[Recorded by Electronic Apparatus]
Wednesday, October 30, 1996
The Chairman: I'd like to call the meeting to order.
Pursuant to Standing Order 108(2), the natural resources committee is conducting a study on natural resources and rural development. We're pleased to be here in Prince Albert today to continue our research and investigation on this matter.
As most of you know, we began our hearings last spring in Ottawa. We have now decided to take our study across Canada. We are stopping in several centres in most of the provinces and in the Northwest Territories in order to learn first-hand from people who deal with this issue on a daily basis.
We have a number of witnesses who will be appearing to provide testimony today. As our lead-off witness, we're happy to have Mr. John Mitchell from the Prince Albert Chamber of Commerce.
Mr. Mitchell, we'd ask you to make an opening statement. I'm sure the members would then enjoy having a dialogue with you about some of the issues. Please proceed.
Mr. John Mitchell (Chair, Natural Resources Committee, Prince Albert Chamber of Commerce): Thank you, Mr. Chairman, honourable members.
Our region includes three natural resource sectors: agriculture, forestry, and mining. Currently only forestry has evolved into added-value production. Our forest industry produces finished construction-grade lumber, pulp, and fine paper. In the mining industry, gold is produced to the ingot level. However, all our uranium ore is shipped to Ontario for processing. Our agricultural sector is only taking tentative steps towards value-added production.
In response to first nations involvement, many of the lease-management agreements contain hiring quotas and northern preferences for contractors. Prince Albert has the educational facilities to ensure persons who are motivated can be trained for work in these industries. First nations people working in industry must be of a productive nature, not just another level of governance and more taxation.
Historically, people have migrated for better lifestyles or to escape oppressive regimes. Currently we are facing a population shift based on employment opportunities, access to education, health care, and housing. We don't believe it's the role of government to interfere with this process.
The best thing the federal government can do for small established business development is to continue to provide a stable interest rate policy and access to financing and to work towards removing impediments to the flow of interprovincial trade and labour and the facilitation of intergenerational transfers of family businesses. Such policies would, coupled with lowering taxation on small businesses, such as with an annual revenue of less than $200,000, encourage the creation of jobs in smaller centres in our country.
The time is past when governments should involve themselves directly in job creation because of the debt and deficit situation. Job creation should be the responsibility of business persons, not the Canadian taxpayer.
I respectfully submit this on behalf of the Prince Albert Chamber of Commerce.
The Chairman: Thank you, Mr. Mitchell.
I think what I'll do is ask the members to ask some questions.
Mr. Asselin, do you want to begin?
Mr. Asselin (Charlevoix): The federal government has carried out an infrastructure program that has assisted municipalities through a partnership between federal, provincial and municipal governments. It has also resulted in job creation. Would the Chamber of commerce support another infrastructure program that would also result in job creation?
I would also like some information on education and training and the availability of manpower in this province.
Mr. Mitchell: Thank you, Mr. Asselin.
The infrastructure program has worked well in some areas. In some areas the chamber's viewpoint was that it diverged from its original intent. It built sports arenas and other things and didn't really deal with infrastructure. When business people think of infrastructure, they think of roads, sewers, waterworks, the basic building blocks of a city, not so much hockey teams and basketball teams.
In response to the second part of your question, we feel the time is really past for government to be involved in job creation. You have to create the economic climate for business to develop, to be competitive, for trade to flow across the country as well as north and south. Governments should be involved in health, education, public safety, international affairs, immigration - things such as that. Job creation such as propping up single-industry towns or regions is past.
About our educational facilities, we have the Saskatchewan Institute of Applied Science & Technology in the city, the Woodland campus. It's an excellent facility that offers a broad spectrum of training for forestry, for mining, for business administration. There are numerous classes given at this fine institution that suit people for work in the modern world. The human resources department has basically established many programs to help people further their education in our region.
Mr. Asselin: Do you think the federal government should invest more in research and development and facilitate manufacturing for export to the international market or simply provide direct subsidies to rural businesses?
Mr. Mitchell: I'm not in favour of the federal government subsidizing business. Certainly, if viable and regional, I suppose research and development that would enhance the economic activity in an area, especially when it would earn currency from abroad, would be of real value. I see nothing wrong with incentives being given by government through tax breaks or something else, but we're not in favour of straight cash handouts.
Mr. Asselin: Okay.
The Chairman: Mr. Chatters.
Mr. Chatters (Athabasca): It's an interesting perspective.
In your opinion, looking back at the last infrastructure program, with the government apparently now considering another infrastructure program in the cause of job creation, would that $6 billion that was invested in the infrastructure program have created more long-term permanent jobs had that $6 billion been directed to tax cuts on small businesses and stuff, or would it be more feasible in the name of job creation to institute another infrastructure program?
Mr. Mitchell: I believe it would have been of more benefit had it been directed, even if you split it 50-50, to the small business sector in the country. The small business sector is the fastest growing part of the Canadian economy. Certainly, it's part of the Canadian economy that's growing well in Saskatchewan. Family-based businesses or community-based businesses are doing very well.
We need to make their burden to do well easier, not through giving them handouts or anything like that, but, as we've said, businesses with less than a $200,000 annual revenue, which may seem very small compared to other industries...this would help small businesses in small communities develop. When they cross that magic barrier, they would be required to pay their full and fair share. We don't believe there are any free lunches left in this country, nor should there be.
Mr. Chatters: Thank you.
The Chairman: Mr. Wood.
Mr. Wood (Nipissing): Mr. Mitchell, I know you touched on this briefly a few minutes ago, but we've been asking most of our witnesses what their priorities would be. It would be interesting to see what the Prince Albert Chamber of Commerce had to say and how you think about this.
What can the federal government do best to stimulate the rural economy? Would you say it would be tax incentives - I know you talked about that a few minutes ago - or infrastructure, or maybe reducing the regulatory burden? Should we focus our efforts on one particular area?
Mr. Mitchell: When I look at what's happened here in the province, they've reduced the tax burden on small to medium-sized business in the province of Saskatchewan. They have offered small incentives to small businesses to start up. We have the regional economic development authorities who offer advice and training for young entrepreneurs on how to do that.
Human Resource Development has sponsored numerous training programs. I had the pleasure of helping design an entrepreneur training program for the Saskatchewan Institute of Applied Arts and Sciences. The first full class will be coming on stream in February 1997. What we hope is that if they can lessen the regulatory burden and the tax burden on companies that are starting up, in their infancy, in their first five years, until they hit some magic threshold of economic activity, it would probably facilitate the creation of a lot more employment in these communities and give them a time to get established and know where they're going. The first couple of years in small businesses are usually the most critical.
Mr. Wood: One other question. Do people take advantage of the western diversification program? I'm from northern Ontario, so I wouldn't know that. If they do, I just wonder if it's your opinion that it's a help or a hindrance, or is there overlap, or is there some way we could maybe streamline that fund in order to help rural development? Do you think it's a good idea? I'd like to hear your opinion.
Mr. Mitchell: I've never been in favour of, and I probably never will be in favour of, funds like that, where the Government of Canada and ultimately the Canadian taxpayer puts out money to subsidize business. I come from kind of the old school.
Mr. Wood: I think they've changed that now, haven't they? I don't think there are grants any more. I think they're loans now.
Mr. Mitchell: If they're repayable loans and the administration is on a sound financial basis - in other words, the same criteria a financial institution would use - I probably wouldn't see a lot wrong with it. I'm much more in favour of lessening the regulatory and tax loads in the initial start-up phase of a business than I am in propping it up, especially with taxpayers' money.
Mr. Wood: Thank you, Mr. Chairman.
The Chairman: Mr. Serré.
Mr. Serré (Timiskaming - French River): Thank you, Mr. Chairman. By talking to a few people last night and hearing your brief here, the economy of Prince Albert seems to be very vibrant at this time. Is that so?
Mr. Mitchell: Our economy in the last four or five years has really picked up, primarily through Weyerhaeuser, which is a major employer in the city of Prince Albert that has established a fine paper production facility here. The price of construction-grade lumber has increased dramatically, too, and this has created employment and economic activity in the region.
The farm economy has finally turned around and is putting more cash through the community, and we're becoming more of a regional centre, both in education, with the Saskatchewan Institute of Applied Arts and Sciences, and with the hospital facilities, the regional medical centre we have here. So we're becoming more of a hub in a service community looking at sales and service and health and education, and serving the north, the other half of the province, as it were.
Mr. Serré: Almost every witness we've heard so far in Yellowknife and Fort McMurray mentioned that one of the worst impediments to rural economic development is the lack of a trained labour force. Yet you seem to say it's not a problem here at all. In your brief you say you have the educational facility. Do you see a problem in developing the skills needed for the new wave economy?
Mr. Mitchell: No, I don't. I really think the Woodlands campus is on top of what needs to be done to develop a highly skilled productive labour force. I know several of the graduates who have gone through the management, marketing and business administration and have taken on jobs with the major financial institutions in Canada. They have done very well for themselves. I believe the young people who come out of the Woodlands campus are well equipped to take their place in the real world.
Mr. Serré: If you were a member of this committee and you went back to Ottawa, what would be the one thing you would advise the government to do as a priority to help develop the rural economy of this country?
Mr. Mitchell: To facilitate small business, I would encourage Mr. Martin to maintain his policy of stable interest rates and access to financing for small business. I would think working towards removing interprovincial trade barriers to both the shipment of goods and the transference of labour.... In other words, make it easier for Canadians to work in Canada. Do you realize it's probably easier for me to work out of the country than it would be to go to another province and work? We have to come of age and take down a lot of artificial barriers in this country and remove impediments to national trade both in labour and in real goods.
Mr. Serré: Mr. Chairman, I guess what the witness is telling us is that we're doing a fairly good job if we stay the course.
I don't have anything more. Thank you very much.
The Chairman: It's noted, Mr. Serré.
Mrs. Cowling (Dauphin - Swan River): Thank you, Mr. Chairman.
Mr. Mitchell, my question is on the population of Prince Albert. You mentioned it's the hub of the service area. What is the population of Prince Albert? What area are you drawing from in that population base?
Mr. Mitchell: Our base population within the city is 30,000 to 36,000 people - somewhere in that neighbourhood. Our region encompasses probably 125,000 people in the trading area.
Interestingly enough, with the development of our sales structure within the city with the addition of the Wal-Mart, the Superstore, and a big new Safeway store, and with the SIAST Woodland campus and some of our very aggressive car dealers, we're now drawing people from northwestern Manitoba and right over to almost the other side of the province. Of course a lot of people from northern Saskatchewan are coming in here and doing major shopping or availing themselves of the educational facilities.
Mrs. Cowling: That leads me to my next question, on those surrounding areas, which are probably very small communities. I'm wondering what the future of those smaller communities will be if in fact this is a large hub. What is their future and their survival?
Mr. Mitchell: Historically, small communities may go the way of the Scottish croft and the small holding in England with sheep ranching. Some things are economically viable and some things aren't. They may be really nice in memory, and it may be really nice to have these pristine little villages out on the prairies, but as an economic unit they just don't function any more. That's the cold, hard reality as a world.
Mrs. Cowling: We've listened to a number of first nations witnesses who were quite concerned about not having a resource base. You say first nations people working in industry must be of a productive nature and not just another level of governance, with more taxation. I'm wondering if you have any comments on how we should deal with this as a committee and what we should be doing as a government.
Mr. Mitchell: I believe many of the lease-management agreements the Government of Saskatchewan have negotiated in the north contain hiring preferences, contractor preferences. Cameco and Cogema, which I'm really familiar with, have northern preferences for hiring. We have the facilities to train people.
We cannot afford another level of governance in this country. We have far too many as it is. It might be appropriate that some of them actually go the way other governments have gone. To create another level of governance, with taxation and all the ramifications that would go with it, would be counter-productive to economic development.
Mr. Wood: Picking up on what my colleague, Ms Cowling, was saying, do the major employers in this area try to train aboriginal people to work for them? You mentioned Weyerhaeuser. I'm not quite aware of how many people work at Weyerhaeuser.
Mr. Mitchell: About 1,250.
Mr. Wood: Do they go out of their way to try to set up a program to train aboriginal Canadians to work in their establishment? Some of our witnesses from yesterday and the day before said there are programs where they try to integrate the aboriginal people into their workforce. Do they do that here?
Mr. Mitchell: Yes, they do, and they've done it quite successfully. Weyerhaeuser has negotiated trading and trade agreements with first nations bands in Montreal, as well as Montreal Lake and other large bands to the north, and they are working quite successfully.
Mr. Wood: That's great. Thanks.
Thanks, Mr. Chairman.
The Chairman: Thank you, Bob.
Mr. Mitchell, I have a number of questions I'd like to ask.
Mr. Mitchell: Sure.
The Chairman: First I'll ask for your opinion. Are the policies we would pursue as a government to help small businesses operating, let's say, in downtown Toronto the same policies that are going to help the small business people working in Saskatchewan, particularly rural Saskatchewan?
Mr. Mitchell: Well, it's probably pretty close.
Business today is not like business was 50 years ago. You can't run it out of a shoebox any more. It's gone national, international, interprovincial. We have regulatory affairs. So probably a small business starting off in Toronto, while it may have more bureaucracy to deal with, given Metro Toronto's peculiarities, wouldn't be really much different from a small business starting in Saskatchewan. Obviously you'd have to have a market for what you're producing or your goods or services, and you'd have to abide by all of the appropriate regulations - federal, provincial, municipal and whatever.
With the amount of training that's available to entrepreneurs these days - and most of the entrepreneurial training programs are reasonably standardized across the country - no, I don't think there's an awful lot of difference, really. There might be a little bit of difference in the skill level and there might be some linguistic problems between the two sectors, but no, I don't think so.
The Chairman: You listed access to capital, access to financing, as one of the issues you thought the federal government should be involved with in establishing an environment that business can operate in. Can you be a little bit more specific on what things you think the government ought to be doing?
Mr. Mitchell: Farm Credit has done quite a good job in working with inter-generational transfers of small business and financing young farmers and so on.
I'm not sure just how that would really work. That would have to be sorted out between the government finance committee, the financial community, the banks and what have you. But there should be some way of having a mechanism that would make financial assistance available to the small business person starting out.
We have a couple of examples.
We had a really successful small business in the city of Prince Albert, and it was time for an inter-generational transfer. Unfortunately the son, who had worked in the business for a number of years, couldn't afford the real price of the building, the business and everything that went with it. So it ended up getting sold to a multinational and the son ended up working for the multinational. Had there been some mechanism in place where he could have gotten long-term financing at reasonable interest rates, which they certainly are now, he could have acquired the business and it would have remained a family business.
Another case was a department store that was privately owned, had a really good reputation and unfortunately fell into the same trap. Because of the building and all of the goods it had, it was far too expensive for the young people in the family to acquire, and it became part of a chain.
The Chairman: Is the Business Development Bank of Canada active in Prince Albert?
Mr. Mitchell: It is, yes. It has been for a number of years. As a chamber, we have them at our small business day on an annual basis, and I'm sure some of our chamber members deal with them quite actively.
The Chairman: Are you familiar with western diversification, or WD, and its operation? Is it assisting small business people here in Prince Albert?
Mr. Mitchell: I'm really not familiar with it. My expertise with the chamber is with the natural resources sector, basically with agriculture, forestry and mining. I haven't really paid a lot of attention to the financing.
The chairman of our finance committee could probably tell you more about that. His name is Trevor Ives and you're going to hear from him later today. He'll be wearing another hat. He'll actually be speaking on behalf of the Prince Albert Development Corporation, but he's also chairman of the chamber of commerce finance committee.
The Chairman: I will indeed ask him those questions.
In your brief, you spoke about the fact that there is not a lot of value adding taking place, with the exception of the forestry sector. You mentioned that your yellowcake is being shipped to Ontario for processing and that with agriculture you're just starting to take some tentative steps.
Do you envision a role for government in facilitating and encouraging the development of that downstream processing of your natural resources?
Mr. Mitchell: Going back to research and development, if there were an established market and if we had an offshore market, let's say, that would earn us hard currency for agricultural products.... Agriculture is the one that's really lacking in getting into the 21st century. It would be really nice to see that happen and to see some incentive, like a graduated tax break or whatever.
I come back to the point that I'm not really in favour of Paul Martin writing somebody a cheque on behalf of the government, but I would be in favour of it if they were going to develop an international market and were given a tax break on whatever they had to buy in industrial equipment in the initialization of a project like that or maybe some sort of a tax break on what we call payroll taxes.
The Chairman: Do you think it's appropriate for the government to be involved in providing telecommunications infrastructure so that your small businesses can connect to the information highway?
Mr. Mitchell: No.
The Chairman: The industry department recently made a major investment developing something called Strategis, which is, I believe, the largest web site in Canada. It provides some 560,000 pages, I think, of information that small businesses can use in the operation of their businesses. Obviously there was a cost for developing that. Do you think that's an appropriate role?
Mr. Mitchell: Is it really the time for government and government departments to be competing with the private sector? I'm sure there was probably a private corporation somewhere in Canada doing something similar.
There's a role for government and there's a role for the private sector, and somewhere in the 1960s and 1970s they became blurred. We became a country that expected government to do everything. We have to reverse that and go back to doing some things for ourselves. We should no longer rely on the Government of Canada and our fellow taxpayers to support business activity.
The Chairman: Generally speaking, I think most people around this table agree with that statement - and probably most people in Canada - but I have a concern that I'd like to express as an individual who lives in a rural part of this country. In large metropolitan centres, there are certain services that the private sector can provide and will provide because they can make a profit. Those very same services, which rural Canadians, I believe, have as much a right to as those living in the city, cannot be provided profitably because there isn't the density of population or because the geography mitigates against it.
I'll use the example of Canada Post, which is probably a very good example. A private corporation can move mail within Toronto and probably between Montreal, Toronto and Vancouver quite profitably and be willing to do it. Whether they can move that mail profitably between two rural centres in Saskatchewan or from Gravenhurst, where I live, to North Bay, where Mr. Wood lives, is a very different question. What that leads to is this: is it appropriate for government to step in to provide those services to rural Canada? The private sector won't because they can't do it profitably.
Mr. Mitchell: Of course, there's nothing wrong with the mail sector, which is essential to the flow of a lot of things. That's something that has a historicity that goes back 200 years with Her Majesty's mail. But whether or not we want to get into the wonderful world of high-tech and provide that to every rural community in Canada, and whether or not they want it or can use it, are the kinds of points that might be debatable.
The Chairman: Let's use a median example.
It would be very unlikely that a commercial broadcaster would be willing to provide to northern Canada, north of 60 degrees, through our satellite system. CBC therefore provides the only television and radio services likely to be available to people north of 60. Is that an appropriate public expenditure for a rural or remote area?
Mr. Mitchell: Yes. I've been stuck in the north so I....
The Chairman: Generally speaking, you're saying things should be left to the private sector, but there are instances where the government will have to provide services in rural Canada because it won't be profitable for the -
Mr. Mitchell: It's just the nature of our country.
The Chairman: Very good.
I appreciate that you have provided this testimony and have taken some time to answer our questions. I know I have enjoyed our dialogue, and I'm sure the other members have as well. We appreciate your contribution to our study.
Thank you very much.
Mr. Mitchell: Thank you, Mr. Chairman.
Mr. Chatters: I have only one question. Would you ever consider being the candidate for the Reform Party?
Mr. Mitchell: The closest I ever came to politics was being president of our beloved chamber of commerce, and that was enough.
The Chairman: Spoken like a true politician, too.
Thank you very much, Mr. Mitchell.
We're a little ahead of schedule, so we'll take a short coffee break while waiting for the next witness to come.
The Chairman: I'd like to call us back in session.
Mr. Chatters will have to keep his questions until the end.
I'm pleased to welcome Mr. Ketilson from the Saskatchewan Wheat Pool. Thank you very much. We appreciate your being here. I understand you have some brief opening comments, and then we'll turn it over to questions.
Mr. Neil Ketilson (Coordinator, Responsible Stewardship Program, Saskatchewan Wheat Pool): Thank you very much, Mr. Chairman. I would like to thank the committee for the opportunity to appear before you.
At the same time, I would like to express my regrets on behalf of the president of the Saskatchewan Wheat Pool, Mr. Larsen. Given other commitments, he is not able to be here. He's an extremely busy fellow right now with his own internal politics. Our annual meeting comes up in November and he's busy going to regional meetings to make sure everything is going according to Hoyle. I expect you people can probably appreciate that.
I'm also a bit of a stand-in, I guess. I found out about this late Friday afternoon, so I'm probably not quite as prepared as I'd like to be.
We have a number of different policy issues with respect to rural development and environmental issues. As I read the background information from Mr. Cole on natural resources and rural development, what I read into it was really a sustainable development plan.
I am a manager of environmental policy and planning within Saskatchewan Wheat Pool, and my background is really in environmental aspects. I am also from the agricultural zone - I've lived here all of my life - and like most other people in Saskatchewan, I have a little piece of land. So I have a fair background in rural Saskatchewan and in the agricultural sector.
From a personal point of view, I can answer a lot of questions you may have. If you want any technicalities, we can respond to you in writing at a later time.
What I'd like to do is provide an overview, my perspective of the fundamental elements of what I would call a sustainable development system or plan, and some of the key elements that might be included in that kind of process.
I think it would also be useful for the committee to get some appreciation of what Saskatchewan Wheat Pool is all about. We are a cooperative that is the largest business in Saskatchewan. We date back to the 1920s. We are primarily a grain-handling and farm supply business, although we have diversified into a whole number of other business interests as well.
The cooperative structure that we have has about 500 committees out in small-town Saskatchewan, so we are spread throughout the entire province. There are about 126 delegates who elect a board of directors, on which there are about 16 people. Those people sit for one week out of each month, discussing both policy and the business interests of the organization. We have at heart the interests of the farm members, as well as a very commercially oriented viewpoint, so we may flip from hat to hat here, although I would like to suggest to you that they're quite consistent.
Some of the other business interests that we are involved in are things like WCFL, a fertilizer manufacturing and distribution system that goes right across western Canada; a herbicide formulation plant in Winnipeg; the publication business, with the Western Producer, which we own; a malt plant in Biggar, Saskatchewan, that handles a very significant amount of malt barley and produces malt that is shipped all over the world; a livestock handling company called Heartland Livestock Services; a feedlot and ethanol plant in Lanigan, which is new and is a co-venture with Mohawk Oil and a group of investors out there who run a feedlot with about 10,000 head of cattle; a biologically based farm input company, Philom Bios, which is into technology in Saskatoon; a natural food marketing corporation called Bioriginal Food and Science Corp.; a national food processing division, CSP Foods, which goes from B.C. right across to Moncton; an oil seed crushing and processing company, CanAmera Foods, which you might be familiar with and which does an awful lot of canola. We own a portion of Robin's Donuts, and Northcote Fruits out of Thunder Bay. In total, as I say, we are a diverse group that has interests in well over twenty companies throughout western Canada and indeed nationally.
I guess my point behind telling you this is simply that we are moving into the 21st century and that we in the agricultural sector are diversifying and value-adding to the best of our ability. We are progressing as best we can.
