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View James Moore Profile
Thank you very much, Mr. Chairman.
Thank you, colleagues. Joining me are Paul Halucha, Lawrence Hanson, Philip Jennings, and John Knubley, who is my deputy minister, to supplement the answers I give or to answer questions with perhaps more acuity than I may be able to offer, and to provide this committee with the information that you need as you consider the main estimates.
Good afternoon, Mr. Chair. Thank you for the opportunity to give this presentation before the committee.
Today, Deputy Minister John Knubley joins me with his team.
I am pleased to be able to speak to you today about the important work that our government is doing, and how we have delivered on our top commitment in the last campaign, which is to create economic growth, stability, and jobs for Canadians.
Mr. Chair, Canada's economy is widely recognized as one of the world's strongest, with more Canadians working today than at any other time in our country's history. Since the depth of the recession our economy has created close to 1.2 million net new jobs, which is one of the best job creation records in all of the G-7.
The vast majority of these jobs are high-paying, full-time jobs in the private sector and in the industry. In addition, Canada's net debt to GDP ratio is now less than half that of the average for the G7 countries.
Finally, for 10 years, Canada has been first among the G7 countries in terms of economic growth. A result of that kind is no accident.
Our government has budgeted responsibility, we've kept spending under control, and we've arrived at a balanced budget without raising taxes. Better than that, we're the only country in the G-20 that has balanced its budget without raising taxes but while lowering taxes. We're the only country able to claim that scale of success.
What has the result been for Canada? The Conference Board of Canada recently said that the Canadian economy will add 187,000 new jobs in 2015. Some 50,000 jobs have been created in Quebec alone this year. The majority of them are full-time. Also, we have some concrete examples throughout the Canadian economy of firms that are growing and adding jobs. Companies from Google, to Lowe's, Siemens, F-Pacific Optical Communications, and Walmart are expanding in Canada.
There have been some challenging times of course in the manufacturing sector, which I'll get to, and some challenging times in the retail sector, for example with Target. But those jobs have more than been made up for by other firms that have expanded into those footprints and beyond with growth in the retail sector. We are strengthening Canadian businesses and creating more innovation and competition across Canada.
I want to talk now a bit about manufacturing.
The manufacturing sector employs 1.7 million Canadians, and most of those jobs are full-time. Sales in this sector have resumed and are up almost 20% since the recession. For our government, the expression “Made in Canada” continues to fuel pride, but we must give manufacturers the tools they need to develop their products and create the jobs of the future.
That's why in this year's budget, economic action plan 2015, we extended the accelerated capital cost allowance for machinery and equipment used in manufacturing and processing. As you know, this was a sunsetter that had to be renewed habitually. For those of you who have been members of the budget committee and even before here at the industry committee, representatives of the manufacturing sector have come before committee and asked for a long-term commitment from the Government of Canada with regard to the accelerated capital cost allowance. Our government has delivered a 10-year commitment in this budget, precisely what the manufacturing sector has asked for. In this 10-year commitment there is an incentive that will provide manufacturers with $1.1 billion in benefits in the first five years alone.
We've extended this same tax break to companies operating in the liquefied natural gas sector. LNG has the potential to diversify our energy market, creating jobs and helping grow our economy. Liquefied natural gas as an opportunity, should the industry stand up and grow, is the cleanest form of energy, which can create jobs all across Canada if we sell this product to the entire world. This tax break will help businesses grow in British Columbia and maintain Canada's reputation as a global economic leader and a leader in clean energy.
Budget 2015 has been praised as well for its targeted support of Canadian manufacturers. The Canadian Manufacturers & Exporters said that our budget has “a number of important tax and investment measures that will have a very positive impact” on manufacturers.
The Canadian Chamber of Commerce agreed when they said
The measures to support Canada’s manufacturing sector are timely. This sector is evolving rapidly and set to seize new opportunities. The budget will have a positive impact in a sector poised for new growth.
The auto sector is critical to our economy, and our government is committed to keeping Canada's automotive industry innovative and globally competitive. The industry represents 10% of our manufacturing GDP and 13% of our merchandise exports. It directly employs over 121,000 Canadians and another 390,000 indirectly through our supply chain.
Economic action plan 2015 announced the launch of the automotive supplier innovation program. This investment of $100 million in this year's budget will help Canadian automotive suppliers gain a competitive edge through new innovative products and processes.
