If I may, Mr. Chairman, I'll start with my remarks.
Thank you for this opportunity to appear before the Standing Committee on Industry, Science and Technology. As you noted, my name is Janet King and I am president of CanNor, which is the short term for our agency. Joining me is Anja Jeffery, acting vice-president, as you noted.
CanNor's mandate is to foster economic development in Canada's northern territories: Nunavut, Northwest Territories, and Yukon. Our areas of business include economic development and diversification through contribution programs, the Northern Projects Management Office, as well as policy and advocacy.
The agency currently has 87 employees, 28 of whom are located in headquarters in Iqaluit, and the remaining employees work in our offices in Whitehorse, Yellowknife, and here in a liaison office in Ottawa.
This year's main estimates allocated $26.2 million to CanNor. Through budget 2016 CanNor received an additional $25.9 million in renewed funding for three of the agency's main activities and programs. In addition, CanNor received $3.2 million to deliver investments that will support projects to renovate, expand, and improve existing community and cultural infrastructure in the north, a program that we are pleased to deliver in collaboration with our sister development agencies.
Mr. Chair, I would like to set the stage by highlighting the context in which CanNor operates, exemplified by the unique challenges and opportunities that face northerners, their communities, and their way of life.
The northern economy has significant potential, but it is challenged by the following factors: first, its vast and remote geography, which accounts for 40% of Canada's land mass; second, its sparse and dispersed population, with half of its 117,000 residents being indigenous; and finally, its infrastructure is lacking. Of a total of 72 communities, 45 do not have year-round road access.
The public sector and resource development sector remain the biggest economic drivers, representing over 50% of GDP for the territories. The north's natural resource endowment will continue to be the foundation for economic growth. Declining commodity prices in recent years, as well as reduced investments, have, however, had a negative impact on the mining industry, and the north certainly felt that in 2015.
Over the medium and long term, it is expected that resource development will pick up again as new mines come online. The opportunity to diversify and to continue building a broad-based economy will nevertheless remain important to reducing the impact of boom and bust cycles. Critical investments in public infrastructure, including roads, airports, hospital renovations, and community facilities, will help the territories create jobs and serve as important foundations on which to build the economy.
I would be remiss, Mr. Chairman, if I didn't mention the complex social issues in the north, such as mental health, housing shortages, food security, and low educational outcomes, which impact the abilities of northerners to successfully partake in the economy.
Economic prosperity is strongly linked to the resilience of northern indigenous peoples and their communities. CanNor's work is shaped by these circumstances and the agency invests directly in the growth of indigenous businesses to support local economies. I'm pleased to report that 92% of the indigenous businesses that CanNor supported in 2011-12 were still operating after three years.
Partnerships are key to our success. The agency successfully leverages its contribution funding by aligning with federal, territorial, and other economic development partners. CanNor will continue to adjust to the realities, issues, and challenges faced by communities and businesses in the north.
Mr. Chairman, CanNor's priorities for the coming years are aligned with those of the government. Our core strategic investments in the northern economic development program, funded at $20 million per year, have as their objective strengthening and diversifying the northern economy. This program supports a broad range of activities and sectors, from fisheries in Nunavut, to biomass fuel in the NWT, and tourism in Yukon.
Looking ahead, CanNor will also focus the program on supporting the development of innovative technologies that can grow and diversify the northern economy. Innovation in the north often involves accelerating the uptake of existing technologies, such as solar or wind energy, by refining them to work under northern conditions. Innovative technologies and processes also include developing clean technologies that lower the environmental footprint associated with northern resource development. A northern innovation research and development cluster is poised for growth with the creation of Polar Knowledge Canada and the completion of the Canadian High Arctic Research Station in Cambridge Bay, which joins such established organizations as Yukon College's Cold Climate Innovation Centre.
We are committed to improving partnerships on all levels. North of 60, CanNor delivers on the government's commitment to improve livelihoods and create jobs for indigenous people. Our northern aboriginal economic opportunities program, at $10.8 million per year, provides investments for indigenous entrepreneurs and supports initiatives that help indigenous communities benefit from economic development opportunities.
Complementary to the indigenous focus of this program, CanNor also administers the northern adult basic education program, extended one year in budget 2016 with $4 million. Delivered in partnership with the three northern colleges, this program has so far helped around 2,500 indigenous northerners get the training they need so they can participate more fully in the labour market.