As an organization, we have also made very formal commitments on the environmental front through the delegate structure in the board of directors. We have an environmental management system, which I can allude to at great lengths with you if you choose to pursue that.
We have a rural development policy that is focused through the rural economic development authorities. The organization has a sitting member in each one of these regional authorities, and what we do is give input into the kinds of economic activity that may be feasible, that we can assist with and perhaps get involved with.
In terms of the kinds of investments that are going on out there, Saskatchewan Wheat Pool itself probably puts about $40 million into rural Saskatchewan through our development plan, just through our infrastructure in itself. We see that as a major effort in and of itself.
Research and development is something we are very much into. We expend a great deal of money throughout the province in terms of agronomic breeding - that is, plant breeding and crop breeding - and those kinds of things to increase efficiency and to be more environmentally friendly, if you will.
In terms of the current status and the key issues from my perspective, from an environmental perspective, I would suggest to you that of the 60 million acres in Saskatchewan.... I think you need to appreciate the magnitude and size of the province. We have about 45 million acres of crop land here, of which about in excess of 30 million is cropped on an annual basis.
We come from a non-industrial background. In terms of the environment, some would therefore view us as very pristine and clean. We believe that is going to be a major benefit for us in the future. We produce very high-quality crops. We have very good processes in place to make sure this happens, and I think we can be thankful for that.
Some of the key issues that I think we have to address on the environmental front include things like soil conservation. We've made some major strides in the past number of years in terms of that. I think we're on an even keel in terms of the amount of nitrogen that's being drawn from the land as opposed to what is taken out annually in terms of crop production. I think we've made some major strides there and will continue to do so.
Water quality is becoming more of an issue, brought on by external kinds of influences. Water quality is a big issue in Ontario, as I understand it; therefore we are starting to look at that here in order to make sure we aren't adversely affecting water quality in either surface water and/or aquifers.
Biodiversity is another one that's brought on from the national front, and we are addressing that within the province.
Farm input use, fertilizer and chemical input, is also something.... We have to recognize that we in Saskatchewan are low-input users. The intensity here is not nearly as great as it is in other parts of the world, and we need to recognize that. However, I think we're tarred with the same brush, from a perceptional point of view, as many other areas of the world. That is therefore a concern.
From an economic and social point of view, agriculture is the key industry in this province. We are dependent on international markets, and there's no getting away from that. We have been diversifying and looking for alternatives and value-added ways of increasing the value of our products here. I'm sure you're also aware that every other agricultural part of the world is doing exactly the same thing, so we are doing what we can.
Depopulation is a major concern in Saskatchewan. As I sat here listening to the previous speaker, I thought about how you define ``rural''. Saskatchewan in its entirety is rural if it's compared to Toronto. I think you have to think about that in the context of what kinds of policies and programs you might want to put into place. With the small towns and that, it is a major concern. They are having a great deal of difficulty with depopulation, with an aged population. There are areas of the province where you cannot find somebody who is able-bodied and/or willing to work. In fact, labour shortage is an issue in northeastern Saskatchewan.
In terms of the elements for a sustainable system, some of the basic needs as I see them include added value. We can produce all kinds of products in this province. The technology is there, so that's the easy part. The most difficult part is securing the market and making sure it's a steady market.
In our view, development must be grassroots-based. You cannot import somebody else into a community, have them manage it on a short-term basis, and then deem it to be successful. The successful businesses are started at the local level and stem from there.
We need to have the ability to use technology - and in terms of the agricultural sector, I'm referring to things like biotechnology. Governments can do a great deal to help speed this process and to make sure that things are adequately looked after but don't take forever to happen.
Education and re-education are, of course, a fundamental part of any sustainable process and increase in rural development.
Rural Canada also needs the maintenance and enhancement of infrastructure such as transportation and communications. I simply say to you - and I suspect you probably already know this - that downloaded costs from federal budgets end up in the provincial budget, and they then end up in municipal governments very quickly. This is in fact a detriment to the ability of those people to move ahead and be economically prosperous. I think we also take a lot of the infrastructure for granted. Our parents and grandparents built Saskatchewan - all the roads and the rest of the infrastructure there. They have not done as well in the past few years, and I think we're seeing their deterioration. I think this has to stop and be turned around.
R and D is also a very important part. From a federal point of view, on the environmental front anyway, I think we have to get over this notion of perceptional issues. We have to start benchmarking environmental indicators so that we know whether or not we are in fact going ahead or backwards. We haven't done that to date, so I think it needs to be addressed.
With that, Mr. Chairman, I open myself to questions. As I said, I would rather have Mr. Larsen here answering your questions - and I'm sure he would like to be here - but I'll do the best I can.
The Chairman: Thank you very much, Mr. Ketilson.
Mr. Asselin: You talked quite a bit about the environment. You seem quite familiar with environmental issues. I would like to know what the major difficulties are here, in Saskatchewan, regarding compliance with environmental standards. Do you feel there is duplication and overlap between federal and provincial regulations?
Mr. Ketilson: By ``standards'', I'm sure you're talking about regulations. Am I right?
Mr. Asselin: Yes.
Mr. Ketilson: A lot of the regulations that govern us are provincial regulations. The federal government comes into the picture with respect to the assessment review process, with the transportation of dangerous goods, those kinds of regulations that we abide by. We have not had a great deal of trouble with those kinds of issues, as an organization. In fact, agriculture is exempt from a lot of the regulations and so we haven't been tied into a great deal of them. They haven't been a problem.
Provincially, regarding the Environmental Assessment Act, one of the major projects we did, for example, was the new pesticide warehouses. They are under the hazardous substances and dangerous goods regulations. They are a national program, but they were an industry program. The industry set the standards and the government agreed to them. We thought that was an excellent way to do it.
It ended up costing Saskatchewan Wheat Pool, and we retrofitted. We used to have in excess of 400 small pesticide warehouses around Saskatchewan. We now have considerably fewer because of the cost. Because of that, we have centralized the system. However, the cost is still in excess of $10 million.
So we as an industry saw that as a positive move. We've expended the money, but it's a kind of one-shot deal and we don't think we will have to do that for a good long time.
There are industry standards coming in terms of fertilizer storage, and that's the next big one we see.
In terms of actual regulations that apply to our company on the environmental front and/or for farmers, they are not overbearing at the present time.
Mr. Asselin: Thank you.
The Chairman: Mr. Chatters.
Mr. Chatters: Thank you, Mr. Chairman.
Certainly, I think no province in Canada more than Saskatchewan recognizes the drain of its young people going to other parts of Canada to find employment in the oil industry. In the ten years I was there, probably 80% of the kids I worked with were from Saskatchewan; everybody was from Saskatchewan.
But I'd like you to comment, perhaps, on the feasibility or the desirability of the federal government, or provincial government for that matter, taking tax dollars and trying to preserve small-town Saskatchewan, trying to fight the natural evolution of the movement of people to larger centres, to where there's an economic base that provides jobs.
Is that a reasonable thing for governments to do, to try to prop up artificially those small rural communities, or should they pass into history? It's a dangerous question.
Mr. Ketilson: This is a really good question for Mr. Larsen. However, let me try to answer it.
You're right. Most young people worked in the oil patch in Alberta; I myself did, on the pipeline, the whole bit. Some come back, but lots don't.
Let me give you an example of what's going on right now in rural Saskatchewan. There is an area in the Humboldt-St. Brieux area. St. Brieux has Bourgault cultivators and the farm machinery line of equipment. They employ well in excess of 600, 700, or 800 people. They have an extremely difficult time finding people to come to work out there. I'm not sure that the government should necessarily subsidize them, but I think we need to make sure there's an infrastructure in place for those people so that they're willing to go out there.
To me, sustainable development means environmental and social as well as economic, and I think the St. Brieux people would probably tell you there are people who don't go out there because they don't get the social benefits they would in the larger centres. The road system, the hospitals, the schools, and all those things are as important to somebody in rural Saskatchewan as they are to somebody in Toronto. With all the cutbacks that have happened I think people are starting to ask, do I really want to go out there? So it is difficult.
From a personal point of view as well as an agriculture point of view, depopulation is having, and will have, a serious effect on agriculture. I don't know what we're going to do when all the guys who are 65 and 70 years old right now retire, because there won't be anybody out there to help with the harvest. There are fewer families out there. It's a problem.
I avoided your question.
Mr. Chatters: You certainly did.
Mr. Ketilson: I don't think anybody is going to tell you to go out and spend a bunch of money to prop up anything artificially, because as soon as you pull the money back it will disappear anyway.
The trends are there. Farm size is increasing significantly. Within our membership a 2,000-acre farm is not unusual. We are starting to see some at 5,000 and 8,000 and 10,000 acres. That's the trend. I think that's where we are going to be in ten years.
Mr. Chatters: It seems to me, particularly in the natural resource sector, and I'm thinking probably more in mineral development than in agriculture...certainly as an agricultural person I recognize agriculture is a natural resource, but it seems to me it's a little like the movie Field of Dreams: if you build it, they will come. Certainly if an industry starts up because of a natural resource in a certain place, if the salary is attractive and the jobs are there, the people will come. You can't move that natural resource to where the labour is; you have to attract the labour to where the natural resource is. It only makes sense.
Mr. Ketilson: I agree.
Agriculture has also changed an awful lot at the primary level. There are a lot of people throughout Canada who wouldn't mind working on a farm now. It's not the drudge work it once was, as I'm sure you're aware. In fact, it requires some high skills. To put somebody on a $250,000 combine is not a decision that's made lightly and you don't give it to anybody who walks through the door.
Mr. Chatters: Of course the salary doesn't attract them. That's generally the problem.
Mr. Ketilson: Well, that's true. It's seasonal. But the kinds of people who are running the larger farms now are paying a reasonable wage. They would very well equate to some of the wages that are paid in Saskatoon if somebody is working in a welding or manufacturer's shop.
The Chairman: Mr. Bélair.
Mr. Bélair (Cochrane - Superior): Thank you, Mr. Chairman.
It was quite an interesting presentation. I sense you have a well-established vision of your many companies. There is prosperity out there, if I read between the lines. Not once, though, have you alluded to the western grain transportation subsidies. I gather the reduction in subsidies certainly had an impact on your operations. Could you inform the committee how you reacted to this? If you did not mention it, I suppose it was fairly easy.
Mr. Ketilson: I didn't want to get into it.
Mr. Bélair: You don't have to.
Mr. Ketilson: It's okay, I will.
The transportation subsidy, the old Crow's Nest, is past, so I thought we had best leave it alone. It has certainly drawn a very significant amount of money out of rural Saskatchewan. It has cost probably in excess of $20 a tonne. If you multiply that by the number of tonnes, it's $800 million or $900 million, which to this province is a tremendous amount of money.
It has been cushioned now because of the relatively recent higher grain prices. That's why you're not hearing the kinds of cries and anguish you will hear as prices decrease again.
If you look at the Canadian Wheat Board expected returns on grains, wheat, for example, is down to about $215 a tonne now as compared with $280 just in July and August. You've already seen a $70 decrease in the price of grain. If you couple that with the increased cost of transportation, it's going to have a very significant impact.
I guess we can't turn the clock back. Perhaps you people can, and if you can, I would wish you to do so.
The majority of people out there have tried to adjust as best they can. I think a lot of adjustment is yet to come. I suspect that will mean accelerating the rate of change and trends in decreased number of farms, decreased population, in rural Saskatchewan. That's the effect you're going to have.
Mr. Bélair: Now I'm going to follow up on what Mr. Chatters started to say. In the smaller communities, within the Saskatchewan Wheat Pool, do you have some kind of congregation of all the elements that compose your rural part? Of course in the larger cities such as Prince Albert it is not a problem - all the activities are centred around here - but what about the smaller communities? Are they shareholders in the Wheat Pool? How do they participate?
Mr. Ketilson: As a co-op, we have undergone change as well. We are now a publicly traded co-op, the largest one in Canada. We went public on the Toronto exchange as of the end of April 1996. So now we have two types of shareholders. We have the class A shareholders, which are the farm members. For $25 you can have a membership in the organization and you get to enjoy the rights and privileges of using that membership as a vote in directing the organization.
What happens then is from those 500 committees throughout rural Saskatchewan they elect what we call ``delegates''. The province is divided into 16 districts, and each one of those districts has approximately 5 delegates. Those delegates then elect somebody for the board of directors and they sit each month to deal with policy and the commercial interests of the organization.
So an individual out in rural Saskatchewan.... We probably have an average of three Wheat Pool public-type meetings in each one of these communities every year. We have very good contact. We have a tremendous network for disseminating information out to rural Saskatchewan and receiving it back. I guess there's always the argument that somebody doesn't feel they're heard or the organization isn't doing what they're saying, but I'm sure you appreciate those kinds of concerns yourself. But it is run as a co-op, and each one of those people does have a voice. If they have a policy position to bring forward they do so.
Mr. Bélair: What are the total assets of the Wheat Pool, and how many employees are there?
Mr. Ketilson: We have about 3,000 employees, and that was with Saskatchewan Wheat Pool proper. If you extend that to the other associated companies and things like that, I'm not sure of the exact number, but it would be in excess of 5,000.
We made about $48 million in net profit last year. We handled about $3 billion worth of sales. As for our asset base, the equity in the organization is $500 million or $600 million.
We are not big by grain-handling standards, but in this province we are pretty significant.
Mr. Bélair: That's right. Thank you.
The Chairman: Ms Cowling.
Mrs. Cowling: Mr. Ketilson, as we move toward the 21st century and we take a look at Saskatchewan, in your presentation you indicated value-added and diversification. In Saskatchewan, with the majority of income coming from the grain sector, you still need to continue to maintain an infrastructure to move that commodity to market.
What can we do, as a government, to enhance and build on the strengths of rural Saskatchewan and the rural areas of this country to help them move toward that transition? As you mentioned, with the changes to the WGTA we're not going to see that right now, but we have to move rather quickly into a quick transition of value-added and diversification so that we're there when we have to pick up those additional costs. What can we do to move rapidly, so that we can be there when we're having to pick up those additional costs that are going to be there and may well cripple the industry before we've made that transition? How can you help us to move into that mode that we need to be in?
Mr. Ketilson: It's an extremely difficult question. There are no easy answers.
The Saskatchewan Wheat Pool probably gets between four and five different business opportunities come through the door every day, which we take a look at to determine whether they're reasonable and feasible or not.
I'll give you a couple of examples. We've been looking at an industry for the durum market to make pasta for probably five or six years and, quite frankly, we cannot find a secure market that we know will be there if we build a processing plant and produce the pasta. To gain entry into those markets is the biggest obstacle. It's not producing the product. That's the easy part. It's finding a market and making sure it's going to be there at the end of the day. That's one.
One of the things we've initiated right now, which might be of interest to your group, is our interest in pursuing value-added opportunities through increased hog production. The model we envision is to set up fairly significant barns, sow barns, and through community investment operate and run these barns. We would be a partner in those kinds of ventures.
That is how we see the organization of Saskatchewan Wheat Pool being involved in these things, not necessarily as the sole owner and sole authority, but being in partnership with the communities, individuals, groups, whatever they might be. It's a similar example to the ethanol Pound-Maker feedlot in Lanigan.
Mrs. Cowling: Many of our young people have left the rural areas of this country and many of them want to come back. Should the Government of Canada be involved in creating incentives that will help those areas of the country that are disadvantaged because the geographics of our country are so large? Should we be focusing on bringing the information highway to every rural area of this country so that if people choose to live there they can, thus helping to revitalize some of those centres?
Mr. Ketilson: Quite frankly, I don't know. The Internet is something that can be accessed, to the best of my knowledge, from rural Saskatchewan right now. The issue is cost. It is far more expensive from rural Saskatchewan than it is, say, from Saskatoon. The issue is not necessarily in terms of being able to access; the issue is in terms of cost and whether or not people will expend the moneys to do that.
One of the things we have to do is tell the story in terms of the cost of living and those kinds of things to people who are sitting in Toronto and who are faced with $300,000 mortgages and things like that. There are opportunities out here in rural Saskatchewan for $40,000 mortgages. That in itself would help.
Think about things like tools, the tax tools and investment tax credits and those kinds of things for community business. I think they are a major benefit. They've been used in other areas. I see those kinds of tools contributing to the rural economies and helping to get these communities going.
Mrs. Cowling: My next question will be my last one. Living in rural Manitoba, very close to the Saskatchewan border, we're finding that a lot of our service centres are 50 or 75 miles away. That's okay for some things, but, for instance, if you're in the field and you break your arm or something happens to you and you need to get to a hospital that's 75 or 100 miles away.... What do we do to enhance that service and bring those service centres to some of the people in those rural areas?
We have a group of rural parliamentarians around here who have to face this every day. We need some help from witnesses like you as to what we should be doing.
Mr. Ketilson: It's a major problem as far as health services, ambulance services and those kinds of things go. From a personal point of view, I think people in rural Saskatchewan should have access to those kinds of services that is equal to the access of somebody who ended up in Toronto or who is in the Toronto-Ottawa area or whatever, so that those rural people get five- or ten-minute access or whatever it might be in terms of emergencies like that.
There are an awful lot of people in Saskatchewan who have some pretty serious ill effects from the accidents that happen to them, when nobody else is around or when they can't get there.... The 911 numbers and more air ambulance kinds of services would be of tremendous benefit. The services are not going to come back to each and every one of these little towns, and I think we all know that, but maybe we could provide the infrastructure to make sure the service is provided in a different fashion.
If we have time, Mr. Chairman, I will share a little story with you. My wife and I were in Switzerland and we were the first ones to come upon the scene of an accident. It was interesting. One of the fellows was knocked out and had a broken leg. The ambulance was there within five minutes. He was lying in the road while two other people were attended to first and put in the ambulance, and we wondered why this was happening. About thirty seconds later an ambulance came and picked the guy up and took him off. That was a tremendous service. I'm sure the guy was looked after long before the other people even got to the hospital.
The Chairman: Mr. Wood, your last question.
Mr. Wood: I wanted to talk about a couple of things...I should say that I want you to talk about a couple of things.
First of all, you mentioned your development plan. I'd like to know a little more about that. You've mentioned value-added a couple of times, which I think is something that is obviously needed in rural Canada. I'd just like to know how you assist your members through your development plan.
As you know, a lot of these people are just common, everyday entrepreneurs who want to get ahead and who have a problem putting a business plan together. Having capital available for small businesses is admirable, but how do you go about getting it? I'd just like to know what steps you take your members through. What have you done or what do you plan to do to simplify the process to assist your members in getting capital and getting into, as you were saying, hog producing or whatever they want to do? How do you get in there? Do you have a partnership with them so that they can access money from the bank as well as from your organization? How does it work?
Mr. Ketilson: There are different vehicles depending on the group we're working with. Some people would like to set up a corporation and have a limited corporation kind of status. Others would like to come in as a cooperative, so they have what they now call new generation co-ops. It's a business enterprise that's limited by the number of people who have joined that co-op; it's limited to those people.
What we have done and what we plan on doing with these ventures is the initiative has to be grassroots-based. We've found it hasn't worked if we go in there and say ``Well, here it is, boys. Let's go to work.''
Mr. Wood: So the guy has to come to you and say ``This is what I want to do'', and then you take it from there.
Mr. Ketilson: Exactly. For example, with the initiative on the hogs, the organization puts out a press release and informs the membership, through the vehicles we have, that we're quite interested in this new initiative and we would like to get into the business in a serious way.
At that point in time we have already done the background information on the environmental issues we need to address, the financial things that need to happen, how things are going to work, the marketing issues, where it's going to go and all those kinds of things. We have people on staff who do that on a regular basis.
We have a business plan package, and for anybody who expresses an interest, we'll go out and share that with them. What we'd like to do is partner with that community, with them investing some of the money. We have a partnership in it in terms of some sort of investment, preferably as low as possible, and in that way the thing gets up and running. That's the process that happens.
It doesn't always happen that way. Sometimes another larger business has an outlet to a market and comes in and says ``We want to put up a malt plant somewhere. Do you have an area to go into? We will go and look at the raw ingredients we need, choose a location and consult with the municipal authorities. Then we'll go in and do it.''
Mr. Wood: So you put up some of the capital to get it going?
Mr. Ketilson: Yes.
Mr. Wood: Do you have a member who sits on the board as an advisory member to all that, so you can watch how your money is channelling through?
Mr. Ketilson: They're quite careful about that, yes. In each of the organizations and other companies we have, business professionals and/or some of the elected people sit on the board of directors. It depends on what the board is and what expertise is required.
We also have internal auditors and all those kinds of people, who will make suggestions and recommendations as to what they ought to think about. They look at business plans and things like that and do the analytical work.
Mr. Wood: Is it safe to say this is part of your co-op's long-range plan for value-added? Is this something you're really pursuing and thinking about and putting into effect right now so a lot of the people won't leave this area and will have a viable income and work? Is this a priority?
Mr. Ketilson: Yes, I would say it's a very significant priority. This is not a brand-new venture. We've been doing it for the last 15 years.
You can look all around this province and see different kinds of activities that we're into, such as the feedlot/ethanol plant at Lanigan, the malt plant at Biggar, CanAmera Foods, and the oilseed crushing plants at Nipawin, Altona, and all over the place.
We have been value-adding for a long time where it makes sense to do it.
Mr. Wood: You mentioned that you're worried about the skills, labour and everything leaving Saskatchewan. Is that going to be a problem in getting skilled people involved in value-added ventures?
Mr. Ketilson: We have not had that problem in accessing people, but I know of businesses....
There's a really interesting little sector of the province in northeastern Saskatchewan here. Annaheim has Doepker Industries, which manufactures grain trailer boxes that are shipped all over western Canada. Englefeld, six miles down the road, manufactures something else. Watson, down the road six miles, manufactures something else. St. Brieux manufactures a line of farm equipment. They employ a number of people. There is actually a problem getting labour in that area. In that area they would say we have an under-employment problem. They can't get enough people to live in those areas.
There isn't anybody out there who wants to work but isn't working.
The Chairman: Thank you very much, Mr. Ketilson. You've done a wonderful job. I think your president can be very proud of your work here today.
I'd like to call to the table our next witnesses, who are from the Saskatchewan Labour Force Development Board.
Welcome, Mr. Orynik and Mr. Pura. We'd like you to make a few opening comments. Then we'll turn it over to members of the committee to ask questions.
Mr. Roman Orynik (Business Representative, Saskatchewan Labour Force Development Board): Thank you for this opportunity to address this group today. My name is Roman Orynik and I'm one of the business representatives with the Saskatchewan Labour Force Development Board. With me today is Conrad Pura, who is one of the labour representatives on that board.
By way of a bit of background, the Saskatchewan Labour Force Development Board was a creation of the federal government in 1994. It represents a truly positive, independent advisory group on labour market policies. It's co-chaired by business and labour. It has representation from education, training providers, first nations, Métis, women, disabled, racialized Canadians, and agriculture. It's really a broad group of the people of Saskatchewan. This year we have the provincial government as a funding partner in the board and we are actively involved in the creation of the Saskatchewan training strategy.