The Canadian Vehicle Manufacturers' Association said that it “welcomes today's federal budget announcement of the Automotive Supplier Innovation Program. A program which addresses the critical gap in support for industry based product development”.
I point out these quotes, Mr. Chairman and colleagues, because it's incumbent upon the government to listen to those who are actually in the field and working in these sectors. They come before parliamentary committees, they come before me as Minister of Industry, and present us with ideas. Our departments do work, parliamentary committees do work, as we try to assess these ideas to see if they make sense. We listen to these organizations and we put forward policies, and they respond positively to the fact that we've listened to them and have in place a policy framework and investments that make sense to those who are actually on the front lines trying to create jobs and develop products for global markets.
This new program complements the automotive innovation fund, created in 2008 by the government, renewed in 2013, that received new votes last year. I am pleased to tell you that the investments are already generating very positive results. Canada's auto production has increased by 61%, and auto exports have increased by 74% since the 2009 recession.
Let me repeat that again. Since the recession in 2009, Canada's growth in automobile manufacturing has gone up 61%, and our exports have gone up 74%. In fact, over just the past two years, automotive companies have invested almost $4 billion in private sector dollars into the Canadian automotive sector in anticipation of future growth and future opportunities, particularly in Europe with the passing and coming into force of the Canada-European Union free trade agreement.
I'd also like to talk about two other important manufacturing sectors that are essential to the Canadian economy: the space and aerospace sectors. The Canadian aerospace and space industries account for more than 170,000 quality jobs, and add over $28 billion annually to Canada's GDP. Since the launch of Canada's space policy framework, our government has taken steps to deliver on the priorities of Canada's space industry to ensure that Canada remains a global leader in a fiercely competitive international market.
Just last year, I announced the creation of a space advisory board to provide policy advice independently to the Government of Canada about Canada's future role in space. The board includes experts such as Colonel Chris Hadfield, retired Canadian astronaut and commander of the International Space Station; John Keating, director of Sandvine and also former CEO of COM DEV; and Dr. Shoukri, president and vice-chancellor of York University, among others. These experts from across a broad field and all of Canada's geography will help lead our space policy conversations for the years ahead.
We had a meeting yesterday in Toronto, and I'm pleased with the commitment from the board as we work together to ensure a strong, commercially competitive space industry that will continue to inspire Canadians for years to come. In fact, in April I joined the Prime Minister in Vancouver when we announced that our government will be providing $243 million to be a full partner in the 30-metre telescope, an international project that will secure access for Canadian researchers to maintain our scientific leadership in astronomy. Most of this money is going to be spent in Canada, and is going to be creating high-quality jobs in the construction and assembly of key telescope components, of which Canadian firms are global experts.
Economic action plan 2015 further supports Canada's aerospace and space industries, including an important commitment to extend our participation in the International Space Station. It was widely hoped that Canada would renew our commitment to the International Space Station after the successful leadership of Commander Hadfield at the ISS. It was hoped that our government would make a commitment through 2021. In this year's budget, we've made a commitment that Canada will be a full partner through 2024.
Budget 2015 also includes an important partnership for Canada in the European Space Agency. Canada is the only non-European country to be a member and partner in the European Space Agency. This partnership has been renewed in this year's budget and will allow for great opportunities for Canada in space, including new investments in the advanced research and telecommunications system program, or the ARTES program, which is a $30-million new investment over the coming five years to extend Canada's participation in the satellite communications sector to create new opportunities for commercialization with regard to space.
Mr. Chair, our efforts in the auto sector, the space and aerospace industry are bearing fruit. However, we must also ensure the free movement of goods and services within the country. That is why our government has taken the lead to update the Agreement on Internal Trade.
Canada has made significant progress towards improving trade relations around the world. However, improvements to trade within Canada are not keeping pace. The willingness of provinces and territories to modernize the Agreement on Internal Trade represents a key opportunity to address internal barriers that weaken Canada's economic union.
In this year's budget our government committed to establishing a federal internal trade promotion office within Industry Canada. The office will act as a federal hub for research and analysis to increase our understanding of the impact of barriers to internal trade, building on the government's internal trade barriers index, which we announced in budget 2014.
