Thank you very much, Mr. Chairman.
Good afternoon, everyone. My name is Jim Saunderson. I am Western Economic Diversification's assistant deputy minister for the Alberta region.
I'm accompanied today by James Meddings, our assistant deputy minister for policy and strategic direction, who is based here in Ottawa, and Ryan Dunford, the acting director general for policy, who, like me, is from Edmonton.
I would like to thank the committee for the invitation to speak to you today. As the first representative from my department to appear, I would like to provide you with a very brief overview of our department.
Western Economic Diversification—or “WD”, as we like to call it—was established in 1987 and has a mandate to contribute to the development and diversification of the economy in western Canada. We are headquartered in Edmonton and have a presence in each of the four western provinces. This allows us to build strong relationships on the ground with provincial governments, industry, not-for-profit and indigenous organizations, and academia.
The department has four priorities, and I'll come back to them later on: innovation, trade and investment, indigenous economic growth, and federal defence procurement. To address these priorities, we have three main programs.
First, we have the western innovation program, which provides repayable contributions to for-profit companies to help them commercialize new technologies. Second is the western diversification program, which provides non-repayable contributions to not-for-profit organizations, including post-secondary institutions, to invest in projects that support our priorities. Third is the western Canada business service network, which includes 100 non-profit organizations that provide services and loans to small businesses across the west. Also, of course, we deliver the western component of national programs when asked to, including the Canada 150 program to celebrate the sesquicentennial of Confederation next year.
But I am here today to talk about the Alberta economy.
After many years of strong economic growth, conditions in Alberta have changed dramatically. Between the 2008 recession and 2014, Alberta's economy grew by nearly 20%, more than double the national average.
Alberta's population has grown to 4.2 million—just behind B.C. in size—and, despite the recession, the provincial GDP is the third-largest in Canada, behind Quebec and Ontario. Of course, as we all know, the Alberta economy is dominated by the oil and gas sector. It makes up about 27% of our GDP.
However, energy prices have dropped from a high of $107 U.S. per barrel in June of 2014 into the mid-$40 range today. This has caused the Alberta economy to decline by approximately 3.7% in 2015, and it's expected to decline by another 2.7% in the current year, 2016.
This will be the first time the Alberta economy will have contracted two years in a row since 1982. Unemployment rates and employment insurance claims are on the rise, while capital investments are in decline. The unemployment rate in Alberta is currently at 8.4%, which is above the national average, and is roughly double the level that we were experiencing two years ago. Also, of course, capital investment in the oil and gas sector has declined by the substantial amount of $50 billion annually between 2014 and 2016.
Of course, the results in 2016 have been exacerbated by the wildfires in Fort McMurray, which caused significant damage to the city and resulted in a reduction of approximately 40 million barrels of oil production when the plants were shut down for safety reasons. The impact of these wildfires on Alberta's GDP will result in a reduction of about 0.6% in 2016, but for 2017 the forecasts are suggesting that the GDP will be about 1% higher than it would otherwise be as the rebuilding efforts begin in earnest.
But all is not bleak. The fluctuation in global prices is nothing new for the energy industry, and most analysts expect oil prices to slowly recover over the next year.
In fact, oil sands production is expected to increase from 2.4 million barrels per day in 2015 to about 3.7 million barrels, as previously planned projects come online.
I think it is important to note that when we talk about the price of oil—I think it was $44 U.S. this morning—that is really the headline price for West Texas Intermediate, which is the benchmark price for lighter U.S. oil. Alberta producers typically receive about $14 U.S. a barrel less for their Western Canadian Select heavy oil. The interest that you hear from Albertans in improving pipeline capacity is not about simply increasing the volume of oil that is exported; it is about adding new customers so that we can introduce an element of competition. It is about maximizing the value of the province's resources, which even at today's reduced prices accounted for about 12% of total Canadian exports last year.
It is important to note that the industry is taking action to increase its competitiveness, as well as to lessen its environmental footprint. For example, Canada's Oil Sands Innovation Alliance, commonly called COSIA, brings together the major oil sands producers and others to develop new approaches and improve environmental performance. To date, COSIA reports that over 800 technologies have been shared among its members.
Of course, the Alberta economy is about a lot more than oil and gas. For example last year, 2015, Alberta was Canada's third largest agriculture and agrifood exporter, with exports totalling about $10 billion, and we were the fourth largest producer of forestry products, with revenues in the $3-billion range.