The board's mission is to foster and promote, through partnership and equity, the effective development of Saskatchewan's labour force. The Saskatchewan Labour Force Development Board believes training needs are directly linked to economic development. We are here today to encourage more coherence in these two systems we're talking about.
The board has achieved consensus on many labour market issues. Most recently the Saskatchewan Labour Force Development Board has been promoting a sectoral approach to training. Many emerging and growth sectors are not well represented by the training agenda in this province.
The four main themes we'd like to discuss today include the climate for fundamental change; shifting decision-making and responsibility at the regional and community levels; the increasing need for a partnership approach to community, economic, and labour force development; and the need for innovation and coherence.
If we want to take our economy forward we will have to have a learning culture to utilize the technology that is currently available and technologies that will be emerging in the future. To enable this technology to benefit the natural resources-based economy in Saskatchewan we will need to invest in research and develop expertise in the organizational and technology infrastructure in the province. We will need to learn new ways to do business, new ways to add value to our resources, and new processes that will enable us to produce products more efficiently than our competitors around the world.
Many of the secondary industries needed for Saskatchewan's economy are yet to be developed. Information technology and telecommunications will serve as a fundamental enabler of business activity, especially in the business-based economy of the future.
Equipment manufacturers in our province are well positioned for growth. New products related to agriculture and other resource industries will create demands for engineering, technical production, and software design. Fundamental change in how we approach technology now will determine whether we're on a grid road or on a super-lane highway on the information highway.
The federal government has been instrumental in successfully initiating many sectoral partnerships at the national level. The board believes a provincial or regional approach is also necessary. We need to support our industry sectors with training expertise, technology in universities, research and development on work systems, new approaches to work, and economic development and technology use.
Leadership in workplace cooperation and sectoral initiatives that include partnerships between employees, employers, government and education, will be a catalyst to facilitate labour market changes needed for us to succeed in the future.
Young people's lack of success in our present education system tells us that we need significant changes. The existing maze of informal networks to access employment is not going to make it any more effective for the aboriginal people in the future than it has in the past. Fundamental changes to curriculum, learning options that include connections to the world of work, and more career education earlier in the education system are needed to facilitate the creation of rewarding opportunities for our young people. I think it is rewarding opportunities that will keep our young people in Saskatchewan as opposed to moving on to other provinces. We will need incentives for employees to embrace the kind of workforce development that will be necessary to ensure our future economic success.
The international adult literacy surveys tell us that our basic foundation skills are below those of our global competitors, and that causes us concern.
Educators are responding to industrial demands, but more work is needed to be done to produce graduates needed to meet current and future needs in our new technologies. This is especially true in rural Saskatchewan. We need to create new alliances, and governments need to provide incentives such as tax credits for these partnerships, to produce the kind of results and labour force development we will need.
It is the board's belief that more relevant decision-making happens closer to the people who know the situation well and can make up the strategies for meeting local needs. In Saskatchewan, however, we have to be very careful with the definition of rural - and I've heard that earlier today. With declining population in rural areas, we have an inherent but cumbersome infrastructure that needs to be remodelled to meet the demands of today and the future. We need to move towards a community-needs assessment model and towards a system based on outcomes, not on process.
The province is in the process of reducing overlapping structures to minimize training and education dollars. We would suggest that the same approach has to be taken to community, economic and labour force development. In areas of Saskatchewan we have regional economic authorities, tourism authorities, Community Futures, rural farm service centres, community college boards and school boards - a whole maze.
Community economic development has been dominated by a business development approach, yet many economic development boards are facing labour force development issues. The previous speaker talked about some issues with respect to a lack of employment or a lack of labour in a particular area. There is a need for more coherence and coordination between federal and provincial governments to deal with this issue at regional and community levels.
The northern labour market committee is a good example of such a partnership that deals with forestry and mining and labour force development issues in Saskatchewan's north. The federal and provincial governments, industry, and training institutes work together to deal with economic and community labour force development issues. National occupational and training strategies, standards, and provincial coordination are necessary, but control over resources and priorities are needed at the local level to ensure training is connected to the community economic development.
The changing direction of fiscal restraint and government policy has facilitated widespread commitment to partnerships. Various objectives are met through partnerships, including coordinating services, adding breadth of knowledge to decision-making, sharing responsibility, and, as our board is learning, valuing diversity. It can also be a way to achieve inclusiveness and involvement. This is particularly true when common goals are to be achieved. Community economic development, combined with labour force development initiatives, can help achieve coherence out of service delivery.
The board just completed a survey of 100 export manufacturers in Saskatchewan, many of which are located in rural communities and do not have access to direct employment or training institutes. These exporters have difficulty finding skilled workers. For every vacant position they have, they have five positions where employees need skills upgrading. It is obvious that retraining and up-skilling workers has to occur in the workplace. To maximize our training resources, industry sectoral training partnerships are needed.
Many of the sectoral approaches are emerging in the province already. IPSCO participates in a steel industry one called CSTEC. The tourism industry has been actively participating for some time. Film and video have been participating, and export manufacturing has completed a needs assessments recently. These are just the first steps of these industries.
Technology must be utilized in the design and deliverance of training and must get to the next steps. New partnerships and alliances are necessary to achieve community development. Support is necessary to access new skill development, new business venture capital and increased communication. Service centres that provide Internet access, as well as export and business skill development, are key to achieving new ventures in the province.
A new infrastructure for a knowledge-based economy will rely on trade, organizational efficiencies, transportation, communications and an evaluation of outcomes. The economy of the 21st century goes well beyond roads, bridges, bricks and mortar. We need new learning mechanisms and new work structures as new occupations emerge in our new economy.
We need to invest strategically and develop closer ties for sharing experience with educators and research capability in our industries and universities to influence program content and research and development.
Innovations of delivery are needed. This will involve expertise in multimedia and education, which is not available in the industrial sector. We need innovations in delivery modes with the Internet, computer-assisted learning access for distance learners, and the use of provincial and national training development. This is particularly true in rural Saskatchewan, where the training institutes may not be in close proximity to those people who are requesting training and development.
The newly formed Saskatchewan trade and export partnership will increase the potential for the expansion of new markets. Our telecommunication and transportation sectors need research and development to further enable us to meet these market demands.
The innovation required is not just technology, but new organizational and work structures that include a learning culture.
The persistent problem of youths leaving our province, tied with aging demographics, spells a grave concern for communities and industry in Saskatchewan. We need to consider increasing opportunities in our workplaces for our skilled and educated youths through work experiences, cooperative educational opportunities, internship and apprenticeships, educational staff exchanges and the shared use of equipment, and the imaginative consideration of the distribution of work.
To keep our rural communities viable, we will need to explore many options for enterprise innovation. Single-industry-community economics fuels our unemployment dilemma. With the use of technology and our prairie creativity, our community should be able to survive in a knowledge-based economy.
Research and development in agriculture has created a substantial biotechnology industry in Saskatoon. More economic stability will be created through opportunity development. If we provide work experience opportunities for our youths who are graduating from university and technical institutes, we may plant seeds for innovation and opportunity.
Your government could encourage this activity through continued partnership models with programs like a technical transfer merit program, which partners university and technical institute expertise, through staff and graduates, with the industrial sector.
Grants are available to partnerships that share experience, equipment and graduates on specific projects to improve products and create efficiencies in communication and work systems. We need to follow through on the internal trade agreement, which addresses the portability and transferability of credits and skills from one province to another. There are valuable internship programs in some provinces that need to be expanded to Saskatchewan.
We need to do better at linking universities, institutes, governments and industry. Sectoral service centres, used successfully in Europe and Japan, provide that opportunity as well as inter-firm cooperation through such services as a shared curriculum and portable computer labs.
We need incentives to encourage innovation in work and organizational structures, including: work distribution; new technologies for production, communication and information systems; learning and training design and delivery for distance and independent learning; and new exporting and marketing technologies.
We need innovation in the utilization and development of our workforce and in the creation of new markets. We need new labour market information systems that consider the complexity of the sector, rather than mere numbers.
There is an opportunity for nation-building around the economic development issues of the country. Sectoral approaches have the ability to form more national collaboration on trade and research development. We will need new approaches to community, economic and labour force development to ensure our ability to skill a new economy.
I would like to entertain any questions that you might have.
The Chairman: Thank you.
Mr. Chatters: First of all, after listening to your presentation and reading it, I marked several areas. It only gives me a very vague idea of what you're talking about.
I'd like to perhaps start off with exactly what your organization does, how it's funded, and specifically what you do. That would be a beginning. Then I'd like some specific explanations of some of the phrases. For instance, I don't know what you mean by this:
For instance, I represent the businesses in Prince Albert and the surrounding area on the board. I bring to the board concerns about labour force development, which is the training needs of those businesses. It also includes, as I said earlier, representation from aboriginals, marginalized minorities and other equity groups.
The funding, up until this year, has come from the federal government. With this current year, our funding is coming from both federal and provincial governments, as well as a large amount that comes in kind from the various people who sit on the board. This is the work they do and the time they contribute to the board activities.
Mr. Chatters: What is your budget?
Mr. Orynik: Our budget is somewhere in the order of about $100,000 to $125,000 a year.
Mr. Chatters: What specifically do you do with that?
Mr. Orynik: We stimulate other partnerships and work. One of the examples is the export manufacturing group. It has been surveyed in the past year.
Through the Saskatchewan Labour Force Development Board, we were able to commission a survey that talked to 100 export manufacturing organizations in the province to ask them about their training needs. Do they currently have enough skilled people? What needs do they have and in what areas? How could that group of 100 companies come together through some facilitation of the Labour Force Development Board to address the needs and share experiences they have had in meeting their training needs across the province? So it's more of a mechanism to bring groups together so that they can share and so that we can more efficiently use the resources that are out there.
Mr. Chatters: So basically you're an information-gathering body that brings people together and gives them the information on issues like labour force needs.
Mr. Orynik: Right. That's one area. The other area is to advise government, both at the provincial and federal levels, with respect to labour force development issues.
For instance, the new training strategy of the Saskatchewan government is being developed. The Saskatchewan Labour Force Development Board is very active in consulting with the provincial government on the development of that training strategy to meet the needs of the people of Saskatchewan and the industry of Saskatchewan.
Mr. Chatters: I better understand what you are now.
Now a little bit about specifically one phrase that I read: your reference to the lack of success in our present education system by aboriginal peoples and the need to change that system.
Generally, to be successful in today's world you need high-tech...you need the kind of education that now exists. That's generally what industry is looking for. How do you change the education system to allow aboriginal peoples to be more successful in it, rather than changing the aboriginal peoples' attitudes towards the education that now exists?
Mr. Orynik: I wish I had the answer. I don't know, and I think if I had the answer, probably somebody else would have had the answer a number of years ago.
It's a dilemma that industry faces, and one that I believe the aboriginal government faces also. How do they prepare their population, their members, for the 21st century?
Mr. Chatters: I have concerns regarding instances where I've seen aboriginal bands take control of education and deliver their own education system, where the emphasis seems to be on a return to their own culture and to their own language - those kinds of things. Those aren't the kinds of skills, that isn't the kind of education, that will make those people successful in today's industrialized world.
That's a concern, and I hope it's a concern for your organization, if your role is to advise governments on what they should do to bring these people in to be able to fully participate in this economy.
Mr. Conrad Pura (Labour Representative, Saskatchewan Labour Force Development Board): May I address that?
At the board level we've had a presentation from the FSIN. They have hired a training specialist to work with training and labour force development. They are starting to work on a five-year plan, which you may hear about if they're presenting here at some point today as well.
Our role in that is to listen to the plan, give them some feedback on the plan, and help encourage that plan to go forward if we see it as something valuable for the people of Saskatchewan as a whole, and if we see how their plan can plug into the rest of the provincial training strategy and the rest of the provincial training plan for labour force development, etc. Our board would encourage something like that, if we thought it was a worthwhile activity, and help to take it forward by presenting it to different levels of government, etc.
Mr. Chatters: Finally, of the $125,000 budget, what percentage is government-funded and what percentage is industry-funded?
Mr. Orynik: The primary funding for the board, the $100,000 or $125,000, is coming from both federal and provincial governments. I can't recall what the in-kind contribution that comes from industry and the partners is, but I believe it well exceeds that in the way of time and maybe -
Mr. Pura: Yes, everybody who participates at the board level is sponsored by whatever organization they represent, so there are very few expenses except for groups that don't have funding sources themselves, like some of the racialized groups, etc., that need some travel expenses covered, and those kinds of things. I represent the Saskatchewan government employee union, for example, so that organization picks up my expenses to be there as a board representative.
Mr. Chatters: Thank you, Mr. Chairman.
The Chairman: Mr. Asselin.
Mr. Asselin: Let us talk first about industry. Businesses, big and small, are always on the lookout for skilled and competent manpower because competitive pressures are becoming ever stronger. They need to become more and more efficient. We know that skilled manpower is also more efficient.
To be skilled and competent, young people who leave school to enter the labour market need to have adequate professional training. At the same time, youths who are just entering the labour market have no work experience.
Here in Saskatchewan and specifically in your field, do you provide training of a kind that will allow young people to enter the labour market and to find long term jobs, and do you have an assessment of labour market needs?
If every year you have in this region a surplus of electricians who cannot find a job, do you keep on training electricians or do you take into account labour market needs? Do you provide training geared to manpower needs? In other words, I hope you are not raising expectations, only for students to discover after school that they cannot find a job.
Mr. Pura: I can respond to that.
In my ``real life'', I work for a regional college which operates in rural Saskatchewan. In the province of Saskatchewan, there are eight regional rural colleges operating. There is also the organization called SIAST - the Saskatchewan Institute of Applied Science and Technology - and the universities, and then some of the private trainers who operate in Saskatchewan.
What has been happening in the past, and which has been identified as something that has caused some issues in the provinces, is sustaining the expertise in the education and training system and being responsive to the demands of the labour market as well, and trying to sustain that. It may be fairly easy to say ``quit training electricians'' on one hand, but then you lose that expertise in having people who can train electricians down the road when you may need that.
So what the board has been encouraging is a sectoral training approach to industry and training, with all the partners involved, including the employers and employees, levels of government and educators, to try to have a more cohesive identification of labour market needs and training needs down the road, to try to encourage ways of getting youth to participate in the labour market and gain valuable experience that they need, and also to be better able to forecast future shortages in certain sectors or in certain areas of the economy.
One example of that is, I sit on a group that is involved in the Canada-Saskatchewan strategic initiatives program - the labour market initiatives program. We've just commissioned a provincial study by sector of the labour market in Saskatchewan. It will be a very comprehensive, year-long study, and the report will come out next fall.
This information will help provide a better picture of what labour actually wants and try to develop some of those partnerships by getting labour sectors to work together and business sectors to work together, getting them together in focus groups and in various ways beyond just sending them out a survey or contacting them by phone, but getting them together to come up and express their needs as a group as well. This will help identify some of these needs.
In the past we have taken the COPS and PIMA information nationally, taken a percentage of that by industry provincially, and said those are our labour market needs for the next three, five, or ten years. As research and other people would say, that's not really a very good way of doing it - for developing a provincial training strategy and working on those things.
So I think we're moving in ways to help improve that. We need more facilitation of various activities like that and encouragement of these local sectors to get together to discuss issues and work together.
Mr. Asselin: I would like to know if you do continuing education for adults in your schools. We know that nowadays technology changes from one year to the next, especially in the automobile sector. Would a mechanic working in a plant or service station be able to access professional development centres in your province if he wanted to upgrade his skills?
Mr. Pura: Yes, we do. As an example in the automotive industry, SIAST, one of the technical institutes in Saskatoon, has an automotive training centre that works with industry representatives on representative boards to help identify training program needs. People go through the auto mechanic training program with equipment and information from the actual places where they're going to be working. GM provides vehicles and equipment they can work on, etc.
In Saskatchewan that program is centred on one location. But if there's a great demand and a great need for that type of program, and if it's economically feasible to relocate the program into rural Saskatchewan, if it's cost-effective it can be delivered through the regional college system or directly on-site for various employers.
Mr. Asselin: Do you have more and more women taking professional training for non-traditional jobs? Let's take, for example, the construction industry. Today, there are women who work as welders or electricians. Fifteen or 20 years ago, these jobs were the exclusive domain of men. More and more women are choosing what are called non-traditional professions. Here, in Saskatchewan, you offer as much professional training to women as to men.
Mr. Orynik: I can't specifically relate to or discuss any particular occupation or field such as construction. To my personal knowledge, though, in some of the things I've been witnessing over the past ten years, in what I do other than sit on the board and in the work I do on a day-to-day basis, I've seen more women in roles that they traditionally would not have been in ten or fifteen years ago.
The Labour Force Development Board is encouraging that change in attitude and is reinforcing training opportunities, not just for women, but for all of the various equity groups that exist, whether it is Canadians of different races, aboriginal groups or people with disabilities, etc. We're encouraging that, and we're encouraging a different attitude among employers and training providers. In general, yes, we're seeing a trend towards more people from those groups being in the workforce than there were fifteen or twenty years ago.
The Chairman: Thank you.
Mrs. Cowling: Thank you, Mr. Chairman.
I want to go to page 2 of your brief, community-based decision-making. You commented that you had a maze of development corporations, and you listed a number of them. As we move into the 21st century and we begin looking at fine-tuning our system to meet the 21st century, do you think that in some areas with respect to rural economic development there is a duplication of services and that perhaps we should be taking a look at a single-window approach for delivering those services?
Mr. Pura: I agree with that statement. I think we would agree to that. We've had some discussions about that at the board. The provincial government is involved in the new training strategy. We are trying to involve more players and more partners at one table or in one setting rather than having a number of different meetings going on at the same time. There is definitely a move towards that. As a board, I think we are encouraging that at all levels, not just in rural Saskatchewan but at other levels across the province as well.
Mrs. Cowling: One of your other phrases, and I'm going to choose to use it, was ``rewarding opportunities which will keep young people in Saskatchewan''. Could you expand on that for us?
Mr. Orynik: My thought is that if I'm a youth and I've just finished high school and my only opportunity is to work at McDonald's, do I consider that to be a rewarding opportunity? I don't think so. I'm going to look for opportunities that are going to be rewarding to me in whatever measure I consider to be rewarding. Those might be financially. They might be developmentally, in a position that would allow me to grow intellectually and to learn.
That's specifically what I'm referring to. If we can provide those opportunities to those individuals so they feel they're being rewarded in some manner, they will stay in Saskatchewan because they won't need to find those rewards somewhere else and they won't leave the province.
Mrs. Cowling: Should our government be encouraging or enhancing on-the-job training or internship? For instance, in some of the areas you've described where you're having difficulty bringing people to the jobs, should we be encouraging and providing programs that would help that process?
Mr. Pura: Yes.
Mr. Orynik: Yes, whether it be federal government, provincial government. What we need to do is figure out the approach. I believe part of that approach is being addressed in the Saskatchewan training strategy, but I believe there is also a role for the federal government to play in this when we start talking about national standards and the portability of skills. We don't want to train someone in Saskatchewan so they can work only in Saskatchewan. We need to train people here so they can work anywhere in Canada, and if we have a need in Saskatchewan, people from all across Canada can come to Saskatchewan and provide that need. We have to look at a whole variety of different scales.
Mrs. Cowling: Because we are looking at a lot of markets that are global, would you include partnerships with other countries in that training?
Mr. Orynik: If we can get something from somebody else, I think it would be beneficial to include partnerships that may go international, yes.
The Chairman: Mr. Serré.
Mr. Serré: Thank you, Mr. Chairman.
It seems to me in the past we've trained a lot of people for non-existent jobs. I have an example in mind. A mine closed in my riding. About 250 people got laid off. They trained maybe 75 people as truck drivers and maybe 3 or 4 of them are now working in that field. They decided they didn't like it for some reason or whatever. Yet we have hundreds of thousands of jobs we don't have the properly skilled labour to fill.
I was listening to the presentation by Syncrude yesterday. It seems to me the kinds of programs that are more industry-driven are more successful. Would you agree with that? And how would the federal government fit into those kinds of programs? What would be our role?
Mr. Pura: We've often asked this question ourselves: training for what? Training for meaningful jobs, training for long-term jobs or transferable skills; a number of those different issues that come up. It's true - we've even seen that in Saskatchewan - that industry-driven training, especially if it has industry participation in it, is definitely more successful. They are more in tune with what they need in their workplace, etc. But what we find in Saskatchewan, where 90% of our businesses are small employers, is they have very specific needs.
The province has initiated some programs over the last couple of years to help do workplace-based training and training for specific industries and specific companies, and it has been somewhat successful, but what happens then when this company or this organization changes is these people are left out. It's just as if they had gone through another program.
An evaluation of that program has just been completed recently, over the last year. So we're going to learn from what's happened in the last year.
As far as a role for the federal government goes, I think the federal government can continue to encourage the type of partnerships that involve employers, employees, labour, and business to identify the training needs, not just train for the sake of training, and try to meet the labour market needs. With shrinking resources we have to acknowledge that. We can't train continuously for jobs that aren't out there.
We need also to encourage mobility across the labour market; encourage people and give them the skills they need to be mobile, to be able to move to different parts of the province or country for employment. But that then causes the problem for us in Saskatchewan of not having trained people here, because they may leave and go to other areas. We need some type of encouragement to keep people in Saskatchewan and have them stay here or move here from other areas. I think the federal government can play a role in that.
Mr. Serré: What would be the form of encouragement or incentives? Do you have any idea how we can do that?
Mr. Pura: We've tossed around the idea of various tax incentives for employers to encourage people to take on various employees and keep them employed - not wage subsidies, because wage subsidies don't seem to be the answer. The board has looked at various options, such as some of the programs that take place in Quebec in particular, programs that encourage employers to take on new employees. They can also be encouraged to take on employees from the various different groups that are under-represented in the labour force: women, youth, and those types of groups. Some programs are happening nationally and in other provinces and they could be looked at in Saskatchewan to encourage more participation in our province.
The Chairman: Mr. Bélair.
Mr. Bélair: I'm of the opinion that the primary and secondary schools, the education system that exists today, are not realistically conceived to prepare young people for the workforce. A comment, please.
Mr. Orynik: At times they may not be. It all depends on the individual and where that individual wants to go.
There seems to be - this is my own opinion - a strong emphasis on continuing education in the context of universities, and there seems to be a strong push in students who are coming out of high schools to attend universities or some other technical institutions, whereas there isn't a big push to fill in some of the gaps in the skills that are required in today's market. There isn't a strong push into apprenticeship programs, trades, and that sort of thing.
It's twofold. Earlier a comment on labour market information said there's a real need for stronger labour market information, so the students who are graduating out of high school have an understanding of where the jobs will be into the future, so they can train themselves for the future. Right now we as a board don't believe there's adequate information flowing back to high schools, the secondary school system, to provide students with those choices they need to make and an understanding of what those choices are.
I personally think in some cases we're not preparing some of those students, students who have no desire to continue at the university level. They may be left high and dry.
But things are happening and they are providing work experience for people in the secondary school system with training partnerships that are going on. There's actually one here in Prince Albert where students from the high school system are being partnered with industry here in town so they do have work-related experience going on during their high school years. It's giving them a better base of training. Those are the types of things the board really supports.
