the initial due diligence on the loan propositions that are put in front of them, who do some of the economic development work that is required in the community. There are overhead costs in terms of office space that need to be covered by that amount.

    We made a change in FedNor administration--in fact, we're in the process of doing it, because it's not complete yet. We went from doing this on an annual basis to doing it on a three-year basis, at the request of our volunteers, to try to assist them in the amount of time, energy, and effort that had to be spent in terms of administrative costs involved in that. I think we've been quite successful in doing that. This is something that was very much appreciated by those who were involved in the Community Futures program.

    There is a core cost, but the actual value of the program is far beyond what that $250,000 provides.

º  (1615)  

    Mr. James Rajotte: So the figures I have here, are they incorrect then?

    Mr. Andy Mitchell: No.

    Mr. James Rajotte: The $750,000 of the $800,000 was used? Is that incorrect?

    Mr. Andy Mitchell: No, I said it was correct. It's $250,000 per year for operating, and I gave you the reasons.

    Mr. James Rajotte: I have $750,000 out of $800,000.

    Mr. Andy Mitchell: Well, $250,000 times three is $750,000, and $50,000 of the money is under what's called the LIP program, the local initiatives program, which provides the Community Futures program with a small pot of funding so they can assist with local projects up to $5,000 each. They have an opportunity to deal with a local project, and they have those funds, the local board of directors making a decision on where they want to put them. They receive $250,000 per year for three years, so that's $750,000, plus the $50,000 for the LIP program.

    I think if you take a look, you'll find that is replicated in many of the Community Futures programs right across Ontario. That's nothing to be discovered, as you may suggest; that's certainly public. It's the way we operate. In fact, we are quite proud of the Community Futures program and operate that way right across the province.

    The Chair: Thank you very much, Mr. Rajotte. I must go to the other side now.

    Mr. Savoy.

    Mr. Andy Savoy (Tobique—Mactaquac, Lib.): Thank you very much, Mr. Chair.

    Thanks for coming, Minister Mitchell.

    I'd like to go back to the softwood lumber situation that we spoke of earlier. We know the allegation against Canada's industry was subsidization in terms of stumpage and other forms of subsidization. In looking at the allegations of subsidization, the programs that were implemented to offset some of the economic problems or issues were R and D, which is general across industry and is not company-specific, employment insurance, which is employees, and the communities themselves. So none of the targeted funds were at the specific companies.

    The negotiations are still ongoing today in trying to resolve this situation. If we provide direct subsidies to companies, it could conflict with or create a problem either in perception or in actual numbers with the U.S. in our negotiations. Is that the reason why, I assume, we would not subsidize directly companies via FedNor on the softwood lumber situation?

    Mr. Andy Mitchell: Let me say first of all that the softwood lumber file in the broad context you're putting it in is not in my file as the Secretary of State for FedNor. That belongs to the Minister of International Trade.

    But yes, there has been discussion on that basis, that if you took company-specific action, it could be actionable by our trading partners. That has been an issue. I think the approach overall that has been taken and I mentioned earlier is the appropriate approach, dealing with the communities, dealing with the workers, dealing with marketing and dealing with research and development. That's a way we can assist the softwood lumber industry without exposing ourselves, as you suggest, Mr. Savoy, to action by our trading partners.

    Mr. Andy Savoy: In your view, then, would it have been responsible to provide direct subsidies to corporations in this situation via FedNor?

    Mr. Andy Mitchell: FedNor doesn't do that as a matter of course. In any action we would take, we would want to make sure we weren't exposing ourselves so that we could be seen to be abrogating our international trading agreements.

    Mr. Andy Savoy: Excellent.

    On the second issue, of broadband or high-speed Internet--and I agree with you that for issues of health care, education, R and D, business-to-business services, remaining competitive in the global environment we live in requires high-speed Internet--in looking at technologies, there's been a development on the satellite side recently where establishing nodes or hubs in remote communities may be much more cost-effective via satellite versus through the traditional cable mechanism.

    In the broadband program we have looked at primarily cable options, but with the development of satellite it looks like there might be some more feasible or viable options around establishing these hubs via satellite. Could you compare and contrast the two options, cable versus satellite, and what the relative costs might be?

    Mr. Andy Mitchell: I'm purposely not going to do that, and I'll explain why.

    The concept behind BRAND is to be technologically neutral. In other words, the community that receives the initial round of funding and is developing the business plan and the request for proposal should be seeking a request for proposal from different types of entities using different technologies. They should be coming forward with a business plan that is the most cost-effective.

    I think that you're right. In some circumstances, a particular technology may be the best. Put it into a different location, give it a different geography, give it a different proximity to an urban centre, and you may have another technology that may be the most cost-effective.

    BRAND has tried to operate in a way that's technologically neutral to allow the request for proposal to come from the community based on the best case and the most efficient case. In some instances, I suspect that you're right, it will be satellite technology. In others, it may be over the air. In others, it may be microwave or it may be cable.

    The idea with the BRAND program is to focus on getting the connection done in the most cost-effective way, and not to be tied to any one particular technology. The technology that should be used is the one that's the most efficient and the most cost-beneficial to utilize. That's the way in which the program has been designed.

º  (1620)  

    Mr. Andy Savoy: Do I have time for one more?

    If the technology we're dealing with—and I'm speaking specifically of satellite—is really on the cusp of development, it's at a point now where it looks like it will be feasible. In some cases, it's an infrastructure issue in terms of satellites in space. They're actually being launched. They won't be available until 2004.

    I realize this isn't FedNor's bailiwick; it's your other department.

    To accept proposals now would be very difficult, if the technology will come into place and the infrastructure for the technology won't come in until next year. There is the predicting of costs and a lot of issues. Proposals can't be met with satellite technology for six months or nine months.

    How do we address that situation?

    Mr. Andy Mitchell: I think that's one of the reasons why they decided to use a model for applications similar to the community access program, in the sense that they're doing a round on them. Then when that's finished they go to the next round and then to the next round. The idea isn't to exclude anybody; the idea is to get to everybody when the rounds are over.

    You may have a community that, because of its proximity to an urban area, might be ready to go right now. The development of new technology is not a major issue to them. The technology is there. They're willing to go on that first round.

    You may have another situation, such as you're describing, where people are saying that they may want to wait until a little later in this process. They think that the new technology is going to be there in six months or twelve months, so they'll hold off and go on a later round.

    I think that designing the program so that it has a series of rounds was probably wise. I think it would help to address that.

    Of course, when you're dealing with technology, you always have the danger of getting something that may, at some point in time, become obsolete. For those of us who bought computers five years ago, they're obsolete. In fact, with the way it goes these days, it can be obsolete six months later.

    I understand your point. With the fact that we're going in a series of rounds where we only do so many communities at a time, if a community believes that it's at the point where it needs to give a little bit of development time, then it should wait.

    We're not trying to do everybody at the same time. It's not feasible to do. There is the opportunity to wait.

    Mr. Andy Savoy: What if the actual community or constituency of interest says that they don't want to wait the six months, but we, as the Government of Canada, feel that it would be of cost interest to the taxpayers of Canada for them to wait? Do we have the authority to say that we'd like them to re-issue tenders in six months or nine months, because we feel there would be a substantial savings once the satellite companies are allowed to tender?

    Mr. Andy Mitchell: There is the ability to do that because there are, first of all, officials who have a fair amount of expertise in this field who take a look at that. Then there is a national selection committee who has an opportunity to look at the applications put forward to them, and then the minister himself has an opportunity to look at them.