In terms of building value added to our resources, Alberta's industrial heartland near Edmonton is one of the world's leading chemical, petrochemical, upgrading, and refining clusters. It has attracted over $30 billion of investment to date from over 40 companies.
The ICT sector is a key component of the Alberta economy. It includes nearly 4,500 companies employing approximately 50,000 Albertans. Their expertise ranges from bioinformatics and global positioning systems to health management systems and wireless communications.
A great example is a company called ResolutionMD, which WD supported through our western innovation program. It enables doctors to review patient information, collaborate, and diagnose using a wide variety of electronic devices. This technology has been accredited internationally in the United States, China, Hong Kong, Europe, and other countries.
Also, Alberta is home to the flagship of nanotechnology research in Canada, the National Institute for Nanotechnology. It was established as a partnership between the National Research Council, the University of Alberta, the Government of Alberta, and the Government of Canada. I am proud to say that our department has played a role, both behind the scenes and with financing some additional equipment.
The environmental industry is an important industry in Alberta as well, with some 1,300 companies generating some $2.8 billion in annual revenues. These companies are active in the remediation of land, climate change solutions, water treatment, and waste management. A good example of our success at diversification as a province is TRIUM Environmental, which recently signed a $40-million agreement to pursue the soil and groundwater remediation market in China, with assistance from both the federal and provincial governments.
The life sciences and pharmaceutical sciences sector is also important in Alberta, comprising some 200 companies with an estimated revenue of $1.5 billion, building on the research strength of our universities.
There are two challenges I would like to speak about very briefly. First, Alberta's economy remains heavily dependent on the oil and gas sector, and diversification is therefore important. That is why my department supports innovative small businesses to commercialize their technologies in areas such as medical devices. The second challenge is the transition facing the oil and gas sector. To succeed, the Canadian industry must contain costs and develop new technologies to enhance environmental performance. Again, an example of my department's involvement is some assistance we have given to COSIA to bring the oil industry together with the very vibrant clean tech sector in British Columbia.
Alberta is fortunate to have a young and growing indigenous population. Approximately 6% of Albertans are indigenous people, which comprises about 15% of the total indigenous population in Canada. It is important to note that indigenous-owned and operated businesses have played a vital role in growing Alberta's economy, including the development of the oil sands. Alberta has a strong entrepreneurial spirit and the potential to grow by expanding the range of value-added products, increasing access to capital, and supporting entry into global markets. The new innovation agenda being spearheaded by the Minister of Innovation, Science and Economic Development will support these opportunities.
In conclusion, it is expected that Alberta's economy will begin to recover in 2017. Continued support and coordination from all orders of government will enable Alberta's businesses and communities to diversify and grow, and I think my department can play a key role in this respect.
Mr. Chair, I would like to thank you and the committee for this opportunity to speak to you this afternoon.
My colleagues and I will be very happy to take your questions.
Thank you, gentlemen, for being with us today. You are brave because you're kicking off a round of hearings with regional development agencies and you're first into the breach. I applaud you for that.
Speaking as a Quebec member of parliament, I would like to state for the record—and I'm sure this is true of each of my colleagues—that we all have an interest in putting people back to work, getting investment flowing, and seeing Alberta re-emerge from this period of low commodity prices and the natural disasters that have befallen that province.
I thank you in advance for your role in helping get that done.
As the chairman pointed out, part of the challenge that we have through these pre-budget consultations, and with regional development agencies, is finding ways in which we can help the Canadian economy grow, find innovation, and perhaps return to the original intent of regional development agencies. This means applying a bit of a local touch to the national conundrum of productivity enhancements, innovation, and diversifying the economy.
My first question would be a bit of a retrospective one. We went through a pretty sustained period of investment and relatively high commodity prices, notwithstanding the famous Alberta discount.
What are the kinds of things that should have been occurring in Alberta through that cycle of high commodity prices that would have altered the trajectory that we are seeing today?
No, my wife would never forgive me if I went anywhere near that; she's a Sudbury girl.
It's interesting to go back and talk about what should have been done by the provincial government, at the federal level, I suppose, and even at municipal levels.