Also, a year ago our government unveiled Digital Canada 150, its plan to ensure that all Canadians can take advantage of the opportunities of the modern digital world. At the core of this plan is connecting Canadians, a commitment that we made in last year's budget to expand and enhance access to high-speed broadband networks at speeds of at least five megabits per second in almost all of Canada. Our goal was to connect 280,000 additional Canadian households.
Today, 94% of Canadians have access to high-speed Internet. Our goal was to close the gap so it would go from 94% up to as close to 100% as possible. To achieve 98% would mean connecting 280,000 additional Canadian households. This month I approved the first round of projects and I'm pleased to say that we have connected and signed agreements to connect those 280,000 households, and have exceeded that goal by 76,000 households. So 356,000 households will be connected. Our goal was to do this within the budget of $305 million, and we have achieved this goal—by some 76,000 households above our target—and we've achieved it at 40% under budget. That means that we will connect 356,000 households—not 280,000—at a total cost of $186 million and not $305 million. This was only the first round of project approvals.
Once the Connecting Canadians program is complete, over 98% of Canadians will have access to high-speed Internet services providing sufficient speed to support activities such as e-commerce and high-resolution video broadcasting. They will also be able to benefit from online employment and learning opportunities, as well as many other advantages that Canadians enjoy in urban areas.
On the wireless sector front, our government has had one goal: to take deliberate concrete steps to create more choice, lower prices, and better wireless services for Canadian families.
A little over a year ago, nearly 90% of spectrum was held by Canada's largest wireless companies. As a result of our actions, including holding three spectrum auctions in the past year, today new wireless companies now hold over 25% of total wireless spectrum. We have tripled the amount of spectrum in total that is out there in the marketplace to meet the growing demands of Canadian consumers, and since 2006 we have gone from having less than 1% of all wireless spectrum in the hands of non-big three incumbents to now having 25% in the hands of competitors. Again, more competition means lower prices, better quality service, and better connectivity for all Canadians, so there is more competition and prices have dropped since 2007.
Another priority for the Digital Canada 150 was to modernize the Canadian intellectual property system to ensure it is better adapted to the digital era.
The balanced and exhaustive approach we have adopted has enabled us to achieve this objective. Last month, I announced that we were going to amend the Copyright Act, which would help us adhere to the Marrakesh Treaty of the World Intellectual Property Organization. This international agreement seeks to help the blind and persons with print disabilities to have easier access to published works. This used to be impossible for them.
Currently only about 7% of books are available in an accessible format such as audio books or Braille conversion for those who are blind or who have perceptual disabilities. Canadians should not be denied opportunities to read and to be educated simply because they are print disabled.
The Marrakesh treaty, under Budget 2015, is one major step to addressing this situation. Canada will be the first country to assent to the Treaty of Marrakesh. We expect the treaty to be implemented by the end of this year, which will provide Canadians who are print disabled and who have perceptual disabilities full access to the print materials of their choice.
In conclusion, Mr. Chair, as promised, our government delivered a balanced budget while cutting taxes for families, for seniors, and for small businesses and while making important investments in infrastructure and supporting job creation across the Canadian economy. By focusing on the priorities I've outlined here today, our government is delivering real results for Canadians.
Thank you very much for your time.
I am ready to answer your questions.
View James Moore Profile
Digital Canada 150 has 39 specific commitments for the Government of Canada to follow through on, and those 39 commitments are spread over five pillars. The first of the pillars is connecting Canadians, which includes rural broadband connectivity and the wireless sector, making sure that we're properly connected, but it also includes some other programs that have received new funding in this year's budget, such as the computers for schools program, which is an important program.
In the Government of Canada and government agencies and other levels of government, we use and replace computers at a rapid pace. But very often, computers that seem to be out of date in 2015, that were purchased in 2013, are perfectly adequate for non-profit organizations, for students who are doing basic research, for word processing for seniors, and so on. So with the computers for schools program, for example, we take computers from the Government of Canada and refurbish them with the help of students, usually high school students who are planning to go on to a technical college or to get into this field. We give them an opportunity to learn how to refurbish computers and get them stood up, and to make sure that they're virus-free and properly operational.
So we get a win out of that. Then we take those computers and we give them to aboriginal communities that don't have the resources, schools that need upgrades in computers or are expanding computer terminals. Furthermore, in this year's budget, we're extending that to a number of non-profit organizations such as the Neil Squire Society and others who need specific computers for people who have a particular kind of disability.