The Chairman: Mr. Chatters.
Mr. Chatters: I'm confused by some of the questions from my colleagues across the way, in that they seem to be searching for a role in manpower training for the federal government, yet there's a move by the federal government to devolve federal responsibility in that area. Certainly in my province and in Quebec that has been achieved: the federal government has been removed from manpower training. Do you not support that process? Do you not think that's a healthy direction in which we're moving?
Mr. Pura: Right now a few members of our board are on their way to Toronto for a labour market meeting where a lot of that stuff is going to be talked about: what is happening in other provinces and how we can develop policies that will still maintain some national standards and incorporate the types of things that some provinces have taken on wholeheartedly.
I have limited experience, but traditionally Saskatchewan has always waited to see what happens in other places before developing its own strategies and plans. In this instance the provincial government is showing some leadership in designing a truly Saskatchewan training strategy, as long as they complete that process and then identify ways the federal government can still participate in that program.
We've been hearing talk that the federal government is definitely still going to be involved in some way in the province, through involvement in Pathways boards, Community Futures funding, Western Economic Diversification funding, etc. There are lots of ways the federal government is still going to be involved in funding, education and training in our province.
The board supports the move to devolve those services to a local or provincial level. We've outlined some of that in our presentation today by saying we believe in community involvement, local involvement and regional involvement in decision-making. So that's something we do encourage and support.
The Chairman: Thank you.
Mr. Asselin: Given the presentation you have just made, I am convinced that you would appreciate it if the provincial government of Saskatchewan were to establish programs. You however need the federal government for financing.
Mr. Pura: Traditionally in Saskatchewan we've had federal funding in a major portion of education. It's been a time period of adjustment for the province to realize it has to take a larger role and a larger financial role in the training programs in the province.
That hasn't happened in the past. Our education system has been developed to receive dollars from the CJS program, which was developed eight or ten years ago. There hasn't been an acknowledgement, except to keep going after the federal money to develop our system. There has to be more provincial money put into the system.
But of course, as with all provinces and all levels of government, there's a lack of resources and a lack of money there. So they're trying to come up with a training strategy that will acknowledge limited resources but also be effective and work well in the province.
The Chairman: I'll wrap up the testimony by making a comment on what Mr. Chatters andMr. Asselin just noted.
Our discussion today is about rural development. One of the points you've made quite well is that the local entity can best make those decisions, and that's particularly important when it comes to decisions on training and education.
The idea that those partnerships have to be formed within Saskatchewan, as opposed to being formed or suggested by a bureaucrat in Ottawa, is an important one. That's an important component of a national strategy, which is seeing the delivery of manpower training being devolved down to the provincial level as a recognition of that need.
Along with that comes a fair amount of money to allow it to happen, and that is the subject of negotiations between the federal government and the individual provinces. But it's not as though the federal government has abandoned it altogether. It hasn't. It's simply recognizing what we recognize as a committee and what you've said in your testimony, which is that the decisions about training and education are best made within the community, be it the provincial community or the rural community.
We thank you very much for your testimony. We appreciate the time you've taken. I know we've kept you here a little longer than we had originally planned to. We appreciate the testimony. Thank you.
Mr. Orynik: Thank you.
Mr. Pura: Thank you very much.
The Chairman: I'd like now to call on the Prince Albert Development Corporation.Mr. Trevor Ives, I believe, is here.
Mr. Ives, welcome. I'll ask you to make a few opening comments, and then we'll turn it over to questions from the members.
Mr. Trevor Ives (General Manager, Prince Albert Development Corporation): I appreciate that. I apologize for not having my opening comments for distribution. I wasn't aware that was something I was supposed to do.
Mr. Chairman and members of the committee, good morning. I'm the general manager and director of finance for the Prince Albert Development Corporation. I'd like to thank you for the opportunity to speak to the committee today and to introduce our company and some of the things we do and how it fits into rural development.
I'd like to begin by providing some brief information and background on the Prince Albert Development Corporation, followed by a little bit of detailed discussion surrounding some of our specific operating divisions and the impacts and challenges we face in our operations from our geographical concerns and operating in rural Saskatchewan, and so forth.
The Prince Albert Development Corporation was incorporated in 1985. It is a privately owned corporation with its head office on the Wahpeton Indian reserve, just north of Prince Albert. The company is owned equally by the members of the 12 individual first nations that comprise the Prince Alberta Grand Council. The shareholder first nations are: Black Lake; Hatchet Lake; Lac La Ronge Band; Sturgeon Lake First Nation; Red Earth Cree Nation; Shoal Lake Cree Nation; Fond du Lac; Peter Ballantyne Cree Nation; James Smith Cree Nation; Cumberland House Cree Nation; Wahpeton Dakota Nation; and Montreal Lake Cree Nation.
Geographically, the shareholders cover a region from just south of Prince Albert, all the way to the far border of northern Saskatchewan and the far eastern border of Saskatchewan that separates Saskatchewan and Manitoba. The Prince Albert Development Corporation currently operates a number of companies throughout this geographical region, including areas that are extremely remote and only accessible by air. We operate within a number of different industries, including the hospitality industry, most notably the Prince Albert Inn - and I thank you for choosing this location to hold your hearings - and the North Star Restaurant and Lounge.
We operate in the property management industry, through the ownership of three commercial buildings in the Prince Albert area, and in the construction industry, with a joint venture with PCL Construction of Regina. We operate within what we call the unemployment brokerage service-type industry through our northern employment services division located in La Ronge, Saskatchewan - I'll provide a little more detail on that later - and finally, in the security and janitorial services industry. It was in this area that we got our start close to ten years ago.
It's noteworthy that the Prince Albert Development Corporation, despite being very diversified, has a number of common elements. All of our companies are labour-intensive and many provide jobs and opportunities in entry-level positions. All of our operating divisions are self-sufficient and do not receive any federal or provincial government assistance for their operations. All of our operating divisions are 100% owned and managed by the Prince Albert Development Corporation, with the exception, of course, of our joint venture with PCL.
All of our operating divisions endeavour to provide employment opportunities for our first nation shareholders. All of our operating divisions are directly or indirectly affected by major natural resource industries such as forestry and mining. As such, the successful economic stability in mining and forestry have a direct positive impact on our company as well.
That's a very brief discussion of the different industries we operate within, and I'd like to spend a little bit of time on a couple of them because I think they're important. They may tie into some of the discussion and questions the panel might have.
First, our security and janitorial division, as I indicated, is where we started about ten years ago. But the Prince Albert Development Corporation has maintained a long-standing working relationship with many of the members of the northern uranium-mining industry.
Specifically we've been performing security and janitorial services for Cameco Corporation and Cogema Resources since 1986. Security services have been and continue to be provided at Cameco Corporation's Key Lake mine site as well as at their head office in Saskatoon.
Our company has also been performing security and janitorial services within the uranium-mining industry at Cluff Lake uranium mine, McLean Lake uranium mine, and other locations since we began over ten years ago.
In addition, we provide janitorial and security services for the Millar Western pulp mill in Meadow Lake.
Not only have these security and janitorial contracts given us the opportunity to build an economically viable northern business, but it has provided the opportunity to create employment for hundreds of northern residents over the last ten years.
As part of our corporate mandate and our commitment to the mining companies and the forestry companies, we strive to hire from those geographical areas that have the most impacts from the activities being pursued in natural resources. These contracts supplement our total staff, which exceeds over 200 people at this point in all of our areas.
Northern Employment Services, as I mentioned before, supplements our security and janitorial services division. In the fall of 1995, I guess, the Prince Albert Development Corporation, with the assistance of one of the mining companies, founded a new business division in La Ronge, Saskatchewan, which operates under the name of Northern Employment Services.
Northern Employment Services has effectively been contracted as the exclusive recruitment and manpower placement service for the construction, labour and trades personnel for the general contractor and subcontractors of the McLean Lake mill project, which is the latest uranium development project in northern Saskatchewan.
As part of this process, NES has developed an inventory of tradespeople from throughout the north. In an effort to create employment opportunities for northern residents, job opportunities are prioritized, as I indicated before, by geographical region, with the first opportunities given to those residents closest to the mine.
Once hired, NES provides on-site assistance to personnel to assist them in integrating into the workforce. Many of these jobs are entry-level jobs and first-time industrial types of jobs for the candidates who get them. We have staff in La Ronge and at the uranium mine, all of whom are northern residents.
More impressive, however, is that since the first construction employees were hired in September 1995, over 160 employees have been hired and put to work on the mine site. Over this short period of time, until the end of September 1996, which is about a year or 13 months, I guess, these jobs have generated in excess of 165,000 man-hours of work for northern residents of Saskatchewan.
This industry-leading concept exemplifies the uranium industry's philosophy to ensure that as part of their developments in northern Saskatchewan, northern companies and individual northern residents are given the first opportunity to realize the economic and social benefits that arise from mining.
The Prince Albert Development Corporation, as I indicated, also was involved in the construction industry through a joint venture with PCL Construction, named PADC/PCL Maxam, a joint venture. The purpose of this company was to strategically pursue a wide range of construction opportunities throughout Saskatchewan, and it's been successful in obtaining the McLean Lake uranium mill.
Within the hospitality industry, as I indicated, we own and operate the Prince Albert Inn and the North Star Restaurant and Lounge, which operates in the Northern Lights Casino in Prince Albert.
The Prince Albert Development Corporation has grown to the point where we employ in excess of 200 people who, as you might expect, are our greatest asset.
Now that I've introduced the company, I'd like to point out some of the challenges that we encounter, not only in our current operations, but in one of our mandates, which is to continue to expand and look for new opportunities.
I focused on three or four different items. I won't discuss them at length, because you may have some questions, but I will note them as issues that are important to us as entrepreneurs.
First of all there is the employment legislation. I recognize that although employment legislation is largely a provincial jurisdiction type of area, it's always a significant issue to labour-intensive operations, which most of our operations are, and always a major factor in potential future economic development opportunities. Legislation and regulations surrounding areas such as labour standards, occupational health and safety, workman's compensation, unemployment insurance premiums, Canada Pension Plan premiums, trade union act legislation, have all become extremely onerous for employers in service-type industries. It makes it very difficult to control payroll costs and has definitely become a hindrance to job creation, to my mind.
Education and training.
As we indicated, we make a special effort to try to hire from local rural communities that are impacted by these natural resource developments. In an effort to hire from these local regions for security contracts, in which we are looking for security guards, or for construction positions in northern Saskatchewan, we always find it difficult to find appropriately trained and educated workers. Hence many people in rural communities do not get the job opportunities that exist within or around their communities, and as employers we tend to hire from a region that already has trained and educated people.
The costs of training cannot always be absorbed by the employer. As a result, local community members sometimes miss out on these opportunities. If training were more closely tied to the needs of industry, with the job expectations that are going to be developed in those rural areas, those jobs would belong to those local communities, because I think most employers would prefer to hire locally rather than source from somewhere else.
Another problem we have with trying to deal in in rural areas of Saskatchewan is once we do hire employees through entry-level positions or security or trade positions, we find we have a fairly high turnover. They tend to leave the base communities they were initially hired from and move to an urban setting or leave the province. For those reasons turnover is quite high, and it's a bit frustrating from an employer's standpoint. We hear a lot of employees tell us they're leaving for wages, they're leaving for taxation types of reasons. It's definitely a concern.
As we pursue other opportunities in rural areas or in northern Saskatchewan, it's always difficult to raise capital for particular projects, such as the construction of new facilities or new buildings. It's a combination of a number of things, everything from lending institutions to the cost of doing business in rural Saskatchewan or rural areas. It's higher than in most urban areas. That's difficult.
Maybe I'll leave it at that for now, Mr. Chairman. It gives you some indication of what we do as a company and some of the areas we find to be a challenge or a concern.
The Chairman: Thank you very much.
Mr. Asselin: I would like to know if there is in Saskatchewan an industrial development and tourism corporation. In Quebec, there are corporations of that nature in several municipalities, some of which are in my riding.
What does an industrial development and tourism corporation do? First of all, it promotes the area, its assets or its resources so as to draw investors to rural areas. It also strives to show future investors that within a partnership system, namely with municipalities, their workers will be housed and will have access to basic services.
Our industrial development and tourism corporation also has a second role to play, namely in assisting small and medium size companies, because we are all aware that large industries need to be surrounded by small companies. We are also aware that large industries contract out work to smaller companies.
The corporation helps theses small companies by giving them work and development possibilities. We even go so far as to draw up their business plans and to, as we say in Quebec, put them on the map in their rural or urban environment. Does anything similar exist here, in Saskatchewan?
Mr. Ives: Actually, your comment is interesting. The larger businesses that pass off to the smaller companies, in contracting out.... That's exactly how our company got its start. As I indicated, it was through the security services and janitorial services, about ten years ago.
But specifically on your question about a corporation or a group that provides business planning, business support, business assistance in that regard, I'll answer that in two ways. First of all, our corporation, the Prince Albert Development Corporation, does a certain amount of that for our shareholders. As I indicated, we are a privately held corporation owned by all those twelve first nations, and we do endeavour to use our business expertise or resources to try to assist them in business planning at their local level, at their community level, at their grassroots level. We ourselves do provide that function, but it's done for a specific target group, that being our shareholders.
Saskatchewan as a whole, or Prince Albert specifically.... A number of different groups try to accomplish that objective. REDA, the Regional Economic Development Authority, tries to fill that niche of promoting the area, trying to draw industry to it. They work in conjunction with the City of Prince Albert to try to bring new industry to Prince Albert. REDA also, in another capacity, does provide business planning services and so on for very small entrepreneurs. The chamber of commerce, on which I sit as a director, tries to provide some sort of business resource to people coming into town and to promote local businesses and small businesses and so on.
So a number of different groups try to fill that void. It's actually a local topic of debate who should do what, in what role, to try to provide that function most effectively. A number of groups are trying to fill that void, but somebody coming into town can't get one-stop shopping; I guess that's the way to put it.
The Chairman: Mr. Chatters.
Mr. Chatters: Is the mandate of your corporation to create wealth for their shareholders? Is that your primary purpose, or is your mandate primarily to create employment for those bands?
Mr. Ives: Both. I believe through the successful operation of a profitable business you will create long-term employment opportunities. The key there is that successful business will create long-term employment opportunities.
Mr. Chatters: So you have been successful and you are returning wealth to your shareholders?
Mr. Ives: Yes, we are, and as I indicated we are also trying to provide employment opportunities.
Mr. Chatters: The other thing we've consistently heard in the last three days is the roadblocks in the way of aboriginal people being successful in business. How many people of aboriginal ancestry hold management positions within your organization?
Mr. Ives: Management positions? The majority. My predecessor was aboriginal. A lot of my divisional managers are aboriginal. That's a function of time, I think. As I say, we have been on the go for ten years now and that has been a transition over time - a positive transition over time.
It's something we always struggle with. Obviously I'm in a position where I'm trying to work myself out of a job by promoting that. That's one of the objectives of the corporation: to be providing these opportunities and developing skill sets that are transferable, and not just to our corporation. If they're working for our corporation or if they're working in our hotel, whether it's as management or otherwise, they should have a skill set they could transfer to the hotel across the street or to a hotel in Saskatoon or to a hotel in La Ronge. It's definitely an objective, yes.
Mr. Chatters: Our last witness was from an organization basically funded by government to advise government and industry on initiatives that should be taken to make manpower training and manpower issues more successful. When I asked him what his ideas were for a need for change in the educational system to allow aboriginal people to be more successful, he shrugged his shoulders and he had no ideas. Yet his organization's mandate was specifically to advise government on that. Do you have any ideas for how governments should make changes that would allow aboriginal people to be more successful, or is it, as you said, just a function of time?
As time goes by and natural resources are developed and exploited, to a great degree aboriginal people are being bypassed because of the roadblock of lack of education. We need to speed up that process of giving them the opportunities, and not only for the grunt jobs, the security and stuff. We heard a reference to jobs at McDonald's not being fulfilling. Certainly janitorial jobs aren't always very fulfilling either. There's a desire there for more fulfilling jobs, yet we don't seem to be able to find success and achievement in our educational system. What do we need to do?
Mr. Ives: It's a very difficult question. When I made reference to time, it wasn't with the association that we should just sit back and let time pass and it'll look after itself; absolutely not. That wasn't the intent. In Saskatchewan, if you look at the demographics, by the year 2000 first nations people, aboriginal people, will make up half the population of Saskatchewan. They will definitely not hold half the jobs, and there's a problem with that. I have a problem with that.
There's no question the mines, the forestry, and so forth do create the opportunities. But again, and I think most entrepreneurs or most businesses or industries would agree, if there is the opportunity to take local people and put them in the jobs they will, but they won't sacrifice 50% of the productivity, 50% of the skill sets, to do that. You hear employers, including ourselves, continually saying, we're targeting to hire aboriginal people; that's our mandate; if they're trained, we'll take them right now.
Mr. Chatters: Is the problem more than anything else a mindset and an attitude towards acquiring those skills...not so much the skills, because those can be provided by industry. I think basic literacy needs to be achieved before you begin the process of providing the skills training.
Mr. Ives: If you want to tie it back in to infrastructure, that's part of it.
A couple of weeks ago we got a couple of résumés. We were looking for a security supervisor. Security supervisors need to have some basic qualifications, like a driver's licence. We're trying to hire out of northern Saskatchewan, where there aren't very many roads, if any. A lot of the people don't have a driver's licence and don't have the ability to get one there. They have to come to Prince Alberta to take a driver's course and get a driver's licence so we can employ them.
Mr. Chatters: If there are no roads, why do you need a driver's licence?
An hon. member: Oh, oh!
Mr. Ives: They don't need one where they're living, but they need one for the job. At the mines they have to do perimeter checks and so forth.
Mr. Chatters: Yes, I know.
Mr. Ives: But this is part of the catch-22.
Literacy is a very good point. We hired an individual a month ago who met all the criteria. He had a résumé. We assumed he did the résumé. We put him on-site as a security officer, and when the time came for him to write up his first incident report, we found out that he couldn't write. We had to let him go. So this person missed out on the job.
They're reasonably well-paying jobs. They're good jobs with transferable skills. These people are missing out on jobs sometimes because of a basic level of education. Not in all cases, though.
Mr. Chatters: I agree. I think 99% of those people are quite capable of learning the skills, but before you can begin you need the basic literacy skills.
Thank you, Mr. Chair.
The Chairman: Mr. Wood.
Mr. Wood: I have a couple of questions. I want to go into the training aspect of it. I want to know how it works. You mentioned a security chief. You mentioned somebody with a literacy problem.
Maybe you already do this. Maybe you are really investing in these people and saying to the gentleman who wants to be the security guy, ``First you need a driver's licence. You have to get one. We'll help you get it. We'll pay for it. We'll train you.'' You do the same thing with this other lady who has a learning problem. You say, ``We'll help you get this education, but in return you have to commit to us for three to five years of good employment.''
It's like the Prince Albert Inn. If an aboriginal person wants to get into hotel management, would you take some of the profit you make from other organizations and reinvest it in this individual, but in turn get a commitment from this person to be employed in hotel management for three to five years, or reimburse or whatever? Do you do that?
Mr. Ives: We do that. You can identify a really good candidate very quickly. If the will, the drive and the initiative are there, taking some of our profits and reinvesting them in that individual is definitely not a problem.
Within the hotel that's a lot easier to do. You're dealing with a bigger base of staff. You can spend a lot more time training at the work site and in the workplace. You can get them involved in hotel management courses and so forth. Absolutely. We don't necessarily get them to sign an agreement or anything that would say, ``Okay, but if we do this for you, you have to stay with us for three years.'' We have those discussions, but nothing is formalized. There's no question, though, that the process and the reinvesting in our staff, which I indicated earlier, make them our best assets. We have developed excellent people.
Sometimes it's a bit different when we are trying to fulfil specific contract obligations. You mentioned the security job. I'll use that as an example. That's a very low margin business. We're effectively operating that business on a labour mark-up. We get a contract for x dollars and we hire guards and supervisors, uniform them, give them training, and try to take a margin to operate the administration between the two rates. In fulfilling those contractual obligations, which are all in remote sites, it's difficult to train on the job. You almost have to set up a training....
Mr. Wood: Why wouldn't you earmark all that and offer them the opportunity to go to a community college to take a law and security course: we'll subsidize or help you pay for it and get you trained. If you're in this business, which you are, then you would have those people available and you wouldn't have that problem.
Mr. Ives: Every couple of years we do that. Again, it's not necessarily on a one-candidate, individual basis -
Mr. Wood: No.
Mr. Ives: - but we'll recruit a group of twelve or fifteen and put them through the course.
Mr. Wood: Do you cost-share with the...?
Mr. Ives: I was going to say that it's easy to cost-share those types of courses with government or with other industries. That is currently being done, but we do find.... It gets back to the turnover. I don't have an answer on how you'd change that, but you recruit them and train them, and then somebody else hires them. Of course, you can't hold anybody back from furthering themselves in terms of opportunity. That's part of the game too. If somebody gets a better opportunity, you wish him the best.
But yes, indeed, we do try to organize and cost-share and participate in those training programs. For security, it's on a group basis as opposed to an individual basis. On something like a hotel, you try to target a real good candidate and bring him along.
Mr. Wood: I just have another quick question about something you touched on quickly as well. What are some of the drawbacks in the ability of aboriginal Canadians to access sufficient quantities of capital for investment purposes? How can you get rid of some of these shortcomings?
Mr. Ives: You have to be innovative and creative. It's difficult to raise capital for assets that are going to sit on a reserve, for instance, especially if you're raising capital through conventional methods - debt and equity and that sort of thing. There is a general reluctance - and I don't think it is necessarily limited to first nations or reserves - that makes it more difficult to raise capital in rural areas as opposed to urban areas. A lot of ventures that will take place in a rural area are very specific to that community and specific to the resource, talent, or whatever it is that you're pursuing, and they basically have to hold up that entire community. It's difficult to do.
We've looked at opportunities everywhere, from starting up a sawmill in a particular region to something that ties in with the fur trade up north. It's difficult to raise capital to get those off the ground because there tends to be a little more risk involved - and I don't deny that. So I don't know what the answer is to try to resolve that; it's a tough one.
Mr. Wood: Thank you.
The Chairman: Just before going to the next witness, I want to explore one thing with you by following up on Mr. Wood's comment. Essentially, you're saying that one of the difficulties in accessing capital for your corporation is the fact that there is an inherently higher risk in the enterprises being undertaken. Did I hear that correctly?
Mr. Ives: A higher risk or a perceived higher risk, yes.
The Chairman: There's an important difference between the two. Which is it, in your opinion?
Mr. Ives: Again, it depends on the particular venture, but there is no question that there is a perceived higher risk.
The Chairman: The reason I bring this up is that in front of this committee and in front of the industry committee - which I've also sat on - the major financial institutions in this country have testified that there is no difference in risk and that they don't treat rural Canada differently from urban Canada. Personally, I don't subscribe to that particular piece of testimony -
Mr. Ives: Neither do I.
The Chairman: - but I'm curious about something. You're in the business, you're busy accessing capital, or your enterprises are. I'm wondering whether, in your opinion, the private lenders see what you do as riskier than what perhaps is happening in Toronto or Regina or Vancouver.