I've been with the department not quite since its inception but for over 25 years now. What I can say is that I think we've been pretty much on the right track. Diversifying an economy like Alberta's is not easy. The weight of oil and gas, particularly when prices are high, is immense. As I said, it's 27% of the GDP now. It was 35% back in the 1980s. It attracts people with its high wages. It attracts capital with its high rates of return. It's kind of hard to compete against.
I think it may be a credit to the government—a series of governments, to be fair—that have stuck with our department for what will be over 30 years next August. It will be our 30th anniversary. They have continually kept up an effort to work towards diversification and to help companies commercialize their new technologies.
Our language has changed a little bit over time, but the emphasis hasn't. Over 50% of aboriginal or indigenous peoples live western Canada. That number has been true throughout this length of time and has been demographically important. We've tried to play a modest role in moving forward the opportunities for indigenous peoples to participate more fully in the economy throughout that period of time.
It's interesting to go back and look, but I think what's required, and partly what's taken, is a long-term perspective of consistently applying force on an object, even if it's fairly small.
I don't know if this is true or not, but I always think of the image of an asteroid coming towards earth. That's like the economy of western Canada, hundreds of billions of dollars. You try to adjust its trajectory with albeit relatively small amounts. If you apply them consistently over a period of time I think you can adjust that trajectory, at least a little bit. When I look back over my career I think we've have some success at doing that.
Thank you, gentlemen, and Mr. Saunderson, for your optimistic view of Alberta in 2017, my home province. I'm afraid I don't share your optimism, and I'll bet you a steak dinner next year this time when you're back.
I think 2017 is going to be a more difficult year than 2016 was. You didn't really touch on construction. There's still a fair bit of construction happening in Alberta. I think about the major oil sands plant of Suncor still under construction, done in 2017; the North West upgrader, 5,000 people, done in early 2018; seven buildings still going up in downtown Calgary. They will be done in 2017. The arena project in Edmonton is done, with the fact that there's still a building going up next to it, done in 2017.
I think it's going to be a horrible year for construction activity through 2017, 2018, and 2019. There's just nothing on the drawing board. I think it's going to be a tough year. Then we layer on top of that a carbon tax on January 1, as you mentioned, winding down coal, and then an increase of the minimum wage to $15. All of this is predicated on the fact that, even if a pipeline is approved this fall, which we all have high doubts that it will be, construction is not going to start and return any sort of economic return to the province in 2017.
I know a year ago they were predicting oil was going to be $60 by the end of 2016. Here we are fighting like hell to get back to $45. I think 2017 is going to be very, very difficult in Alberta, and the unemployment rate will hit close to double-digit numbers.
We'll see who buys the steak dinner next year, but I appreciate your optimism.
I want to just touch a little bit on the question that Mr. MacKinnon raised around diversification. I'd like your view on diversification, because I think there's a strongly held view out there that diversification should be built on some of your strengths. I think if you look at what's happened in Alberta over the past number of years, you have very strong diversification into agrifood, you have fairly strong diversification out of the energy industry into petrochemicals and some others, obviously a lot of things on which you could have expanded. At the end of the day, when you start to assess where diversification should and could go into the future, how much of that is based on working off your base industries? We're not going to bring auto manufacturing to Alberta, and we don't want to, but give me your view on working off the base industry that's there.
Since I neglected a few things in my opening remarks, I'll add, in addition to everything you've said, that I guess we'll tell a year from now. We can meet in the Market for a steak one way or another.
There will be some infrastructure programming kicking in, both on the federal side and the provincial side, which will help at least to some extent on some of these construction projects that are going to be completed over the next year or so. You're right.
As I tried to answer, I think you need a double-barrelled approach. I think we need to look at the strengths we have. We have oil and gas. We need to make it more effective, reduce the environmental footprint, and build off that into value added. We're really good at this, right? We're not the only people in the world with oil. We know how to get it out. We know how to do petroleum engineering. Let's export that expertise around the world.
It's not our only strength. Agriculture has been a strength since the founding of the province a hundred and some years ago. I spoke to that a bit. I think we should be looking at that and at adding value to our high-quality products as well before we export them.
There have been government investments, both federally and provincially, in a number of areas. I've touched on nanotechnology, health, and ICT. They're not going to replace 27% of GDP—I'm not naive—but they exist, they have the potential to build, and they are having some success in exporting around the world.
I think exporting is part of the equation, too, when we look at these other things. It's not the local Canadian market that is going to push us ahead. We need to really be upping our game, both as governments and in the private sector, to take more of our products to American and international markets if we're really going to succeed.