So connecting Canadians, that first of the five pillars, is about a lot things. It's about rural broadband and spectrum auction policy, connectivity, and competition on the wireless side, but it's also about some of that basic infrastructure for communities.
We also have the digital privacy act, which is part of it as well, because we want to make sure that the digital world is secure and protected online. We also support things like anti-cyberbullying initiatives through our policy.
The third pillar is the digital economy strategy that Minister Clement worked on when he was Minister of Industry, which tries to take full advantage of the economic opportunities.
The fourth of the five pillars is digital government. The government needs to walk its talk when it comes to accessibility, which is why we have the Open Data Institute and the open science commitment. We have an across-government effort to try to make everything more legible and easily accessible online for Canadians.
The fifth and final pillar to me is the most interesting and fun one. Once you've made connectivity a goal, once you've made it more secure, once you're taking advantage of the economic opportunities, and once the government is acting in a more digital way, then comes the fun stuff, the good stuff, which is telling stories to Canadians. This is a piece that came over from when I was Minister of Canadian Heritage. It's why we have Digital Canada 150. The year 2017 is our sesquicentennial, and a big part of the reason that Canada has been able to survive over 150 years of history through incredible challenges and divisions in the early days—east and west, and north and south, and French and English, and aboriginal and non-aboriginal, and Protestant and Catholic—is our respect for each other, our understanding of our shared history, our ability to tell stories, to be connected with one another.
So that fifth and final pillar is about a digital content effort to get all of our museums to have digital policy, to have more Canadian history minutes, to work with Historica Canada, to tell the stories of veterans, for example, online, and to share more of Canada's stories one to another.
Anyway, it's a long answer to a short question but it's a comprehensive policy.
View James Moore Profile
Well, I don't know intellectually how you connect one with the other. I don't know how allowing, for example, pension income splitting for seniors denies job creation. I don't understand the correlation between the two.
View James Moore Profile
I was answering your first question because talking about tax relief as it relates to the other is a false correlation.
View James Moore Profile
If I can finish my sentence, that would be great.
I was saying that there's no correlation between the two. It's good rhetoric, but it has no policy basis, frankly, number one.
Number two, with regard to jobs and employment in the long term, yes, we do have a challenging global dynamic. We do have a challenging dynamic within Canada.
The most responsible thing for the government to do in the macro, and I'm happy to get into specifics, is to do what I said in my presentation, which is to listen to those who actually are creating jobs on the ground, who are struggling to find growth, and who are facing stiff competition in the global environment, and listen to them and talk to them to find out what public policy implements we need to put in place as a government to make sure that we are growing and that we are having success.
That's why the OECD is projecting Canada to have one of the best job growth numbers in the G-7. That's why the World Economic Forum has said that Canada has one of the best job numbers in the world. It's why Bloomberg has said that Canada's the best place in the world to start a small business, which of course creates jobs.
When the small business community, which is 90% of all jobs in this country, come out and support our budget and say it's what's best for creating jobs in Canada, I think we've struck a right balance in our government from investment to tax relief to supporting job creation to expanding trade opportunities around the world.
View James Moore Profile
It's CANARIE, not cannery, and we have renewed our investments in them, because it's a key instrument or backbone for information sharing across universities, for example, and innovation.
It's a false comparison between us and those other economies for a number of reasons. One is that, frankly, in part because of our natural resource wealth, we are not isolated like some of the landlocked countries you described and we do have a natural resource wealth that is a huge benefit to the Canadian economy. That is number one.
Number two, we do invest into research and innovation, and as the Conference Board of Canada has pointed out, the lag is not in Government of Canada investment in R and D. The actual lag is in private sector investment into R and D. That's where the real challenge is.
That's why we try to do things like the automotive supplier innovation program that I described that's in this year's budget, which is to incent the private sector to draw in and commit themselves to the Canadian economy, to commit themselves to research and innovation, and to commit themselves to Canadian jobs through partnership.
That's what we do as well with the tech demo program. That's what we do with the automotive innovation fund: try to incent the private sector to make long-term commitments in Canada.