CanNor is also responsible for the Northern Projects Management Office, renewed over the next four years with $10 million in budget 2016. This office was established in 2010 to improve the environmental review processes for proposed major resource and infrastructure projects in the north. The office has a mandate to improve timeliness, predictability, and transparency of northern regulatory processes to foster a more stable and attractive investment climate in the territories. The office exercises this mandate by coordinating federal efforts in the northern regulatory review processes; providing advice and issues management to partners such as territorial governments, industry, regulatory boards, indigenous groups, and communities; and by overseeing crown consultations within indigenous communities.
As I mentioned, the mining sector currently faces challenges due to global economic circumstances. Nevertheless, shovel-ready projects are in development in the north. The Northern Projects Management Office is currently working with over 50 companies and tracking over 30 major projects that are either preparing for regulatory processes or are already in the process. These projects represent more than $21 billion in capital investment and over 9,000 jobs.
Let me conclude by noting CanNor's role as a federal voice for the territorial north. By continuously building with partners an understanding of the north and its unique circumstances, we strive to help foster and support a prosperous and resilient north, both within and outside the federal government.
Mr. Chair, this is a brief overview of CanNor's operating environment and of the agency's programs and services.
I will be pleased to answer the committee's questions.
Thank you. Merci. Qujannamiik. Mahsi cho.
My name is Aime Dimatteo, and I'm the director general of FedNor. Like my colleagues' organizations, FedNor is a regional development organization that is responsible for economic development, job creation, and economic diversification for the constituency that we serve, which in my case is northern Ontario. We do so through the delivery of our programs and initiatives, but just as importantly, we do so also through partnership and collaboration with all of our other federal departments and with the Province of Ontario in a very large way.
FedNor has a very large service area. FedNor's northern Ontario represents 90% of the land mass of the province of Ontario, but we have 7% of the population scattered across this very large geography. While more than half of the population lives in five major centres, the remaining population of 150 municipalities and 110 of 126 first nations in Ontario residing in the north quickly falls into very small population bases. Over 80% of the municipalities have populations of 2,000 or less. Probably close to 90% of our first nation communities have fewer than 1,000 people on reserves in the 110 communities that we serve. Of those 110 first nation communities, 29 of them are remote first nation communities that are accessible only by air and by winter road. That aboriginal population represents approximately 12% of northern Ontario's population, some 100,000 people, and it's a growing population in northern Ontario.
FedNor's organization serves this large constituency through our six offices located across northern Ontario, so we are extremely hands-on with all of the stakeholders that we serve across northern Ontario.
In a nutshell, the challenges are varied but significant. Notwithstanding the results of the delivery of our programs and our efforts through FedNor's programs and its collaboration, there are still significant challenges that remain. Some of these are cyclical in nature, including the dependency on natural resources that are susceptible to global economic influences. We see these fluctuations now playing out in the mining industry, and certainly in the steel industry, and not as recently in the forestry industry, where there was a major downturn. Now we're seeing the cycle starting to pick up again.
A large number of our communities, as I said, are small. They're rural, they're remote, and they lack the capacity, both fiscal and human, to undertake a lot of the economic opportunities that every once in a while do come in front of them. It requires a major effort by not only FedNor but all the players in northern Ontario to build that capacity that will enable us to get to the outcomes that we are all striving for, which is economic development, economic diversification and, of course, job creation.
Northern Ontario is faced with limited infrastructure—again given the large geography that we cover—including limited availability of broadband. We still have many small communities across this vast region that are unserviced with the most basic broadband that we generally take for granted.
While we have a declining population, the good news on the aboriginal communities' front is that their populations continue to grow and are becoming a force to be reckoned with from an economic development perspective.
Lastly, I'll mention the high energy costs across northern Ontario. Our major industries—forestry, mining, and steel—are huge users of energy, and the energy costs are extremely prohibitive, in some cases meaning the difference between their making investments and availing themselves of growth opportunities, which are not possible with some reduction in high and growing energy costs.
Notwithstanding these challenges, we certainly view the glass as half full. We think there are great opportunities that come from these challenges. Those include investments in new technology and value-added products, and I'll be pleased to provide examples later on if the opportunity provides itself.