Thank you, Mr. Chair. Committee members, good afternoon. Thank you for the opportunity to be here today. I'm joined by Kalie Hatt Kilburn, director general of policy, advocacy and coordination.
First, I would like to say a few words about ACOA's work in the Atlantic provinces.
Headquartered in Moncton, ACOA has an office in each capital, 23 field offices throughout the region, and an office in Ottawa.
ACOA works with a variety of partners to help businesses grow, innovate, and export so they can create quality jobs in vibrant communities. We do this in three key ways: supporting business with a focus on innovation; supporting infrastructure to enable economic growth and to build on the strength of our communities; and representing the region's interests in policy development and coordinating with partners.
In undertaking these efforts, ACOA is supported by three core programs. The business development program helps businesses improve their competitiveness with an emphasis on strengthening innovation, improving productivity, and boosting international business development. The Atlantic innovation fund encourages partnerships among private sector firms, universities, colleges, and research institutes to develop and commercialize products and services. The innovative communities fund invests in strategic projects that build on the strengths of Atlantic Canada's communities. It provides assistance to support sustainable economic growth.
ACOA's programming is aligned with the government's commitments on innovation, high-growth firms, clean technology, and inclusive economic development. The agency is working to achieve commitments outlined in budget 2016.
ACOA also works to support the priorities established through the Atlantic growth strategy, which will see new projects announced as the provincial and federal governments move forward with initiatives around common priorities.
Now I’d like to provide you with some information specific to New Brunswick.
It is the only officially bilingual province in Canada, with just over a third of its 750,000 residents reporting French as their first official language. It has a highly dispersed population, with nearly half of its residents in rural communities while the other half live in and around Fredericton, Saint John and Moncton.
New Brunswick has an aging population and a shrinking labour force, with 89,000 fewer people under age 45, in fact, than it had in 2000. This has challenged businesses to access the skilled labour they need to grow.
It is within this dynamic and complex environment that ACOA operates every day.
The province's abundant resources have long supported traditional industries and value-added manufacturers in forestry, fisheries, and agriculture. Indeed, the province is home to global companies in these fields including McCain Foods and J.D. Irving Ltd.
As New Brunswick is one of the most export-intensive provinces in the country, ACOA is placing an important focus on supporting the global competitiveness of New Brunswick's exporters by helping them to innovate, improve productivity, and expand into new markets.
ACOA investments in research and development are helping to identify new products for global markets, including new and novel uses for our abundant natural resources.
For example, ACOA's support has enabled the Coastal Zones Research Institute to work with a fish-processing company to develop a value-added product from shrimp-processing waste—an oil that can be used as a feed supplement. And the company is working with its partners to take this new product to market.
In recent years, the province's knowledge sectors have become important growth contributors. New Brunswick has a strong track record for developing globally competitive technologies that have attracted the investment of international farms like IBM, Siemens, and Salesforce.com.
Radian6 is often noted as a New Brunswick success story. ACOA was instrumental in supporting the early growth of this social media monitoring company, which sold to Salesforce.com for a very significant sum, garnering international attention. The resulting wealth injected new venture capital into the start-up ecosystem while also retaining the company as an important employer in the region.
New Brunswick's startup ecosystem is emerging as an important strength for the province. Anchored by dynamic incubators, accelerators, and research institutions, including the University of New Brunswick, which was recently recognized by Startup Canada as the country's most entrepreneurial university. ACOA is an important supporter of this ecosystem and of the services it provides to promising new companies.
A recent success in the start-up ecosystem area is Eigen Innovations, which received ACOA's support to develop software offering real-time solutions for industrial manufacturers. Founded in 2012, the company has received international acclaim, placing third in the prestigious Cisco Innovation Grand Challenge for companies leading in the development of disruptive technologies.
As countries work to minimize their carbon footprint, clean energy is emerging as a significant growth opportunity. New Brunswick is attracting international attention for its leadership in the development of a smart energy grid. ACOA is a key partner in this effort. The agency's $2-million investment to establish a smart grid research lab at the University of New Brunswick has allowed the university to partner with Siemens Canada and NB Power to create a Smart Grid Innovation Network. Working with this network, companies have the potential to become part of an international smart grid supply chain, bringing local innovation to the world.