Mr. Ives: In my opinion, absolutely. That's why I qualified that with ``perceived risk''. If I'm a lending institution, I guess I'm not going to sit in front of this committee either and say that I perceive there to be more risk in rural Canada. So in my opinion, I believe there is a perceived higher risk among commercial lending institutions about doing business in rural Canada.
The Chairman: Do you see trying to level that playing field as an appropriate role for government?
Mr. Ives: I believe the answer to that is yes. I think the playing field, given the opportunity, would level itself out. Nothing brings things back into line like success. If one could hold up enough success stories, I think the playing field would level out on its own. But to get to that point - maybe.
The Chairman: Thank you very much, Mr. Ives. I appreciate your effort to provide us with a particular type of model to take a look at and to examine in the context of our study. We appreciate your time and your testimony.
Mr. Ives: Thank you for the opportunity. I appreciate it.
An hon. member: As a former banker, I think you can probably answer your question better than anybody else.
The Chairman: But fortunately in this role I ask the questions; I don't have to provide the answers too.
We will now call on our last witnesses before the lunch break. They are from the Saskatchewan Council for Community Development. I believe they are here, and we'd like them to come forward.
Welcome. We appreciate having you here. Perhaps you could introduce the group that's with you and provide some opening comments. We'll then turn to the committee members for questions.
Ms Linda Pipke (Executive Director, Saskatchewan Council for Community Development): Great, thank you very much. I certainly appreciate the opportunity to appear before you.
I have brought with me today several executive members of the Saskatchewan Council for Community Development. I think you'll find they have some interesting backgrounds that you will want to ask lots of questions about. With me are Mitch Ozeroff, the chair of the Saskatchewan Council for Community Development, but also a Saskatchewan Wheat Pool director; Joan Corneil, a member of our executive, and also a representative of the Saskatchewan Economic Developers Association; and Louis Hradecki, our vice-chair and also a representative of the Association of Rural Development Corporations in the province. So you'll find that they have a breadth of experience in economic development.
What I'd like to do is just give you a few opening comments. Joan also has a few comments she would like to make, and then we'll go from there.
As I mentioned, the council would certainly like to thank you for this opportunity to appear before you. We only hope you get a feel for our concerns and the issues that are facing rural Canadians, and particularly those in Saskatchewan since you're here with us today. We are very pleased to hear that the government is committed to the economic renewal of Canada. It is of utmost importance that the government work with rural Canadians to tailor responses to ensure, from the economic prosperity, benefits that lead to healthy, sustainable communities.
As a handout for you, I brought along some background with regard to what the council is about in order to give you a bit of a perspective. Basically, the organization was formed in 1992 by a number of organizations that were very interested in communities and in rural community development. At the meeting at which we were formed, it became clear that it was very important to maintain communication linkages around community development efforts and, secondly, to play an important role in fostering community empowerment and development in the province.
The notion that associations, institutions and agencies voluntarily collaborate to support community-based development is consistent with the philosophy of bottom-up development. Bottom-up development in which local communities take initiative and control of their future is essential if rural and regional development is going to be successful.
Those participating in the discussions at the initial meeting really felt strongly that there should be a new multi-organizational group formed with a clear mandate and the resources to move forward in these areas. Our vision is basically that of communities collaborating to develop a rich social environment, optimal economic opportunities, and a high quality of life. Our aim as an organization is to be a catalyst for community empowerment and development. To give examples of a couple of our objectives, we aim to assemble and distribute information on community empowerment and development in Saskatchewan; to identify development challenges and opportunities common to the collaborating stakeholders; and to support and promote appropriate collaborative action, innovative approaches, options and partnerships for community development.
Part of what we're looking at for our workplan in the coming year is an attempt to increase awareness of community development information by using the Internet, home pages and hot links to other community development information and sites, as well as a place to share our success stories of what's happening in the province. This way, others can become aware of them, and they can hopefully glean information and contacts on what is happening, what has worked, and what combinations might work in their own rural communities.
We're quite involved with a resource directory that we're developing to be able to provide information - print, audio-visual and resource material in particular - that our member organizations already have so that people throughout the province can gain access. We're also working on process development with a number of provincial and regional organizations and communities to encourage collaboration and cooperation.
Just as a quick example, one of the most recent groups that we have worked with actually happens to be the RCMP for all Saskatchewan. Together, we looked at how we can work together to develop a process to work with communities, especially to establish where new facilities will be built. When towns are competing within detachments, how do you work with the people? How does this blend in with the community-based policing approach that's now being taken? We hope it will be a model that can be used across the country. So that's an example of the kinds of things we're involved with.
We're also involved with developing a proposal for the Canadian Adaptation and Rural Development Fund, or the CARD Fund. That's a federal program being initiated through Agriculture and Agri-Food Canada, and some of you may be aware of it.
We've spearheaded calling together a working group that consists of many commodity groups, as well as development groups in the province, to design a proposal that has now gone forward verbally. We're hearing that it has been accepted very favourably, but we don't have it in writing as yet. It hasn't been announced.
To give you a quick flavour, our membership involves businesses such as Credit Union Central, Federated Co-ops, and Saskatchewan Wheat Pool. In the federal government, we have Agriculture and Agri-Food Canada; Prairie Farm Rehabilitation Administration, or PFRA; and Western Economic Diversification Canada. And in Saskatchewan, the Department of Economic Development is taking the lead role. There are other departments involved as well, such as municipal government and Agriculture and Food, and the social services' community development unit is a new member. Municipally, we have the Saskatchewan Association of Rural Municipalities; the Saskatchewan Urban Municipalities Association, or SUMA; Saskatchewan Housing Authorities, and the West Central Municipal Government Committee.
Joan can also give you more details on this if it's an area of interest.
In the aboriginal area, we have the Métis Nation of Saskatchewan Inc. We've been working to try to have the FSIN, the Federation of Saskatchewan Indian Nations, as part of our organization. As of yet, they are not at our table, but discussions are ongoing and we would certainly like them to be at the table.
We have an education component that includes a lot of the regional colleges, the Centre for the Study of Co-operatives, the technical institute - or SIAST, as it's called in Saskatchewan - as well as the University of Saskatchewan extension division.
There's a very large non-governmental component, which includes: the Catholic Rural Life Ministry; health districts; the National Farmers Union; the Prince Albert Regional Economic Development Authority; Sagehill Development Corporation; the health organization for the province, or SAHO; and a number of the groups I have mentioned that are represented here today. As well, there's the Saskatchewan Parks and Recreation Association; SWAN, the Saskatchewan Women's Agricultural Network, which you'll hear from later today; and some of the Community Futures Development Corporations.
In the last year we've provided workshop forums, short in length, in which we focus on success stories and how to maximize potential within communities. We've had about 225, which isn't a huge number, but given the growing interest, every workshop is increasing in size. People have responded to this very favourably. This week, beginning tomorrow through Saturday, we will be having an interprovincial conference called Prairie Forum, in which we have 260 or so people registered, to look at sustainable ways of moving communities into the future.
That gives you a quick overview of some of the things the council is involved with. There are just a couple of things I'd like to draw to your attention.
The council sees community development, including, as I've mentioned before, the economic side, but also the social and environmental sides.... The three areas could be thought of as concentric circles, and where they all overlap is the community development, the wholeness of the community we're looking at.
We would hope that any economic development undertaken that has the positive effect of promoting growth in economic activities and in the area of jobs and dollars for communities also provides positive ways for people to grow and learn new skills, but does not risk the environment in that process. There has to be consideration of all three areas.
In some provinces they have used what's called an environmental audit for economic development to determine what impact it may have on the environment. I know at one point the Saskatchewan Health Council recommended something called a community audit, in which new proposals and new activities, such as economic development activities, etc., would have a kind of check-sheet that could be reviewed before implementation in order to understand what the impact would be on the other segments of the community.
There needs to be a reduction of what we would call the stovepipe mentality, which sometimes does exist within government when there's no mechanism to check the impact of policy or programs before they're actually implemented and to review existing programs.
Inter-sectoral and interdepartmental collaboration is a real necessity. I know provincially some of the government departments are working towards that, but it's becoming more and more clear that each department needs to understand what the other is doing and that they all link. We need to make sure they come together before one happens to have a major impact on the other.
As one quick example, a number of years ago in rural Canada, the concept or policy put forward by Agriculture and Agri-Food Canada tended to be that big is better. I sometimes wonder how that was examined, because what's occurred of course is more depopulation, an increase in land-holding size, an increase in equipments and larger financial loans obtained to do this. But now many communities are struggling because they don't have sufficient infrastructure, or there aren't enough kids any more for the schools, for the hospital or for shopping centres that are more than convenience centres.
It's becoming more difficult to attract employees to rural areas if the basic services are not available. In the news just recently, the company Bourgault, which is an agricultural company, was stating the problems it was having in attracting welders to a small rural area; they do short-line equipment manufacturing. Some of the people didn't want to leave the cities or urban areas because they thought there wouldn't be the services available.
Another emerging need is for us to understand cooperation and working together. We need to rethink our whole notion of community; it's not that one community wins and another loses, but rather we should look for win-win solutions in a regional situation.
We need to teach leaders to have a vision of what collaboration can accomplish, to be sensitive and to have the ability to build relations with diverse stakeholders. We need to help people become process-literate so they know how to design processes that are both human and organizationally effective. We need to cultivate leaders with these special competencies to manage multi-party interdependencies.
Also of primary importance is to have the ability to place decision-making within the context and to feel the connection to community and community welfare, rather than just individualistic motives. The ability to examine problems in a holistic way has to be encouraged and included in the educational curriculum at all levels.
We also must be able to include in all levels of the educational system the whole concept of wealth creation and what it means to be an entrepreneur. We need to change our thinking so we don't expect there will be a job when we're finished whatever it is we've been learning or training for, but will know how to identify development opportunities; how to support and provide collaborative, innovative projects and partnerships; and how to strengthen leadership.
One of the things we've been working on in developing the proposal for the Canadian Adaptation and Rural Development Fund looks at several key priority areas.
I have provided as a background piece a chart that I thought you might find rather interesting. It shows some of the programs that are operating in Saskatchewan, what government departments they originate from, what they cover, the type of funding and how many years they've been in existence. That's part of the exercise we went through to try to determine where the gaps are and where we need certain things to occur.
Two priority areas we've looked at are: business and economic development, with everything from manufacturing and value-added processing through to rural-based, export-oriented services; and agriculture-related or rural-focused tourism or eco-tourism. So I see some threads here that are common to what you're talking about.
The kinds of assistance people seem to be needing are market assessments, feasibility assessments, business plan development, technical assistance - a lot of the questions you've already identified.
We've looked at funds for strategic initiatives as well as research and projects. Industry groups must have input into defining, developing and implementing initiatives in priority areas. They must and will respond to government direction and prevent overlap.
In the area of human resource development, we saw a gap or a need in encouraging strategic alliances and self-sufficiency. Assistance is required in everything from community facilitation, strategic planning and community sustainability to youth leadership training, entrepreneurial training, community business plan development and management. All of these have emerged. I get a number of calls from communities asking ``How do we work together? What process do we use? How do we get started? How do we make things work? We know we need to do something, but how do we do it?''
In terms of training, just to make one quick comment on another topic area I know you've been enquiring about, it seems imperative from our point of view that there is access to training in rural areas via distance education, satellite, audio-visual home study - all of those modes and more that are evolving - with access to tutors.
Nine regional colleges identify local needs for training and work with accredited technical institutes to give credit training in rural areas. People have to live and also take training at the same time, so it must be within their area.
There should be transferability of skills between jobs and employers. There needs to be a prior learning assessment of skills and of on-the-job experience, as well as on-the-job training by employers.
Apprenticeship that can be certified by remote or roving journeymen should also be considered, because in rural areas there are not always the journeymen they must train under in the apprenticeship program. There are other ways of doing that, so we need to be sure it's updated.
Of course there should be transferability of all certificates between provinces. There shouldn't be barriers within our own country. And there should be an emphasis on core job skills.
We need to turn around the negative attitude that's persisting and share our success stories, provide opportunities for our people and learn how other like-minded people have been able to accomplish this.
I'll turn it over to Joan, who may want to respond to a couple of questions. I know she has reams of material, but she's going to try to target it and go from there.
Ms Joan Corneil (Member of the Executive, Saskatchewan Council for Community Development): I'll give you a little bit of background on what I do.
I'm employed by a rural development corporation called the Bear Hills Rural Development Corporation, in Biggar, Saskatchewan. It covers five rural municipalities and six small towns and villages within the area.
Out of that office we run the midwest REDA. The midwest REDA encompasses thirteen municipalities and has four economic development entities under it.
The other group I sit and work with is also a member of the Saskatchewan Council for Community Development, and that is the West Central Municipal Government Committee. It is a unique organization of all rural and urban municipal reeves and mayors and the administrators. I work on the transportation subcommittee, so when I read one of your questions about the infrastructure...I'm well versed on that and on what we're doing in our area.
I was very interested in listening to the gentleman from PA who was sitting here. I share a lot of his views. I share the views Linda expressed here.
We in Saskatchewan have a very small population. As you can appreciate from what I mentioned about what I do in my office, there aren't many of us around to do a lot of work, so we get farmed out everywhere. The local chamber in Biggar also runs out of my office, along with the tourism group, and we have fifty clients. We do up business plans. We do up feasibility studies. We take our clients by the hand into the banks with their cashflow statements and try to get them access to capital.
Access to capital in rural Saskatchewan is very difficult. It's a perception that real estate values.... Banks invest in property. They want to go in and they want to knock on wood or kick cement or whatever they do. That's what they're buying. That's what they want back if something should happen. The reality is out in rural Saskatchewan there isn't a great market for a 600,000 square foot warehouse. We have to take a look at those situations and we have to work with the banks.
Maybe we have to start small. As Linda said, maybe mega isn't good. But I always use the analogy of J.L. Kraft. He did not start off with a cheese factory; he started off in his kitchen. But if Kraft General Foods came into the province of Saskatchewan, we in Biggar would hold our arms wide open and bring them in too. So mega is good.
Small is good because it has the potential to grow into mega. That's what we're hoping to do in this province. I come from the community of Biggar, where Prairie Malt is situated. If you aren't familiar with Prairie Malt, it's close to becoming one of the largest maltsters in the world. The cranes are out there. Construction is under way.
I come from the community of Biggar, where we also have a wonderful high-tech greenhouse, which the receiver is dealing with right now. That's the reality anywhere, except in a small community it shows up. If that greenhouse had not been successful in the city of Saskatoon or Regina it would just have slipped by the wayside, but in the community of Biggar it meant forty jobs. It also meant a lot of spin-offs. It meant trucking. There are a lot of spin-offs in the rural communities.
I not only live and work in Biggar, but I worked for the provincial government. I covered off 59 rural municipalities in the southeast corner of the province. Biggar is situated just about an hour west of Saskatoon. So I have seen a lot of the province. I have worked in a lot of the province. I have worked with a lot of rural people. We have real leaders out there. Quite a few of our municipal elected officials are the leaders, they're the movers and the shakers, and they're going to be the ones making things happen.
What is happening? Again, the reality in rural Saskatchewan is that transfer payment cuts from the federal government relate to transfer payment cuts from the provincial government to the municipalities.
One thing that has happened out in rural Saskatchewan is a growing knowledge of economic development and the benefits of it. It's happening slowly. It's not going to happen overnight. We're still working at it. It's a new phenomenon out in rural Saskatchewan. The City of Saskatoon, the City of Regina, the Cities of Swift Current, Moose Jaw, and Weyburn, had economic development committees and offices set up and they've been working at it for years and their people have been going out and beating bushes and dragging in people. Our provincial government works very, very hard to bring large major industries into large centres.
Out in rural Saskatchewan it's a new phenomenon and it's just beginning. Government is just beginning to see that there is some benefit to having rural Saskatchewan. For a while there we were beginning to wonder whether they didn't think we should just shut the door in every small town and move into the city. They set up the Regional Economic Development Authorities, and they have allowed some flexibility in how we develop our organization. Ours is unique. I don't know whether it's a model for the rest of the world. It's a model for our area. It works for us.
The point I would like to make with the committee here is that government programs come down through the tubes. Somebody pulls them out of...[Technical Difficulty - Editor]
The minister in his wisdom allowed us to develop what we wanted and gave us three people within the department. They have done just a fantastic job for us. We're not wasting any money or time, and we're going to have a real tool for our municipalities to use.
They're going to be able to take a look at this and decide for themselves which road they should be building up to heavy-haul standards, rather than wasting money building a road that's going to eventually go nowhere.
We're taking a look at rail-line rationalization, elevator closures, the growing food processing that's going on in our area, etc. Prairie Malt alone hauls more malt barley into our area by truck than what goes through an inland terminal. That doesn't show up on any government statistical data because it's not a cereal grain that runs through the elevator system. It's trucked in and out, or railed out.
That's just a little bit of background. I'm going to stop there. I will try to answer any questions. I did go through your questions and I have a written brief. I may mail it in because I've been scribbling all over it again.
This is a directive of the Saskatchewan Economic Developers Association. They're 150 members strong. They are volunteers, communities and professionals. We're struggling constantly with the different programs brought out by the senior levels of government to help economic development in rural Saskatchewan.
In reality, it is causing confusion with the elected officials. I have had people throw their hands up and say, ``Oh no, not again!''
A very simple solution is to go into an area and do a needs analysis. I have a son who works at putting software into large companies for their programs. He will just put a program in because it's their program. He goes in and does a needs analysis of the company first to find out what they want. If they're going to spend $30,000 to $60,000 on something, it had better work for them.
That's what our municipalities are being faced with right now. Because economic development is still kind of fuzzy in rural Saskatchewan, our elected officials and our counsellors are being faced with the transfer cuts. They're taking a look and they're saying, ``What's the easiest thing to cut?'' The easiest thing to cut is the thing that is least understood. Right now, economic development is the least understood because of the confusion with the different programs and different government departments. Every government department has a mandate to do economic development, even if it's only 10% of the time. It happens here in the province and I'm sure it happens in the federal government.
The Chairman: Thank you.
Mr. Asselin: Allow me, first of all, to congratulate you on the work that you are doing for your community and also on the number of volunteers who are involved in your organization.
The witness was saying that her son, before investing $60,000 in software, had to ensure that the software fit the needs of the customer. It is the same thing in Ottawa. The federal government decided to set up a committee, the Standing Committee on Natural Resources. The committee's mandate is to study rural development.
During several months, the Committee on Natural Resources sat in Ottawa and heard various groups, associations and individuals who came to explain their concerns and the way in which, in their view, the government should deal with the serious problem of rural development.
Over the course of the next two weeks, the committee will be travelling about the country. This week, the group went to Yellowknife, Fort McMurray and it is here today with you. All week, the committee will be travelling throughout the West, and next week, there will be another committee travelling in the East. We are aware that organizations such as yours are working very hard in the area of development, but we have come here mainly to hear what we should in your view be doing so that with the same MPs and the same money we will be efficient, so as to ensure that rural development will be more worthwhile for you here.
I wish to stress that we are not here on holiday. We are not just touring about the country enjoying ourselves. The members of Parliament who have come here to meet with you are members who are very interested in rural development and who are hoping that the Prime Minister and his ministers will also take the issue to heart. If we are concerned about development, then they too should be.
Following theses consultations, the committee will draft a report containing recommendations to the government, that should lead to an action plan. If this does not come about, we will not have done our job. Upon our return to Ottawa, following these consultations, after having heard you, we will have our work cut out for us if we want to respect the work schedule, draft our report and make recommendations that will lead to an action plan.
I would like you to give me three elements, in their order of priority, that might assist regional and rural development, facilitate the creation of durable employment, eliminate unemployment and social assistance and enhance the exploitation of existing resources.
Ms Corneil: I'm really glad to hear your comments. I gather you don't have the solution in your back pocket, which is wonderful to hear.
I'm going to relate a little story about when I worked with a social service recipient on developing a business. I love to use analogies. When we talked about addressing the needs of an area specifically, that area probably is going to be key in keeping sustainable rural development in this province.
A client who did have the skills and the will and the wherewithal came in. He had been unemployed due to job cuts all over the country. He went in and retrained himself in air-conditioning repair and refrigeration. He was on social services. He said he knew that, statistically speaking, in two years he would be totally unemployable. He asked if there was any way our organization could help. I said, yes, there was.
We arranged to get him some financing so he could purchase all the right equipment to get going in his business. He had to start developing and building up a clientele. It wasn't that difficult. The clients were out there. But he was faced with the problem, being a single parent, of how to feed his son until he got some money from his job.
We went to social services, saying, we'll make a deal with you. We'll monitor the money he has coming and going and we'll work with him. We've provided the money. Let's take a look at a partnership, and take a look at what he's making to make sure his cost of living allowance is not taken away from him so that he can feed his child, and feed himself, and go to work.
It took me a year to finally get somebody to see that if we took this guy off social services, he was going to be putting tax dollars back into the system and eventually probably going to be employing another person. There was no loss to them. We could keep him on social services forever
It was the same thing with two dentists who came in from El Salvador. They were political refugees who needed certification at $5,000 each. There was a family of four. These were two dentists, two professional people, one of whom was a university professor.
We pretty well just about had to take social services by the throat to get them to even assist these people. They would have preferred to keep a family of four on social services.
One of the things you're talking about is priorities. I am suggesting that what you do when you develop your programs is leave enough of a window open so that when you go into areas, those areas can express their own needs and design that program around that.
Community Futures is probably one of your better-known federal programs out there. Unfortunately, it does not cover off our province.
I come from the town of Assiniboia in Moose Jaw, which just recently got a Community Futures area.
I live in the community of Biggar. My rural development corporation is not completely covered off by a Community Futures area.
We're not always too sure that we even know what's happening with them. For the sake of the value of number counts, when that goes in, we are part of them. For funding, we're just kind of on the border. Some of my clients can't even get access to that.
So this is what occurs when you develop a program that is generic: it does not fit everything. We really need to streamline programs to specific areas. The only way you're going to find that out is by sending people around who know what it's like to operate a business, have their children in a rural school, work in rural hospitals, and volunteer the majority of their time to keeping their communities going. They are the ones you have to sit down to talk with to ask what they need. Would this generic program help rural economic development here for you? It may fit some communities, but it does not fit them all.
We were in competition for the Canadian Community Investment Plan. We were shortlisted to the business plan. We developed what I thought was a really good plan. We had some wonderful people helping us out with that.
We were not accepted. This is because we did not have - this is one of the things I was told - 100 industries through which we could flow money at 20 per year, at least.
The reality is that, in rural Saskatchewan, 100 industries is not rural. You don't find 100 industries in rural Saskatchewan. You find 100 industries in the cities of Swift Current, Saskatoon or Regina.
The city of Swift Current was a successful applicant for CCIP funding. For us, it meant probably sustaining several of our industries. For Swift Current, they will probably stay the same.
But in Saskatchewan, Swift Current is not rural. It is in Canada, maybe, but it's not so in Saskatchewan.