    What generally happens is that officials out of the branch of Industry Canada responsible for this work with community proponents, and they're very knowledgeable of the technology, very knowledgeable of the way to do it. Through discussions with them, they usually come forward with something everybody is comfortable with. Again, I reiterate the point that what we're trying to do is to make sure we include everybody. It isn't that you have to jump ahead of the next one or you're left out; that's not the design of the program. The design of the program is to get everybody connected at the end of the day.

    Those situations you're talking about, Mr. Savoy, are exactly what we try to do, to have the officials sit down with the proponents and have that discussion, because most proponents want to accomplish this. In fact, I would suggest that perhaps all of the proponents want to accomplish this in the most cost-effective way, using the best technology, and are very amenable to listening to the advice of people who have a lot of experience in this respect.

º  (1625)  

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

    Mrs. Gallant and Mr. Rajotte.

    Mrs. Cheryl Gallant: The issue in rural Ontario, when it comes to broadband access, boils down to infrastructure with or without the private sector investment. How will your most recent broadband announcement actually contribute to the creation of infrastructure?

    Mr. Andy Mitchell: It does it, really, in two ways. First, it gives an opportunity to communities to develop or do three things. One is to go through a process of aggregating demand in a particular geographic area. That's really a process of going out and talking to potential users, whether they be institutional, governmental, business, and even personal users, and try to get an idea of what is the demand, what would the revenue stream be in a particular geographic area if high speed were there. That's the first part of what they do.

    Secondly, what they do is translate that revenue stream into an investment amount. In other words, given an investment or given a revenue stream of say $50,000 annually, that will support a capital investment of $2 million--I'm just using these numbers as examples--so it does that.

    Thirdly, it puts out a request for proposals based on this to the private sector that says “Based on this revenue stream, based on this aggregation of demand, how much are you willing to invest and how much will it cost to do?”

    In some cases, particularly areas that are adjacent to existing service, the difference between what the private sector would be willing to invest to meet the revenue stream and the actual cost could be very small. In some of the more rural, remote northern parts of Canada, the difference between what the private sector is willing to invest based on the revenue stream and the actual cost could be substantial. The second part of the program, then, is to fund a portion of the capital deficit between what the revenue stream would support and the actual cost of doing it.

    Mrs. Cheryl Gallant: As a former branch manager in a small town, the minister will understand that the latest barrier to small businesses is access to capital. This is especially true for tourist operators, small family businesses. What special plans does Industry Canada have to assist these small businesses to get through this year, beyond what has already been announced from areas outside Toronto?

    Mr. Andy Mitchell: Well, certainly through the Community Futures program it provides an opportunity to assist businesses that need capital. It operates where the traditional private lenders are not willing to operate right now; it goes higher up the risk curve. It prices accordingly, loans tend to be collateralized, and they're fully repayable. Money that's repaid goes back into a revolving fund and can be lent back out to additional businesses. I think that's one of the important ways this is going to be done.

    We're operating a couple of pilots--one in northeastern Ontario and one in eastern Ontario--of a process of pooling Community Futures moneys so they can deal with some of the larger transactions that some of our tourism operators and others may face. So we're trying to do that.

    We've established a loan-loss pool with the Business Development Bank of Canada, so they will be willing to go higher up the risk curve. As you very well know, some of the tourism lending is seen, particularly in rural areas, as being higher up that risk curve. We're trying to profile that money so they can deal with that.

    We also, based on the citizen engagement action plan, are trying to develop ways to get some additional risk capital, some additional venture capital, equity capital, placed in northern and rural Ontario.

    So we have a number of measures we're undertaking to help in that respect. In addition to that are some of those other things I mentioned earlier in terms of helping with the marketing. If you help with marketing and bring more people to an area, that's going to have a positive impact on those entrepreneurs. If you assist in the support of some large events that attract people into the area, that's going to assist. If you help with some of the public infrastructure needs, that will be some help.

    We're doing all those things. We're very cognizant of the importance of tourism in northern and rural Ontario--indeed, across rural Canada--and we're working to make sure we can deal with that impediment. And I agree with you, it's a significant one.

º  (1630)  

    Mrs. Cheryl Gallant: That was a very lengthy answer, Mr. Minister, but at the end of the day, it doesn't sound like there's any additional funding for communities outside of Toronto other than was originally planned on the books, other than was originally planned for through Community Futures. So they get $10 million, and outside Toronto, zip.

    Now, there's another issue, also with respect to Community Futures. When it was moved from HRDC's predecessor to Industry Canada, a disconnect occurred between regional employment programs that stayed with HRDC and the new jobs that were supposed to be created with Community Futures. A good example of this is the sharing of the unemployment figures in the softwood lumber industry.

    How do you intend to fill the gap between what each side of the House is doing when it comes to regional economic development?

    Mr. Andy Mitchell: Well, very often in terms of the FedNor portfolio--I can't speak for my colleagues in regional development agencies--we work in conjunction with HRDC. It's not an unusual thing for us, where you will see FedNor taking part of a particular project, and you may see HRDC using part of their active measures tools to be part of a project.

    In our case, in northern Ontario, we often deal with the provincial government as well on those projects. So we work on the ground with HRCD. The field officers for FedNor are very familiar with the field people for HRDC, and we work with them on an ongoing basis and do projects jointly.

    The Chair: Thank you very much.

    Mr. Bagnell, you have a short question.

    Mr. Larry Bagnell: I have a short question.

    I wonder if the minister is aware that some of the chartered banks have decided to get out of the tourism business. Also, the insurance costs that are being spread around everyone since September 11 have caught all sorts of industries in Canada with huge increases in insurance, which is another challenge. These are just two more challenges regional development agencies must face.

    Mr. Andy Mitchell: Absolutely.

    Mrs. Cheryl Gallant: Mr. Chairman, last year at this time when we had you in committee, I asked you how it was determined if a region qualified for northern status. It was kind of a wishy-washy answer; there wasn't a definitive formula. Would you please explain, now that you've had a year to research this, how exactly an area achieves northern status?

    Mr. Andy Mitchell: Well, I didn't think it was a wishy-washy answer. I thought it was a direct answer. And I see from the testimony you asked my colleague, the Minister of Industry, the same question.

    When the Province of Ontario developed its programming for northern Ontario in the 1970s, it defined the region of northern Ontario. It originally defined it as the area north of the French River. That was the original definition, and the federal government followed suit. It changed that definition to include the area north of the southern boundary of the district of Parry Sound, and again the federal government followed suit. Then for a third time the province changed the definition and made the boundary to include the district of Muskoka, and again the federal government followed suit.

    One of the things I said to you in my testimony last year--I think it's very apropos and it's something we need collectively to work on as parliamentarians--is that the issue isn't proximity to a particular geographic area. That isn't the issue. I don't think the idea that regional disparities are simply based on geography is valid in 2003.

    We have different regions that have great strengths in them. For example, in western Canada, Calgary has a pretty good economy right now, and the Edmonton-Calgary corridor is probably the fastest-growing area in Canada. The disparity, in my opinion--and I think we share this, from looking at some of your comments--is the disparity that exists largely between urban and rural Canada. The issue shouldn't be tied to any particular geographic area. What we need to look at is the wealth disparity between urban and rural Canada and our ability to provide tools that will assist rural areas to create wealth, jobs, and long-term sustainability.

º  (1635)  

    Mrs. Cheryl Gallant: Thank you.