As we work throughout the region, ACOA hears that, aside from its investments, what matters as well is the interaction clients have with our staff, who work closely with them to find solutions to the challenges they face. This engagement is facilitated by the agency's place-based approach to economic development, which builds our in-depth understanding of local businesses and communities, their strengths, opportunities, and challenges. We then use this knowledge to adapt our support to best suit these realities.
First and foremost, ACOA has passionate, dedicated employees who live in the communities they serve and who are committed to helping the region realize its economic potential.
Thank you for your time, Mr. Chair. I would be pleased to take questions.
Thank you, Mr. Estabrooks, Mr. Caron.
I do have one question I want to bring here.
I know ACOA reasonably well. I will agree with you that on firms you've operated with their productivity is better, and their contributions to the economy is better. We have some real challenges. The reason I raise this is that I'm one of the Atlantic Canadians who would love to see my kids come home and work in Atlantic Canada. It's not happening.
When I look at the numbers with ACOA being in place for the last number of years, with the aging of the population, our demographics are going the wrong way. We're still having an out-migration of youth. We're not retaining them. Even with the immigrants who come in, we don't retain them. As soon as they're a Canadian citizen or a permanent resident they go elsewhere in the country. We have a low retention of immigrants and that's with all the good work you're doing.
The problem on productivity is that the lowest productivity in Canada is in Atlantic Canada, and it's even worse in P.E.I., I hate to admit. My question is along these lines, and I'm not questioning that ACOA is doing good work. I think you are, but if we do what we've always done, then we can expect the results to be the same.
What else do we have to do with ACOA in order to increase productivity, to retain immigrants in the region, and to get our kids back home so they are contributing to our economy and not somewhere else in the world? What's the problem? How do we solve it?
We're going to be making recommendations to the minister. I'm a strong supporter of ACOA, but I want to see it be able to do the job that needs to be done. I don't like the results at the moment.
We believe—and I can speak from the New Brunswick perspective here—that there are really three key areas where we see possible development, and in fact they require development in some cases. Primarily, with respect to value-added resource sectors like agriculture, forestry, and the fishery, as you pointed out, there is a lack of productivity. This isn't something that we can let up on, though, because a lot of the jobs associated with value-added resource sectors are in rural New Brunswick. There are challenges there in maintaining them, so we believe we need a continued focus on improving productivity and investing in innovation in these firms. We believe that, as well, we need to expose these firms to international markets and to open up doors in terms of new sales opportunities and help them develop new products and services for rural New Brunswick.
In addition to that, a second focus would be in the area of information technology. I alluded to this in my opening remarks. In New Brunswick, we have a number of success stories in growing ICT firms, a handful of which, if I add them up over the past few years, have actually sold for over a billion dollars. The terms of the deals are private, but we do have access to some of the reported information. The important thing to note is that this wealth that was created from the sale of these firms remains largely in the region. More importantly, the individuals who grew these firms, who now serve as mentors for the start-up ecosystem, are also there. They're investing their capital and they're investing their time.
ACOA sees that investing in the start-up ecosystem, making sure it's solid, is paying real dividends. A number of IT firms that we've seen come through the start-up ecosystem, as I mentioned in my opening remarks, are garnering international recognition for their work.
The third area I want to cover, and the last area, is around clean technologies. As jurisdictions, countries, and economies around the world are moving toward reduced emissions and targets, this is opening up a real opportunity for new business in that sector, new technologies. We believe that the Smart Grid Innovation Network and the smart grid development project are really at the forefront of that. It's a unique opportunity, and we have a world player in Siemens. We have NB Power fully cooperative. They have provided an end-to-end system that can be mined for data, and there are real opportunities to develop new technologies and new ways of power generation that could then be turned out and sold to utilities around the world.
Thank you very much, Mr. Chair.
Ladies and gentlemen, members of the Standing Committee on Finance, thank you for your invitation. I am particularly happy to be here today.
I have now been in the position for three months, and this is a great opportunity to start a dialogue with you. I will take this time to draw a brief portrait of the situation in Quebec, and talk about what CED is doing, as well as its results and priorities.
First, allow me to outline CED's mandate, which involves supporting the regions of Quebec by focusing on their potential and by giving special attention to those regions where economic growth is slow or opportunities for employment are scarce.