Ms Pipke: You can tell that Joan has a lot of passion and works heavily on this, and it's good to hear the comments. But I know Mitch wants to add something to this.
Mr. Mitch Ozeroff (President, Saskatchewan Council for Economic Development): First of all, I am also very happy to see a group of people who have gone out on behalf of the federal government to try to find a solution to this problem, because it is a major problem.
I sit here representing SCCD. I also sit here representing one of the largest, if not the largest, cooperative in Canada and of course Saskatchewan - farmer-owned, which has farmer members.
I think that we in Saskatchewan seem to do best when we do follow the progression of having small business, big business and cooperatives that can help to formulate and run the economy in Saskatchewan. As soon as we start to tinker with and enhance a certain portion of it, this seems to be where we run into a problem.
I think the problem that we have as well - let's not forget about it - is duplication. I heard somebody say recently that duplication in Canada costs us about $8 billion a year.
When you talk about cutting costs, that's not cutting service. We shouldn't be looking at that. We should be cutting duplication.
A city or a region will go to Hong Kong, as an example, or Tokyo, to open an office. Then the provincial government does that. Then the federal government does that. Then somebody else does that. Before you know it, we have four, five or six offices doing the same thing and selling the same product or service. So I think we have to be careful about that.
The three levels of government - municipal, provincial and federal - have to form a liaison. We have to form a goal of where we're going in Canada, and not change on a whim.
Let's not forget that Japan has a goal set, or a vision, if you want to call it that, of 200 years. Somebody once asked an elderly Japanese gentleman, ``Who is going to be around in 200 years to see if you're on track?'' He said, ``Who cares? Somebody will be here. Somebody will be watching.'' If a goal doesn't fit, you change, you shift, you do something. The thing is, everybody is talking and they've bought into a goal.
The gentleman from Quebec, I presume, talks about what's happening here. We have also talked to Mr. Pellerin of the UPA. We had Mr. Pellerin and his group here last June talking about the same kinds of goals. It's something we have to start. We have to eliminate duplication.
We also have to talk more and stop being the modest Canadians and modest Saskatchewanians that we are. There are a lot of things we do right, but we're not saying it. We're not even showing it. You can't do that, be down in the mouth and say we're always panning. We're not always panning; we're ahead of the rest of the world. Let's take a look at that. Look at what the UN said just recently about Saskatchewan and about Canada. It's the best place in the world to live. I agree, but there's a lot more we can do, there's no doubt about it. But we have to do that in the context of everybody buying into a goal and not shifting it at the whim of - let's say it - politics.
The Chairman: Thank you.
We are running a little bit behind here, so I'm going to ask the members to frame their questions very specifically and the panel to provide their answers very succinctly.
Mr. Chatters: That's a tall order. I don't know quite where to start.
Certainly over the last three years that I've been a federal member of Parliament, I've seen a lot of attempts by the federal government through programs like Pathways and community enhancement.... A great deal of money is poured into the community in the name of economic development. Yet I have a real problem, because I'm expected to approve those programs and there's no assessment of the program when it's finished. There's no expectation of success or requirement that if the project is not successful it won't continue. There seems to be an attitude by the federal bureaucracy involved that the primary aim is to preserve the bureaucratic positions rather than the success of the program.
We've heard over and over again in the last three days of hearings about the necessity to remove the responsibility for those types of programs to the municipal level - direct involvement by the municipal governments - and yet I hear my colleagues on the other side continually searching for ways the federal government might be involved in providing this service to rural Canada. What we need to hear is ways we can make these programs work, make them be accountable for the tax dollars provided, and how best the federal government can be part of that, but not necessarily to preserve federal bureaucracy to make the system work.
I don't know how more succinctly I can put it. I could go on forever.
Ms Corneil: The CCIP project allowed that. It said to communities, we have a certain amount of dollars that will help your industries access risk capital, but you tell us how you can use these funds in your area.
You have a model, and your community futures program might well be the same way. You have to articulate expectations to the communities, because there's going to be a huge gap there. There will be the communities' wants and needs and government dollars, and there are going to be expectations on both sides in between.
So government has to articulate to the municipalities - and if you want to talk to municipalities I think it's a wonderful idea - what they expect to occur with these dollars, not necessarily dictate guidelines: we expect to see your community grow and thrive.
It's as simple as that. That's a mandate for every community in this province right now.
Mr. Chatters: The evaluation of that program is based on the success of the program at the community level.
Ms Corneil: Depending on what the community has defined as what they need.
Ms Pipke: I have a point here complementing what Joan is saying. That's one of the keys, and it's getting back to your question earlier about the three things. I'm not sure we have them in priority, but one of the other things, besides being responsive to community needs and meeting their needs, I think is the work that needs to be done on intersectoral policy development. It needs to be linked among a number of different departments, federally and provincially. It's going to be important for that to be carried out at the government level in order to make it more feasible and workable at the provincial level. You may have mechanisms for committees and what not, but that needs to be a very real concern, so you're complementing each other, you're building on what each other is doing. It's the duplication point Mitch was making.
I know some of the other provinces don't have what we have, the council for community development as a focal point in the province where a number of organizations come together, so you have more of the one-stop-shopping kind of thing, or referral. There could be a very useful liaison between federal and provincial governments to support one such mechanism in each province, however that might be organized or set up, because it's a way to keep the focus on community and keep it going back. It forces, in a sense, the sharing of what's going on in a number of different organizations and how they come together to talk about community and rural development.
We do have that in Saskatchewan right now. We really see it as being an effective way of carrying out that kind of business. I think it's something that could be encouraged.
Mr. Ozeroff: Further to what Linda has said, this organization is also funded partially by organizations such as The Co-Operators, but it's also funded by some provincial government departments and the federal government. Without that it would be impossible to run an organization such as this, because you have to have staff. If you rely on people such as ourselves to run the organization.... We all have lives and businesses of our own to run, and it's an impossibility.
So there again I just hope at least the three levels of government - and SARM and SUMA are part of our membership - don't overlook this fact that we do need continued funding. That's putting it pretty bluntly, but that's the way it is.
The Chairman: Mrs. Cowling.
Mrs. Cowling: Thank you, Mr. Chairman.
I want to come back to duplication of services and a system that is fairly fine-tuned as we approach the 21st century. I want to know what your response might be to a single-window approach for services for a rural community.
Secondly, when we heard witnesses in Ottawa we heard from a number of groups. One of the groups was in fact the CFA, the Canadian Federation of Agriculture. Their suggestion was that we should probably be bringing all the natural resource sector under an umbrella where there would be a role for a rural minister or a rural secretariat. I want to know what your response is to that, and if in fact you think that is a good idea, please identify for us what the mandate of that position should be.
Mr. Louis Hradecki (Executive, Saskatchewan Council for Community Development): I'll just tell you my background for a bit. I'm a small business person, a small farmer.
Welcome to Prince Albert. Somehow the winter came with us and our crop is still out there.
I'm a volunteer. I volunteer for this organization. I also sit on the executive of the Prince Albert Regional Economic Development Association, which considers the REDA a provincial initiative.
One of my problems personally is that a lot of the programs are set up and all the meetings and training sessions are happening across the province. As small business people we just don't have the time to go to a lot of these things. We are the targets, yet we don't get there because we just don't have the time or money to go there.
We tried a single-window approach here in the Prince Albert REDA. We developed a resource centre. We have it here in the federal building in the city of Prince Albert. The resource centre was a place where we had a small business consultant, secretarial staff and an executive director who was the REDA executive director.
This is one of the positives: working with Human Resources Development Canada we've also collaborated in training sessions and in everything else.
It's starting to work. We have a small business consultant who now has 30 or 40 clients and is working with business plans and everything else.
One of the major problems has happened in the last little while. Because of the lack of municipal funding and the matching funding through all of the different governments, we have not been able to hold on to our executive director.
When you eliminate your staff in every REDA or in every area in this province and bring it all to the volunteers, we're finished. We cannot continue. We must have at least some funding to allow for our positions so that it continues and so that these people are able to explore all of these opportunities.
The single-window approach there is just great. As these people get to know that the resource centre is an area that has all of the resources and information, that we have set up computers and the Internet, and also that we help them out.... For example, we give an hour of free consultation to our clients, but then, of course, it becomes pay-for-service. We have to charge that fee for service just to make the thing go. A lot of times we're just struggling along.
In answer to a little question about the federal programs as they come down the pipe, we rural people and small business people and people kicking around...if a program comes to us we value it very highly, because we feel...I feel it's my job here so I want to make sure that this program is here and that it did some good. We go on like that.
In the city of Prince Albert, for example.... There are a lot of forest resources and some northern mining and all of that stuff. As we move on with this REDA concept and the resource centre, we may very well have to move it to the next place where we have the...maybe we'll have to move it to the Woodland campus at the regional college, so that, again, there is more expertise brought in, and maybe business counsellors and maybe a shop will be available so we can do prototypes and different stuff. At the end of the day, that's where we would like to be. When you go into Prince Albert and the area and you want to explore business opportunities, you want to have resources in one place that's all-encompassing.
With that, with the forest...it's not only a forest, but a natural resource. There are mushroom-picking and berry-picking, which are offshoots, let's say, of the fires that happened here last year. There's also the stuff that goes with that. It's a one-stop base.
We can't do it. There's not enough funding. That's all we always ask for, because a lot of the programs are matching. It's easy to say, ``Find yourself some matching funding. We'll give you some money for executive director if you can only find some to match.''
We go to the RMs - the rural municipalities - and the cities and villages and they say they can't help because they're tapped out. So there you are. And you're sitting there saying, ``If we can't get some matching funding for this office then we'll just have to shut it down or not apply for anything.'' Then suddenly it blows away from us and we do not have the ability to continue servicing the needs of these folks.
Ms Pipke: If I may, I would like to make a very quick comment, Marlene, that is related to your point. I think the single window is very important, especially at the federal level.
We do need that umbrella. The CFA has suggested...I believe he said the national resource sector is a key player in that. My only caution is to be sure to keep it inclusive of the wholeness of everybody that it's going to impact on, rather than keeping it to just a very tight, small group.
In our membership, we found that because training is related to it, it's useful to have them at the table, as well as people from business and from the human side of things, the health, the social, etc.
So, yes, it's important, but the group that's there needs to look at the holistic approach.
Ms Corneil: I just want to comment, too, that I think your provincial counterparts should also take a look at the single-window approach. As I said, every department has a mandate for economic development and they're tripping over each other duplicating their programs. That's what happens.
The Chairman: Mr. Wood.
Mr. Wood: Regarding Joan's comments about the CCIP program, it really is too bad that Biggar didn't get involved or get selected, obviously. I believe Swift Current and Canmore are the only ones out west that were selected. My community was lucky; it is one of the pilot projects, and I guess I feel very fortunate now, listening to Joan's comments, that we were selected.
Obviously a change has come across in rural Canada in the last 10 or 15 years, and it has probably been going on right under the noses of the federal government and other governments. Their priorities have probably been in other areas, like fiscal problems. We seem to have that under control a little bit but not entirely.
How has the nature of all that changed over the years? How can we catch up? It's obvious that we've let it slip; it's quite obvious in everything we've done.
Ms Corneil: I'll try not to...[Inaudible - Editor].
Mr. Wood: No, no, get on with it. It's fine; it's great. It's nice to see somebody with that kind of passion, actually.
Ms Corneil: I can give you a succinct answer for that. Having worked within the provincial government system I find that in numerous cases the elected officials are simply being told what the bureaucrats think they want to hear and not what they need to know.
Mr. Wood: That's true.
Ms Corneil: They will quite often take a look at something too, and they will react to it. This is what you're talking about. Instead of coming forward, as this group is doing here, and taking a proactive look at things and finding out what's wrong and saying let's fix it, they go in and say, oops, there's a problem, and they throw a program at it, which maybe doesn't fit. Again, I'm getting back to my fit.
What I think needs to happen within all levels of government, right down to local municipal groups, is to take a proactive look at things, to have vision, to look ahead. Instead of reacting to a situation, catch it before it happens.
Mr. Ozeroff: I tend to think as well that we can't be too critical of what we have done in Canada. I'm not trying to defend anybody, and of course there are a lot of things that we could do much better, that should be done, and so on.
I had the opportunity a couple of years ago to attend the American state rural development councils in Washington, and when you hear some of the problems they have.... They were talking about setting up a rural firefighting group in Mississippi, and I simply couldn't believe it. This is the 20th century, for heaven's sake. One old fellow said to me, ``Our firefighting equipment back in Mississippi is a half-inch hose and a pail of water.''
They're talking about setting up the sewer and water projects in Missouri. So let's not be too critical of ourselves. There are a lot of places in other parts of the world that haven't got it.
I agree with you, there are many things we can do, that must be a lot better. The matter of duplication I think is one of the keys.
Mr. Wood: Obviously you people have been in the business for quite a while. What rural development approaches have you found to be successful - ones whose successes we could try to build on and maybe branch out a little bit but still use as kind of a cornerstone to build on?
Ms Corneil: Actually, the rural development corporation - that program was working very well, and it was evolving into something quite different. Communities were beginning to find out who they could play ball with and where they could work. Then of course a new government comes in, a new program comes in, and things are kind of.... Nothing has ever been done in this province once a new party comes in.
I'm not too sure that in this province that may not have worked. It wasn't given a complete chance to work. I always spoke of that specific program not as being a five-year government-funded program but as being an 80-year program, and government was helping municipalities with their baby steps and learning about the process of economic development. Our REDAs may well evolve into that, of course. They're only two years old; they're barely walking yet.
Those types of programs...and I think Louis pointed it out. Don't get me wrong here; I come from a farm, too. I do this work - and I'm being paid very well for it, by the way - because it is a passion for me. I have a family who would like me to go down and sit on the combine all year round.
I am a firm believer in this province. I am a firm believer in what we can do. I would like to see a brick wall around this province, and we wouldn't let anything out unless it was in a package. We'd hold the rest of you guys up to ransom. You'd have to pay for our water, our oil, our uranium, everything, finished.
Getting back to that, if something is working, why fix it? I can see going in and bringing it up to a future vision, but that is what happens quite often within governments when they bring in programs. They have to put their own personal stamp on it. Instead of enhancing what we have, we tend to be building something new.
Mr. Wood: Louis, do you want to say something?
Mr. Hradecki: Yes. There are lots of pluses with the federal government as well. Just off the top of my head, some are.... The PFRA is doing an excellent job. Over the last little while in our area they're becoming the front runner of the federal government in economic development. The very fact that they would sponsor, for example, nature berry picking and all that stuff, those kinds of seminars.... They have also lent expertise up in the area of the ski hills. That department is working out very well because they are now becoming beyond what we thought PFRA would be.
As a note here about the PARD, the federal-provincial government communication agreement on partial funding for a lot of projects is one thing that's working well.
With even the HRDC, the human resources development group, where they've started to sponsor young entrepreneur training sessions and stuff like that, we are targeting high-risk, social welfare, unemployment insurance-type people who they can maybe start to process.
So there are things that are working. It is just that sometimes we have to continue.
A lot of things happen this way. It doesn't work for a year, or they do some work for a year or two and they figure, well, I guess it's not going to work; give us more time. Rural Saskatchewan or rural Canada is in a decline. Rural Saskatchewan has been declining for how many years? We will not save rural Saskatchewan overnight. It's a long-term process to start rebuilding.
Mr. Wood: Linda, did you want to say something?
Ms Pipke: Yes, I did have a couple of key points. What I have heard over and over again, and I suspect maybe you have, is it's the access to dollars. It's also access to information and resources.
One of the key resources is people. What I've heard Louis and Joan and Mitch talking about, and I hear from a number of our member organizations, is it's really important to have a person or some way to connect to people with ideas who just need that help to do the business plan or get some dollars.
Once that is approved, they run into a little glitch and they get hung up on it and need someone who can work with them to help them through it so they can get on and do what their bigger idea and concept is so it can grow and flourish. They still need that human contact that touches with them, connects with them, does the linkages, that kind of thing. It's really key in making a lot of things work. That's where we're running into problems, having that touch. How do we get that? How do we keep that kind of thing? Those are the points I would mention.
Mr. Wood: Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Wood.
I'm going to ask a very straightforward question and try to elicit from you an opinion about choices that the government has to make. As with all governments today - and I think the reality has always been, although we might not have always recognized it - there is a finite amount of resources, and choices have to be made on how best to use those resources.
Generally speaking, as the federal government, as we grapple with the issue of development, and rural development specifically, there are really four general categories you can move forward on. I'm going to enunciate what those are and ask your opinion on which is the best path to go down.
First, you can take your resource, your money or whatever it is, and just simply hand it over to a delivery agent without any strings attached. You can say, ``There it is. You go about doing whatever it is you think you need to do in the best way you think is necessary in your area.''
The second way, a variation of that, is to have a national program that has a set of criteria, but has local delivery. For instance, the community futures program is a national program, but local boards decide on the different types of delivery at a local level.
Third, you can have a national program that is delivered nationally. There really is not a lot of local input. It's the ``one shoe fits all'' type of programming.
Or you can take your financial resources as a government and do none of the above. You can simply deal with the macro issues and deal with trying to create a climate within which things will hopefully happen naturally.
Which of those types of approaches do you think is most appropriate?
Mr. Ozeroff: If I can go back to comment on Mr. Wood's questions, you can take a look at what the SCCD in Saskatchewan has done. It's been recognized, I think, that Ontario, Quebec and Saskatchewan have been the only provinces until now that have organizations like that in place.
We have managed to get 34 or 35 member organizations into one room, from major cooperatives to all three or four levels of governments, from big business to small business to the religious groups, and so on. We're able to sit around a table like this and talk, and we're able to try to realize or visualize what the other groups' problems are.
As well, there is some experience. Some of these players have been successful. Maybe I'm blowing my own horn, but the cooperatives are having success, not because of luck but because of goal planning and so on.
The Chairman: Which approach do you think government should take, though?
Mr. Ozeroff: Take the fourth one. Governments are there to listen. I think that's what people in this group are saying. Give the people a chance to talk and to tell you, the government and the government people, what is needed. Let's all develop a plan, a vision and a goal, not for two months or five years but for longer than that.
Ms Corneil: One of the options you didn't mention was giving resources to a community and letting them plan and have some accountability for it.
The Chairman: That's the first option I mentioned.
Ms Corneil: You said no strings.
Mr. Chatters: You didn't include the accountability.
Ms Corneil: No, you didn't. There must be accountability for those dollars. They're my tax dollars.
The Chairman: That would be the second option: program with local delivery.
Mr. Wood: With accountability.
Ms Corneil: Definitely with accountability.
Mr. Ozeroff: If you're sitting around the table, or somebody representing the governments and the various groups is sitting around the table, that is accountability, and that is planning.
The Chairman: Okay.
Mr. Hradecki: Give us the funds and the accountability, but give us a timeframe of more than a year or two. We'll produce, but we can't do it in a year or two. Give us a five-year mandate so that we can show you. That's what it will take. Don't chop us off after year one, saying, ``After year one, we'll cut you off, or cut you down, or cut you somewhere.''
We will be accountable for every cent we spend, like the groups we've sat around the table with, but don't start putting pressure on us in the second year by saying that we haven't produced exactly all that much yet so you're chopping us off. Give us a little more time.
Mr. Chatters: Governments can only give you a four-year mandate, because that's their mandate.
Some hon. members: Oh, oh!
Mr. Chatters: That might be a problem....
The Chairman: Thank you very much. We appreciate all of you taking the time to be here. Your testimony introduced a number of concepts for us to deal with and I'm sure the members appreciated that.
We stand adjourned until after the lunch break.
The Chairman: I call the meeting back to order.
Welcome, Mr. Smith, and thank you for your patience. We've been running a little bit behind most of the day.
We'd ask you to make an opening presentation and then we'll turn it over to the members to ask some questions.
Mr. Stephen Smith (Vice-President and Manager of Timberlands, Weyerhaeuser Saskatchewan Limited): Thank you very much, Mr. Chairman. My name is Stephen Smith. I'm the vice-president and manager of timberlands for Weyerhaeuser Saskatchewan Limited.
Weyerhaeuser is a forest products company operating a pulp and paper mill here in the city of Prince Albert as well as a dimension sawmill at Big River, about 90 kilometres northwest of Prince Albert. We also operate an industrial chemical facility on the north edge of the city of Saskatoon.
My specific role as manager of timberlands is to supply the raw materials - logs and chips - to the sawmill and the pulp and paper mill in Prince Albert. Essentially my responsibilities are the building of roads, the planting of trees, the harvesting of trees, trucking - those forest operations that take place over a fairly broad forest area to the north of Prince Albert.
I have provided you an information package. It is not specifically a submission or a presentation as much as an overview of our company and its operations. A short list of elements I wish to touch on, though, is included in the report.
I would make a reference to an earlier submission that was made to your committee, I believe back in June of this year, by Madame Lise Lachapelle, president of the Canadian Pulp and Paper Association. Our company is one of the members of the Canadian Pulp and Paper Association. Madame Lachapelle referred to some 300 communities that are dependent on the forest sector. Prince Albert, Big River and many of those communities to the north are some of those same communities Madame Lachapelle was speaking of.
Weyerhaeuser's significance in Saskatchewan is shown on a sheet at the back of your book, called an economic fact sheet. I won't go through any extensive list of those numbers, other than to say we have somewhere in the neighbourhood of 1,300 employees in Saskatchewan and we have a gross payroll in excess of $80 million.
We conduct all of our forest operations, for which I'm responsible, with a group of small businesses, independent contractors, who build roads for us, harvest trees and haul them to the mills. Somewhere in the neighbourhood of 100 individual contractors or small businesses perform these functions for us. This is in contrast to the logging camps or lumber camps of many years ago, which disappeared from the face of Saskatchewan in the last 15 years.
Suffice it to say Weyerhaeuser is probably the largest employer in Prince Albert and in northern Saskatchewan. Although we don't specifically count the number of people involved with our forestry contractors, we believe somewhere in the neighbourhood of 300 to 350 people derive their livelihoods from the forest.
In terms of representation by first nations and other aboriginal people, from our survey taken back in the spring, we believe we have somewhere in excess of 100 full-time people working with contractors and performing our operations. That's about one-third of the contractor workforce, and that does not include the seasonal work of planting and thinning trees, which takes place in the summer months. For over 50% of that work, probably some 200 people are employed for short periods of time.
Our focus for the future is to seek more opportunities for local, aboriginal, first nations and community-based entrepreneurs and businesses in our forest operations. We are trying to balance that with the need to maintain an experienced, viable, long-term contractor workforce. So at the same time we're trying to maintain long-term existing businesses, we're trying to encourage new businesses to come into the employment fold.
I want to make a comment about value-added manufacturing. In 1987 Weyerhaeuser built a fine paper mill here in Prince Albert, which added some 400 jobs and almost $500 million in new investment in the city of Prince Albert. Shortly after that, in 1990, we built a folio and cut-size sheeter, which actually takes those big rolls of paper that you can envision in a paper mill and cuts them down into 8.5 by 11 and 11 by 17 sheet sizes. So when you go into a stationery store or look at a copy machine and see a small, bound bundle of paper, that's the value-added product in the form that comes out of Prince Albert.