    Based on your response, would the minister agree to undertake looking into the statistics that would show the incomes for the regions that are now lumped together into the Kingston area when they do their statistics? What happens is in rural areas the statistics are lumped together with a large urban area, so the true economic disparity is not shown; it's blended in and put across the board. For example, in the ridings west of Ottawa, the west Carleton region and on up, would you be able to extract the income statistics from having them lumped in with Kingston?

    Mr. Andy Mitchell: Let me see what we can do. You'll notice one of the actions in that action plan, the citizen engagement, is just the point you're making, that we need to have better statistical data. So we're already engaged to work on that process.

    Now, you've suggested income as being one of the variables, and I think you're right. That has to be one of them. I think there are other variables as well that we will want to look at. But I'll make a commitment to you as we go through this process to keep you informed of what we're doing and to seek your suggestions as to how we could do this in the best possible way.

    The Chair: Thank you very much, Minister. Thank you for being with us today. We'll look forward to some of your studies and reports, and maybe mid-year you might want to report back and share--

    Mr. Andy Mitchell: I'm always happy to be here, Mr. Chair.

    The Chair: Then we'll call you back. So thank you very much for being with us.

    We'll take a two-minute break and we'll change ministers.

    Mr. Andy Mitchell: Thank you.

    The Chair: We'll suspend for two minutes.

º  (1637)  

---

º  (1641)  

    The Chair: We'll bring this next session to order.

    We welcome Mr. Claude Drouin, Secretary of State for the Economic Development Agency of Canada for the Regions of Quebec; Marc Lafrenière, Deputy Minister; Suzanne Tining, Assistant Deputy Minister; and Jocelyn Jacques, Assistant Deputy Minister, Policy, Planning and Information.

    Welcome, Minister. We'll carry on with your opening remarks.

[Translation]

    Hon. Claude Drouin (Secretary of State (Economic Development Agency of Canada for the Regions of Quebec)): Thank you very much, Mr. Chairman, colleagues.

    I'm very pleased to be able to address you again this year. This appearance allows me to give you a few examples of our action in the various regions of Quebec, as well as the results we are achieving. Mr. Chairman, I thank you for introducing my colleagues, the deputy minister and our two assistant deputy ministers, as well as Mr. Bordeleau and Mr. Thibeault, Directors General.

    Canada Economic Development's mandate is to promote the economic development of the region of Quebec. We pay special attention to the regions experiencing slow economic growth and inadequate employment.

    We carry out our mandate in such a way as to contribute also to the attainment of a number of national priorities, not the least of which are innovation, export development and infrastructure improvement.

    In terms of overall performance, it is estimated that in all, the 1,390 new financial contributions awarded during fiscal 2001-02, namely, about $390 million, will leverage a total of more than $1.7 billion in investment throughout Quebec.

    Let's now discuss the framework which will guide Canada Economic Development's activities during the period of 2003-04 to 2005-06. This framework sets out our priorities as well as the strategic outcomes we intend to achieve.

    Canada Economic Development targets the attainment of three main strategic outcomes. The first involves enterprise development, the second, improving the economic environment of the regions, and the third, development and renewal of collective infrastructure.

    To achieve these results during the period of 2003-04 to 2005-06, Canada Economic Development plans to divide its total contributions budget of $1 billion 9 million as follows: $385 million will be allocated to enterprise development and $255 million will go toward improving the economic development of the regions. As well, $369 million will be allocated to infrastructure programs.

    To work toward enterprise development and improving the economic environment of the regions, Canada Economic Development has implemented regional intervention strategies in each region of Quebec. These forward-looking strategies build on innovation, but innovation tailored to the development context of each region. Designed specifically to enhance each region's potential, these strategies are based on their economic strengths and local industrial and institutional fabric.

    I would now like to give you an overview of each of our main strategic outcomes. Enterprises are the primary engine of development and the creation of wealth in all the regions of Canada. It is in this context that we made enterprise development our first strategic outcome.

º  (1645)  

[English]

    First, I work for Canada Economic Development to contribute to the development of enterprises, and to improve their objectives and their access to information likely to inform their businesses decisions.

[Translation]

    Over the next three years, we will also support the establishment of enterprises in economic activities deemed strategic by community stakeholders for the development of their region.

    Moreover, in the context of globalization of the economy, our enterprises will need to reinforce their competitiveness. In this regard, we will foster development of enterprises' skills in the use of advanced business practices. We also work to improve enterprises' ability to adapt and test a new or improved product, service or production process. Lastly, we will provide financial support for organizations offering enterprises export and marketing services with a view to increasing their capacity to compete.

    The last priority we set ourselves within our strategic outcome related to enterprise development is to foster the growth of small local and regional enterprises. Small enterprises are key to maintaining the economic vitality of communities. That is why we target the start-up and expansion of such enterprises, while fostering improvement in their success rate and durability.

    Our action in this area benefits from the ongoing contribution of our partners in the field, namely, the Community Futures Development Corporations, the Business Development Centres and the Community Economic Development Corporations.

    I would now like to examine with you our second strategic outcome, that is to say, improvement of the economic environment of the regions.

    Our enterprises' ability to meet international competition largely depends on an economic environment conducive to development. Based on this observation, we want to enhance communities' ability to energize development of their economy. To that end, the Agency supports organizations that cooperate with and mobilize the milieu around local or regional strategies and priorities, carry out international promotion and enhance entrepreneurship.

    Improvement of the economic environment of the regions also depends on the economic enhancement of regional development assets. In this respect, we intend to support the implementation of projects of public interest likely to generate a strategic impact on a region's economy in the long term. We therefore anticipate substantial ripple effects on a region's economic activities.

    Finally, our last priority is development and reinforcement of knowledge-based competitive advantages. To improve their competitive performance, our enterprises have to innovate unceasingly. It is in this context that we want to support the completion of knowledge-based infrastructure and R&D projects as well as dissemination and network activities. A good example of this outcome is our $25 million contribution to the Aluminum Technology Centre in Saguenay.

    I would now like to say a few words about our third strategic outcome, namely, development and renewal of community infrastructure. Indeed, Canada Economic Development wants to help improve municipal, urban and rural infrastructure in Quebec, with special emphasis on citizens' quality of life.

    That is why the Government of Canada set up a new infrastructure support program in 2000 and reached an agreement with the Quebec government for its implementation. Canada Economic Development is responsible for implementing this program in Quebec.

    At present, we have 870 files at various stages of processing. In all, they involve total federal contributions of more than $450 million. I would finally like to take a moment to talk to you about other initiatives, in addition to our regular activities. These programs, established in conjunction with other federal departments, are all aimed at creating long-term economic spinoffs in regions and communities affected by a particular situation. Canada Economic Development has thus been given the mandate to implement the Canadian Apparel and Textile Industries Program in Quebec. The objective of this financial assistance measure is to help the industry adjust to the effects of the Market Access for Least Developed Countries initiative. It also aims to work in partnership with enterprises in this industry sector to help them become more innovative and better equipped.

    Canada Economic Development has also been entrusted with implementation of the Adjustment Fund for the industry and communities affected by the softwood lumber dispute. In Quebec, this Government of Canada measure aims to give enterprises and communities in the eight affected regions the means to explore their potential for economic diversification and development. This could involve, for example, new forest product lines, experimental forestry programs, and even entirely new initiatives in such as areas as tourism.

º  (1650)  

    Lastly, as you know, on April 24, the Government of Canada announced the fishing closure of three cod stocks in the Gulf of St. Lawrence and off the northeast coast of Newfoundland and Labrador.