This role is at the heart of the mandate given to the , and the minister responsible for CED is first, to help businesses grow, innovate, and export so they can create good quality jobs; second, to make strategic investments that build on competitive regional advantages; and third, to support the transition of communities reliant on a single industrial sector.
Our challenge is to tailor our actions to the specific realities of each region. To do this, we rely on our 12 business offices located throughout Quebec to make sure the needs of businesses and the regions are well served. As you know, Quebec is an economy of small and medium-sized enterprises. We have over 257,000 of these, which together generate about 50% of the province's GDP; 80% of these SMEs have fewer than 10 employees.
There are three types of regional economy and dynamics in Quebec: resource-based, manufacturing, and urban. However, all of these regions, whatever the type, are facing certain key challenges: an aging labour force, a shortage of entrepreneurial carry-over; a decrease in productivity; a shift to digital, which is sometimes difficult; the development of new markets, which can also be hard work; and, of course, attracting skilled labour.
Among Quebec's advantages are a highly skilled workforce, but often not large enough; an abundance of natural resources; world-class research infrastructure, universities and technology clusters; and access to numerous markets.
Our main program at CED—the Quebec Economic Development Program, the QEDP—allows us to promote innovation in all regions, stimulate the creation of jobs and foster growth and prosperity. It is a flexible program that basically enables us to do three things.
First, we take care of business development and entrepreneurship support. CED is able to intervene by, among other things, providing assistance for start-up, growth and commercialization. We have a number of examples. The first one that comes to mind is the Kinova company that created JACO, the robotic arm that helps people with reduced mobility. In 2006, this company was incubated and, in 2009, CED helped with the commercialization of its product. In 2013, we also helped the company expand and increase its productivity, enabling it to repatriate its production from Asia to Quebec.
CED is therefore active in businesses and in regional export promotion organizations. It also plays a role through research centres, incubators and accelerators.
Second, QEDP allows us to support the economic development of the regions by facilitating the mobilization of local stakeholders and the promotion of regional assets, be they tourist attractions, their natural resources or localized specialization. I'm thinking of the Lower St. Lawrence with its maritime aspect.
Third, QEDP allows us to strengthen the community economy. This support, provided on an ad hoc or targeted basis, helps communities that are grappling with certain difficulties diversify their economy. That is our main program.
We also have the community futures program (CFP), which allows us to work with the community futures development corporations (CFDCs) and community business development centres (CBDCs) in rural areas where businesses are typically very small and where every job counts.
CED does not work alone. On the federal level we have many collaborators and they include the BDC, the NRC, for instance.
We also work very closely with our Quebec partners, the main economic government departments, lnvestissement Québec, and others such as the industrial clusters, municipalities, universities, and many more.
Now let me tell you a little about our results.
Over the past few years, CED has contributed to the renewal of Quebec's business pool thanks to its support of 115 start-up projects. Statistics Canada confirms that CED's support has helped increase the earnings, number of jobs and productivity of enterprises, and that the businesses we help are better off than the companies in the control group.
How have we done this? In 2015-2016, for instance, CED approved $218 million in grants and contributions. If we go back to April 1, 2012, when the QEDP was implemented, the amount was over $1 billion in authorized assistance and over 2,700 approved projects. Forty per cent of the funding we provided went to projects in communities with low growth potential representing around 20% of the population.
I will say a few words about the future. The Government of Canada has made the commitment to promote innovation, foster business growth, and build a clean economy.
To be sure we hit the nail squarely on the head, CED launched a dialogue in 2016 on the economic development of Quebec. This engagement strategy has allowed us to talk with over 1,000 participants, who were all eager to give their time to let us know what is important to them in terms of economic development. They said that we had to continue to support technology and equipment modernization, support incubators and accelerators, support businesses and their diversification as well as the economy of communities
The flexibility of our programs is crucial to business growth. Supporting the regions so that they can build on their competitive advantages is still a must.
The last budget also put key emphasis on the challenges of climate change and calls upon the agencies to double their efforts in this area.
CED is tackling this priority head-on by increasing to $25 million per year the assistance it provides to SMEs to help them develop and adopt clean technologies.
In terms of the growth of businesses, CED is implementing in Quebec the new accelerated growth service to support businesses whose potential is very high in terms of growing and innovating more quickly and being recognized worldwide in their field.
Of course, CED will continue to foster growth in the regions through its activities.
In a nutshell, that is what we are working to achieve.