I'd like to make three comments in response to some of the subject matter that was raised in the preparatory material I received. Take them as recommendations, observations for improvement or whatever.
The first comment I'd like to make is with respect to the environmental assessment process. We continue, in our industry, and specifically in my company, to face parallel and overlapping jurisdictions on environmental assessment, with federal environmental assessment as well as provincial environmental assessment. We find this confusing, frustrating and in many cases needlessly expensive through the duplication. To the extent that we wish to support further investment in rural Canada, we need to clean up some of these bureaucratic tangles. I do understand that there are moves under way to do some of that harmonization, but I also recall hearing that for the last six or seven years.
The second point I'd like to make on improvements is that our industry certainly needs access to markets. We make the product here. We now add value and create finished products here. We need to have access into the marketplace, and that requires a good, solid infrastructure, such as roads, railways and communication lines, in order for us to carry on our business.
I would say specifically that we need a north-south transportation corridor. This province is fairly well served with transportation routes going east and west, but it's very poorly served with transportation going north and south.
I mentioned earlier the reams of paper we sell. The paper business is quite unlike the pulp business. Pulp is sold in very large quantities and shipped in rail cars, ships, and so forth, to go overseas or to other paper manufacturers.
As for paper, the more you manufacture it toward its end consumer form, the more it's made in smaller quantities and batches that go to many different destinations. More than half of our paper from this mill goes out by truck. It goes into the central and western United States, as well as to eastern Canada.
There is no quick way to go south into Chicago, Denver or California without going significantly west or east before we connect with major highways going south. You can confirm that with the people here who go to Arizona for the winter. They always head east or west before they pick up the major highways.
On the same subject of access to markets, we need to continue the trend toward the reduction of tariffs on finished products.
The last point I'll make is again a reference to interrelated federal and provincial legislation, such as what faced the forest sector most recently. There are changes occurring with Fisheries and Oceans with the Navigable Waters Protection Act and with the new endangered species legislation. There's an awful lot of territoriality between different levels of government on those two subjects. The effect of that on an industry that's trying to carry on its business is time, people, and in some cases, additional money for the costs of meeting two different sets of hurdles.
That concludes the remarks I intended to raise with you. The material, as I say, that's in the package talks to some of those issues. If I can answer any questions, I'll be happy to.
The Chairman: Thank you very much, Mr. Smith.
Mr. Asselin: I see that you are involved in forestry and I would like you to tell the committee if, so as to protect our forestry resources for the future, you are doing as much planting as you are doing harvesting. Are you planting as many acres as you are cutting? I would also ask you to tell us if the federal government's policies in the area of production and export quotas for the international market satisfy you. We know that all of this is administered by the federal government. Forestry is, I believe, a provincial matter, but exports to the international market are governed by export quotas. Does this create a problem for the forestry industry in your province?
Mr. Smith: To answer the first question, which I think is a question about sustainability and the level of planting versus harvesting, yes, our company does plant more trees than it harvests. We are planting on average somewhere in the neighbourhood of six million trees annually. By our calculations we are harvesting approximately four million.
We also, in this province and in our paper machines, use aspen species. Essentially we use all of the species that grow in the forest, so we believe we are practising full utilization, as well as good forest management. For those aspen areas, because the aspen regenerates naturally and does not require planting, all of the areas that we harvest are reforested within two years.
On the subject of export quotas, I have to admit ignorance on the specifics of the quotas. I'm not familiar with exactly where the quotas exist on finished paper or on pulp products. The quotas that exist on lumber arising from the recent lumber countervail have not affected our markets here in Saskatchewan.
The Chairman: Mr. Chatters.
Mr. Chatters: Perhaps this is getting a bit away from the topic that we are discussing, but what is your estimation of the timeframe for sustainable harvest - how many years from the time you plant a seedling until it will be harvested? - and is there any area in Saskatchewan that has yet harvested a reforested area?
Mr. Smith: The answer to the question about life cycle or rotation in Saskatchewan is, depending on the species, about 80 years on average.
Have we harvested areas that were regenerated? The answer to that is yes. They were areas that were naturally regenerated following harvest, back at the turn of the century. One of the larger sawmills in the British Commonwealth existed at Big River, not far from here.
Mr. Chatters: But they weren't in effect reforested.
Mr. Smith: They weren't in effect replanted. This was natural regeneration that occurred after the harvest.
Our operation here - the pulp operations that began here in Prince Albert - began in 1968, so we still are some way away from harvesting those first planted stands.
Mr. Chatters: So you are not aware of any place that was clear-cut and reforested that is anywhere near harvestability.
Mr. Smith: No. We certainly have some stands that are well along the way, but they would still be at best 30 years away from harvest.
Mr. Chatters: Thank you.
The Chairman: Mr. Wood.
Mr. Wood: Thank you, Mr. Chairman.
Mr. Smith, I want to talk about value-added products. You mentioned your new business kind of goes into that. I just wonder how successful you've been at it, and I'm interested in how you do your R and D on those things. Do you use the government agency Forintek at all in Vancouver, at UBC? Do you get involved in that? If you do, I'd just like to find out if you're satisfied with it.
Mr. Smith: We do use Forintek as well as the Forest Engineering Research Institute of Canada, FERIC, which receives significant federal funding, as does Paprican in Montreal. Our parent company is U.S.-based and has a fairly high research capability in Tacoma, Washington as well, so we benefit from that research as we do from the institutions in Canada. There's also a tremendous amount of work that goes on with end customers.
Most of the paper produced here in Prince Albert appears under the Xerox label. We sell to Xerox; in fact, we wrap it here with their label on it. When you buy a ream of Xerox paper, quite often you're really buying some Prince Albert warehouse paper. We have dealt for more than five years with Xerox as a customer to meet their criteria for the quality and consistency that would allow them to put their name on the paper.
Mr. Wood: Can you give me a ballpark figure about how many jobs you've created through value-added in the last five or six years? Have you any idea?
Mr. Smith: About 400 with the sheeter and the paper machine.
Mr. Wood: All of them in this particular area?
Mr. Smith: Yes, all Prince Albert jobs.
Mr. Wood: Do you think governments should be in the business of providing direct or maybe indirect investment incentives for valued-added processing?
Mr. Smith: With direct incentives, I don't believe so. I believe there may be places where the playing field needs to be levelled to enable competition, but the roads and transportation aspect I would see as a legitimate place to provide that kind of benefit.
Mr. Wood: So infrastructure would be better.
Mr. Smith: Yes.
Mr. Wood: Good. Thanks a lot.
The Chairman: Mr. Serré.
Mr. Serré: Thank you, Mr. Chairman.
In view of the fact that the parent company is U.S.-based, have you developed specific procurement policies to favour local companies, or do you import most of your needs from the United States?
Mr. Smith: I don't have the specifics on that, nor do I think they are contained in the fact sheet. I see a reference to $99 million worth of purchases from major Saskatchewan suppliers as part of the acquisition of goods and services. We do not have a written policy that says we will purchase locally, but we do have an intent, wherever possible, to buy goods and services in Saskatchewan first, in Canada second, and throughout the world third.
Mr. Serré: Along the same line of thought, have you developed hiring policies that would help in training specific groups like aboriginal women or whatever?
Mr. Smith: Specific policies on training, no, but we have directed hiring practices and policies, and I've just received from the Human Rights Commission the approvals we need to advertise for and specify that a diversity candidate will be preferred in our selection for permanent hiring and job selection. That's fairly recent.
We do have a university bursary awards program for students in resource fields within our geographic area of business to enable them to obtain higher education, and we have a policy tied to that bursary awards program of providing summer intern employment to those recipients of bursary awards. We also direct much of our - this is not on the training subject - citizenship community support funding towards communities lying in and adjacent to the forest area where we do our business.
Mr. Serré: Do you have any problem finding the skilled labour you need for your company in the immediate area? If so, are you involved in any direct industry-driven retraining?
Mr. Smith: We're not involved in any direct industry training. We have difficulty through the contractor workforce we deal with in having the skills - some of those are management skills and equipment maintenance skills - to ensure that these small entrepreneurs and small business people can be successful in their own right.
As we try to create business opportunities, there is a perception that as long as a person has a piece of logging machinery and a power saw, he can be a successful businessman. In today's society, where people have to meet all of the criteria for unemployment insurance, Canada Pension Plan, worker's compensation and labour standards, and carry out their business according to those criteria, we find the business training among those entrepreneurs lacking.
Mr. Serré: What would be your recommendation to correct this shortcoming?
Mr. Smith: I think there needs to be much more coordination in providing that training than there is at present. Right now there appears to be a whole smorgasbord of training, funding and direction available through Indian Affairs and northern affairs departments at the provincial level.
I can think of three or four different federal and provincial departments, all more than happy to sponsor some sort of a program on this, that or the other thing, but it seems to be a shotgun approach. There is no real coordination.
Mr. Serré: So you would suggest a more focused and coordinated approach.
Mr. Smith: Very much so.
Mr. Serré: Thank you.
Mrs. Cowling: I'd like to follow up with respect to training. Do you provide on-the-job training?
Mr. Smith: We provide on-the-job training for direct employees of the company. We do not provide training for contractors doing business for us.
Mrs. Cowling: You mentioned earlier that we have an east-west corridor, but we lack a north-south corridor. Where in the north would that corridor be? Where would you...?
Mr. Smith: I'm talking about a finished goods corridor. What we're talking about is Prince Albert down to Saskatoon to Regina and points south. I don't know if you flew in or drove in, but we have an undivided highway between here and Saskatoon. It is not a bad route from Saskatoon to Regina. There are a couple of secondary and tertiary highways that run south of the TransCanada into the U.S., but there is nothing you could put heavy transportation on that could maintain the adequate speeds and safety that would allow you to be competitive in the trucking industry. So trucks go to Lethbridge or Winnipeg and then they go south.
Mrs. Cowling: If you were looking at export markets going out north, where would you be going north to move your product out?
Mr. Smith: We would not be shipping north. Our product would all be going south.
Mrs. Cowling: Okay.
Mr. Smith: What I'm saying is a highway that runs north-south, with Prince Albert being at the north end.
Mrs. Cowling: Thank you.
The Chairman: Thank you.
Mr. Smith I want to briefly follow up on something Mr. Wood was talking about, and that has to do with the value-added entity that exists here in northern Saskatchewan and explore the government's role in that. If I understand correctly, the company was originally formed in a partnership between the government and the private sector, then it became a government entity, and then eventually it became yours. So the government has had a significant role to play in the development of this particular institution.
In 1986, when your company purchased it, I understand from reading this that you made a commitment as a company to make a fairly substantial investment.
Mr. Smith: Yes.
The Chairman: Was part of that transaction that you received the existing assets at a below-market price as a trade-off for your willingness to make that investment?
Mr. Smith: I wasn't part of the negotiating team, but I don't believe there was ever any intention.... I'm sure the people who were involved would adamantly argue that we did not buy the mill at whole market price. We bought the mill at a time when the market was depressed and at the end of a fairly long market depression when most companies operating in Canada had a lot of red ink on their books.
Where there may have been some negotiation with the sellers of the mill, the Government of Saskatchewan, was in the terms and the financing arrangement - the term over which the government was paid for the mill.
The Chairman: In essence the government funded the transaction and became the funding agent.
Mr. Smith: Yes, they became the bank or the mortgage holder. They were paid out in 1989.
The Chairman: So the government did have a substantial role to play in the fact that a privately owned value-added entity exists in this part of the world today.
Mr. Smith: Yes.
The Chairman: One of the things we're trying to explore here this morning and through the day is the role of government in trying to encourage that kind of value-added. I'm trying to get my mind around the fact that the government did play a part in your company coming here.
Mr. Smith: It's certainly fair to say they had a part to play in it. To ask whether it would have proceeded if they hadn't been there -
The Chairman: That was my next question.
Mr. Smith: - I'm not anxious to answer that question.
The Chairman: Okay.
Finally, yesterday we talked to a number of private sector firms and they described some pretty elaborate partnerships they had with the communities within which they operated, both in terms of training, rural development and economic development. Is your company into those types of close partnerships with the community and with other organizations?
Mr. Smith: I would have to say no. We are exploring some business relationships, business partnerships, with community-run businesses or selected entrepreneurs within a business. There is a very strong expectation these days in northern communities that somehow the benefits that go to a private sector company such as ours have to come back and be shared with the community. Some people take the view that means there should be a community-based royalty or something that is paid by the company.
Others take the view that as long as some employment is returned to that community from the resource sector, that need is satisfied. We have three or four communities.... Seven of our 25 logging contractors are community-based or first nations-based, and we either have financially helped them get into business or we have removed other barriers from them to get into business.
I'm trying to be a little careful of what I say here because some of the existing long-term logging contract businesses did not have the kind of assistance we are providing the new entrants, and they are becoming competitors against the longstanding businesses. So at the same time as we're trying to achieve community-based business, we're doing it at the expense of some long-term suppliers, some second and third generation family businesses, who are asking why we are doing this. They are saying that while it is great to provide local jobs, we're taking bread out of their mouths.
The Chairman: If you were planning an expansion or a change in operations, would you consider it appropriate for your company to liaise with or deal with potential local contractors in advance to give them, or the community at large, an opportunity to set their plans to deal with your expansion?
Mr. Smith: Yes.
The Chairman: So you would see those kinds of partnerships. I take it your plant is profitable.
Mr. Smith: Yes.
The Chairman: In closing I would say that one of our challenges, not just as a committee but as a Canadian society, is to replicate your success as a company in being able to locate a value-added operation in rural, remote Canada, make a profit, generate large numbers and spin off businesses from it. I appreciate you taking the time to provide testimony. Thank you again for your patience in waiting for us.
Mr. Smith: Thank you very much.
Mr. Chatters: Mr. Chairman, can I add just one thing that came out of your questioning?
You mentioned this desire for some kind of a community royalty, and that's not the first time we've heard that idea. What are your thoughts on that?
Mr. Smith: I don't like it. I went to forestry school in New Brunswick and what was conveyed to me was that these natural resources are publicly owned; they're not regionally owned. In parts of the province they are part of the provincial wealth, and they are administered by various branches, agencies and departments for the benefit of the population at large.
I think these communities certainly have a right to say they want to see some benefit come back into our communities. But when we start talking about royalties, I think this is the way in which we should redistribute the overall wealth of the province so as to provide the benefits that can go back to the places of greatest need.
Mr. Chatters: So you and your company wouldn't support the concept of a third order of government that somehow has some sort of inherent ownership of the resource of that region.
Mr. Smith: I'm going to weasel a little bit on that. We are winding our way through the new relationships with first nations. We certainly see the first nations not only on their reserve lands, but on traditional lands surrounding them, which the province calls provincial crown lands, as having a status that is different from that of a stakeholder or resource user. We're struggling a little bit with what the substance of that status is. We would like to see those first nations people benefit from our business, just as the local communities benefit.
In some respects, the focus is now on getting more community-based benefits rather than having first nations people versus Métis versus non-aboriginals. As long as it's going to the community, it is of lesser importance whether that community is a first nations community or a Ukrainian one.
Mr. Chatters: I'm having a little trouble with the difference in what you're talking about: a community-based benefit and a community royalty. It looks like you're paying it whether you believe in it or not.
Mr. Smith: There's the benefit through employment and jobs and that sort of thing, but the royalty -
Mr. Chatters: The royalty would be the benefit.
Mr. Smith: Yes.
Mr. Chatters: Okay, thanks.
Mr. Smith: But for some people around the other side, as for the co-management fee, we have been ducking, diving and avoiding that.
Mr. Chatters: Yes, I understand. Thank you very much.
The Chairman: Thank you, Mr. Smith.
I'd like to call on our next witness, Noreen Johns, from the Saskatchewan Women's Agricultural Network.
Welcome. We appreciate you coming. If you would like to make an opening statement, we'll have the members ask some questions afterward. Please proceed.
Ms Noreen Johns (Executive Director, Saskatchewan Women's Agricultural Network): Thank you.
First of all, I want to thank the committee for travelling to Saskatchewan. I'm always pleased when Ottawa visits our fair province. I also thank you for hearing from our organization.
Without a lot of timeframe and with a lot of our people still in the field or trying to be in the field, it has been a bit of a rush job. You all have a copy of our presentation. We'll be reading from it, and skipping parts of it as well.
Just to give you some background, SWAN, the Saskatchewan Women's Agricultural Network, is a province-wide organization of farm women. It was founded in 1985 as an educational and support group. Through conference programs, workshops, a quarterly newsletter and personal encouragement, we have promoted the personal and organizational development of farm women.
With this information at hand, an informal talent bank, a lot of great women, and our networking with agricultural and women's organizations, governments and agencies, we have reached beyond our original aspirations of support and education to now become a credible voice for farm women.
First of all, I have to express my bias right up front: agriculture. I urge you first and foremost to recognize the need for a strong agricultural foundation in our rural communities. As a primary industry here in our province, it contributes 10.5% of our GDP. When you calculate the ripple effect of purchased goods and services and value-added spin-offs and wages going into our communities, the GDP contribution jumps to 19%.
We believe that central to a vibrant rural community and economy is a healthy, family-oriented agricultural industry with more people, not fewer.
The trends we have created in the past have been towards larger and larger farms with fewer and fewer families. Can we halt that trend? Can we encourage our young families to farm and to live in rural Saskatchewan? In order to do that, paramount is the need for economic stability and certainty, adequate farm safety net programs and crop insurance programs.
On the way up, I just listened to one of our economists tell us that Saskatchewan is indeed $1 billion in the hole from our expectations for this year's harvest. With declining crop prices and a lot of the crop still out in the field, $1 billion is significant to that industry.
We need adequate net farm incomes. We need to look at access to credit and to farm land transfers, and certainly at monitoring of input prices. We need access to information and access to research and technology transfer. We need stable marketing institutions and market development. SWAN is a strong supporter of the Canadian Wheat Board. We need rural infrastructure to encourage people: services, transportation and communication.
In many cases the hype of value-added processing is concerning me. The term itself, ``value-added'', would suggest the basic raw product is without value. When an aim of the value-added processor is to secure cheap raw products, he is building on shaky ground.
I would urge governments to support locally driven initiatives, where the community benefits from the profits as well as from the job creation.
In many cases the government support needed may be just in the way of feasibility studies, kind of encouraging an overall, provincially planned development, or in the form of market expertise, information on sources of capital and possibly overseeing or an expertise role in the start-up stage of value-added development.
The most important natural resource in our province is our human resource. Careful consideration must be given to support and enhance the professional and personal development of our agricultural population.
Farming is the most dangerous of all our occupations. Attention can be given to machinery design, pesticide application, stress levels and workload expectations. Areas for government involvement would include regulation and licensing, possibly extended support for our farm stress line, financial and mental health services and farm safety programs and initiatives. As well, SWAN is very actively looking at issues around the health of rural women, around rural child care and around the prevention of family violence in our rural areas.
One of the great human tragedies in agriculture today is the expectation of off-farm employment. A farmer working on his farm feeds 90 families, but he has to work off his farm to feed his own. Consider all the jobs the farmer already has: manager, labourer, bookkeeper, marketer and mechanic. Does society ask any other professional to be such a super-being and then take an ``off-job'' job? The stress is taking its toll, let me tell you, on our family relationships as well as on our volunteer efforts, which are so essential to our rural communities.
Going on to the education and information section, statistics show the educational level of farm operators is lower than that of the general working population. I would be greatly alarmed by that if I didn't recognize the great education and skill levels that have been acquired through our school of hard knocks.
But let's look at the support needed for rural education and skills training. Accessibility is the key. Educational opportunities for rural people must understand and recognize rural realities. For many farm family members, distance, seasonal and daily workloads, lack of child care and lack of access to financial support for training prevent their participation. Current practices do not help farm women return to the workforce or enhance their careers, and being asset-rich and cash-poor has in the past prevented farm women from accessing training.
Let me tell you about the adult education system that is most important in rural Saskatchewan, which is our system of eight regional colleges. They are not buildings and ivory tower thinking. They're distance education people. They offer credit and non-credit education and skills training, and they emphasize training for the rural community in the rural community. They may broker to rural Saskatchewan what urban Saskatchewan has.
Current demands for training include: truck driving, which I was very remiss in leaving out, because there's a very remarkable demand for that; computer and Internet training; entrepreneurship; bridging programs, that is, getting women back into the workforce and getting our kids from school into the training programs and into the workforce; farm financial and technical courses; training for off-farm jobs; and certainly classes for our seniors.
With the recent federal cutbacks in education dollars and the changes to unemployment insurance and training, these rural regional colleges face a 25% reduction in support over the next three years.
Our provincial Minister of Education has recently released a discussion paper, ``Choices for a Saskatchewan Training Strategy''. It outlines a new vision, principles and strategies for a more regionalized and community-partnered delivery of both education and career services and programs. While this integrated approach will create efficiencies, the federal government withdrawal of support for education is definitely at odds with any plans for economic renewal of rural Saskatchewan.
Access to ongoing information is equally important. Great strides have been made, as you know, on the Internet, but that's not yet a replacement for the written word, our community newspapers or our CBC noon show debates. Training, cost to rural residents, and monitoring of content are all issues that have to be considered here.
Declining infrastructure has to be a major concern in attracting rural economic development. Our deteriorating highways and the consolidation of our schools and health services, while provincial responsibilities, are feeling the slap of federal cutbacks. Without these services, it will be difficult to attract and keep employees in rural Saskatchewan. Quality of life is linked to economic development.
Government policy must recognize the need to spend more per capita in rural areas and must assess its impacts right back to the farm gate, in human as well as economic terms. I provide some examples there.
Each of our provinces has a farm women's organization or network very much like SWAN. We are all working at great odds to achieve recognition for the contributions of women in agriculture and to promote their deserved involvement in decision-making for our industry.
We are dismayed with recent developments within Agriculture and Agri-Food Canada's Farm Women's Bureau and with the removal of special assistance through the farm women's advancement program. In the past we have been supported to attend leadership development programs and consultations such as the one today. That is no more.
I end by reiterating your assessment that urban Canadians must recognize that economic activity in rural areas contributes to the overall economic health of urban Canada and that the motor driving the rural economy continues to be the natural resource sector.
My last suggestion is to emphasize the need for addressing the education of consumers on what's right and what's rumour in nutrition, food safety, farming methods, farm support, the contribution of agriculture to their well-being and the bargain in the Canadian food basket.
In many of the areas I discussed, there was a role for an integrated approach, including all levels of government - not an offloading of responsibility by the federal government, but a defining of the roles and cost-sharing.
Attached to the brief I've presented are a couple of interesting pieces of information: a statistical profile of Saskatchewan farm women, to help you better understand our sector of the Saskatchewan agricultural economy; and a very timely newspaper article I clipped that speaks about rural community spirit and about government's role in supporting this.
I thank you for your attention and certainly would welcome your questions.
The Chairman: Thank you very much.
Mr. Chatters: That was a very interesting presentation, and one I certainly relate to. My partner, my wife, and I have been in agriculture for 30 years. I am one of those farmers who spent most of those years seeking off-farm employment to build an equity in the farm while my wife stayed home and did the farming. So I certainly agree with many of those things.