We are advancing innovation clusters. In some of my discussion in the introductory remarks, there was a comment made about the Sudbury centre of excellence in mining innovation, which is a world-class cluster when it comes to mining. Whether it be deep mining, supply and services, or product development, we lead by example for the world.
We have an expanding ICT sector that is taking advantage of working with SMEs, small and medium-sized enterprises, that are adopting technology and are becoming companies that we know and expect we will be able to work with and to grow in the future.
I referred earlier to the active and increasing aboriginal population, which is taking on a more proactive and participatory position in economic development than ever before. This presents a great opportunity to advance a lot of resource development opportunities in the far north, in particular, where many of our remote communities are located.
We also have growing opportunities in both tourism and agriculture. Where the Canadian dollar stands right now certainly provides an incentive for tourists to visit northern Ontario. Again, 90% of the land mass is a beautiful wilderness. It is attracting world-class attention. We are seeing visitors from a variety of countries around the world who come to visit and play in northern Ontario.
Agriculture is on the rise. We have affordable agricultural land in northern Ontario. On average, you can buy an acre of land for as low as $500, whereas in southern Ontario that same acre of land will start at somewhere around $5,000 and may go as high as $25,000.
There is a lot of available land, and we are seeing industry players wanting to take advantage of that. We've talked to the Canadian Cattlemen's Association of Canada and to cattlemen's associations in Ontario who are looking for these kinds of opportunities.
Also, given, if you will, climate change, we are seeing that our agricultural businesses are able to grow a different kind of product mix because they can grow it earlier and the season is lasting longer. That is also providing great opportunities for the agricultural businesses in northern Ontario to extend their reach and their capacities.
It would be remiss of me not to talk about the budget pressures that FedNor and my other colleagues are facing. FedNor operates four programs. Three are national in context, but our flagship program is called the northern Ontario development program. It focuses on three priorities: innovation; business growth and competitiveness; and community economic development. It's not by coincidence that these three priority areas align directly with the government's priorities and the mandate across the country to make the economy grow.
Our program has experienced a continued and steady increase in demand over the last five years, and we do not see the demand stopping any time soon. Unfortunately, the demand is exceeding the current level of funding available to FedNor; hence, the importance that FedNor puts not only on its own grants and contributions programs, but also on the collaboration and partnerships that we look for with other federal departments, other programs, and with the Province of Ontario and all of its ministries to ensure that we can maximize the right revenues brought to the right project at the right time, so that no good project goes unfunded.
We have many single-industry and resource-dependent communities, in forestry and mining in particular, and in the last downturn in the forestry industry, some 35 or 40 of these communities were extremely impacted. They lost their fundamental economic engines and had to recreate themselves. We are quite thankful that we're seeing a rebound in the industry. It is not as job-intensive as it was in the past, but nonetheless we are now seeing investments coming back into the forestry industry.
As a matter of fact, these threatened single-industry communities were referenced in our minister's mandate letter as communities that will require additional assistance to help them achieve a better strategic plan, outcomes, and diversification, so their economies can and will continue to prosper and will not always be dependent on the vagaries of a single industry.
In conclusion, FedNor will continue to act as the Government of Canada's lead economic development organization in northern Ontario. We believe that we are well positioned to deliver on our mandate, the government's priorities, and to work in unison with all of our federal partners to ensure that our indigenous communities and our small municipalities across northern Ontario are offered the opportunities and provided with the backing to spur on economic prosperity and diversification.
Thank you very much, Chair. I look forward to continuing the discussion.
Mr. Chair, members of the committee, it is a privilege to appear before you today representing the Federal Economic Development Agency for Southern Ontario.
FedDev Ontario was established in 2009 in response to the global economic downturn. The agency started with a five-year mandate and was renewed in 2013 with a second five-year mandate, ending on March 31, 2019. The agency is headquartered in Waterloo and has offices across the region, in Ottawa, Toronto, and Peterborough, employing approximately 230 full-time staff.
To better understand FedDev Ontario, let me first highlight the region we serve. Our catchment area spans from Cornwall in the east to Owen Sound in the west, and from Pembroke in the north to Windsor in the south.