    Canada Economic Development will ensure delivery of short-term measures to assist individuals and communities most affected by the closure of these fisheries. A budget of $14 million has been set aside for Quebec for this purpose. The Agency will also take an active part in determining what further measures will be required for a comprehensive approach to strengthening the sustainability of local economies, and diversifying the economic base of communities.

    Canada Economic Development is already consulting with industry stakeholders and should be announcing these measures in the fall.

[English]

    These interventions clearly illustrate the Government of Canada's and Canada Economic Development's commitment to assist the workers and communities of Quebec in finding new sources of prosperity. While working on achieving our outcomes, we maintain a continuing concern with examining our management practices, our processes, and our activities in the various regions of Quebec.

[Translation]

    This allows us to improve the relevance, the effectiveness and the efficiency of our programs on a continuous basis. It also enables us to offer quality services.

    Finally, we are able to maintain a high level of client satisfaction. By fostering the best conditions for development possible, we are helping build a country where equal opportunity and quality of life are tangible realities.

    Mr. Chairman, I tried to be brief in order to have more time to answer my colleagues' questions, and I hope you will appreciate this.

[English]

    The Chair: I very much appreciate your sticking to the ten minutes, because it allows us to go right into questioning.

    I'll begin with Mr. Fitzpatrick.

    Mr. Brian Fitzpatrick (Prince Albert, Canadian Alliance): Mr. Secretary, I want to zero in on the history of Papiers Gaspésia, a pulp and paper mill at Chandler, Quebec. You can correct me if I'm wrong.

    In 1999 Abitibi Consolidated had a plant there and closed it down. It was a business decision on their part. They said it wasn't a viable operation. A consortium of partners came upon the scene and convinced the government--your department, I presume--to inject $80 million to revive that operation. Perhaps you could tell me what information was made available to your department that would have made this investment look like a wise decision and Abitibi Consolidated's decision look like a poor one.

[Translation]

    Mr. Claude Drouin: Thank you, Mr. Chairman. I'd like to thank my colleague for this important question. This measure was taken by our government and by the Government of Quebec, because it's important to remember that this is an issue in which both levels of government are involved. It is a sector that is experiencing certain difficulties. However, Gaspésia produces a special paper, a product that is unique in North America and that does not compete with any other pulp and paper company.

    I'd also like to remind you that the Gaspé is the third most disadvantaged region in Canada after the two regions of Newfoundland.

[English]

    Mr. Brian Fitzpatrick: I understand that, sir. Could I get on to my next question, please?

    You would have relied on key documents to make that investment, I'm quite sure. The Auditor General keeps commenting, when she's scrutinizing investments and so on, about looking at documentation to support this information.

    It's my understanding that information on market assessment was provided to your department. I can't get a copy of that document because it's the property of the consortium. The Government of Canada doesn't have a property interest, I guess, in that report; even though we have to rely on it to make the investment, we have no interest in it. The taxpayers of Canada have no access to that report to look at and determine whether the government made the right decision or not. We're entitled to do this sort of thing, are we not?

    Why can't I get a copy of that market assessment, sir?

º  (1655)  

[Translation]

    Mr. Claude Drouin: As you know full well, we are subject to the Access to Information Act. We are compelled to provide upon request anything to which the Act applies, and that is what we've always done up until now. However, when something is not subject to the Access to Information Act, we must have the authorization of the company involved, because this could harm its competitive position. If we don't have the company's authorization, it is not our decision to refuse to transmit the information. The company has that right and we follow the Access to Information Act to the letter.

[English]

    Mr. Brian Fitzpatrick: My point of objection on that answer is the consortium isn't asking for private financing; it's asking for public investment. Every Canadian is making an investment in that operation. We're not asked whether we want to do it or not. We're being forced into doing so. I become a shareholder, as a taxpayer, and I think I am entitled to have access to this information. If they don't want me to have access to this information, they shouldn't be asking for our participation.

    Is this a fair enough position? Can you understand the logic of my position?

[Translation]

    Mr. Claude Drouin: First of all, we'd have to make sure we are complying with the Access to Information Act. But secondly, there is private financing too except that both levels of government are also involved. Good for you if you're a shareholder. I hope you'll be pleased and that we'll have good results, but we will create hundreds of jobs in the region. That was the goal in a process unique in the Americas. It does not exist and does not compete with other pulp and paper sectors. Everything that is accessible under the Access to Information Act will be sent to you, Mr. Fitzpatrick. However, the part that is not subject to the Access to Information Act...

[English]

    Mr. Brian Fitzpatrick: I'd like to pursue the jobs end of that, if I could.

    The industry in North America as a whole is going through a lot of restructuring. It's not just the softwood lumber business. The pulp and paper business is having trouble times two. In fact, I have it from one industry source that we're talking about a 20% overcapacity in North America and there are going to have to be plant closures and layoffs. I think it's already happening in other parts of the country.

    The concern I have, sir, is whether the government, through subsidies and contributions, is in the business here of deciding who's going to survive in this restructuring process, or whether the market is going to decide those questions.

[Translation]

    Mr. Claude Drouin: Mr. Fitzpatrick, governments are not the ones who decide on a market, except that we had an opportunity here to create a company in Canada that did not exist, that does no harm, and that does not compete with other pulp and paper companies. We should congratulate ourselves for that as a government because we've managed to support a company that does not produce in that sense, but that will create jobs here for hundreds of people who will pay taxes and create wealth, and this will mean there are fewer people unemployed.

    So this is excellent news that does no harm to the existing industry. Even if you are correct in the sense that it's not necessarily going well, these are not competitors. They are not in the same market at all.

[English]

    Mr. Brian Fitzpatrick: Are you saying this thing is a resounding success story then? It's through the hoops and there's no doubt in your mind that this project is a complete winner for the taxpayer and the Canadian public and so on?

[Translation]

    Mr. Claude Drouin: All indications to date are that the process is working very well. As a matter of fact, I would call your attention to the fact that the government, in the past, both at the provincial and federal levels, has taken chances on businesses that are now successful and have gone from 100 to 200 to 5,000 or 10,000 jobs. There was some risk in those cases, and we took it; that is what we are here for. But that produces results, and to date there is nothing to suggest that this business won't succeed and be efficient, it's just that it will take a few years for it to post a profit. I am confident that they will succeed, given the expertise they had in that field.

[English]

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

    Monsieur Normand.

[Translation]

    Hon. Gilbert Normand (Bellechasse—Etchemins—Montmagny—L'Islet, Lib.): Minister, first of all, I'm glad to see that you are asking for money for Canada Economic Development, which has a proven track record in regional development. There is one point that you stressed and that pleases me greatly, and that is that from now on, the regions will be given priority. You suggested that from now on, the regions would set their own priorities. Does that mean that the cookie-cutter approach will disappear or that there will be more program flexibility? That is my first question.

    Secondly, how do you intend to harmonize that with the new policy of the Quebec government, which said last week that instead of funding large projects, it is going to focus much more on small business?

»  (1700)  

    Mr. Claude Drouin: Thank you, honourable colleague.

    First of all, I would like to say that what I was referring to in my opening remarks had to do with regional intervention strategies, which, from their inception, have been based on regional needs. We consult the regions, the socio-economic leaders of each region, and determine what should be given priority in order to support the economic development of each region. So the RIS in your region is different from those in the Gaspé, Saguenay or Abitibi, because the needs are not the same, the concerns are not the same. We make sure that our work is based on the interests of the socio-economic leaders.

    However, there is no perfect program and no magic recipe. A region could decide to come up with a project that unfortunately doesn't fit in with what the community has decided. But we are there, I think, with our RIS, to work with the regions and be flexible.