That is the end of my presentation. I would be happy to take your questions.
Committee members, good evening. Thank you for the opportunity to speak about the economy of Prince Edward Island and ACOA's work to foster economic growth. As the chair pointed out, I'm joined today by Lynne Beairsto.
P.E.I., as you well know, is Canada's smallest province, with a population of about 146,000. Outside of Charlottetown, the province is largely rural. Its primary industries of farming, fishing, and tourism reflect this. These industries, key drivers of the island's economy, have adapted in recent years to global trends and emerging market opportunities. ACOA was a central player in the transformation and growth of several sectors that have emerged to play key roles in the province's economy.
While the economy is performing relatively well, there are challenges, including access to skilled labour, an aging population, and not optimal levels of innovation and productivity. ACOA's investments target these challenges and foster continued growth in the priority industry sectors.
ACOA supports economic growth in three key ways: supporting business, with a focus on innovation; supporting infrastructure to nurture economic growth and R and D and build on community strengths; and representing P.E.I.'s interests in policy development and coordination of federal programs.
The food sector remains the primary economic driver for our province, accounting for 18% of GDP, over half of provincial exports, and 10,000 jobs in food production and manufacturing in rural communities.
PEI Mussel King is a rural family-owned business that grows, harvests, and sells over five million pounds of fresh mussels annually, more than half of which are exported. ACOA has helped the company increase productivity, create value-added products, and expand its workforce to 70 employees.
ACOA also supports food-focused R and D. A key driver of growth for this sector in coming years will be the Food Island Partnership, an industry-led initiative that brings together food producers, culinary experts, and researchers to create products, expand exports, and promote P.E.I. as a culinary tourism destination.
With roots in the food sector, the bioscience industry accounts for 3% of the province's GDP, employs about 1,400 people, and has more than tripled in size in revenues in the past 10 years. Growth in the bioscience sector will be accelerated by the $14-million federal investment to establish Natural Products Canada at the University of Prince Edward Island, announced earlier this year by .
Aerospace and advanced manufacturing are relatively new to P.E.I.'s economy, but employ over 900 people and account for 18% of total exports and close to 5% of provincial GDP. The main aerospace cluster is at Slemon Park, where Vector Aerospace is an anchor tenant with annual sales of $140 million and 445 employees. With ACOA's support, Vector develops state-of-the-art aircraft engine repair techniques to enable them to take on new work.
P.E.I. is a world leader in renewable energy, and home to the Wind Energy Institute of Canada. Wind energy currently supplies about 30% of the province's electricity.
Aspin Kemp & Associates, which started in 2010 with eight employees and now has 125, is a good example of ACOA's support in clean tech. The company is a global leader in the development of power management and energy storage solutions for the marine and oil and gas industries.
The last sector I will touch on is another traditional industry that has transformed itself. Tourism employs 15,000 people and generates close to 7% of GDP for our province. ACOA provides direct support to operators and communities to capitalize on trends and opportunities. For example, the strategic tourism expansion program brings community stakeholders together to identify their tourism potential and build a collaborative approach to developing local assets.
The program has worked well across Atlantic Canada, and is quickly becoming a best practice. It was developed by the Tourism Atlantic group, based in ACOA P.E.I.'s office, with a mandate to support tourism across Atlantic Canada. Tourism Atlantic also administers the Atlantic Canada Tourism Partnership, a $20-million three-year partnership between governments and industry that promotes the region to key markets in the United States and overseas.
ACOA also works with communities in a number of ways to support economic growth.
We help communities build on their strengths. For example, the rural town of North Rustico developed its waterfront area to showcase its marine and Acadian heritage and to provide commercial and performance space for local artists. We also work with P.E.I.'s indigenous communities to advance their economic development priorities.
ACOA's main partner in economic development is the province. Trade Team PEI is an example of a federal-provincial partnership that supports the international business development activities from export readiness to trade missions. This is a successful partnership, with P.E.I. leading the country in export in the last two years. The agency and the provincial government also work together to address challenges such as an aging population and skilled labour shortages by encouraging international immigration; and we work with post-secondary institutions on international student recruitment and retention.
Looking ahead, ACOA remains focused on delivering results for the province. With the Atlantic growth strategy reinforcing our collaborative approach, we see even more opportunities to address economic challenges and drive future growth.
Mr. Chair, thank you for the opportunity. I'm glad to speak.