Southern Ontario is a unique region and a key contributor to the Canadian economy. It is home to approximately a third of Canada's population, and accounts for more than a third of national employment, GDP, and exports. Southern Ontario is home to key clusters, including automotive, finance, ICT, and life sciences, many of which are being supported by incubators and accelerators. The region hosts almost 50% of all employees in high tech, financial services, and other knowledge-intensive industries. A large number of multinationals are also operating in the region.
Nearly half of all Canadian private sector research and development is performed in Ontario, and Ontario also has the highest rate of university educational attainment in the country, and the largest number of colleges and universities.
Nevertheless, the region has not been immune to the pressures of the changing global economy. Similar to other advanced economies, the region is undergoing a shift towards a growing service-oriented and knowledge-based economy. Many of the region's traditionally strong industries, such as the manufacturing and automotive sectors, are facing challenges. While economic conditions have improved in recent years, there are still some ongoing challenges. These include lagging productivity, a lack of access to risk capital, poor export performance, competition from emerging markets, and fluctuations in the Canadian dollar.
FedDev Ontario's programs and services are meant to leverage the region's strengths to address these challenges. Our core mandate is to strengthen southern Ontario's economic capacity for innovation, entrepreneurship, and cooperation, while also promoting the development of a strong and diversified southern Ontario economy.
FedDev Ontario supports the Government of Canada's priorities, such as driving clean economic growth, supporting firms' abilities to scale up, and creating good, well-paying jobs for the middle class, as announced in budget 2016.
FedDev Ontario has five key roles. We invest in targeted projects, along with other partners, to stimulate the economy. We deliver national programs in our region. We provide business-related services to firms and other stakeholders. We bring together key stakeholders to improve the economy, serving as a convenor. Finally, we act as a champion for the region.
To deliver on this mandate, we were provided with $920 million for core programming over five years. Through an initiative called investing in business innovation, the agency supports early-stage companies in areas such as access to capital, mentorship, and work with incubators. The agency also supports SMEs in areas such as scaling-up capacity, facilitating access to export markets, and adopting technology to increase productivity, through an initiative called investing in business growth and productivity.
It is a well-known fact that the manufacturing sector is an important part of southern Ontario's activity. There are more than 34,000 manufacturing establishments across Ontario, almost all of which are in southern Ontario.
Since its creation, FedDev Ontario has committed more than $571 million through approximately 2,200 manufacturing projects. The agency continues to support the manufacturing sector, primarily through investing in business growth and the productivity initiative referred to earlier, as well as through the advanced manufacturing fund. Through this fund, the agency supports companies investing in large-scale, incremental, and transformative advanced manufacturing activities, and adopting cutting-edge technologies, and undertaking projects that create spillover benefits for manufacturing clusters or global supply chains.
Further, given the research strength in the region, FedDev Ontario also supports commercialization partnerships. These partnerships allow one or more private sector companies to leverage a university or research institution's expertise, with the goal of developing globally competitive products and services, or innovative platforms that can demonstrate commercial value. This is done through an initiative called investing in commercialization partnerships.
Supporting our communities to thrive is an important role of FedDev Ontario as well. Through an initiative called investing in regional diversification, the agency supports communities to leverage their unique assets and take advantage of emerging opportunities to diversify, enhance competitiveness, and attract investment.
To serve the ongoing economic challenges of youth out-migration and the transition of traditional sectors in eastern Ontario, the agency has a program called the Eastern Ontario development program. This program promotes business development, community innovation, and strategic collaboration, and is delivered through the region's community futures development corporations.
Fed Dev Ontario, like other regional development agencies, plays an important role as a federal delivery agent for national programs, specifically the community futures program, the economic development initiative, and the Canada 150 community infrastructure program.
FedDev Ontario also delivers services that are common to other regional development agencies, through industrial and technological benefits activities and Canada Business Ontario, which is part of the Canada Business Network. Canada Business Ontario provides information on how to start, manage, and grow a business to people across Ontario through its online contact centre and outreach activities. It also provides services to the National Research Council's industrial research assistance program and the concierge service across Canada.
Our contribution to achieving positive economic outcomes is realized not only by co-investing in projects and delivering services, but also by acting as a convenor and champion for the region. Fed Dev Ontario convenes key regional players to seek a common vision and encourage the development of coordinated plans, while actively promoting the region. The agency can also provide regional intelligence, serving as the bridge to and from Ottawa.