    As to your second question, on small business, that is our niche, and that will help us to boost our activity, but in Quebec, there was also a lot of emphasis on big business and large projects, where we were less involved. I think it should be very positive.

    Mr. Gilbert Normand: You mentioned the sectors that could be affected: textiles, softwood lumber and fisheries, in particular.

    With respect to the textile industry, the policy that was supposed to apply only to Africa but that has been broadened to apply elsewhere is clearly going to cause us problems; we are already beginning to feel the effects here at home. As for softwood lumber, I don't think anything more needs to be said; everyone is well aware.

    I am going to talk about the fisheries, which don't affect my riding, so that I won't be accused of partisanship.

    From 1997 to 1999, I was Secretary of State for Fisheries. What was going to happen was foreseeable. Unfortunately, the Department of Fisheries and Oceans has always been much more policy-based than development-based. When I arrived at the department in 1997, there were six people working on aquaculture development. I managed to have an aquaculture commissioner appointed. I think that Canada Economic Development would be well advised to ensure, particularly with respect to fisheries, because the population in resource regions... You are going to have a lot of them to deal with, especially with the North Shore and the Gaspé, because even if it is not because of recent decisions, there are those decisions that were made in the past. Those people live in those regions because they used to be able to fish there. No alternatives have even been put forward.

    I can tell you, for example, having visited a country like Portugal, which was once the largest producer of sea salt, that production fell overnight along with the fisheries. The government was smart enough to convert all of the salt marshes into fish farms and to use former fishermen as fish farmers. Meanwhile, we were buying back fishing licences and burning boats so that fishermen would not get too sentimental. They, at least, were thinking of doing something else.

    So I am wondering how you are going to manage to harmonize with a department like Fisheries and Oceans, which in my view is much more of a policy department than a development department. I am very concerned about aquaculture. It may be where agriculture was 100 years ago, but if we want it to develop, we are going to have to give it a hand. In regions like those, for example—just to avoid any accusation of going to bat for my own part of the province—I wonder how you are going to work in harmony with the departments in question to enable those people not only to rebuild their lives, but also to mend their social fabric.

    Mr. Claude Drouin: Thank you very much, Gilbert.

    First of all, on April 24, 2003, when the closure was announced, short-term measures were announced at the same time. Fourteen million dollars was made available for short-term measures for the Gaspé and the Lower North Shore region. We simultaneously worked on consultation on long-term measures. We will be coming back to Cabinet in the fall with a proposal for diversification, as you mentioned.

    If there are no more fish, even keeping the fishery open will not solve the problem. So we have to work on diversifying. I can tell you that the consultation had begun even before the short-term measures were announced. There are several projects currently in place that will soon be announced and that will demonstrate the extent to which we were ready to respond quickly with those measures. In addition, we are going to consult—we have already started—on long-term measures and working toward diversification, because if there are no fish left, we can't wait for them to come back. If they don't come back, people could spend years waiting on the dock. We are trying to come up with alternatives for those people, who do want to work. We are going to do that with them, in cooperation with the Government of Quebec, the workers and the municipalities. Together, we will meet this challenge and maintain the dignity of people who want to work.

»  (1705)  

[English]

    The Chair: Thank you very much.

    Ms. Girard-Bujold.

[Translation]

    Ms. Jocelyne Girard-Bujold (Jonquière, BQ): Thank you, Mr. Chairman.

    Good afternoon, minister.

    I am very glad that you are here, because I have a lot of questions for you.

[English]

    The Chair: I ask you to make your questions short and right to the point, because you're going to run out of time. Thank you very much.

[Translation]

    Ms. Jocelyne Girard-Bujold: Mr. Chairman, I have six minutes, and I intend to use them.

    Your agency's primary mandate is to promote the economic development of the regions of Quebec. When we refer to regions, I think that we should include Saguenay—Lac-Saint-Jean, Abitibi, and the Gaspé.

    That being so, how is it that your agency spent $64 million in contributions, in 2001-2002, in the riding of Westmount—Ville-Marie and $38 million in the riding of Louis-Hébert, when the stated purpose is to promote the economic development of the regions? That means that one-third of your 2001-2002 budget was spent in these two ridings alone. So I would like to know how you justify that.

    Mr. Claude Drouin: It's quite simple...

    Ms. Jocelyne Girard-Bujold: Come on! Everyone knows that there are lots of other programs for the Montreal area.

    Mr. Claude Drouin: We do a lot of work with the universities, among others, and there are many organizations in the province that are established in that riding, but that operate across Quebec. So the money is sent there because that is where they are located. But the money does not just stop there. Using your logic, explain to me why $25 million was spent on the Aluminum Technology Centre in Saguenay—Lac-Saint-Jean. Montreal is a region too.

    Ms. Jocelyne Girard-Bujold: As far as I'm concerned, there are 17 economic regions in Quebec.

    Mr. Claude Drouin: Including Montreal.

    Ms. Jocelyne Girard-Bujold: So why did only 2 of the 17 regions get one-third of your budget? There were only scraps left for the others.

    Mr. Claude Drouin: The regions received about 40 per cent of the budget and represent 12 per cent of the population, Ms. Girard-Bujold. If you are telling me that that is not equitable, I have a problem with that.

    Ms. Jocelyne Girard-Bujold: On page 3 of your brief, you say: "The first involves enterprise development, the second, improving the economic environment of the regions..." You know that our regions are currently suffering an exodus, and having to change their niche. For example, in my region, people have always depended on Alcan and Abitibi-Consolidated. We know that these regions no longer create employment.

    We want to get involved in secondary and tertiary processing. With homegrown niches, we also want to do the opposite: bring people back into the region. To do so, we need a lot more than our current means.

    Minister, you know that Montreal and Quebec City have other programs to help them to provide everything that the regions don't have, because the regions are very, very targeted economies, given that they are resource regions. We are a resource for the rest of Quebec. Everything that comes from the regions is processed elsewhere.

    That is what we wanted to do with the Government of Quebec, and we are wondering whether it will continue. That is why when you say that your goal is a change of vision and focused help based on what the region has decided... The Regional Economic Development Council and everyone associated with it had said that that was the priority of the regions. I see that there is a lot of encouraging talk, but not a lot of money for an added boost.

    You also talked about tourism. This has to do with tourism too. When we invite tourists to our regions, if there is nothing left to see... We have a zoo, we may have an old pulp mill that has been shut down, but you also have to have some economic activity in order to have tourism.

    So I find it disturbing listening to your remarks, when I know that the opposite is occurring in our regions. There isn't much money to enable investors... It is always investors who are going to invest in the regions.

»  (1710)  

    Mr. Claude Drouin: Those are the remarks I make or that you would have liked me to make. What I am saying is that we are going to work with the regions.

    The best example is that when I mentioned $25 million for the Aluminum Technology Centre, it's not $25 million, it's $57 million that the Government of Canada has contributed. It's 80 researchers who are going to work on aluminum, because we are one of the biggest aluminum producers in the world, but unfortunately, we import finished products. We have decided to take action in your region. We have added $25 million to the $32 million from the NRC, which makes $57 million. The building is not yet complete and already, as we speak, there are spinoffs, and Alcan is going to spend $15 million a year on research that will add to that.

    Secondly, Alumiform—you know about this; it's in your riding—is an Ontario company that is using a Quebec company instead of importing from the United States, and that will create some 75 jobs. Our contribution was worth $2.9 million. These are concrete examples.