I have a little trouble understanding if there are solutions to those problems in sight, given the problems with agriculture. It seems that over the years, when my grandad farmed, my dad farmed and I farmed, the objective of much government policy was to keep poverty on the farm where it belongs. I'm not sure that's changed an awful lot.
Perhaps, as you said, the key is educating the consumer to the bargain they are receiving in the food basket. Perhaps instead of continually lessening the share the farmer receives for that value-added product in the supermarket, there should be some attempt to increase it.
Certainly from an economic development perspective it's very difficult for a government with tax dollars to revitalize small rural communities and the small family farm. It seems inevitable that we're moving toward larger farms and the elimination of those small family operations such as mine. I don't know how we can stop that. I would be interested to hear your ideas on this.
Ms Johns: It is a trend that is certainly going on. I know some work has been done to look at the input costs in agriculture. I really don't see that agriculture in Saskatchewan has shared in the blip, the upturn, we've gone into now. As quickly as prices were rumoured to be going up, the input costs rose on the other side. In our estimate, at least, there was no rhyme or reason for some of that, except to skim off a share of our opportunity to get back on our feet in many cases.
Perhaps we can look at all levels of input costs - gas prices, for instance. When we started farming back in 1975 our whole bill for the complete year we now pay in one fill when the fuel truck pulls into our yard. Government has part of that responsibility because of the taxation issue there.
In all the roles of information sharing and education and of helping farmers to be better farmers...we appreciate all this, but at the same time we're almost left with the impression in the delivery mode that we're all bad managers.
We're not all bad managers. I'm sorry, but the last two months of weather has had nothing to do with my management ability. We're an industry that's not very much in control in many cases of what we can and can't do. The weather is one thing we can't control.
We are very much urging Mr. Goodale to take a strong stand on protecting the institutions, particularly the Canadian Wheat Board, and to give us some stability within our industry and within our marketing institutions.
I'd now like to talk about value-added processing in terms of what we as farmers can get in a fair return for our product.
We had a brand-new canola crushing plant at Clavet, which is very near to the community where I live. It was put up by Cargill and has now shut down. What kind of planning went into putting that up? They're saying there's not enough of the product. They're saying there's not enough margin. They kicked the prices right out of my canola. For that big company to come in here and look like a saviour for our cash crops market...it's not happening. It's not happening because they're controlling the prices and what's going on on that side.
We have no control over that, except that my canola has gone down over $1 in price within the last month simply because they decided their margin wasn't there.
Mr. Chatters: Certainly the same would be true of the budding ethanol industry, which we've heard a lot of discussion about recently. The very existence of that industry depends on a cheap source of raw material. I think it's being oversold as a boon to the agriculture industry in producing the raw material. The industry is based on a level of the raw product. The price of the raw product is not profitable to those who produce it. That should be better understood by producers.
Thank you, Mr. Chairman.
The Chairman: Spoken like somebody with a true petroleum background.
Mr. Chatters: And from an agricultural background, too.
The Chairman: Mrs. Cowling.
Mr. Cowling: Thank you, Noreen, for your presentation.
I want to focus on education. This committee has listened to a number of witnesses from right across the country. What priority would you like us to focus on when we leave Prince Albert today? What's the main thing you would like us to take back from your presentation to be part of the package we put together?
Ms Johns: You mentioned education, and certainly I want to speak to that in a moment.
But if I were looking at my priorities, my priorities are trying to ensure a fair price for our product. That combination of value-added processing on the prairies cannot ignore that we, in Saskatchewan, are an exporting province and will forever be an exporting province.
With the Crow gone and the impact of what's going to happen there, it makes a major difference to my net income. While Crow being gone seemed to be a happy situation, and we were going to have all of this value-added coming to be our saviour, it honestly hasn't happened. I'm sorry, but what we've come through from Crow...the industry that we've built has been a trucking transportation industry that has destroyed our roads. We now have more costs coming up on the tax side to build that infrastructure.
If we had kept our movement of grain on the rails, where it was the cheapest and where it belonged, rather than having started this trend toward elevator consolidation with roads that cannot handle the amount of trucking.... If you had listened to the radio here in Saskatchewan in the last two months, you would have heard that just about every weekend there has been a death on the highway involving transport trucks.
It's not that they're at fault; it's just that there are increased numbers of trucks on the highways and we as drivers are just not used to driving on the same roads as this increased number of trucks. So the whole issue for me is the price and the support that way for farmers.
On the education side, our organization is a strong proponent of rural education in the community, for the community, delivered by the community, and with the needs assessment done in the community.
Personally, I do not believe in parachuting education in. I don't want someone to come out of Regina and give me a course that has no rural understanding. Don't transplant something for me from Regina to Zelma, because the psyche is quite different. We need to make sure that the programs we get support these institutions that will remain within our communities. We've had examples of training that's been parachuted in, and they've gone.
Perhaps you can do that same training through our regional college network. We have a very unique and special arrangement there. Those people are staying there. They are an ongoing support network for our education.
Yet we have seen a lot of our farm management training dollars, for instance, going into private consulting that's parachuted out to rural Saskatchewan, and then it's gone. If more support was shown for this institution that's within our community and driven by our community, with advisory boards from our community, we'd get a better bang for our buck. There'd be an ongoing support for the people we train.
Mr. Wood: Can I intercept? This is just about what Marlene and Noreen were saying.
I have a quick question, Ms Johns. Has your organization thought of developing a program like the one you were talking about that is not driven from a bigger centre - maybe starting a drive and having everything run at a small centre to community colleges? Does your organization get into any of that stuff?
Ms Johns: No. Our organization has not been in the development of programs, but we have worked closely -
Mr. Wood: Would they entertain that thought? Would they think about it?
Ms Johns: I'm not sure we have -
Mr. Wood: Is that out of their mandate?
Ms Johns: It's not out of our mandate, but I'm not sure we have the expertise or the time to do it. The reason I've come alone today is that absolutely every one of our board members is either at a health board meeting or working off the farm.
Mr. Wood: I was listening to your comments before about how the farmer and his whole family is so involved in everything. I'm sure you and your husband's family have certain roles you play in the family business. I just wondered whether you're right that the time element is.... You probably don't have time to do it.
Ms Johns: Yes. I think we work very -
Mr. Wood: If nobody has the time to do it, how do we get it done? How do we put some of those programs in place that you and your organization have brought forward?
Ms Johns: For some of the programs we have out there that were denied...as rural people we have worked on advisory boards with our educational institutions to develop them. We have worked with Wascana Institute, which develops our agricultural training here for them and brings them out. We don't go to Regina to do their technical courses or their computer courses, accounting with farm computers, or farm management. They come out to the rural community, and we have worked with them in establishing and improving those programs.
Mr. Wood: How does that work? Does it work all right?
Ms Johns: Yes. I think the major problem right now is, again, the time element. They need a critical number of people - eight to twelve people, depending on the classes - to bring a class out. Coming out to a rural community where people are working on the farm and off the farm and finding a time that eight to twelve people can agree on to take a class is becoming tricky.
As well, we have developed an excellent entrepreneurship program in our Carlton Trail Regional College that has been piloted in one of our communities and has proven very successful. As I say, we brought some expertise in, but we also had local people as part of the training program. Maybe some of the experts had gone home, but after the program was done, we still had our regional college office there so these people could come back and say they'd forgotten a bit about this or they needed a little extra help in accounting or in computers. We've been able to be there to support them in starting up their new businesses. To us that local driven support is very important.
Mr. Wood: I know in my area Human Resources Development has become involved in sponsoring some of those programs. Do they do that here?
Ms Johns: Yes, exactly.
Mr. Wood: Good.
Ms Johns: One thing we have noticed with dismay is that there's been an urban-based program that they're trying to parachute out into rural Saskatchewan. They're not doing it directly through the regional colleges; they're having a private consultant go out to do it. I think that linkage is important.
Mr. Wood: It turns people off.
Ms Johns: It turns me off.
Mr. Wood: I can understand that.
The Chairman: Thank you, Bob.
I have a quick question before we let you go. I may have misunderstood or misinterpreted what you were saying. Did I get from your testimony that you're not particularly excited about the prospect of value-adding occurring or that you didn't believe it was feasible?
Ms Johns: I honestly think we need value-adding. We need a strong agricultural base there. We need some critical population with agriculture. We need to build for our communities some types of businesses, value-adding certainly being an important one in this province.
My problem with the value-adding is.... As the question that came from over here about the cheap raw products...if that is the underlying expectation of value-adding, we're going at it in the wrong direction. I think our value-added processing has to be in a position to be able to pay an adequate price for the raw products so that there is a secure supply. Otherwise I might as well be shipping it overseas, rather than encouraging value-added on the prairies.
I don't think value-added can be on the backs of farmers. I think we have to get a fair price for our products. We cannot be captive to local value-added processing. We have to maintain some competition, and if that competition exists to ship it overseas, at the unfortunate expense of our rural communities, it's a serious problem.
The Chairman: So your fear is that if a company that was going to use your crop established itself in Saskatchewan, and you sold 100% of your crop to that entity, within a short period of time you would be a captive of that entity in terms of the price they would provide to your product. Is that what I'm hearing?
Ms Johns: In a way it can be, depending upon the size of the company. That's why I'm talking about support for locally driven initiatives.
Tomorrow in Saskatoon, for instance, there is a big conference on new generation co-ops. How can we encourage local initiative? How can we encourage farmers to be a part of that? If they're not a part of the value-added processing at some stage, or derive some benefit from it, it's not the saviour of rural Saskatchewan. It can't happen; we can't keep giving our product away. So if governments could look at supporting that type of local initiative....
The Cargill plant that I referred to, coming in with the big multinational company - huge volume, volumes in other parts of the country as well - and all of a sudden they just shut down production.... That's pretty controlling. If it's a locally driven thing that we can be a part of somehow, I don't have any problem with that. That's why I certainly support local initiatives, government support for local initiatives, however it can be done.
I just don't like to see a lot of government money going into promoting the big companies simply because it's value-added. Maybe I'm a skeptic, but I fear loss of some control there when a lot of these multinational companies come in and the profits go out. The jobs are there, yes, but they're bottom line, and profits are paramount to those companies, not the community.
The Chairman: Thank you very much, Ms Johns. We appreciate your taking the time to be here and providing testimony with some perspectives a little bit different from what we've heard in the last couple of days. I appreciate it.
Ms Johns: Our group is very pleased to be a part of development in rural Saskatchewan. We are a proponent of primary agriculture, but we realize that we don't want to live out here alone; we want some people to join us. Thank you.
The Chairman: Very good. Thank you.
I would now like to call upon our next witness, from the Kitsaki Development Corporation, David McIlmoyl. Welcome.
Mr. David McIlmoyl (General Manager, Kitsaki Development Corporation): Thank you, Mr. Chairman, and good afternoon, ladies and gentlemen. I'd like to thank you for this opportunity to come and share some of my thoughts with the committee.
Kitsaki Development Corporation is the economic development arm of the Lac La Ronge Indian Band. The Lac La Ronge Indian Band is the largest first nation in Saskatchewan. It is located adjacent to the town of La Ronge in north-central Saskatchewan on the edge of the Precambrian Shield. It's about 235 kilometres due north of Prince Albert. The band has about 6,300 members, located in six communities spread out over its 18 different reserves.
In 1980 the chief and council of the band directed an effort to generate some economic development activity as they noticed that unless the band was directly involved in a project, band members didn't get jobs. At about that same time, the Key Lake Mining Corporation was developing its uranium mine at Key Lake. The band was successful in forming a joint venture with a Saskatoon firm to provide all the crushed aggregate for the construction phase of the mine. To do our part of the contract, we had to buy six gravel trucks.
Kitsaki Development Corporation was formed in 1981 when we found that an Indian band couldn't borrow the money it needed to buy the trucks because it was not a person at law. We had a contract, it had lots of cashflow to support it, but the band couldn't borrow the money, so we incorporated Kitsaki.
Kitsaki was incorporated under the laws of the Province of Saskatchewan as a for-profit corporation. Its shares are held in trust by the chief for the members of the Lac La Ronge band. Since its inception in 1981, Kitsaki has grown to own shares in eight different operating companies. We will have gross revenues this year of $33 million, and we currently have 350 employed.
About 75% of our gross revenue is earned directly from providing services to the uranium mining industry in northern Saskatchewan. The other 25% of our gross revenue is impacted quite strongly by the prosperity that the uranium mining brings to the north.
In recent years Kitsaki has taken other aboriginal groups, both first nations and Métis, as business partners in some of our established businesses. This has helped to deliver benefits from the mining industry more widely throughout the north.
During the 15 years that Kitsaki has grown in northern Saskatchewan we have experienced the problems facing other groups trying to develop businesses in the hinterland. One of the first problems encountered in business development in northern Saskatchewan is the general lack of infrastructure such as roads, water and sewer, power, natural gas, communications, and all the other amenities that most urban communities take for granted.
It's very difficult to develop a business if you don't have access to, say, a dependable, economically priced source of power, which many of our northern communities haven't had. That's becoming less problematic these days but we still don't have things like natural gas or those sorts of things. It tends to be much more expensive to conduct the day-to-day affairs of a business in a remote location.
Another large problem we encountered is the lack of access to capital of any kind. It's difficult enough to get bank financing for small business in an urban location, but just try to get bank financing for the expansion of a hotel, say, located in a remote northern Saskatchewan community. The urban, predominantly eastern bias of most Canadian banks makes it difficult for a business located outside the accepted urban locations in Saskatchewan to access loan funds, even if the business has the cashflow to support the loan.
Lack of access to capital is exacerbated by the general lack of equity available to most northern small business people. The lack of access to traditional sources of financing make business development difficult, if not impossible, in most situations. The government programs designed to mitigate this problem have disappeared in recent years, which further hampers the process of business development.
Another impediment to business development is connected to the sparse population, the long distances between pockets of population, and the general poverty of the people in this region. When this is coupled with the lower educational levels and the limited job skills of residents of the area, it becomes difficult to find skilled, motivated workers. Business development depends on access to a quality workforce. If you have to spend your money to educate your workforce in basic life skills before they are productive, it's an added cost of doing business.
In order to have any business development you have to have market opportunities. In most remote locations those market opportunities are limited. In our area we have the uranium mining industry and to a smaller extent other mining activity. Without the uranium mining industry Kitsaki would not have been possible. The uranium mining industry is very heavily regulated. In general this is good because unregulated development is not in the best interest of anyone save for the developer. If the mining industry is unreasonably regulated it will go elsewhere and no other development will be possible. It is very important to balance the regulation of the industry with the benefits it delivers and to keep the regulation fair and reasonable.
The final problem I will address is unique to first-nations-owned businesses. First nations people maintain they are not subject to income tax by right of treaty and they contend that this should extend to their economic development activities too. In general, first-nations-owned businesses development faces many impediments. In recognition of this problem it is imperative that consideration be given to taxation as it applies to first nations economic development. In our experience it seems that the Supreme Court of Canada generally rules in favour of first nations people being tax exempt. Then Revenue Canada develops regulations to try to tax those same people.
This makes economic development difficult to plan. Tax planning is a component of business development everywhere, but formalizing the regulations surrounding first nations economic development in favour of the general tax-exempt status of first nations people and their organizations would be a good incentive for development. It would not likely raise the spectre of a first nations mega corporation operating in a tax-free environment, because these entities tend to devote their profits to social improvements amongst their membership. This would not be any different from the City of Saskatoon owning a development corporation that was tax exempt.
While development in Canada's hinterlands is difficult, it is possible, and with the right mechanisms and support in place, development can be fostered. The benefits to Canada as a whole are worth pursuing, as productive citizens are preferable to citizens existing on transfer payments.
The Chairman: Mr. Chatters.
Mr. Chatters: I didn't catch much of the presentation, but this issue of taxation is certainly interesting as it relates to rural economic development. Much of the rural economic development that takes place in the non-aboriginal community happens because of the tax base of the community, the property tax and other municipal taxation of the industry. In my view, that in good measure has been been part of the cause of the lack of development in remote and rural communities of the north. Certainly the lack of a municipal tax base to help build schools and to provide that is a major problem in my constituency.
I take quite a different view from you on the need and desirability of all residents to share in the responsibility through their taxation, to provide those services for the community. That's really the only way I can see that happening.
Mr. McIlmoyl: I guess I was referring to income tax more than municipal taxes, especially in first nations where you have attractive land that's set aside for the use and enjoyment of Indians with title residing with the Crown. If you don't own something, it's pretty hard to tax it. In my experience with Indian reserves in northern Saskatchewan, you're dealing for the most part with people who are existing on welfare. They don't have the means to pay the tax even if they did own something.
I agree with you. One of the elements of the government is its ability to generate revenue from its own constituents. It's responsible to those constituents. You can't argue with that principle at all. But unfortunately, that's not the way the system is set up, particularly with Indian bands.
In some of the smaller incorporated communities, you have such a small tax base that even if everyone pays the tax that is assessed, which happens quite often, there's so little money there to provide the various services that it's just not feasible.
Mr. Chatters: I would ask for your opinion on a concept that I've always thought would be workable.
Instead of the way the federal government and provincial governments deal with aboriginal people in funding programs or by removing more and more block funding and self-government, I was thinking of the concept of providing a guaranteed annual income for aboriginal people and then having their own self-governments taxing back from those people to whatever level of government those people desire. This way you're not only doing something real about the lack of wealth among grassroots people, you're also making their governments responsible to those who elect them and responsible for the spending of those funds.
Mr. McIlmoyl: I think that's an interesting concept. It has some principles in it that I personally agree with, although I don't pretend to speak for the chief and council members of the band or whatever.
If a government isn't responsible to its electorate, what's it doing? One way to ensure responsibility is to take the money from that electorate and spend it in a way that's acceptable to the electorate. That is definitely a mechanism for doing that. I think it definitely deserves some exploration and discussion.
Mr. Chatters: Thank you.
The Chairman: I have a couple of questions. I'd like to explore your comments about access to capital. Basically it goes to a conversation we had earlier today, where one of the witnesses indicated that indeed lending in rural areas - in this case, rural Saskatchewan - is viewed by the financial institutions as being far riskier than lending in urban centres. I take it from your comments that you believe that to be the case.
Mr. McIlmoyl: Yes, I do. The reason Kitsaki as an entity was started was that we couldn't borrow money from a bank. That was back in 1981. It's gotten a little bit better since then, but we try to conduct most of our businesses. We don't go after a lot of government grants and that sort of thing. In the past we have accessed them from time to time.
These days if we want to start a project, we have some equity from the profits that we've generated that we can put in. We'll go to the bank like anyone else and try to borrow the money.
It's very difficult to borrow money in a place like La Ronge, where for instance there is the hotel example I alluded to earlier. We have a hotel that we've been operating for about the last six years. If I had that hotel in Regina or Saskatoon, I would have less of a problem borrowing money.
We're in the process of doing a $3 million expansion, putting in 40 rooms, meeting and conference facilities and all that. We're very concerned that we will not be able to borrow the money, even though we'll have more than 25% cash equity. We have the cashflow projections to support the operation, and the appraised value of the building means that probably the $2.5 million that we'd be looking to borrow is a relatively small percentage of the overall value of our property.
Because it's a hotel and it's in Saskatchewan - and it's in remote Saskatchewan - we will have a very difficult time getting that money, even though by most standards if that hotel was located someplace else we would have a lot fewer problems.
We run into that difficulty with almost every project we try to do in going to the banks. Because we have a track record, we have some revenue and that sort of thing, we have fewer problems than a lot of groups in getting bank financing.
When we started we had a project, and we shopped around to 17 different institutions before the Federal Business Development Bank loaned us the money to buy it. It was a building in La Ronge. It was a bingo hall, which was kind of weird, and it was owned by an aboriginal group. We had loads of cashflow and we paid the loan off in less than what the term of the loan was and all that sort of thing, but we had to go to 17 different financial institutions to try to get an operating line or any of those other things secured by inventory and receivables. It's very difficult.
When you couple that with the fact that most small business people in the north have no equity, banks aren't around to put their money at risk, and a lot of the programs that were there to help offset some of those problems aren't there any more, or if they are they're drastically cut back. It's just very difficult to accumulate the capital necessary to do the business.
The Chairman: Do you see it as an appropriate role for government to try to level that playing field to ensure there is access to capital in rural areas?
Mr. McIlmoyl: No, I'm not really a proponent of the government coming in and fixing things. I don't think in the long term that works. If your business is only profitable with the aid of government grants or intervention or whatever, you really don't have a profitable business.
The Chairman: I wasn't thinking of grants. You mentioned the Federal Business Development Bank, which is a government entity.
Mr. McIlmoyl: Yes, there could be an entity, and I think the government's job is to put something like that in place, but in what particular structure I really can't say. But a development bank that has money they can put at risk, or be a lender of last resort or something like that.... They could charge a premium like the Federal Business Development Bank does. Something along those lines would sure help.
The provincial government has something that's called the northern revolving loan fund that does a bit of that, but again it's very small and was built more for the private entrepreneur, the mom and pop gas stations and things like that.
To get involved in some of the big contracts with companies like Mr. Smith's Weyerhaeuser or with Cameco Corporation, we're looking at access to large sums of money. We have a trucking company that provides all the bulk commodities that go into all the uranium mines in northern Saskatchewan. It costs $110,000 to buy a tractor. Some of our trailers are $250,000 each. Most of those programs aren't set up to accommodate that sort of thing.
The Chairman: I have just one last comment. You made a comment regarding regulations governing the uranium mining industry, and it's interesting that the committee has just passed through clause by clause legislation that is going to change the law that governs that regulation. You indicated you thought there needed to be a balance struck there. Do you think that balance has been struck, or are you concerned with the way that is, one way or the other?
Mr. McIlmoyl: We've got a situation now where there are some new mines that are before the uranium panel hearings. In northern Saskatchewan there really isn't a lot of market opportunity. That is one place where we have some market opportunity and are able to do some things. If the mines are delayed, it's just that much less development going on that we can tag onto.
While I'm all in favour of regulated development, I personally think it's over-regulated now. I think they're trying to count how many angels can dance on the head of a pin. They're taking it to the infinitesimally last.... It's almost to the point of being ridiculous, because mining companies could be here, or in South America, or in Asia. If you make the cost of mining too expensive for them, they will go someplace else. If they go someplace other than northern Saskatchewan, we're without the source of revenue, without jobs, and people are back on the welfare rolls. But I'm not saying completely unlimited development. I think the rules should be looked at, they should be made reasonable, and that's about it.
The Chairman: My researcher has pointed out to me that in addition to our work on Bill C-23, probably in the next two or three weeks this committee will table a report on mining regulations wherein we make exactly that point, that if we don't find a streamlined process of regulations, we will drive investment out of Canada and all of the things that flow from that investment.
Anyway, I'd like to thank you for taking the time, Mr. McIlmoyl, to provide this testimony, to provide your perspective to us. I know the committee members appreciated that, and also your patience; we're running a little bit behind. So thank you very much.
Mr. McIlmoyl: Thank you very much for the opportunity.
The Chairman: The committee stands adjourned until 8:30 a.m. tomorrow in Swan River.
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