Looking ahead to this fiscal year, and as outlined in the agency's main estimates, FedDev Ontario plans on spending more than $200 million on strategic projects approved through our funding programs. We will do this with less than $29 million in operating funds.
In closing, I want to thank you for the opportunity to appear before the committee today.
Mr. Chair, I referred in my introduction to the capacity that the region has and also the fact that it has the highest concentration of colleges and universities. There are 35 colleges and universities in southern Ontario as well as a number of research institutions.
Through the investing in commercialization partnerships, the objective and the goal is to try to leverage that capacity in order to support the innovation ecosystem and to support the development of partnerships with the private sector. Through that program we're trying to leverage those partnerships but also to ensure that they are focused on commercialization outcomes.
The idea is to have those public-private sector partnerships to make sure that some of the challenges and opportunities that the private sector is facing are identified and that the capacity of the universities or the colleges is leveraged in order to find solutions to their challenges.
I'll give two examples. In January the announced funding of $12 million for the Southern Ontario Water Consortium. It's a $12 million contribution for a consortium of 11 universities and one college, all of which have capacity in water-related technology, research, and development. The idea is to have that consortium of universities and colleges partner and complement their capacity; and in return they will partner with various small and medium-sized enterprises across the region in order to accelerate or prototype or bring to markets water-related technologies.
Each university or college that is part of the partnership has its own strength, which could be, for example, water treatment or water filtration. They're trying to complement one another as opposed to competing in order to leverage their capacity.
In return, this allows the small and medium-sized enterprises to partner with those universities, to partner with those researchers in order to bring to market their products or their services more quickly. In return they will, for example, partner with municipalities in the region in order to do some prototyping on testing of the technologies. If they are successful, they can use those outcomes to more easily export their products or their services globally.
The other example is the Southern Ontario Smart Computing Innovation Platform. Some of you may have heard of it, it's called SOSCIP. It's a consortium of 14 universities across the region again in partnership with IBM and also with a number of small and medium-sized enterprises. The idea is to leverage essentially the digital infrastructure or the digital technologies, big data, and high performance computing that IBM has to offer but also that the universities have access to in order to leverage big data analytics to accelerate commercialization of products and services again.
In that case, last year the agency provided $20 million to support the platform. They have four areas of specialization. Three of these are mining, advanced manufacturing, and cybersecurity. The idea, again, is to spur and to create those partnerships leveraging any comparative advantages to accelerate commercialization and to provide those companies with the first mover's advantage, because it's really important for them to bring those products and services to market as soon and as quickly as possible in order to beat the competition.
Thank you to all of our witnesses for being here today. It's good to get this geography lesson as we find out about southern Ontario and northern Ontario. I must say that coming from Alberta, when people used to tell me some of the places they say are in northern Ontario, to us that's Idaho.
Voices: Oh, oh!
Mr. Earl Dreeshen: Truly, to speak to those who are responsible for north of 60, I think you have such great responsibilities there. A number of years ago I had an opportunity to go with Aboriginal Affairs and Northern Development for a study there dealing with barriers to northern development. We saw some amazing things and some amazing people.
When you mention that 92% of the businesses there are successful, I can see why, because, as I would tell people, some of the folks who are there would make great CEOs no matter where they were. They certainly understand the land and the things that are necessary. You've done a great job helping bring all of that together. I'm extremely pleased to see that.
One other aspect of it that I want to ask about, which I don't see in the main estimates, is the Northern Projects Management Office. Where would one see that and find out what is happening there?
The other question on the main estimates, of course, has to do with advancing adult basic education in Canada's territories. We see part of it, but we really don't know where it's going as we look at table one on the actual expenditures.
To get to the northern projects, one of the things, Ms. King, you mentioned was how important it was. It was established in 2010. A key part of this was improving the environmental review process for proposed major resource development. This was an initiative of the previous government, to make sure that there was a strong and rigorous environmental review that could be respected. Again, as you indicated, it gave the advice, the issues' management, the transparency, and predictability so businesses could go in there and flourish.
I wonder if you could first of all tell me something about the Northern Projects Management Office and the significance of the great work it did on environmental issues. Where should I be looking in these sheets, meaning table one of the actual expenditures and appropriations through CanNor? Then, could you just quickly speak to the advancing of adult basic education in the territories.