    You mentioned tourism. We chipped in over $10 million for the Saint-Félicien Zoo.

    These are concrete examples that show that Canada Economic Development has been in your region. This is good news; I would have thought that you would welcome that.

    Ms. Jocelyne Girard-Bujold: I've always said that it's a fair return on our taxes and that it's not much. By the way, it's just...

    Mr. Claude Drouin: It is true that you don't pay much in federal taxes; you are right.

    Ms. Jocelyne Girard-Bujold: I also note that according to your budget forecast for 2003-2004, your budget has been reduced by $58 million this year. Fifty-eight million dollars is a lot. The RIS and IDEA-SME programs have had their budget cut back dramatically. Those programs are there to help the regions. So what do you have to say about that? How is it that you allowed this to happen?

    Mr. Claude Drouin: When you look at this document, it's like a snapshot of a particular moment in time. Funding in the order of $35 million has been carried forward from previous years. There was $12 million for increased transfers to various departments, there was $9.4 million worth of repayable contributions and there was the end of the special fund for coastal Quebec and the Saint-Jean Military College, in the amount of $5.6 million.

    What I can say is that today, as we speak, we have the equivalent of what we had last year to ensure that our actions are concrete in terms of economic development in every region.

    Ms. Jocelyne Girard-Bujold: On that point...

[English]

    The Chair: Thank you very much, Madame Bujold.

    We will now go to Mr. Marcil.

[Translation]

    Mr. Serge Marcil (Beauharnois—Salaberry, Lib.): Thank you very much, Mr. Chairman.

    Good afternoon, Minister.

    From what you say, Minister, I would like to have a quarter of half of the amount Canada has invested in the Saguenay—Lac-Saint-Jean region. I know there is a member of Parliament in that area who works very hard; his name is André Harvey. I think he is a model MP. Since he has been involved, I can tell you that the region has received a great deal, and good for it. We should not be robbing Peter to pay Paul. I think that all regions have their own unique features.

    Our region, Minister, is also one that was developed by large industries such as Alcan, PPG, Goodyear, and so on. This industrial sector has not evolved or modernized. It is always unfortunate when large companies of this type decide to close down their operations. This has a negative impact. The same is true of our colleague, André. When a company closes down and lays off over 1,000 people, in a very short period of time the region loses about $90 million a year in total payroll.

    I have already spoken to you about this, Minister, and I am still requesting emergency support for my region. We are still waiting for Canada Economic Development to analyze our community under the program it put forward.

    Canada Economic Development has worked very hard to develop a number of programs in an effort to work in partnership with the Quebec government so that we can work together to build stronger, more durable regions. I know it has always been difficult.

    How does the situation look to you, with a new Liberal government in Quebec? Do you think there might be greater openness now? Do you feel you will be able to work more as a team to promote regional development?

»  (1715)  

    Mr. Claude Drouin: The difference is incredible.

[English]

    The Chair: I think it's the minister's turn to speak.

[Translation]

    Mr. Claude Drouin: Since the election of the Liberal government in Quebec, I've had more discussions with the new ministers than I had with the previous government in the last six months. It is easier, because we have a similar approach. Without wanting to cast any blame, I do appreciate very much the work we are doing at the moment with the Liberal government of Quebec. We are working closely to try to find ways of supporting regional economic development.

    I met with the Quebec Minister of Economic and Regional Development, Michel Audet, last Thursday. I am in constant touch with Mr. Béchard as well, as is my staff. We had a good discussion and I hope and trust that we will be able to continue to work together in this way.

    Mr. Serge Marcil: Has there been any request from the Quebec government to extend or develop a new infrastructure program? Has the Quebec government made any proposals along these lines?

    Mr. Claude Drouin: We were supposed to have a discussion with Mr. Fournier on Monday. I do not know whether it will take place. We know that in the February budget, we committed $3 billion for infrastructure, $2 billion of which was strategic infrastructure and $1 billion of which was to extend the existing program. There will be discussions on that, but I sincerely hope that we will be able to work with the Quebec government to continue to support our municipalities and regions, whose needs are immense.

    There have been requests for $5.8 billion, Ms. Girard-Bujold. I have the figures and applications at the office. The figure is $5.8 billion, not $4.5 billion, and we had $1.6 billion available.

    So there have been far more applications than money available, and the needs are urgent. Hence it is important to add some new money. We will be discussing this issue with Quebec in the very near future.

    Mr. Serge Marcil: Normally, in a federation where there are provincial partners, when the Government of Canada develops programs, it should sit down with these partners and see how its programs could complement provincial development programs.

    As regards Canada Economic Development's programming in Quebec, do you intend to review your programs so that you can sit down with the Quebec government to try to develop complementary programs.

    Earlier, Gilbert was talking about trying to focus our efforts more on small businesses in the regions. Since that is the approach the Quebec government intends to take, would it be possible to review our current programming and come up with something new that might complement the Quebec government's initiatives?

    Mr. Claude Drouin: We will certainly be having some discussions. Mr. Audet has asked to meet with me, and I too am eager to meet with him. That should happen very shortly. They are familiar with our programming. We know Mr. Audet's background; he has worked with Canada Economic Development's programs, so he is familiar with our programming. There is a process of restructuring under way. The Liberal government came to power at a time when the financial situation was very difficult, so it will have to make many adjustments to ensure it can keep within the budget. Consequently, we have to let them carry out this exercise, but at the same time, they know that we are ready to work with them and that we will be pleased to do so in order to provide people with better services. You can be sure of that.

[English]

    The Chair: Thank you, Monsieur Marcil.

    Monsieur Bachand.

[Translation]

    Mr. André Bachand (Richmond—Arthabaska, PC): Thank you, Mr. Chairman.

    Good afternoon, Minister. I would mention in passing that Gaspésia is a very good case. We hope we will be able to submit one to you soon for Magnola. I am sure we would have the support of the Canadian Alliance on that.

    I have a few quick questions for you, and, naturally, I will end with a question about the Asbestos region, if I may, Mr. Chairman. It is a region that is in the process of regaining control of its development.

    Have all the directorate positions been filled? Are there still some acting appointments there? I just want an update.

    Mr. Claude Drouin: As far as I know, all the positions have been filled.

    Mr. André Bachand: All the management positions have been filled. I know that at one point, the fact that the position had not been filled was creating some minor problems in certain regions.

»  (1720)  

    Mr. Claude Drouin: That was particularly true in the Eastern townships, but the situation has been corrected for several months.

    Mr. André Bachand: In response to an earlier question asked by my colleague regarding the intervention program, you said that if we subtract all the programs and expenditures that have been transferred for 2003-2004, Canada Economic Development will have the same amount available for these intervention strategies. Has the funding for Canada Economic Development's intervention program gone up or down or stayed the same, compared to 2001-2002?

    Mr. Claude Drouin: I do not have the exact figures here, but roughly speaking, the funding is about the same.

    Mr. André Bachand: So there has not really been an increase.

    Mr. Claude Drouin: But there has not been a decrease either. That is good news.

    Mr. André Bachand: I know, but what is not shown... It looks like you need a little financial viagra in your program.

    Mr. Claude Drouin: That is an important point.

    Mr. André Bachand: I am an ardent defender of Canada Economic Development. We see figures such as $500 million and $400 million, but the fact is that, unfortunately, there has been no increase for direct intervention strategies. That means that the implementation time is longer for these initiatives, because your funding—and this is a comment—is stable, despite the fact that there is growing economic uncertainty in the regions of Quebec. I would have hoped to see an increase in your budget. That is the comment I wanted to make.