Look, Ms. Nash, I—
View James Moore Profile
I think part of the automotive policy we have put in place, particularly with the supply chain initiative—the $100 million that's in this year's budget—is to broaden out the focus of the Government of Canada into two distinct tracks. For the longest time, the pursuit has always been on mandates, OEMs, the big firms, to plant and to grow and to therefore then have firms that come around them. As the numbers suggest, for every one OEM job, there are four to five supply chain jobs associated with it. We need to continue to pursue those large-firm investments as a tent pole around which other investments will be drawn. We need to pursue those opportunities. It's incredibly competitive, which I'll talk about in a minute.
On a parallel track, we also need to support the supply chain, because one feeds the other. Among the criteria that OEMs look at when they're considering investing and committing to a footprint, for example in Ontario, is supply chain capacity. They look for infrastructure. They look for tax policy. They look for the regulatory environment. They look for energy cost dynamics in the province of Ontario, which has been incredibly challenging over the past 10 years. They look for efficiency of supply chain.
What we want to do is continue to pursue the OEM investments on the one hand, and on the other hand ensure that we have an automotive supply chain that is well suited and properly equipped, and that has the right policy framework, in order to show OEMs that they would be operating in a Canadian environment where they have a supply chain that is efficient and nimble and that is ready to provide them with the parts, the supplies, and the capacity to grow in Canada in a cost-competitive way.
With regard to pursuing OEMs, we've had some challenging news, for sure, but we have also had some good news as well. We have some other good news that we'll be announcing in the near future, with some investments in Canada. We live in a North American environment, in the auto sector, that is extraordinarily competitive. I'm vice-chair of CAPC, the Canadian Automotive Partnership Council. In the group we're reminded all the time that in North America there really are four auto sectors. There's the Canadian auto sector. There's the northern U.S. or midwest auto sector. There's the southern U.S. auto sector, principally right-to-work states, lots of corporate welfare, greenfield sites, and so on. Then there's Mexico, paying incredibly low wages, with massive amounts of corporate welfare. It's very challenging for Canada to compete in this environment.
How do we compete? Well, we compete by doing things like investing in north-south infrastructure; twinning the Detroit–Windsor border crossing; having the beyond borders agreement with the United States; and to make it cost-competitive in Canada, having a 13-point lower corporate tax than what's offered in the United States. We have funds like the automotive innovation fund, the automotive supplier program that is in this year's budget. We work in cross purposes. We have Jerry Dias of Unifor, Brad Duguid in the province of Ontario, me, plus industry all sitting around a room similar to this size, partisanship entirely aside, really working together to try to find the right mix of policy at all levels of government and the private sector, to ensure that we have a competitive environment in Canada.
View James Moore Profile
We're doing all we can to make sure that the auto sector continues to find a new horizon in Canada.
View James Moore Profile
I can't remember the exact number.
John, do you have that?
View James Moore Profile
No. Since we formed the government in 2006 we have increased funding to Genome Canada. Let me go back to the beginning of your question. This is a huge part of science and medicine. I know this personally very well. My son has a genetic challenge, and for families to get a diagnosis is incredibly expensive. I know this personally. To get genetic research done, and to be able to have a sense of the horizon of your child's health, and to know what's coming is really important for families. That's funded in part through the Government of Canada, but it's principally led by the provinces and across Canada in 13 provinces and territories. It's a patchwork of what gets funded and what does not get funded in terms of genetic research. You mentioned the personal dynamic on a personal basis. I've worked, for example, in British Columbia with our health minister out there, Terry Lake, to try to get it covered by our MSP—
View James Moore Profile
View James Moore Profile
Geoff, you know how budgeting works. There are supplementary estimates that will come in the fall that backstop those investments. Also, I think you're segmenting in specific areas and you're leaving out things, for example, like the brand new investments in things like the Canada first research excellence fund.
View James Moore Profile
No, I think it highlights a better understanding of members of parliament to know how the process works.
View James Moore Profile
I don't agree with the premise, but I'm sure Mr. Holder will be glad to come and talk to you about our increased investments.
Geoff, as you know, when the budget comes out, there's always a torrent of quotes about the budget: it's good, it's okay, it's awful.
View James Moore Profile
I can tell you, for example, in the U15 Group of Canadian Research Universities across the country there is broad-based, widespread support and endorsement of this government because of our increased investment in scientific research and discovery.
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