    Mr. Claude Drouin: That is a good comment, and I can assure you that I share your view that our budget should increase. However, our budget is increasing. We should never forget that we are providing services under various programs, such as the ones on softwood lumber, textiles and fish. All that is separate funding. It is not calculated within our program; it is extra money. So our budget is increasing. The expertise that Canada Economic Development has created means that we can deliver the services of other departments. So some moneys have been transferred to us and I am sure that we will be getting some good news.

    The Canada Jobs Fund has been transferred to our department, and if the economy improves... We remember that when we came to power in 1993, the unemployment rate was 11.4 per cent. It is now 7.5 per cent. Some areas may require less help, while others require just as much, if not more. But our budgets are increasing, and we are working very hard and we hope to increase them even more.

    Mr. André Bachand: Your budgets are increasing, but they are ad hoc budgets. The budget for intervention strategies has increased very little or not at all. That is the problem.

    As we know, and I have already spoken about this, the Industrial Development Fund is legally distinct from the government. How do you feel about the IDF? There have been a number of very good examples of types of investment that could be made. This program worked very well. It was similar to the CFDC or the Business Development Centres. This is a program that also works very well. What is your objective as regards the IDF at this point? Are you going to abandon it for good, or might the government become a partner of the IDF once again? I am referring to the Industrial Development Fund, the Laprade fund. Representatives from this group have met with you in the past and met with your predecessor as well. They are still in place, but there is no longer any legal connection with the federal government. This was a mechanism whereby several million dollars was invested in programs that worked very well. I know that some representations have been made to the department, but I would like to know what your thoughts are on the Industrial Development Fund.

    Mr. Claude Drouin: I haven't completely ruled out the Industrial Development Fund, but it is true that there have been some representations. We could look at this again, but so far, we are partners, together with the Business Development Centres, the CFTDs and the Community Economic Development Corporations. These are preferred mechanisms for delivering funds to assist business. We will review this, and we will see whether there is a need.

    Mr. André Bachand: I apologize for rushing you, but I have two other questions I would like to ask.

    How much funding is there in the Canadian Apparel and Textile Industries Program for Quebec?

    Mr. Claude Drouin: There is $8 million.

»  (1725)  

    Mr. André Bachand: Just for exports? Can this amount be used to help textile firms in the regions that sell to Montreal?

    Mr. Claude Drouin: Yes, the program covers areas such as technological improvement, innovation, and electronic sales.

    Mr. André Bachand: As regards the Asbestos region ...

    Mr. Claude Drouin: There have been a number of representations made to us on this issue from the beginning. We reacted immediately in cooperation with the CFDC, which is our partner or regional branch in the Eastern Townships. I met with the mayor myself. We had discussions with these individuals and we consulted the businesses involved. We worked very hard to try to find a way of diversifying. We have been involved since the beginning, and we will continue to be involved, but it does take time.

    Unfortunately, bad news is always announced at the last minute, and we have to act fast. If we had the bad news six months ahead of time, we could prepare and react in such a way that there would be no negative impact.

    As we speak, Mr. Charest has made some commitments to ensure that the Quebec government will be involved. So we will be working with provincial government officials. We have put forward some money to get a diagnosis of the problem facing the region and to see how to go about finding the best solutions to act quickly and provide real jobs for the region. So we will continue to pursue these efforts.

    Mr. André Bachand: Thank you.

[English]

    The Chair: Thank you very much.

    Mr. Bagnell.

    Mr. Larry Bagnell: I have just two quick questions. Obviously you think the agency is good at creating jobs to help the economy in remote and northern regions. My riding, north of 60, is the only part of Canada that doesn't have regional development funding. Because of the success you've seen, I hope you will take that message to cabinet.

[Translation]

    Mr. Claude Drouin: I will be pleased to pass on that message. We have an SOS meeting tomorrow; I will speak about the issue directly then and later as well.

[English]

    Mr. Larry Bagnell: Merci beaucoup.

    My second short question relates to some of those benefits. I noticed in your report you talked about the 1,390 new contributions, leveraging $1.7 billion in investment, which is great. Do you have any other measures of the benefits to Quebeckers, jobs, taxes, or revenue generated, etc., for the project?

[Translation]

    Mr. Claude Drouin: To reply to your question, in 2001-2002, the Agency helped maintain 7,900 jobs. These are the jobs reported by clients that dealt with the Agency that year. These figures were taken from the annual project follow-up survey. However, we must always remember that sometimes we help a business create five or ten new jobs at one point, but that often this one-time assistance means that 10, 20, 30 or 40 new jobs are developed in the future. We take the reading on the basis of the project as submitted, and we say that we are calculating the number of jobs created. However, often there are much greater positive spin-offs in the medium and long term, but it is difficult for us to quantify them, because we cannot keep the books open on all the projects for years and years. I'm sure you understand that the effects are extremely positive, and that we must continue our efforts along these lines.

[English]

    The Chair: Thank you, Mr. Bagnell.

    Ms. Gallant, you may have a short question and then we're going to switch over to Mr. Rajotte.

    Mrs. Cheryl Gallant: Okay.

    The Champlain waterway project will greatly benefit both provincial sides of the Ottawa Valley, from Lake Timiskaming in the north, down the Ottawa River to the Pontiac on the one side, and Renfrew County on the other, all the way through to the city of Ottawa. So the waterway project now is at a point where it will collapse without an infusion of funding.

    While I understand that FedNor is restricted to the north in Ontario, I'd like to know how you, as the Minister of Economic Development for Quebec, will work with the FedNor minister to ensure that this funding happens and we have this waterway project go forth?

»  (1730)  

[Translation]

    Mr. Claude Drouin: We will definitely work with FedNor, as we have in the past.

    My deputy minister mentioned to me that three or four US jurisdictions are involved in this matter, so it is very complicated and length. However, we are working on the file, and we have an excellent cooperative arrangement with FedNor. We will do everything we can, as far as possible, to support this project, while respecting our programming.

[English]

    Mrs. Cheryl Gallant: Okay. And I would just like to conclude by stating that we have full cooperation both at the municipal level and at the provincial level. We are just waiting for some cooperation at the federal level. That's where the obstacle is right now.

    The Chair: Mr. Rajotte.

    Mr. James Rajotte: Thank you, Mr. Chairman.

    And welcome to you, Minister. It's always good to see you here. Come back as often as you like.

    I do want to ask about two main issues. The first issue is from a report done by the Canadian Taxpayers Federation. They did quite an extensive, comprehensive report in which they analysed Canada economic development from the funding years of 1989-90 until 2000-01.

    They found that during this period $1.78 billion was disbursed through about 9,000 separate allocations. But they found out that approximately $1.4 billion, or 81% of all funds disbursed, were in the form of non-repayable contributions and subsidies. Now, obviously, as watchdogs for taxpayers, parliamentarians have a great concern about that high a percentage for non-repayable contributions and subsidies.

    I'd just like to ask whether these figures are correct for this time period, and if so, is this an acceptable level to you as the minister for this agency?

[Translation]

    Mr. Claude Drouin: Please correct me if I have misunderstood your question. First of all, would they prefer to have business loans rather than the direct assistance we provide? The contributions we give to SMEs are repayable. So when we make a loan, they do not have to start repaying it for the first two years, and then they have five years within which to repay us without interest. They repay the money to us, and we lend it to another company.

[English]

    Mr. James Rajotte: To clarify, then, they say 81% of the funds disbursed were in the form of non-repayable contributions. You're stating today, then, that 100% of the funds you disburse are repayable. Is that correct?

[Translation]

    Mr. Claude Drouin: No, not at all. The contributions are repayable, except in the case of not-for-profit organizations. In that case, the contributions are non-repayable.

    For example, we work with the University of Quebec in Chicoutimi, where we have established an Aluminum Technology Centre. This is a non-repayable contribution, but we did establish a research centre. In the case of businesses, the contributions are repayable. So what you say is not in keeping with what we do.

[English]

    Mr. James Rajotte: What percentage, then, would be repayable and what percentage would be non-repayable? If you could get me those figures, I'd certainly appreciate it.

[Translation]

    Mr. Claude Drouin: I would be pleased to do so.

    Fifty-three per cent of the loans we make under the IDEA-SME program are repayable, but that does not mean that the other 47 per cent are not repaid. Not-for-profit organizations or corporations are not required to repay the contribution. Of the combined total of our assistance, approximately 35 per cent of the contributions...

»  (1735)  

[English]

    The Chair: Mr. Minister, I want to make sure this is properly on the record. Could I ask Mr. Rajotte to ask his question again and then you can answer it? We're trying to get some real clarification for all of our development areas.

    Mr. Rajotte, would you please ask your question again?

    Mr. James Rajotte: The Canadian Taxpayers Federation asserted in a report that 81% of the funds dispersed were in the form of non-repayable contributions and subsidies. From say 1993, what percentage would be reimbursed or repayable loans and what percentage would be non-repayable loans, whether non-profit or whatever?

    If you don't have this information today, I'd certainly appreciate it later.

    I do have one more question, Mr. Chairman, if I may.

    The Chair: The question was, very clearly, of the contributions given out since 1993, how many went to businesses? Are those repayable loans for those businesses? And what happened with the others, the ones that didn't go to businesses?

    You can get back to us on that.

[Translation]

    Mr. Claude Drouin: Thank you, Mr. Chairman.

    We will send you that information. As I was saying, 53 per cent of the contributions to SMEs are repayable. I must tell you that since 1995, since program review, there are no longer any grants. We have repayable or non-repayable contributions, but there are no longer any direct grants. In order for a contribution to be non-repayable, it must go to a not-for-profit organization.

    We will send you the details on that, James.

[English]

    Mr. James Rajotte: Okay.

    The Chair: Just send the information to the clerk.

    Mr. Rajotte, what's your other question?

    Mr. James Rajotte: The second question also relates to the report of the Canadian Taxpayers Federation. They also found that one-third of this agency's loan portfolio had been written off in the past ten years.

    I just received a response to an order paper question I did in which I asked what the top 50 annual write-offs were for each regional development agency since 1993. Just looking down the information here, in 1993-94 it was over $6 million; in the next year, over $4 million; in the next year, over $20 million; in the next, over $35 million--over $10 million, $5 million, $10 million, $3 million, and $7 million--written off as loans. This is actual information provided by the Government of Canada.

    And yet when you look under “Company Name”--because I asked for the companies that did not repay their loans--it just has blanks and a note at the bottom that says “This information cannot be provided, on the basis that it could be prejudicial to the companies”.

    If I understand this correctly, a company gets a loan from the Government of Canada, from the taxpayers of Canada, does not repay it, and then it does not even have to have its name down in the public accounts explaining that it did not pay the loan back because this may somehow be prejudicial to its own interests.

    I just find it astounding that the taxpayers of Quebec, or any other province, would accept the fact that their money, their hard-earned taxpayer dollars, are going to companies, companies are not repaying these loans, and they don't even have to be recorded in the Public Accounts of Canada. I just find this astounding, and I'd like you to explain this situation to me.

[Translation]

    Mr. Claude Drouin: On the first part of your question, I would say that as soon as bankruptcy is declared, we can disclose the names. However, we definitely cannot do so before that. As long as there's life, there's hope, and if the company can manage to meet its commitments, we must give it an opportunity to do so. However, once the trustee has decided that the company has gone bankrupt, we can disclose the names, because it is true that we are talking about taxpayers' money.

    In 2002-2003, 91 loans were written off, for a total of $7 million. That is about 3 per cent of the budget, if I remember correctly. In 81 of the cases, the reason was insolvency, in nine there were no assets, and there was one friendly settlement. That amounts to a total of 91, or approximately $7.9 million.

[English]

    Mr. James Rajotte: Again, I would say that I don't think my question is being addressed at all.

    You have the Canada Economic Development for Quebec region write-offs from 1993-94, over $6 million. For 1996-97 over $35 million has been written off. Yet there are no companies listed here, because this information could be prejudicial to them. So there's no accountability, no transparency whatsoever to the taxpayers of Quebec, who are basically funding this regional development program.

    At the very least, regardless of how we feel about this agency, I think we as parliamentarians should say there should be accountability and transparency, so that if companies are receiving money from the government--and those loans are being written off and will not be repaid, even though they are under repayable contributions--there should be an accounting for who got this money and why they did not pay it back. That seems to me a fairly simple, fairly basic request.

»  (1740)  

[Translation]

    Mr. Claude Drouin: We will get you the list of all the companies that have declared bankruptcy. We will submit that to the committee. You will have a written list of all the companies that have gone bankrupt. Is that all right?

[English]

    Mr. James Rajotte: But it's not necessarily a bankrupt company. There could be other reasons why a company did not repay the loan. That's what we're finding out. If it's a company that's healthy and making a profit and is not repaying loans, then obviously there's a more serious question as to why a company is not repaying loans, if they are in fact making profits.

    The Chair: I must make an intrusion here.

    We need to understand, and, Mr. Minister, you have said it and a number of the other ministers have said it, that we don't give grants to business. We make loans and they're repayable. Then the question comes up about some of those loans not being repaid because a company goes bankrupt. That's one classification area. But then it seems there are some loans that are not repaid, even though the company didn't go bankrupt. For some reason, they're written off, or we're getting the interpretation that they're written off. So we would ask you to take a look at that and answer back to the clerk and we'll distribute it to the committee.

    I hope I've made myself clear to the deputy ministers who will be doing the work. Thank you.

[Translation]

    Mr. Claude Drouin: Thank you, Mr. Chairman.

    I will not repeat myself, because I gave you the information for 2002-2003. However, I would like to say, James, if a company makes a profit, it is required to repay the contribution. We have a legal section that will look after recovering the money; we have always proceeded in this way and we will continue to do so.

    However, we will send you all the information in writing.

[English]

    The Chair: Thank you very much, Mr. Minister. You know, we'll probably have some additional discussion within our committee because these questions have been asked of all the ministers.

    I want to thank you very much for being here today, and all your officials. We wish you the best. Thank you very much.

[Translation]

    Mr. Claude Drouin: Thank you very much.

[English]

    The Chair: One item to the committee. We're allotting some time on Thursday to go over some of the information and communication that the clerk and the researchers have prepared for next week's meetings. We'll take 30 minutes to go over those notes in advance. They're being translated right now and they'll be distributed either tomorrow or first thing on Thursday.

    Mrs. Cheryl Gallant: May I ask a quick housekeeping question?

    The clerk advised me that the reason we did not have this committee televised is that it did not fall on our normal day for a committee meeting. What I wished to ask is whether or not we can formally put forth that if we are having a minister appear, it take place on our normal day so we can have it televised?

    The Chair: The problem that has come up--and we're going to talk about this after this year's recess--is when changes are made. We have to stop the changes being made by ministers' offices. It's the problem of making things happen.

    The meeting is adjourned.